Cyprus Problem – The Draft of a possible Cyprus Settlement?


Cyprus Problem

The Draft of a possible Cyprus Settlement?

shared by Steven Roberts

Omphalos news service in the south of Cyprus has translated an article from Politis newspaper about the current talks aimed at finding a solution to the Cyprus Problem.  

Cyprus and the EUPolitis newspaper says that the atmosphere around the Cyprus talks has changed for the better over the last few weeks, according to well informed sources on both sides, in contrast to the feeling a while back that things had reached a deadlock.

Differences in the chapters on government, economy and the European Union have been greatly reduced with only a few details left to iron out, some of which may be  being held as last minute bargaining cards.

Two large differences remain, namely the property issue, which seems to be hanging on the issue of guarantees/security and to a lesser degree, how the solution will be financed.

President Anastasiades has made clear that he will not accept any guarantees and nor will the Greek Cypriots vote for any solution that contains any. Politis notes that the Greek Cypriot side is cautiously optimistic that some commonly acceptable formula may be found on this matter based on the fact that they haven’t been pressured by any external powers in this direction.

The financial aspect of the property issue is the other aspect that will determine whether a solution will be found. The Turkish Cypriots believe that the money for compensation will easily be found, whereas the Greek Cypriots and the IMF feel the cost of a solution must be reduced as much as possible because there is no easily available money and investors will only come to the island after the solution is implemented to reduce their risk. Thus the effort is focused on finding a formula for the property issue, as well as on the size of the federal government in order to limit bureaucracy and avoid inefficiency.

It seems everything depends on what will happen in the twenty days between 23 August and 14 September. It is hoped that on the first meeting the leaders will put the property issue to rest or at the very least to agree that it hinges on the territorial issue. The leaders have agreed to hold three meetings in August (on the 23rd, 29th and 31st) and four meetings in Septemebr (2nd, 6th, 8th and 14th) when they will discuss all the chapters in depth. If all goes well, this will pave the way for a joint meeting between Anastasiades, Akinci and Ban Ki-Moon in New York during which they will discuss the possibility of holding a conference in the fall on the external aspects of the Cyprus problem.

The paper notes that the coup in Turkey has created an atmosphere of uncertainty around Turkey’s intentions. However, it has strengthened the Greek Cypriot side’s position that the guarantees be abolished, while making the Turkish Cypriots more anxious than ever to disconnect themselves from Turkey’s internal strife.

The paper stresses that President Anastasiades is pleased with what has been agreed so far which he considers an improvement on the Annan plan. He is particularly pleased with the four freedoms, namely that people will be able to own property, reside, work and travel freely all over the island, as well as with the 4:1 agreement whereby for a Turk to acquire Cypriot citizenship a further four Greeks must also acquire citizenship. The population ratio has been agreed at 78.5% Greek Cypriots to 21.5% Turkish Cypriots, or 803,000 to 220,000, making the total population of Cypriot citizens on day one at 1,023,000.

 So far, the paper says, the following has been agreed…… 

Executive
The president, whether this will be a Greek or a Turkish Cypriot, will safeguard the constitution, the federal functionality, the accreditation of diplomats, international agreements, appointment of ministers, will preside over the council of ministers. President and vice president will decide foreign and defence policy together and will be able to override decisions of the council of ministers on these issues. Their joint competence will be the international obligations of the Cyprus Republic. The two will consult each other regarding the appointment of ministers and in the event of disagreement will appoint separately the ministers for each community. Decisions of the council of ministers will be taken unanimously (at best) or by majority (with the participation of at least one Turkish Cypriot). On vital issues, if all Turkish Cypriot ministers vote ‘no’, or a corresponding number of Greek Cypriots vote ‘no’, then the ministry will not take a decision. The president and vice president can jointly decide to fire ministers. Pending matters include how the president and vice president will be elected, the size of the council of ministers, and the rotating presidency, which the Greek Cypriot side is holding as a last minute negotiating card.

