New EU president Cyprus teeters on financial precipice

16/07/2012

Ignored by Turkey, reaching out to both the EU and Russia for help, Cyprus is struggling.

By Andy Dabilis for Southeast European Times in Athens -- 16/07/12

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Cyprus President Demetris Christofias attends a ceremony marking the assumption of Cyprus' six-month EU presidency, at an amphitheatre near Limassol. [Reuters]

With its banks under siege, Turkey's refusal to recognise it and with a president disgruntled that he couldn't re-unify the island, Cyprus' six-month term at the helm of the EU presidency could turn into a hiatus for Turkey's EU hopes and leave the island even more divided.

As Cyprus began its already-tenuous tenure on July 1st, Greek Cypriot President Demetris Christofias, a Communist educated in Moscow, was looking towards Russia to help solve its economic problems: asking for a loan of 5 billion euros, at the same time he wants the EU to prop up the country's banks with an injection of as much as 10 billion euros.

Cyprus' banks were hurt by holding Greek bonds as a previous Greek government imposed big losses on private investors to write down its own staggering debt and try to restore its economy.

The EU presidency is largely symbolic, and even more diluted since the office of European Council president was established in 2009 at the same time there was already a European Commission president. Cyprus' time could see Christofias distracted by domestic problems, having largely given up on trying to find a solution to the problem of an island split since an invasion by Turkey in 1974, which occupies the northern third of the territory.

Turkey also refuses to allow Cypriot ships and planes into its ports and airports, an irritant holding up its EU membership hopes.

With only 800,000 people, Cyprus will be in the role of pushing policies for a 27-nation bloc of 500 million. In Germany, a business group linked with Chancellor Angela Merkel's conservative party said it was unacceptable that a country seeking a bailout should lead the EU, putting more pressure on Christofias. With the question of reunification in limbo too, that leaves Christofias and Cyprus with seemingly little to do.

"The (EU) presidency is not to be used as an opportunity by either side, " Ahmet Sozen, director of the Cyprus Policy Centre and director of international relations at Eastern Mediterranean University in Famagusta, occupied by Turkey in 1974, told SETimes.

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Turkish Cypriots dressed as ghosts to protest outside of the European Council building in Brussels on June 27th, angry that they are not being represented in Cyprus' EU presidency. [Reuters]

"The Greek Cypriot government doesn't have the intention to rush any solution on Cyprus so they won't make any dramatic moves," Sozen said. "Turkey made sure it's not going to take the presidency as an interlocutor and won't talk to them and won't use the six months to try to solve the Cyprus problem. There is a chance what has been achieved so far in the Cyprus peace talks might degenerate."

There's also a chance Turkey might not mind sitting on the sidelines, occupied by developments in neighbouring Syria.

"Turkey's not going to do anything that Cyprus is very nervous about in terms of surprises. Turkey has much bigger problems to deal with," Hugh Pope, the Istanbul-based project director for Turkey and Cyprus for the International Crisis Group, told SETimes.

He said he expected nothing to happen until the February 2013 elections to find a successor to Christofias. "The main role has to go to Turkey in persuading Greek Cypriots that Turkey has no bad intent," Pope said.

Mustafa Kutlay, a Cyprus analyst for the Ankara-based think tank International Strategic Research OrganiSation, said Turkey doesn't mind being on the sidelines for now as the EU is overwhelmed with its economic crisis and expects no change in the status quo.

"We may witness certain rhetorical tug-of-wars between Turkish officials and Greek Cypriot representatives, yet I do believe that nothing will change in substance," he told SETimes.

Still, Cyprus remains inextricably tied to Greece in many ways. The Cyprus problem remains Greece's "top foreign policy priority," Foreign Minister Dimitris Avramopoulos said when he arrived the day Cyprus assumed the rotating EU presidency. He added that Turkey must stop what he called its "threats and aggressive attitude" towards Cyprus, but that kind of talk has been going on for years.

Andreas Theophanous, professor of political economy at the University of Nicosia, Cyprus' divided capital, told SETimes that he was more optimistic.

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The prospect of all-out civil war next door in Syria seems a more pressing problem for Turkey, says one analyst. [Reuters]

"Despite difficulties, the Cyprus presidency will be successful because the government understands the agenda," he said. "Cyprus will not fall into the trap of Turkish provocation."

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Still, Cypriots have some ambivalence, taking over the helm of the EU at a time when their country -- like Greece -- is just about broke.

Benedicta Marzinotto, a research fellow for the Brussels-based think tank Bruegel, which put out a paper that urged the EU to set aside the Cyprus conflict while the Greek Cypriots held the Presidency, told SETimes that a delicate balance must be reached. She said Cyprus should stick to EU issues, such as growth and jobs creation. "It's wise for a small (vulnerable) country to avoid putting in the agenda tough political issues and rather focus on ideas that already benefit from a broad consensus," she said.

Stavros Karkaletsis, a Cypriot analyst who heads the Athens-based Hellenic Centre for European and International Analyses, said Christofias is a roadblock. "He tells everybody that the Cyprus (economic) crisis is a result of the Greek crisis, but that's not true," he told SETimes. "The EU has to be stronger with the Turks and it's unacceptable that an EU candidate won't recognise the six-month Presidency of the EU. The behaviour of Ankara isn't only against Cyprus but all the EU."

Correspondent Menekse Tokyay in Istanbul contributed to this report.

This content was commissioned for SETimes.com.
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