Fourth Financial Protocol

The Fourth Financial Protocol was signed on 30th October 1995 and involved the provision of ECU 74 million to Cyprus over the period from 1996 to

31 December 1998. The aim of the assistance was to contribute to the economic and social development of Cyprus, facilitate its economic transition with a view to accession to the European Union, and support efforts to promote a general settlement of the question of Cyprus. A one year extension of the Fourth Financial Protocol has been agreed with the EU, and the documents will be signed when the EU procedures have been completed.

The ECU 74 million committed by the EU was to be derived from the following sources:

1. ECU 50 million in loans from the European Investment Bank.
2. ECU 22 million in grants from the European Community Budget.
3. ECU 2 million in risk capital from the European Community Budget.

The grants (ECU 22 million) were to be used for technical assistance to help Cyprus adopt the acqui, of which ECU 17 million were to be used for projects relating to the Cyprus question and bicommunal projects.

More specically ECU 5 million were to be used «for programmes and projects destined to promote the development of the whole island: bi-communal projects or projects for the benefit of the Turkish Cypriot community which contribute to the unity of the island.

The ECU 12 million allocated in grants was envisaged as being available for potential initiatives agreed jointly in Cyprus to promote a general settlement of the «Question of Cyprus.» It was agreed that the ECU 12 million in grants for projects related to the Cyprus question could not be precisely defined and that that appropriate projects would be reconsidered at a later stage. The two sides agreed, however, that these funds could be used for the following:

1. The financing of studies on the balanced and integrated development of the economy of Cyprus after the solution of the Cyprus problem.
2. Projects jointly presented by different elements of Greek Cypriot and Turkish Cypriot civil society (trade unionists, businessmen, journalists, non-government organizations etc) which endeavour to create a climate of confidence, openness and exchange between the two communities.
3. Other proposals to be submitted by Cyprus or the EU.

Though all the loan components of the Protocol (ECU 50 million) have been utilized, up to now it has not proved possible to utilize the ECU 17 million of EU grants for projects relating to bi-communal activities and the Cyprus question, even though a number of proposals have been submitted to the EU by Cyprus. More specifically in July 1997 the following bicommunal projects were submitted to the EU for approval.

• Restoration of the Hala Sultan Tekke mosque in Larnaca District.
• Construction works on the Klimos river.
• Support for the Cyprus Institute of Neurology and Genetics.

These projects are still being considered by the EU. Other bi-communal projects are under consideration.

The loan component (ECU 50 million) of the Protocol has been used as follows:

The loans were issued through the Cyprus Development Bank. While the risk capital-component has been used to increase the participation of the European Investment Bank in the Cyprus Development Bank.