Yesterday i attended a series of talks on the economic aspects of the Cyprus problem. The speakers were Mr. Basilliou, the chief G/C negotiator on European maters, Mr. Sarris, the chief G/C negotiator on Economic maters and A person form the European Commission (finance section) whom i unfortunately do not remember his name.
I left highly troubled due to three things – i do stress that below are my own conclusions of the speeches, and not the positions of the speakers themselves.
1) The EU has a Schizophrenic approach to the solution. One the one hand it does not want to get involved at all, despite the fact that a solution needs to fit (or even alter) the laws and regulations of the European Union. So it is left on the G/C side to argue that there can not be an prevention of people and capital crossing the borders of the constituent republics of a future federal Cyprus, despite the fact it is actually the EU than demands such a rule. Most worrying is the fact that the EU is thinking that Cyprus could finance rebuilding and a solution by just breaking the growth and stability pact for a maximum of 4 years. That is sheer lunacy – the construction of roads and a common electricity network, let alone making Famagusta fit for human habitation, will lead to prolonged and sustained budget deficits that could not and should not be restricted.
2) The Turkish Cypriot negotiation seems to suffer from the fact that the T/C have only the faintest idea on how the EU works. The lack of entry negotiations by the T/C mean that some demands are quite simply not realistic within an EU framework. Thus it is a fact that the EU will not accept constituent states to make any representation directly to the EU – it opens up an very ugly precedent. Thus the federal state needs to work correctly as the EU will only interloculate with federal instruments. Like wise arguing for two financial regulatory authorities, or for separate rules for Turkish institutions, goes contrary to the basic tenants of the EU and it is futile and destructive to argue for them since they will not be accepted by the EU.
3) In game theory terms, the negotiations are difficult because the actors have completely different aims: The EU, Turkey and G/C + T/C find it difficult to find common ground since their aims are parallel to each other – they simply do not connect.
I expect a long and frustrating negotiation process, that can only be aided with the EU actually becoming an actor and explaining to all what can and cannot be accepted.