Gearing Up for Change: With Formal Welcome into the European Union Announced This April, Cyprus Stands to Reap Major Economic and Political Benefits. but EU Membership Also Presents Significant Challenges, Both to Cyprus and Its Non-EU Neighbours. (Cyprus)

By Martin, Josh | The Middle East, May 2003 | Go to article overview

Gearing Up for Change: With Formal Welcome into the European Union Announced This April, Cyprus Stands to Reap Major Economic and Political Benefits. but EU Membership Also Presents Significant Challenges, Both to Cyprus and Its Non-EU Neighbours. (Cyprus)


Martin, Josh, The Middle East


Strollers along the corniche in the resort city of Limassol will hardly notice a difference this season, but the latest expansion of the European Union is expected to bring great changes to the Cypriot economy. Even the elegant Cypriot pound will disappear in the process, as the country swiftly moves to complete its integration into Europe. By year-end 2006, customers in Limassol boutiques will be using Euros to make their purchases.

For Cyprus, as with its fellow Mediterranean island nation, Malta, EU membership (expected to be formally complete as early as January 2004) will probably mean the end of most indigenous agriculture and manufacturing industries. In Cyprus, for example, wineries will no longer be able to market domestic "sherry." And much of the country's textile industry will probably disappear, apart from a handful of boutique operations.

But Cypriot trade officials believe the decline of those sectors will be vastly offset by the renewed growth of the country's role as a centre for trade and finance in the Eastern Mediterranean. Government officials say the country will expand its focus from traditional shipping-related services, to embrace investment banking, consulting services, and telecommunications.

"Cyprus will bring the European Union to the Eastern Mediterranean and the shores of the Middle East and Israel, "says Glafkos Clerides, former president of Cyprus, and a leading proponent of EU membership. "Cyprus will become the political, economic and cultural bridge between the EU and the countries of the Middle East and North Africa."

It has been a long and sometimes stormy road: When EU representatives gathered in Athens this April to welcome 10 new members, Cyprus witnessed the culmination of a 30-year policy to establish its identity as a European state. The Athens meeting, formally welcoming new members, followed the political approval of candidate countries last December.

Full membership is expected to be completed by May 2004, establishing the political, legal and economic integration of Cyprus into Europe.

THE TURKEY FACTOR

The Cypriot membership is unique: It is still technically a war zone (one-third occupied by Turkish troops). The capital city, Nicosia, remains divided by barbed wire and UN peacekeeping forces. But the EU has seen the division of the island as a political problem to be solved, rather than an insurmountable barrier to membership.

Cyprus signed an Associate Agreement with the EU in 1972, followed by a customs union in 1987. The negotiations for full membership were initiated in 1990.

Cyprus' EU accession is expected to inspire renewed membership efforts from Morocco, and Turkey. Each of those countries can argue that although the Government of Cyprus is dominated by Greeks, it is the nominal ruler of an island nation that is one-third Muslim and Turkish.

The Turkish government has been left in a quandry. It strenuously attempted to block Cypriot EU membership, unless linked to a settlement with the Turkish Republic of Northern Cyprus. But with Cyprus now a full member, experts believe Turkey--which remains anxious to join the EU--has a major incentive to negotiate a settlement ending three decades of military occupation.

The intransigent position held by Turkish Cypriot leader Rauf Denktas--effectively rejecting recent proposals submitted by UN Secretary General Kofi Annan--has been widely seen as a major impediment to any Turkish efforts to renew its EU membership application.

Turkey may have to abandon the Denktas regime, in order to open full negotiations in its bid for EU membership. Although it has had an Associate Member agreement since 1963, long before Cyprus started its bid for membership, Turkey's military occupation of the northern third of Cyprus has long been cited as a major barrier to any EU membership bid.

"Cypriot membership in the EU could act as a catalyst for reunification of the island," says one well-placed UN diplomat. …

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Gearing Up for Change: With Formal Welcome into the European Union Announced This April, Cyprus Stands to Reap Major Economic and Political Benefits. but EU Membership Also Presents Significant Challenges, Both to Cyprus and Its Non-EU Neighbours. (Cyprus)
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