Dear Mr. Speaker: (Dear Mr. Chairman:)

In accordance with Public Law 95 - 384 (92 Stat. 739; 22 U.S.C. 2373(c)), I am submitting to you this bimonthly report on progress toward a negotiated settlement of the Cyprus question.

This report covers the period from mid-May through July 1990, a time in which American efforts with respect to Cyprus were concentrated on finding a means to restart the U.N.-sponsored intercommunal negotiations. These negotiations had come to an abrupt and unsatisfactory end in early March.

I discussed the Cyprus issue personally with President Gorbachev during the U.S.-Soviet summit at the end of May, and we both agreed to do whatever we could to support the efforts of the United Nations Secretary General. Then on June 4 and 6, respectively, Secretary Baker and I reaffirmed directly to Greek Prime Minister Mitsotakis during his visit in Washington the United States strong interest in progress toward a Cyprus settlement. While we expressed our willingness to discuss ideas about Cyprus with all interested parties, we emphasized as well that a Cyprus solution could not be provided by the United States but had to be reached through direct negotiations between the two Cyprus communities in the context of U.N.-sponsored talks.

In late May and early June the U.S. Special Coordinator for Cyprus, Ambassador Nelson Ledsky, visited Athens, Ankara, and Nicosia. During his trip he met with the Prime Minister and Foreign Minister of Greece, the Foreign Minister of Turkey, and President George Vassiliou and Mr. Rauf Denktash in Cyprus. In all his discussions Ambassador Ledsky emphasized the importance of resuming intercommunal negotiations in accordance with U.N. Security Council Resolution 649 of March 12, 1990. He also stressed the need for confidence-building measures as a means of creating trust between the two communities and, in turn, enhancing prospects for a durable political settlement. He urged leaders of both communities to take the initiative in proposing confidence-building measures of this type.

On May 31, the United Nations Secretary General reported to the Security Council on U.N. operations in Cyprus for the period December 1, 1989 - May 31, 1990 (report attached).

The report concluded that the continued presence of the U.N. Forces in Cyprus (UNFICYP) ``remains indispensable to achieve the objectives set by the Security Council,'' and recommended extension of the UNFICYP mandate for a further 6-month period. The Secretary General also underlined that UNFICYP faced ``a chronic and ever-deepening financial crisis, which imposes an inordinately heavy burden on the countries contributing troops to the force.''

In mid-June, both President Vassiliou and Mr. Denktash provided assurances to representatives of the Secretary General that they endorsed all the provisions of U.N. Security Council Resolution 649. This was of particular significance, given the Resolution's call ``to co-operate, on an equal footing, with the Secretary General in completing, in the first instance and on an urgent basis, an outline of an overall agreement . . . [and] to refrain from any action that could aggravate the situation.'' On June 22, Mr. Denktash reaffirmed publicly Turkish Cypriot acceptance of ``all aspects'' of Resolution 649 and pledged that ``the Turkish Cypriots are ready to cooperate with the Secretary General . . . with the aim of completing the basic lines of a comprehensive solution.''

Progress toward reconvening U.N.-sponsored intercommunal talks was interrupted by two developments in July. Each in its own way was viewed by one community or the other as cause for concern, and as a step that soured the atmosphere for productive negotiations.

First, on July 4, the Government of Cyprus submitted an application for membership in the European Community (EC). The mere filing of the document angered the Government of Turkey and the Turkish Cypriot community. Both viewed the application as a unilateral effort on the part of the Cyprus Government to arrange the island's political and economic future without consulting directly the Turkish Cypriot community.

Second, in mid-July the Turkish army completed a transfer of responsibility for the security of the fenced, uninhabited area of the city of Varosha to Turkish Cypriot security forces. This area had been under the control of the Turkish army since 1974. The Government of Cyprus feared that this action could constitute a first step in the eventual movement of Turkish and Turkish Cypriot settlers into Varosha. The United States expressed its concerns on this matter directly to the Government of Turkey.

As required by U.N. Security Council Resolution 649, the U.N. Secretary General submitted to the Security Council on July 12 a further report on his mission of good offices (report attached). The report referred to ``a general deterioration'' of the atmosphere and went on to urge both sides to show moderation and compromise. The report then outlined ``a plan of action'' that would begin with separate discussions in Nicosia -- designed to begin preparation of an outline for a Cyprus settlement -- between U.N. authorities and each of the two Cypriot communities. The Secretary General envisioned that as work progressed on this outline it would be possible late this year to call for a meeting between him and the two community leaders.

On July 19 the U.N. Security Council, responding to the U.N. Secretary General's report of July 12 unanimously adopted a statement that was read by the President of the Security Council, as follows:

``The members of the Security Council have considered the Secretary General's report on his mission of good offices in Cyprus (S/21393). They are unanimous in giving their full support to the Secretary General's current effort to assist the two communities to reach a just and lasting solution. They agree with his assessment of recent developments, share his concern about the lack of progress, and endorse his plan of action.

``The members of the Council reaffirm their Resolution 649 (1990) of 12 March, 1990 which was accepted by both sides, and reiterate the importance they attach to an early negotiated settlement of the Cyprus Problem.

``The members of the Council call on the leaders of the two communities to cooperate fully with the Secretary General on the basis of his plan of action and to arrive, on an urgent basis, at an agreed outline of an overall agreement. In line with Resolution 649 (1990), they request the Secretary General to make suggestions as necessary, to assist the two communities in arriving at an agreed outline.

``The members of the Council again call on the parties concerned to refrain, especially at this sensitive stage in the process, from any action or statement that could aggravate the situation. They express their concern over any action which contravenes paragraph 5 of UNSC Res 550 (1984) and paragraph 5 of UNSC Res 649 (1990). They call upon both communities to concentrate their efforts on promoting mutual confidence and reconciliation.

``The members of the Council request the Secretary General to inform the Council by 31 October, 1990 about the implementation of his plan of action.''

Sincerely,

George Bush

Note: Identical letters were sent to Thomas S. Foley, Speaker of the House of Representatives, and Claiborne Pell, chairman of the Senate Foreign Relations Committee.