EU Announces Investment Package For Northern Cyprus

by Lorys Charalambous, Tax-News.com, Cyprus

05 June 2003

The European Commission has this week announced a EUR12 million financial aid package aimed at bringing the Turkish half of Cyprus closer to the European Union and promoting economic redevelopment.

Commenting on the Commission's decision, Enlargement Commissioner Gunter Verheugen, who played a large part in the initiative, observed that: "There is a window of opportunity for a united Cyprus joining the European Union by 1 May 2004. The Commission is ready to assist any further efforts to contribute to a comprehensive settlement on the basis of the UN plan, which remains on the table. Meanwhile, in line with the request of the European Council, we should do all we can to help the people of the northern part of Cyprus."

The EU is keen to see the UN plan, which was rejected by Turkish Cypriot negotiator Rauf Denktash in March, resurrected and used as the basis for an eventual settlement for the divided island. As an incentive for the resolution of the situation in time for the official accession date of May 1 2004, the Commission has dangled a rather large carrot for the Turkish Cypriot delegation in the form of EUR206 million worth of aid over a three year period, in the event of a settlement.

As part of the initial investment in the north, the EU is hoping to see EUR3 million of the first EUR12 million spent on information seminars on the acquis communautaire (i.e. the entire set of EU rules and legislation); visits of selected groups to the EU institutions organised by the Commission to provide more information on the EU; consultation with the Cypriot authorities on finding ways to encourage the participation of Turkish Cypriots in EU programmes; support for civil society and social partners, and continuation of the translation of the acquis communautaire into Turkish.

The EU is also hoping to promote trade in the northern half of the island by giving the Turkish Cypriot Chamber of Commerce the power to issue movement certificates.

Since a 1994 European Court of Justice judgement, movement certificates issued by "TRNC authorities" have not been accepted under the Association Agreement between Cyprus and the EC. The de-facto division of the island has thus not allowed direct exports of goods produced or obtained in the northern part to benefit from the customs preferential treatment under the Association Agreement.

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