CYPRUS PROBLEM

FEATURE

TOWARDS THE EUROPEAN UNION

A Historical Review

Cyprus, when considered from a historical, geographic or cultural point of view, constitutes an inalienable part of Europe. its eastern Mediterranean location at the extremity of Europe is of considerable strategic significance. Over the span of history Cyprus was colonised or subjugated by a multitude of conquerors on account of this significance and remained in subservience to the various powers which, at different times, held supremacy over the region. Nevertheless, these vicissitudes transformed the island into a unique crossroads of diverse culture with an enviabel inheritance of experiences, traditions and influences. Cyprus began in Europe-oreinted policy immediately upon obtaining independence in 1960. It became a member of the Council of Europe in 1961 where it has been active ever since. The Cyprus Government expressed its interest in an association with the EEC as early as 1962, the same year Great Britian submitted its own first application. The heavy dependence of the Cyprus economy on British Commonwealth preferential trade tarriffs until then, and the prospect of dismantling the latter following Britian's entry into the EEC, rendered an approach to Europe imperative.

Neverheless, this first attempt to join the European Community did not materialize, due to the faillure of the British application. New prospects surfaced when the British made another effort during the 1970s. As that time Cypriot justification for membership of the EEC was primarily economic. Specifically, Cyprus needed to offset tht losses it would incur as a result of Britain's entry and, as already noted, from the termination of prefxerential trade tarrifs among Commonwealth countries. Furthermore, an expanded European market seemed quite appealing to Cyrpiot agricultural and industrial product. Until then a significant proportion (approximately 40 percent) of ecports were directed at Britain; the loss of that market would therefore have dire consequences on Cyprus's economy. On the other hand the government was confident that Cyprus's vigour in agriculture, industry and even in services would ensure the success of the venture, despite the structural inefficiency and infrasturctural deficiencies of the Cypriot economy.

Meanwhile, the Europe Community inauguarated a new policy of preferential trade status with respect to countries in the Mediterranean basin. Soon, the competition threatening form that direction further prompted Cyprus to seek ways to safeguard its interests. As had become apparent, a simpe trade agreement could not remedy the situation in the long run; it was therefore preferable to find a formula for some eventual permanent customs union with a sizable and stable market, such as the European Community.

Alongside economic reasons, a number of political considerations also weighed in favour of entry into the EEC. Inter-communal relations between Greek and Turkish Cypriots posed an open constitutional question as early as 1963. There was an evident need therefore to improve the international posistion and independence of Cyprus. Association with the EEC would provide the necessary interest in develoments in that part of the world. Despite its brief life the European Community had already given unmistakable proof of its economic rigour - a quality which added to its political import.

On December 19, 1972, negotiations culminated in an Association Agreement between Cyprus and the European Community, which came into effect on June 1, 1973. This Agreement provided for two stages: In the initial stage to be completed by June 30, 1977, thw Agreement provided for reduction on import duties for Cypriot industrial products and a number of agricultural products. At the same time Cyprus would progressively reduce the duties it levied on a number of EEC imports, up to a certain point. Moreover, the Community was to terminate quotas on Cypriot products (specified in the Agreement), while Cypurs could opt to retain (but not increase) existing restrictions. The entire system was to be guidelined by the possibility of derogations and payments and other pertinent economic indicators. Implementation was to be administered by a number of bodies - the Assciation Council, the Association Committee and the Joint Parliamentary Committee. The second stage of the Association Agreement was to become effective following termination of the former one. In essence, it was to act as a transition to a complete customs union between Cyprus and the EEC at a foreseeable future date. The Turkish invasion of Cyprus in 1974 upset the political and economic situation on the island and rendered extremely difficult the respecting of the timetables set by the Association Agreement. Turkish armed forces uprooted 200,000 Greek Cypriots who abandoned the northern reions of Cyprus and fled south as refugees. In addition, the illegal authority imposed by Turkey usurped private property (homes, factories, estates, crops, etc.) which Greek Cypreiots had left behind. In view of this tragic situation and the ensuing loss of control over the economy, a timely implementation of the stages as foressen in the Government of Cyprus had the courage to mobilize the remaining forces so effectively that, in the end, all Agreement obligations were met on schedule. Thus, in spite of its clamity, Cyprus was ready to proceed to the second economic stage of the Association Agreement as programmed initially.

Nevertheles, as this next stage was on the verge of beginning in July 1977, some Community partners cited prolonged political instability on the island as a factor which, supposedly, brought into question the success of the stage about to commence. There were two caterogies of 'cautions' behind this last minute impediment: political and economic. Some EEC member states discerned here an opportunity to exert pressure for a particular sort of solution to the Cyprus problem; a number of others were not too eager to see Cyprus move to the next stage because they themselves had products which competed with Cypriot ones. Even though this concerted effort did not succeed in its political objective, it nonetheless managed to lead to a prolongation of the initial stage through a new Additional Protocol Agreement signed in Brussels on 15 September 1977 which provieded for the extension of the first stage until 31 December 1979. The new protocol lifted customs duties on Cyprus exports to the EEC on condition that productus met Community rules of origin. On the other hand, Cyprus reduced its tarriffs on imports for the Community by up to 35 percent. At about that time, Cyprus and the EEC signed the First Financial Protocol, the total funds of which amounted to ECU 30 million.

On 11 May 1978, Cuyprus and the EEC, also entered into two new protocols: a special supplementary protocol which settled some additional agricultural issues in line with the Mediterranean policy of the community and another laying down certain provisions relating to the trade in agricultural products. A new transitional protocol was again signed on 7 February 1980 ectending even further the initial stage of the Agreement.

