Cyprus’s future: De Soto’s plan and the risks involved

Over the past two months, debate on the Cyprus issue has focused on whether there is in fact a plan for Cyprus, and if so, whether it was designed by the Americans, the UN, the British or the Europeans, what its contents are and what the agenda for the January talks will be. Just how close are we to a resolution, people are wondering. The question also being asked is why Turkey and the Turkish-Cypriot leader, Rauf Denktash, have suddenly changed their stance and what the plan means for the defense of the island. In fact there is a plan, in the sense that UN mediator Alvaro de Soto has drawn up several top-secret documents which will form the basis for the most unusual talks ever to take place on the Cyprus issue, due to begin on January 15. They are unusual because for the first time, Cyprus is not hanging on the outcome. Whether the talks are successful or not, Cyprus’s accession to the European Union is assured, as Brussels has already rejected the idea of a confederation and has decided to bring Cyprus in on the first wave of new members, so as not to cause delays for other countries. In these final negotiations, Cypriot President Glafcos Clerides will have EU backing. The next European Parliament elections in 2004 will result in Cypriot representatives to Strasbourg. That is why Ankara, forced by immediate economic and political needs not to clash with Brussels, appears to have changed its stance overnight and forced Rauf Denktash to be more conciliatory. There is only one possible risk – a complete breakdown in the talks, which would lead to Turkey provoking a military crisis before Cyprus joins the EU. The question is whether the moderate line taken by Turkey over the past few weeks, even if sincere, will last until the accession procedure is complete, or whether Turkey will eventually carry out its long-standing threat to provoke a crisis when Cyprus joins the EU. As the answer to that question will not become evident now, Nicosia, far from convinced of Ankara’s good intentions, has, in the utmost secrecy, been taking very serious, indeed radical, steps on the military front for the immediate future. At the moment, Cyprus has new military equipment in operational condition which alters the military balance. It is extremely up to date and covers all three forces. Green light from Brussels The EU has made it clear that the accession of Cyprus to the EU is a given, both on the technical and political level. On the practical level, harmonization is almost complete. The last obstacle, that of offshore companies, has been resolved rather ingeniously. Brussels is not demanding that these be removed, as many people believe, but what they are asking is that these companies be taxed in the same way as other companies in Cyprus. Consequently, the government is reforming the taxation system, lowering company tax from 20 percent to 10 percent, and raising offshore taxes from the current 4 percent to 10 percent. Thus it not only ensures that most offshore companies will stay in the country so as to avoid the cost and trouble of moving elsewhere, but it also combats tax evasion, since a recent study shows that the existing taxation system results in an 8-percent loss of revenue and also involves risk. On the political level, the visits by European Commission President Romano Prodi and his statements – including a historic speech in Cyprus’s Parliament House – as well as by European Commissioner Guenther Verheugen, are making people aware that Cyprus will be included in the EU’s next enlargement. In his speech, Prodi appealed to the Turkish Cypriots not to miss their last opportunity to become part of Europe. A third, particularly important factor is that in the UN’s latest six-monthly extension of the UNFICYP peace-keeping force on the island, there is a clear statement that no solution to the Cyprus problem can be acceptable that is contrary to the acquis communautaire. Moreover, Brussels is displaying intense interest in the constitutional issue. The EU is absolutely opposed, as is Nicosia, to the idea of a confederation as they fear it would create problems for the island within European organizations and that it would result in a lack of flexibility in the decision-making process. The de Soto plan Given these new political and military factors, the idea of a Cyprus solution has now lost its old meaning. Whatever the solution, if there is one, it will be based on the de Soto plan, the basis for January’s talks in Nicosia, which has the full support of the Americans, British and Europeans. The plan, according to the documents drawn up by the UN mediator in the previous Clerides-Denktash talks, includes two sections. The first is not negotiable, while the second is more flexible. As a whole, the plan is more a reflection of the positions of the Greek-Cypriot than of the Turkish-Cypriot side. Its first and most crucial section provides for three alternative scenarios for a federation, all of which include a central government and two local governments and corresponding legislatures. The first alternative is a presidential federal system with a strong Greek-Cypriot president and a Turkish-Cypriot vice president with the right of veto. This system is considered likely to lead to a repetition of what occurred under the 1960 Constitution, with similar problems. The second alternative is a loose federal system with a figurehead president, and a prime minister and deputy prime minister with executive powers. The third proposal is for a Swiss-style system, with a Council of Ministers whose members form a rotating presidency. The plan provides for a return of territory amounting to about 10 percent of the Cypriot state, including the port of Famagusta with the exception of its Turkish sector. It also includes a large number of major villages, an important point as this will facilitate the return of refugees. The National Guard would be abolished, its weaponry sold and an international police force set up, alongside a more lightly armed mixed local police force. The plan also provides for incentives to settlers in the northern sector (not born in Cyprus or not married there) to return to Turkey. It is estimated that over half of the inhabitants in the Turkish-occupied sector (100,000 out of the total 180,000) are settlers. The de Soto plan recognizes the inviolability of ownership, fully adopting the position of the European Court of Human Rights in the Loizidou case. (The Court ordered Ankara to pay 400,000 Cypriot pounds in damages to Titina Loizidou for property seized in the north of the island after Turkish troops invaded in 1974). There are also a number of provisions on issues such as a common currency. Clerides and Denktash are to meet prior to January 15 for the purpose of discussing humanitarian issues, particularly the old agreement on Greek Cypriots who live in the enclave on the Karpasia peninsula in the northeast. In order to prepare for this meeting, Cyprus’s prosecutor-general, Alekos Markidis, was in Athens incognito this last week for talks with the Greek government. Koustsogiorgas: ‘We want to make you president of the Republic.’

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