CONTENTS
 

[01] New U.N. Peace Initiative Seeks  "Just and Lasting Settlement"
[02] Cyprus-European Union:  New Decisive Phase
[03] Water Shortage May Bring  Shipments From Abroad
[04] Budgets Approved
[05] Israel's Weizman: Ties with  Turkey no Threat to Cyprus 
[06] Did You Know?

[01] New U.N. Peace Initiative Seeks  "Just and Lasting Settlement"  Envoy Confirms Goal is Bicommunal, Bizonal Federation

The United Nations launched its latest peace initiative on Cyprus in mid-October, based on shuttle diplomacy conducted by Secretary General Kofi Annan's Deputy Special Representative for Cyprus, Ann Hercus, in an effort to break the deadlock in reunification talks. Ms. Hercus's talks with President Glafcos Clerides and Turkish Cypriot leader Rauf Denktash are intended to "develop a process for on-island contacts with both parties, with the goal of reducing tensions and promoting progress towards a just and lasting settlement."
 
That's the language the U.N. adopted when it announced in September its new attempt to break the stalemate, and end the 24-year illegal Turkish occupation of the northern portion of the island.
 
While acknowledging that her immediate target is the resumption of intercommunal talks, torpedoed by Denktash last year, Ms. Hercus has stated categorically that her efforts are mandated by all relevant U.N. resolutions, which call for Turkey's withdrawal and the formation of a bicommunal, bizonal federation.
 
Speaking in Nicosia, Ms. Hercus said that she believed U.N. Security Council objectives were realistic and pledged to work for their implementation. Her watchword, she said, "is called the gospel of the Security Council and its resolutions and the principles that lie behind those resolutions. Of course this is my gospel," she stressed. "I believe in translating principles into life and making them work if I possibly can. If I fail it will not be for the want of trying."
 
The talks have no agenda nor a deadline and are under a media blackout.
 
In London, on Nov. 4, Foreign Minister Ioannis Kasoulides endorsed Ms. Hercus's aims at both the resumption of talks and the reduction of tension on the island. Kasoulides told the 50 members of parliament attending an event in honor of Cyprus's Independence Day, that it is Cyprus's position that to reduce tension, the questions of the reduction of foreign troops, armaments and defense spending must be addressed first. He also agreed with a proposal by Euro MP Pauline Green that EU funds be used to clear land mines along the buffer zone.
 
The U.N. action has been widely applauded, and comes at a time of increasing tensions on the island, following Turkish military maneuvers in the occupied areas and repeated, massive violations of Cypriot airspace by Turkish fighter planes--intrusions which the government has protested repeatedly to the United Nations.
 
U.K. and U.S. Offer Strong Support

British Prime Minister Tony Blair welcomed the resumption of U.N. efforts to work for U.N.-led intercommunal talks. In a letter to the World Federation of Overseas Cypriots, Blair said: "The British government is committed to using the U.K.'s unique position as a guarantor power, a permanent member of the U.N. Security Council and as a member of the European Union to do all that it can to assist the people of Cyprus to achieve a just settlement on the island."
 
Blair stressed that any talks must be based on U.N. resolutions, and criticized recent confederation proposals by Denktash, which have been rejected outright by the world community. "We have made it clear that a confederation of separate sovereign states is not consistent with the objective of a bicommunal bizonal federation agreed by both communities in the 1977 and 1979 High Level Agreements and set out in the relevant U.N. Security Council Resolutions," Blair wrote. Both the Security Council and the international community "have repeatedly endorsed the U.N. Secretary General's efforts to promote negotiations aiming at a bizonal, bicommunal federation."
 
The U.S., whose own mediation efforts have been undermined by the Turkish side, applauded the U.N. move. In Washington, on Nov. 5, State Department spokesman James Rubin expressed U.S. backing of the U.N. effort. "The U.S. strongly supports the efforts of the U.N. Secretary General's Deputy Special Representative for Cyprus and we have worked closely with her and will continue to do so," he said.
 
