THE Cyprus government says it is seeking a compromise with the EU over proposals for financial aid and direct trade with the Turkish Cypriots, according to Government Spokesman Kypros Chrysostomides.
Chrysostomides’ statement signals a climbdown from the government’s earlier outright rejection of EU proposals put forward earlier this summer.
If the proposals are implemented, the north will, in theory at least, be able to trade directly with the EU without having to send produce through the internationally recognised ports in the south. It will also receive 259 million euros of EU aid. A decision on implementation was to be made this month, but observers say it may be delayed till October as the government seeks to block its ratification.
Chrysostomides said yesterday he hoped that the European Commission would “take into consideration all the legal and political parameters of the issue” – something the north will read as a desire by the government to keep the north in economic isolation, especially given the EU legal services’ concern about opening ports of entry without the government’s approval.
Turkish Cypriot Chamber of Commerce president Ali Erel insists that without direct trade it will not be possible for the north’s economy to develop – something the EU believes would help bring about economic parity, and thereby an early reunification of the island.
“Exporting to EU member states [based on the Green Line regulation that requires goods to be transferred to the south before being shipped abroad] makes this impossible as there is a need for a Greek Cypriot intermediary,” Erel said in a statement issued yesterday.
He added that without direct trade the only way to secure exports from the north through the south would be for Turkish Cypriot businesspeople to relocate to the south.
“But this is not our preference as it would shift economic activity from the north to the south,” he said.
Erel believes that the Green Line regulation, which allows Turkish Cypriot businesspeople to sell their goods in the south, will bring benefits, but he is adamant that it does not have the scope to bring about eventual economic parity between the two communities.
The Green Line regulation, he says, results in Turkish Cypriot businesspeople paying “double VAT and double taxation” because they are accountable to two sets of authorities – one in the north and one in the south.
Commenting in Brussels, EU Commissioner Gunter Verheugen said the final decision would be taken by the EU General Affairs and External Relations Council (COREPER).
A COREPER spokesman indicated that debate on the issue would probably be postponed to a later date.
