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Cablegate: Welcome to Cyprus, Codel Sires

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PP RUEHAG RUEHAST RUEHDA RUEHDBU RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA
RUEHLN RUEHLZ RUEHPOD RUEHROV RUEHSR RUEHVK RUEHYG
DE RUEHNC #0940/01 3301507
ZNR UUUUU ZZH
P 261507Z NOV 07
FM AMEMBASSY NICOSIA
TO RUEHC/SECSTATE WASHDC PRIORITY 8353
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE PRIORITY
RUCNDT/USMISSION USUN NEW YORK PRIORITY 1018
RUEHBS/USEU BRUSSELS PRIORITY

UNCLAS SECTION 01 OF 04 NICOSIA 000940

SIPDIS

SIPDIS

FROM AMBASSADOR RONALD L. SCHLICHER, TO THE MEMBERS OF
CODEL SIRES. ATHENS FOR CODEL CONTROL OFFICER

E.O. 12958: N/A
TAGS: PGOV PREL ECON KCRM PTER CY TU
SUBJECT: WELCOME TO CYPRUS, CODEL SIRES

1. (SBU) Welcome to Cyprus, Representative Sires, my home
since December 2005 and an island whose complexity belies its
small size. We have crafted a program that contains calls on
President Tassos Papadopoulos and other high ranking Republic
of Cyprus officials, contact with both Turkish Cypriot (T/C)
and Greek Cypriot (G/C) opinion leaders, and a visit to the
Buffer Zone that so sadly has divided this island since 1974.
Our goal is to see you depart Cyprus cognizant of the
challenges it faces, but also of the contributions it can
(and does) make in areas of U.S. interest, such as
counter-terrorism.

2. (SBU) Passing briefly through the schedule, you first
visit the historic St. Mamas Orthodox Church in Morphou.
Once threatened by neglect, elements of St. Mamas have been
returned to their 16th century grandeur thanks to a
USAID-sponsored conservation project, a centerpiece in the
Mission's effort to preserve and protect the island's
cultural and religious monuments for the benefit of all
Cypriots. Day 1 concludes with a reception at my official
residence; invitees include political, religious, business
and cultural leaders from both communities. The following
morning, I and select members of my senior staff -- the
Country Team -- will provide you a Cyprus snapshot and
discuss Mission goals and our programs to reach them. Your
first call is on House Leader and current presidential
candidate Dimitris Christofias, whom I find warm but guarded
in his discourse. With elections just three months off,
Christofias may attempt to "sell" you on his candidacy. With
all candidates, however, we suggest you repeat our mantra
that the United States has no favorite in the February 2008
race.

3. (SBU) A courtesy call on Papadopoulos follows, with the
President later hosting you for lunch. The government's
efforts to reinvigorate UN-led Cyprus Problem negotiations
will top his talking points, although he likely will raise
improved bilateral coordination, especially in security
matters, occurring on his watch. Commerce Minister Antonis
Michaelides, with responsibility over energy matters,
receives you next; we expect him to promote his plans to
expand our trade and commercial relationship. Before the
evening concludes at the 232nd Marine Corps Birthday Ball,
you will engage Cypriot legislators serving on the
Parliamentary Foreign Affairs Committee.

4. (SBU) Foreign Minister Erato Marcoullis will host a
working breakfast on December 1. Cypriots take seriously
their outreach to the United States Congress, and Marcoullis,
a former ambassador in Washington, knows and handles this
task well. She likely will concentrate on the Cyprus Problem
and Cyprus's desire to play a larger role in the Middle East,
although the question of Kosovo might also come up. Your
stay concludes with a UN-led tour of the Buffer Zone in old
Nicosia. Threading your way through disputed territory still
peppered with observation posts and nervous conscripts, this
surreal walk backwards in time reminds us that Cyprus's
conflict is by no means frozen. Speaking on behalf of the
entire Embassy Nicosia team, we look forward to your visit
and will endeavor to make it productive and enjoyable.