Deputy Secretary of State Strobe Talbott expressed determination to achieve a lasting Cyprus solution. Speaking at the Turgut Ozal Memorial lecture in Washington, D.C., on Oct. 14, Talbott said, "Among the many challenges in the Aegean today, the most pressing is to find a solution to the decades-old conflict on Cyprus. Let me be clear: The United States's goal in Cyprus remains a bicommunal, bizonal federation. We have underscored that commitment with the caliber of our International diplomat team assigned to work the problem--Marc Grossman, Dick Holbrooke, and Tom Miller. . . . Finding a lasting solution to the Cyprus problem requires lowering tensions and reducing the likelihood that disputes will erupt into war."
 
Turkish Side Criticized

On Oct. 8, U.S. Ambassador to Turkey, Mark Parris, discussed the Cyprus situation and U.S.-Turkish relations in Washington before a Turkish-American audience. The U.S. has been "disappointed that Ankara has not been more supportive of our efforts to bring the two Cypriot parties to the negotiating table," he said. Nevertheless, the Ambassador was firm, stating, "The United States will not walk away from the Cyprus question. The stakes are too high for that. And we remain convinced that with the passage of time it will become more, not less, difficult to solve. The status quo is neither static nor is it moving in a direction good for Turkish or Turkish Cypriot interests."
 
U.S. Ambassador to Greece Nicholas Burns, in a speech in Washington on Oct. 28, summed up what is now the prevailing international consensus on Cyprus: "The U.S. supports a bizonal, bicommunal, federal settlement under U.N. auspices. We want to see a Cyprus that is whole and free, where all Cypriots share a common future and where all are blessed with safety, security and prosperity. As you know we have been disappointed in the Turkish side's inability to agree to begin negotiations on a realistic basis. And Mr. Denktash's confederation proposal is not realistic."
 
Breakout Box
 
"President Clerides has responded immediately to the initiative of the Secretary General and he . . . will be engaged in any effort of the United Nations. . . . There is an urgency for the solution to the Cyprus problem. . . . The real danger is for Cyprus to remain divided. We have to reunify the country."

--Amb. Erato Kozakou-Marcoullis CNN WorldView, Oct. 17
 

[02] Cyprus-European Union:  New Decisive Phase
 
The second ministerial meeting of the Conference on Accession to the European Union (EU) held in Brussels on Nov. 10 marked the beginning of substantive accession negotiations with Cyprus. Speaking at a joint press conference with Cyprus's Foreign Minister Ioannis Kasoulides and EU External Relations Commissioner Hans van den Broek, the President of the Council of the EU, Austrian Foreign Minister Wolfgang Schussel, greeted the development warmly. "Today is the actual day for the beginning of negotiations and nothing can stop those going ahead," he said. "It represents a historical moment when the accession train is picking up speed."
 
Schussel added in response to concerns raised by some member nations about the lack of a political solution to the Cyprus problem: "There have been reports in a number of newspapers and through the agencies, but there is nothing new or dramatic about something which was said--without any discussion--in the Council yesterday. Just like the Cypriots, everybody wants a political solution and a political settlement under the auspices of the U.N. There is a problem that we want to solve together." Furthermore, he said that in the Turkish Cypriot community "there is a majority in favor of joining the EU."
 

EU Commissioner responsible for enlargement, Hans van den Broek, also greeted the beginning of negotiations positively. "We consider that this is a very important step on the way to the EU membership of Cyprus, he said. "I would like to say that we do appreciate the professional and cooperative approach from the Cypriot delegation and I would also like to emphasize and underline how much we look forward to see the negotiations extended, the delegation extended and include the Turkish Cypriot community. We are all decided and so much convinced that it will be the ultimate benefit of the island as a whole, and in particular for the Turkish Cypriot community to participate in this historical enterprise," he continued.
 
In an interview on the same day, British Foreign Secretary Robin Cook also took the position that Cyprus's membership in the EU "should be considered on its own merits." He further explained that the United Kingdom does "not believe that accession of Cyprus should be made conditional on a solution to the division of the island." In fact, he stated that "the process of accession will help encourage a solution" to the problem.
 
