The European Commission announced its intention to liberalize trade with Northern Cyprus in a proposal that EU Enlargement Commissioner Guenter Verheugen said he expects the bloc's member states to accept.
Additionally, the commission proposed an aid package of 259 million euros over the years 2004-05.
Verheugen said yesterday that, despite setbacks, the European Union remains committed to its long-term goal of reunifying the Greek and Turkish parts of Cyprus: "The aim of the package is to bring the isolation of the Turkish Cypriot community to an end, and we're using different instruments in doing so. The political purpose of the whole exercise is to contribute to the solution of the Cyprus conflict and, finally, to bring about the reunification of the island. It is still -- and will continue to be -- the policy of the European Union that we want to see [a] united Cyprus as a member of the European Union."
Verheugen said that, since the Turkish Cypriot community had overwhelmingly supported reunification at a referendum on 24 April, "it would be unfair, to say the least, to leave it out in the cold."
The UN-sponsored reunification plan was rejected in April by the Greek Cypriot community. Its government, alone in enjoying full international recognition, joined the EU on 1 May. The government of the so-called Turkish Republic of Northern Cyprus is only recognized by Turkey.
Verheugen said the economic impact of the EU aid plan is likely to be "limited" in the short term. He said the EU will offer Northern Cyprus free trade in all goods except foodstuffs, as long as they can be proven to originate in Northern Cyprus.
Among potentially EU-financed projects, he listed modest examples such as sewage treatment plants, the rehabilitation of copper mines, and in the longer term tourism ventures, agricultural support, and infrastructure involving electricity and telecommunications. He said the EU will look to promote joint projects involving both Turkish and Greek Cypriot authorities.
Verheugen said the political importance of the measures is likely to outstrip its economic benefits. He said aid would help reduce the costs of an eventual reunification and preempt the rise of Turkish nationalism.
"We believe strongly that as a precondition for [a] solution, [it] would be useful to eliminate the very strong economic disparities between the south and the north [of the island]," Verheugen said. "If the economic disparities [were to] continue -- if the economic future of the northern part would be very, very poor -- then, of course, we must take into account that probably the majority of the Turkish Cypriots would leave the island. And at the end of the day, we would not have Turkish Cypriots, but we would only have Turkish settlers there."
Verheugen said the EU wants to reward "pro-European democratic forces" in Northern Cyprus.
He repeatedly stressed that the proposed measures could lead to a formal recognition by the EU of the Northern Cypriot government.
"Nobody has the intention directly or indirectly to recognize the Turkish Republic of Northern Cyprus. We have certainly not the slightest interest to see a Turkish ministate in the eastern Mediterranean. That [would] make thinks only more complicated. Nobody supports that, and the [European] Commission certainly not," Verheugen said.
Verheugen said, however, that contact with Turkish Cypriot authorities is unavoidable for cooperation, as the only alternative would be continued isolation.
Verheugen said all member states support the proposals. He indicated the Greek Cypriot government has certain reservations, but said trade liberalization will only need the backing of a majority of EU member states. Officials say the Greek Cypriot government opposes allowing trade to pass through Turkish Cypriot ports, as well as across the "Green Line" separating the two communities.
Greek Cypriots are not expected to object to the 259 million-euro aid grant, for which unanimity is needed.