-------------------------------------------
The Cyprus Problem: All Roads Lead to Rome
-------------------------------------------

5. (SBU) Taxi drivers, barbers, shop clerks -- to say
nothing of politicians -- have strong opinions on the Cyprus
Problem, the de facto division of the island since the
violent conflict of 1974. All will share their thoughts at
the drop of a hat, and I can think of no country where a
single issue so dominates. Space limitations preclude me
from offering even the briefest of summaries; I can only
offer that, for every compelling point made in one community,
there exists a similarly justifiable counterpoint in the
other. To illustrate, Greek Cypriots call Turkey's military
intervention an invasion and continuing occupation of
sovereign Republic of Cyprus (RoC) territory, while Turkish
Cypriots classify it a peace operation undertaken to prevent
their community's annihilation at the hands of G/Cs. We
think that both communities would be better served by
focusing on a common future, rather than re-fighting
yesterday's battles.

6. (SBU) U.S. involvement to mitigate damages from the
conflict and effect the island's eventual reunification began
almost before the smoke cleared in August 1974. From feeding
and housing refugees early on, our efforts morphed into
infrastructure construction and later, fostering bi-communal

NICOSIA 00000940 002 OF 004


cooperation. While the United Nations has directed most
Cyprus Problem settlement efforts, all have featured some
level of U.S. backing. The last, known colloquially as the
Annan Plan after then-UN Secretary General Kofi Annan,
culminated in April 2004 simultaneous referenda that saw two
of three T/C voters cast "YES' ballots but three of four
Greek Cypriots vote "OXI" (no). In his subsequent report to
the Security Council -- which never became "official," owing
to a rare Russian veto -- Annan urged the international
community to end the economic, social, and cultural isolation
of Turkish Cypriots, since they had cast their lot for
reunification. U.S. policy since 2004 has followed suit:
while we have not and will not recognize the breakaway
"Turkish Republic of Northern Cyprus," we do maintain close
contacts with leaders of the T/C community, attempt to engage
them on matters of common concern, and are working to improve
the north's economic performance in the hopes of reducing the
final cost on Greek Cypriots of a final Cyprus settlement.

7. (SBU) For two-plus years after the failed referenda,
leaders in both communities alternated silent treatments with
petty sniping, and hopes grew dim for a re-start of
negotiations. UN Political Under Secretary Ibrahim Gambari
therefore deserves major kudos for convincing President
Papadopoulos and "TRNC President" Mehmet Ali Talat in July
2006 to ink a framework arrangement, the "Gambari" or "July
8" Agreement. The deal committed the sides to ending the
unhelpful "blame game," enacting confidence-building
measures, and reunifying the island under a bi-zonal,
bi-communal model, while also stipulating a process in which
committees and working groups would form to tackle day-to-day
life issues and final settlement matters. Seventeen months
after Gambari's departure, however, not a single committee or
working group meeting has taken place, the "blame game"
remains de rigueur, and the likelihood that full-fledged
settlement talks will recommence anytime soon seems slim.

8. (SBU) Significant movement on July 8 or the broader
Cyprus Problem looks unattainable before the RoC elections in
February 2008. The period after the vote holds great
promise, however, regardless of who emerges victorious.
International community leaders, among them Department of
State Undersecretary Nicholas Burns, have urged the United
Nations to re-engage fully in 2008, perhaps by naming a UN
special envoy to jump-start the negotiations. I am convinced
that every day that passes makes cracking this nut that much
harder. And solve the problem we must: the continuing
division incurs great costs, both real and political, for the
United States. Our contributions to the 43 year-old UN
peacekeeping mission run high in the millions. Disagreements
over differing settlement tactics harm our bilateral
relationship. And Cyprus Problem fallout exacerbates
tensions between NATO allies Greece and Cyprus, complicates
Ankara's accession to the EU, and undercuts EU-NATO
cooperation in hotspots like Afghanistan and the Balkans. It
is not just the island's problem.