 An Important Day For Cyprus

On Nov. 10, at the joint press conference Foreign Minister Kasoulides, thanked the EU "for the assistance, the cooperation and the effort which has been made jointly to arrive to this day, which is an important day for Cyprus." In his remarks before the ministerial meeting also on Nov. 10, he expressed, "our satisfaction about the fact that the EU was able to arrive at a common position on substantive negotiations, and thus, reinforcing the message that no third country can in effect stop our accession, and depriving those who block the progress for a solution of an additional reason to continue their negative stance. I wish to reiterate once again that the government of Cyprus, despite the absence of positive developments and the hardening of the Turkish position, not only earnestly desires a solution of the Cyprus problem but also devotes all its powers and exerts all its efforts in search of a viable and just solution." He added, "Cyprus strongly believes that her accession to the EU will strengthen the internal coherence of the Union."
 
The Foreign Minister said that the invitation to the Turkish Cypriots to join the accession process "still stands" and that he hoped "the political circumstances will allow them to take it."
 
"The government of Cyprus will continue its efforts, and, very shortly, it will create a web page on the Internet, which will be specially dedicated to providing the Turkish Cypriots with up-to-date information and documentation on Cyprus's accession course. For the same purpose, the broadcasting of special programs in Turkish has already begun," he continued.
 
With regard to the EU accession process and the solution to Cyprus's political problem Kasoulides insisted: "Sending the message that the Cyprus problem, if left unresolved through no fault of our own, excludes Cyprus from joining the EU is a certain way to deepen and perpetuate the existing cracks in the common foreign and security policy towards our sensitive areas. It would also deprive the Union of its strongest leverage in making the accession beneficial for both communities in Cyprus and contributing to civil peace and reconciliation."
 
 Landmark Event

In Nicosia the Cyprus government also welcomed the opening this concrete phase of detailed discussions. Government spokesman Christos Stylianides said: "We consider the start of substantive negotiations as a very important event and an important landmark in Cyprus's European course."
 
"Excellent" Report

Meanwhile on Nov. 4 the European Commission issued a report on European Union enlargement. The document contains details on progress toward accession by each of the eleven prospective members. Van den Broek told the European Parliament the "reports show that much has been achieved. But we also know that the candidates still face a huge task in readying themselves for EU membership." Overall, however, Cyprus received high marks.
 
Cyprus, the report noted, has demonstrated that the "economy possesses the ability to adapt to the challenges posed by the adoption of the acquis." The report concludes that despite the hard work that remains ahead, "Cyprus should not face major problems in adopting the acquis. In general terms, its administration seems to be prepared to ensure the correct implementation of the acquis."
 
The government of Cyprus greeted the report warmly. "Excellent," President Glafcos Clerides responded when asked to comment. George Vassiliou, Cyprus's chief EU negotiator, joined in the official enthusiasm describing the report as "positive without a doubt."
 
[03] Water Shortage May Bring  Shipments From Abroad

Cyprus is experiencing a severe water shortage brought on by several years of drought. The island's water supply depends almost exclusively on rainfall and this year the drought has been particularly severe.
 
In late October, Agriculture Minister Costas Themistocleous told The Third Mediterranean Agricultural Forum meeting in Nicosia that Cyprus will run out of water by Dec. 31 unless the supply is replenished by rain. With reservoirs only 5.9 percent full, and falling, the government is drilling more bore holes to help make up for the shortfall.
 
The government has also sought bids on buying either imported water, or two "mobile" desalination plants which would supply 15,000 cubic meters per day.
 
Shipments of over 40,000 cubic meters of drinking water per day from Greece could start within three months. But Themistocleous remains cautious about the feasibility of shipping 15 million cubic meters of water from the Megara area of Greece.
 
He described Greece's offer of free water as "significant," but repeated that overall costs might still be too high. "It is not the purchase price of the water but rather the transport cost that counts," he said. "If this cost is lower than for other methods of securing water . . . then we will go ahead with implementation of the Greek offer," the minister said. It is hoped that Cypriot shipowners will help out with transportation costs.
 
