black_horizontal.gif (38 bytes)

 

black_vertical.gif (38 bytes)
Back ] Up ] Next ]    
Documents

Conclusion of the First «Regular Report from the Commission on Cyprus’ Progress towards Accession», November, 1998

In the political field, continuing attention needs to be paid to avoid measures which could create additional tensions on the island and could make the creation of a bizonal and bicommunal federation more difficult.

Despite the efforts to achieve a political solution to the continuing division of the island, it has not been possible to reach a comprehensive settlement in accordance with UN Security Council resolutions. The invitation of the Cyprus Government to include representatives of the Turkish Cypriot community in the negotiations has not so far been taken up. This has meant that the analytical examination of the acquis could not cover Cyprus as a whole.

In the economic field, developments since 1993 confirm that the Cyprus economy possesses the ability to adapt to the challenges posed by the adoption of the acquis and that the authorities appear committed to restoring a stable macro-economic environment and a favourable business climate. As a result of the characteristics of the country, notably its insularity and the continuous wage pressures and wage rigidity (also related to the full employment situation), Cyprus has in recent years lost competitiveness in traditional sectors (industry and tourism). This is also reflected in the declining trend of domestic exports to the EU. But the importance of the tertiary sector has continued to increase, while efforts have been made to reduce the overdependence of the economy on tourism. This trend can be expected to continue. The most notable development has been the large and growing importance of the international business sector, in particular the international banking sector. It will be important to ensure that the sector’s activities are in line with the acquis. Another equally

important challenge will be to restructure the domestic financial sector with a view to ensuring that it can withstand competition stemming from capital account liberalisation.

The integration of the northern part of Cyprus, especially if it takes place in the context of Cyprus’ accession to the EU, will not raise major economic difficulties, because of its relatively small size and its potential, in particular in terms of agriculture and tourism. However, it will be important to bring the basic infrastructure up to the standards of the southern part of the island.

As regards the adoption of the acquis, a large number of the instruments required for the progressive adaptation of the acquis are already contained in the 1973 Association Agreement and the 1987 Protocol. On the basis of these instruments, Cyprus has made significant progress in adopting the acquis, most notably in the context of the Customs Union. However, substantial efforts have yet to be undertaken in the internal market field and, in particular, in the international business and financial sectors. Furthermore, maritime transport, telecommunications and justice and home affairs constitute other areas of particular concern. Cyprus should not face major problems in adopting the acquis with regard to the 16 chapters already screened.

It seems that major problems will not be encountered as concerns Cyprus’ administrative and judicial capacity to apply the acquis. However, administrative capacities need to be strengthened in a number of areas, including the internal market, maritime transport, telecommunications, environment, and justice and home affairs.

 

Back ] Up ] Next ]