--------------------------------------------- --
Elections 2008: A Long, Strange Trip It's Been
--------------------------------------------- --

10. (SBU) President Tassos Papadopoulos won election in
February 2003 with support from his own DIKO party, EDEK, and
AKEL. This ideologically-incongruent alliance --
centrist/nationalist best describes DIKO, while AKEL is
Europe's largest per capita Communist party -- nonetheless
held strong for four-plus years, with Papadopoulos dominating
CyProb policy and AKEL focusing on domestic and societal
issues. Most considered the President's 2008 re-election a
fait accompli, even after opposition DISY, traditionally a
near-equal to AKEL in electoral strength, put forward popular
former Foreign Minister Ioannis Kasoulides as its
standard-bearer this spring.

11. (SBU) By June, however, cracks in the alliance had
become visible. Insiders claimed that AKEL Secretary General
Dimitris Christofias was becoming ever more uncomfortable
with Papadopoulos's hard-line Cyprus Problem tactics, which
he considered counterproductive. So, too, were AKEL's
rank-and-file, who historically enjoyed closer cross-Green
Line ties than supporters of other organizations. Party
leaders were bombarded by polling and anecdotal evidence
portraying the AKEL SG as Cyprus's most popular politician.
If AKEL ever were to capitalize on its status as the island's
preeminent political force, conventional wisdom offered, this
was it. The President's camp drew the final straw in June
when it announced, apparently without having consulted AKEL,
that Papadopoulos would represent the alliance in 2008.

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Within three weeks, a scorned Christofias had gone before his
party congress, received a mandate to run if he so chose, and
declared his independent candidacy.

12. (SBU) Papadopoulos will not repeat the first-round
runaway win of 2003, that is certain. While all polls still
show him leading, just four to seven points separate the
President from third-place Kasoulides, and two recent polls
show Christofias winning the second-round runoff. This
election constitutes a perfect venue for Greek Cypriots to
debate the candidates' alternative visions for the future,
whether over Cyprus Problem strategies tactics, energy and
water usage, or tax matters -- traditional campaign grist.
Regrettably, however, the contenders are looking backwards,
not forwards, with the Annan Plan and who-voted-how
continuing to dominate. So far, the United States and
Cyprus's relations with Washington have not surfaced as
campaign issues; by professing our neutrality at every bend,
we intend to keep it that way.

--------------------------------------------- --------------
Counter-Terrorism Cooperation: In General, Trend Points Up
--------------------------------------------- --------------

13. (SBU) Cyprus's location at the crossroads of three
continents and its historically close ties with Eastern
Europe and the Balkans make it especially vulnerable to use
as a transit point for the smuggling of weapons, people, and
money. RoC legislation on arms brokering, evidence, and
intelligence collection is antiquated, limiting the
government's ability to counter threats. Even worse is the
situation in the Turkish Cypriot-administered areas, where
the lack of C-T infrastructure, expertise, and legislation
leaves authorities unable to confront money
laundering/terrorism finance, weapons proliferation, and
general smuggling. Given the porosity of the Green Line
separating the communities, the north of Cyprus represents a
potential target of opportunity for terrorists seeking entry
into European Union territory.

14. (SBU) Cognizant of the threat, Cyprus takes a clear
stand against international terrorism and is supportive of
U.S. C-T efforts. The government continues to allow blanket
overflight and landing rights to U.S. military aircraft
supporting operations in Iraq and Afghanistan, for example.
Cyprus is a party to all relevant UN conventions on
terrorism, generally supports international efforts to block
and freeze terrorist assets, has implemented Financial Action
Task Force (FATF) recommendations, and conforms to EU C-T
directives. Additionally, it was the first EU member state
to sign a shipboarding agreement with the United States under
the auspices of the Proliferation Security Initiative
Agreement (PSI), and has cooperated recently to interdict
suspect vessels.

15. (SBU) Our countries also collaborate on money laundering
and terrorism finance (ML/TF) issues. In the area
administered by Turkish Cypriots, however, issues of status
and recognition restrict the ability of T/C authorities to
cooperate fully on C-T. The "TRNC" cannot sign treaties, UN
conventions, or other international agreements. Moreover, it
lacks the legal and institutional framework necessary to
combat ML/TF effectively. Within these limitations and with
USAID technical assistance, T/C leaders have cooperated with
the United States in pursuing specific C/T objectives,
however, and have improved their abilities in this critical
field.