The above - described regime was extended again in July 1983 thrugh yet another special protocol. This protocol made additional concessions on customs duties and quotas on a number of agricultural products and lifted quotas on certain industrial categories (textiles, yarns, garments). In addition, in December 1983, Cyprus and the EEC signed the Second Financial Protocol, which totalled ECU 44 million.

In short, through such methods and means (ad hoc protocols), the initial phase of the Association Treaty was prolonged until 1987. Throughout this period of successive extension, cyprus never abandoned its objective to proceed to the second phase which would eventually lead to a cusotms union.

The opportunity for transition to the second stage was finally offered after the completion of negotiations for the Single European Act when the Community decided to revise its poliy with regard to the Mediterranean countries following the entry of Spain and Portugal. In an appeal to Community members, Cyprus reminded them of its readiness and willigness to revise the status of relations. At this juncture, the support frothcoming from Greece was indeed decisive. The Greek government predicated its consent to the new EEC Mediterranean policy on a decision giving mandate to negotiations for a customs union agreement with Cyprus. Moreover, the overall political climate in the EEC was on an optimistic swing; the Community was euphorically contemplating the prospect of its 1992 market and, in the long run, its monetary and political union. In the meantime the Community had developed an interest in the Mediterranean regions, which constitute an area of vital importance for its strategic planning.

Under these circumstances the Council of Ministers issued its mandate to the Commission on November 21, 1985 to commence negotiations with Cyprus. Negotiations resulted in the Customs Union Agreement signed on May 22, 1987, in Brussels, between the EEC and Cyprus. According to this agreemeent, upon completion of the second stage, Cyprus will be ready for customs union. The Customs Union Agreement, in effect as on January 1, 1988, provides for two stages: an initial ten-year stage with provisions affecting all of Cypriot agriculture and industry, terminable on ratification by the Association Council, to be followed by a four to five-year stage when Community products (as specified in the Agreement) will flow freely into Cyprus and the Common Agricultural Policy (CAP) will apply to Cyprus. In return, the EEC will lift all restrictions imposed by the CAP now in effect with respect to Cypriot products.

The Customs Union Agreement constitutes a turning-point for Cyprus. to assess its significance we must ot confine our judgement to economic considerations alone but also take into account its political importance. Signing this Agreement not only draws Cyprus and the EEC economically closer together, it also acts as ratification on Cyprus's ultimate goal of joining Europe. This unmistakeable politial message need not detract from United Nations initatives on Cyprus; it merely underlines the determination of Cyprus to move towards Europe. Even in 1988 the Cypriot economey was already advancing rapidly in that direction, the EEC ranked first in absorbing Cypriot products (47.4 percent) whilst Arab markets (representing 34.3 percent) and eastern European markets were declining. In terms of imports the EEC likewise ranked first: 54.5 percent of Cyprus's imports originated in the EEC.

In signing the Customs Union Agreement, the European Community reaffirmed its support for the legal government of the Republic of Cyprus, for the independence, sovereignty, and territorial intergrity of the country and for the need for a solution to the Cyprus problem based on the relevant U.N. resolutions. The gains expected to accrue to Cyprus from the Customs Union Agreement will apply, as stated by the EEC to its entire population. The signing of the Customs Union Agreement was accompanied by the Third Financial Protocol for Cyprus on November 30, 1989. This protocol amounted to ECU 62 million extended over five years. The Agreement created a climate of optimism in Cyprus. The majority of the political parties considered the Customs Union Agreement as a preliminary to full admission. Preoccupation with the subject resulted in extentive analyses on whether entry shoulb be sought. Relevant observations and arguments included, among others, the following:

  1. Today Cyprus is at stage of develpment which can withstand shocks from an incorporation to the EEC.
  2. Political and social parctices prevailing in Cyprus, as well as Cyrpiot civilization, historical traditions and values, are in concordance with European culture and frame of thought.
  3. On the economic side: (a) Full entry to the EEC is more advantageous to Cyprus than remaining at the level of a customs union. In fact, the latter is of value only in so far as its acts as a stepping-stone towards eventual membership. (b) Full admittance to the EEC will in the long run benfit the Cyprus economy also, by compelling it to overcome its structural inefficiencies.
  4. Finally - on the political side - it is hoped that entry to the EEC will facilitate a just and parid solution of the Cyprus problem. The rules and pricinples regulating political conduct in Europe will lead to a solution in harmony with democratic notions and justice - an evetuality beneficial to both Greek and Turkish Cypriots. The EEC will then be in a better position to influence Turkey to abide by international norms of justice and U.N. decisions on Cyprus. The entry of Cyprus to the European Community is not without substantial benefits for the EEC as well:
  5. The EEC would extend its 'boundaries' into the eastern Mediterranean and acquire a direct access in prusuance of economic and political influence in the reigion.
  6. The extension of the European Community to the eastern Mediterranean will assist stability, peace and cooperation in the region.
Arguments in favour of applying for accession to the EEC gained much public support in the yars since 1988. Public sentiment was so unanimous that when the Parliament of Cyprus had a resolution on the floor urging for a petition, three political parties (out of four) voted overwhelmingly in favour.

Indeed, on July 3, 1990, the Foreign Minister of Cyprus, Mr George Iacovou, on behalf of the Government of the Republic of Cyprus, dilivered a letter to the President of the EEC Council of Minister whereby the Republic of Cyprus submitted its official application for membership.

The application came on the agenda of the Council of Ministers on September 17, 1990. In compliance with Article 237 of the EEC Treaty, the Council voted to transmit the application to the European Commission for its opinion to the Council of Ministers which,a fter having also considered the position of the European Parliamanet, will then act on whether to order negotiations to commence. The application of Cyprus to become a full member of the European Community promises a whole new chapter in the history of Cyprus and offers prospects both for Cyprus and the European Community.



European Union & Cyprus

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Giorgos Zacharia (lysi@mit.edu) 1995-1999.
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