The government last considered importing water in 1991 from Crete, but shelved the plan as too costly. Technological advances and the urgent need, however, have made shipments increasingly attractive.
 
[04] Budgets Approved

Cyprus's Council of Ministers has approved three budgets for 1999--the Ordinary Budget, the Development Budget and the Cyprus Relief Fund for Displaced and Affected Persons. These budgets reflect the new Strategic Plan for 1999-2003, a period which is considered crucial for Cyprus's EU accession, as well as one <%0>of increased globalization of economies and liberalization of trade. They also reflect the need to improve the environment and quality of life, modernize the public sector and increase technological improvement. In addition, emphasis will be placed on supporting refugees and financially weaker social classes as well as on cultural development.
 
Net Expenditure

(US$ million)

Budget 1999 1998

Ordinary 2,536.7 2,433.9

Development 496.5 496.1

Refugee

Relief Fund 172.3 174.1

TOTAL 3,205.3  3,104.4
 

[05] Israel's Weizman: Ties with  Turkey no Threat to Cyprus

Israeli President Ezer Weizman departed from Cyprus Nov. 4 after a three-day state visit, the first ever by an Israeli head of state. The Cyprus government described Weizman's visit as "very important" in efforts to develop bilateral cooperation. Weizman agreed, noting that both Israel and Cyprus "are countries suffering from conflict and aiming for peace."
 
At a state banquet, President Clerides noted he was only expressing the feelings of Cypriots that "Israel's military cooperation with Turkey constitutes a source of concern for our own security" and will not "evolve into developments detrimental to our good relationship."
 
Weizman acknowledged that concern, saying "I can understand it," but went on to say the ties with Turkey are not a defence alliance. "We are not going to help Turkey in case of war and they are not going to help us," he said, "our relations with Ankara are not directed against you. You are our friends and the last thing we would wish to do is to harm you."
 
He also stated, "Cyprus occupies an important part in Israel's history," noting in particular the assistance given by Cypriots to 50,000 Jewish immigrants between 1946 and 1948, who were trying to reach Israel.
 
On a first-hand visit to the Nicosia demarcation line, Weizman said the wall "reminded me of Jerusalem" and "like Jerusalem has a solution, I'm sure this will have a solution," although it cannot be known "how long you will have to wait for it."
 
At the state banquet, President Clerides said that Cyprus's entry to the EU "will establish an important link between Europe and the Middle East." Weizman concurred, saying, "we will be happy if Europe becomes closer to Israel by a forty minute flight."
 
Weizman endorsed closer bilateral ties, saying that both countries "have much to give and learn from each other."
 
[06] Did You Know?

In early November, the Department of Statistics and Research released foreign trade statistics for the Jan.-Aug. 1998 time period. The report shows a slight increase in the number of imports and decrease in the number of exports.
 
Sarah Russell will replace Waldemar Rokoszewski as U.N. Cyprus Peacekeeping Force spokesperson at the end of the year.
 
On Oct. 21, President Bill Clinton signed the foreign aid bill for 1999 which includes a total of $15 million for Cyprus.
 
Cyprus has loosened investment restrictions in its mining sector in an effort to increase foreign participation and attract capital for the industry.
 
In mid-October, Cyprus signed the charter for the International Criminal Court (ICC). Fifty seven out of a required 60 countries have ratified the charter. The ICC will have jurisdiction to try individuals for genocide, war crimes and crimes against humanity.
 
Governor of the Central Bank of Cyprus, Afxentis Afxentiou, announced in late October that a bill to liberalize interests rates will be introduced soon.
 
Cyprus is among the regional winners of the 1998 British Airways "Tourism for Tomorrow" awards. More than 120 projects from 43 countries were entered this year. The award is given for projects which are environmentally and culturally sensitive to tourism.
 
The Department of Statistics and Research announced that tourist arrivals increased by 11.4 percent in September compared to the same month one year ago. Fifty one percent came from the U.K., 7.2 percent from Germany, 5.3 percent from Sweden, 5.3 percent from Russia and 4.8 percent from Switzerland.