Deadlock-breaking mechanism
The old proposal of having a foreign judge to break any deadlocks that may arise has been abandoned and has been replaced with a four-member team consisting of president, vice president and two minister from each community. If there is deadlock, then one of the ministers will withdraw and the remaining three members will decide.

Legislature
There will be an upper and a lower chamber, with the president and vice president of each chamber coming from different communities. If the president of one community is a Greek Cypriot, then the president of the other chamber shall be a Turkish Cypriot. The upper chamber will have 40 elected members, 20 from each community, and the lower chamber 48 – 36 from the Greek Cypriot state and 12 from the Turkish Cypriot state. Decisions will be taken by simple majority in both chambers in the presence of at least a quarter of the members of each community. For special laws in the upper chamber the presence of two fifths of all senators of each community must be present. If there is a deadlock there will be a mediating subcommittee consisting of four members (president, vice president and other members of the upper and lower chambers) who will study the case and submit a joint recommendation on how to overcome the deadlock.

Judiciary
A supreme court will be set up that will convene as the Supreme Court of Appeals, as a Federal Electoral Court and as a Constitutional Court. Decisions will be taken by simple majority. There will be an annual rotation of the president by 4:2.

Federal competencies
Twenty eight competencies have been outlined safeguarding the three singles (single sovereignty, international personality, citizenship). Agreement is still pending on the issue of the airspace (FIR). The Turkish Cypriots have stepped back from wanting two FIRs and now want two Air Control Centres, one for each state. The two sides have also agreed that the two federated states should cooperate as to their participation in various international organisations (on tourism, fisheries, agriculture, town planning, health, veterinary issues, tobacco sales, notarising documents, education, sports). It will be possible for technocrats from one or other of the two communities to represent the federation at international organisations.

International agreements
It has been agreed that the two federated states can enact agreements provided the foreign state is recognised by the Cypriot federation and does not impact its foreign policy. The federal government must be informed and can object to such an agreement being enacted if it violates any of the laws. The Turkish Cypriots insist on being able to enact agreements at all levels, while the Greek Cypriots insist that only a limited number of such agreements can be signed by the states (such as on sports and culture).

Domestic issues
All Cypriot citizens will have the right of abode, the right to work, start businesses or trade throughout the island. Elections to the upper chamber will be according to community of origin, elections to the lower chamber will be according to internal citizenship and European elections according to place of residence. The two communities must also state who has domicile status (where people have their habitual residence, not domicile). Status of domicile will be given to a maximum of 20% of those controlling the internal citizenship.

Property
The right of property ownership was recognised as being an inalieable right and 22 categories of property owners were defined. There remains disagreement regarding the acquisition of property, with the Turkish Cypriot side insisting on controlling the market so that each state may determine the size of property that can be bought or sold, although for a shorter period of time than in the past. President Anastasiades has made clear that he will not accept either population restrictions or limitations relating to the acquisition or possession of property. Ways for solving the property issues include full restitution, partial restitution, alternative restitution, exchange of property, and compensation.

The owner/user will have the right to appeal to the property commission, which will operate 10 chambers whose task is to immediately and quickly examine all requests, with priority given to those who want to return. A property tribunal will be set up and every Cypriot citizen will have the right to appeal to the ECHR after exhausting all internal remedies. Disagreement remains on the criteria with which to assess the property that will be compensated. There is disagreement on whether properties are to be compensated on the basis of current prices or on the basis of prices that the current Immovable Property Commission is compensating property for. If the former, then it is estimated that 25 billion euro will be needed for compensation, as opposed to 8 billion for the latter. The three main criteria of the future property commission will use is still pending and will depend on the territorial issue.

Internal security
The Greek Cypriot side insists on a 60 – 40 participation of the two communities in the federal police force whereas the Turkish Cypriots want 50-50.