16. (SBU) Kurdish-origin communities exist on both sides of
the Green Line. Media report that the Kurdish Workers' Party
(PKK) maintains a presence island-wide, using the island as a
fundraising, R&R, and transit point. The government
maintains, however, that it is fulfilling all
responsibilities with respect to the EU's designation of the
PKK as a terrorist organization. Turkish and Turkish Cypriot
contacts believe that the large troop presence in the north
acts as a significant deterrent to open PKK activity there,
and both the RoC and authorities in the north believe there
is little risk the terrorist group will conduct operations on
the island.

--------------------------------------------
Balkans: Favors Stability, Fears Separatism
--------------------------------------------

17. (SBU) Cyprus, like Greece, maintains close relations
with fellow Orthodox nations like Serbia, a fact that colors
its Western Balkans policies. During NATO's 1999 Kosovo

NICOSIA 00000940 004 OF 004


campaign, the same ugly, pro-Milosevic demonstrations which
wracked Athens plagued Nicosia as well, resulting in minor
damage to this Embassy. On Kosovo, Cyprus supported the
2006-07 efforts of UN envoy and former Finnish President
Marti Ahtisaari to broker an agreement between Pristina and
Belgrade, but regretted Ahtisaari's decision to suspend talks
last spring with the parties still miles apart. Foreign
Ministry officials believe that negotiations should continue
in order to find an arrangement that satisfies both the
Kosovars' demands to manage their own affairs and Serbia's
insistence that the international community respect and
ensure its territorial integrity.

18. (SBU) Cyprus publicly opposes a Kosovar unilateral
declaration of independence (UDI) should the follow-up
"Troika" (U.S., EU, Russia) talks prove unable to resolve
Kosovo's final status -- an outcome most experts predict.
Underpinning the Cypriot position is their belief that
independence for Pristina, even under international
supervision (as Ahtisaari's plan stipulated), sets a
dangerous precedent for countries battling ethnic and/or
regional separatism. After the international community
partitions Serbia it will divide Cyprus, their theory goes.
Our best efforts to convince the government that Kosovo's
case is sui generis were generally effective over the last
two years, but are fraying as Kosovo nears the point of
decision. On another "hot" Balkans issue -- the uptick in
tension between Greece and Macedonia over the latter's
constitutional name, and the possibility Greece will veto
Macedonia's eventual EU and NATO membership as a result -- we
can expect Cyprus to back Athens solidly.

---------------------------------
Energy Security: Possibly a Role
---------------------------------

19. (SBU) Its island geography and small-market status
leaves Cyprus out of the latest "Great Game" of
pipeline-building and alliance-forming. In general, energy
security issues garner little press play or official notice
here. Oil and gas did dominate newscasts earlier this year,
however, as the RoC initiated the tender process for seabed
blocks potentially containing recoverable reserves. The
government's actions drew an immediate, threatening response
from Turkey. The RoC had no right to delineate Exclusive
Economic Zones with Egypt and Lebanon, Ankara argued, since
the "Greek Cypriot government" did not speak for all the
island's residents -- Turkish Cypriots, too, deserved a slice
of the natural resource pie.

20. (SBU) We were unable to remain outside the fray,
unfortunately. Asked to comment publicly, I voiced our
conviction that the Republic enjoyed a sovereign right to
conclude treaties and agreements with its neighbors. Both
communities should seek opportunities for rapprochement in
the potential energy windfall, I added, not further grounds
for discord. The first bidding round disappointed government
circles, as none of the multinational biggies bid on the
plots (but one mid-sized U.S. firm did). A second round,
containing more attractive blocks, is scheduled for shortly
before the presidential elections in early 2008.

21. (SBU) American companies have scored notable energy
sector successes in Cyprus, in part due to Embassy efforts.
In 2006, General Electric and its partners won a power
station tender worth $250 million. With the RoC facing EU
demands to move from environmentally-unfriendly oil-based
electricity generation to cleaner methods, U.S. companies
selling "green" solutions like wind farms and solar power
would seem to benefit. I have made commercial advocacy a top
strategic goal of this Mission, and we are actively pressing
for further market liberalization and expanded opportunities
for non-EU firms.
SCHLICHER

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