Economy
There is full understanding as regards control of the federal banking system, public finances, developmental issues, social issues, and the broader institutional framework. There will be one central bank and one currency (the euro) from day one. There will be an internal stability pact, which will limit in , government spending, debt, and revenues and expenses in both the federation and the two constituent states, so as not to deviate from European regulations.

Indirect taxes will be levied by the federal government and direct taxes by the constituent states. All state benefits are to be compatible with the European acquis. There will be one Registrar of Companies and separate systems for social security, pensions and health. A central body will manage public debt is the central management body, in which both the federal government and the constituent states will participate. There will be a common VAT rate throughout the island. The paper adds that that the IMF has begun testing banks in the occupied area and the news so far is not good  in that their situation is worse than the Greek Cypriot banks were in 2013). Initial findings show that the banks of the occupied are completely dependent on Turkey and will probably require more than a decade to be able to stand on their two feet. However, if they follow IMF recommendations they have great potential. Several studies being currently carried out by the IMF and the World Bank on the economy and the finances of the solution, are expected to be ready by the end of September.

Allocation of revenues
Revenue will be allocated in proportion to the population of each community. It has been agreed that 6% of the budget will be allocated to infrastructure in the two states, and for the first few years of the federation five sixths of this  will go to the Turkish Cypriot state for infrastructure construction. Note that there is disagreement only on the issue of budget approval – the Turkish Cypriot side wants this to be by a qualified majority whereas the Greek Cypriot side wants a simple majority.

European Union
It has been agreed that positions in the EU will be allocated 2:1, ie four Greek Cypriot MEPs to two Turkish Cypriots. The same rate will apply to technocrats that Cyprus is entitled to appoint to the EU. The European acquis will cover customs and tariffs, border control, immigration, and economic – monetary policy, competition, agriculture and fisheries. A Ministry of European Affairs will be set up, falling under the presidency of the Republic with its own secretariat.

Primary law
This is no longer an issue. There will be no permanent derogations from the acquis communautaire. After successful interventions by Pieter van Nuffel (the Personal Representative to the Good Offices Mission of the United Nations in Cyprus) and Espen Barth Eide, the Turkish Cypriots have understood the Greek Cypriot position. Any difficulties the Turkish Cypriots may have as regards harmonization or convergence purposes shall be resolved through Protocol 10 of the Act of Accession of Cyprus to the EU. However, agreement is still pending on setting up internal mechanisms for formulating joint Cyprus – EU positions. The creation of a joint EU statistical unit is being discussed, which will be the common Authority that will participate in all processes. The Greek Cypriot side proposal that territory that will be returned to the Greek Cypriot side should be given special treatment for development purposes was accepted, specifically these areas will also be eligible for financing as will the Turkish Cypriot constituent state. The ad hoc committee for the harmonization of the Turkish Cypriot side will continue to operate.

Security
A large number of troops will leave the island as soon as the solution comes into effect and {the ‘ghost town’ part of} Famagusta and the buffer zone will be returned on day one. All other areas will be returned within short timeframes. Regarding Morphou and other areas, there are ideas on the table which are expected to satisfy most people. The aim is to mix the population so as to achieve genuine reunification of the country, and not to create two “ethnically” clean areas or states.

Guarantees
Two things were agreed at the last meeting between the two leaders – the 1960 guarantee will be defunct, but that didn’t mean there would be no guarantees at all. The Turkish Cypriots want to be able to have the right to turn to Turkey during an emergency or at a time of high risk or crisis. The Greek Cypriot side proposes that during a crisis a mechanism at the federal level should exist and if that fails then there should be an EU mechanism. If that too fails then there should be a request to the United Nations (without Turkey being excluded at the last stage). All of this should take place under Article 7 of the UN Charter.

Open issues
Issues that have not been discussed at the level of the leaders (the technocrats have discussed them) include the hierarchy of laws, precedence, instruments, external relations, independent institutions, regulating authorities and international agreements. A committee has already been set up to  draw up the federal constitution and federal laws, while a special committee has also been set up to handle day one of the solution.

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