1

A

VIABLE SOLUTION TO THE

CYPRUS PROBLEM:

Lessons from Political Economy

By

Andreas P. Kyriacou

Published by Intercollege Press, Nicosia, Cyprus, 2003

2

To all Cypriots

in the hope that they can live together in peace and prosperity

3

‘Persons are neither bees in hives, carnivorous beasts in a jungle, nor

angels in God’s heaven. They are independent units of consciousness,

capable of assigning values to alternatives, and capable of choosing

and acting in accordance with these values. It is both physically

necessary and beneficial that they live together, in many and varying

associations and communities. But to do so, they must live by rules that

they can also choose.’

James M. Buchanan, Nobel Laureate in Economics, 1986

4

Acknowledgements

The ideas contained in this study first emerged in the context of my PhD thesis

defended in early 1999 and they were further developed in the form of academic

papers published over the course of the year 2000. This book presents many of the

insights contained in that research in a more accessible way but goes beyond this by

further developing and refining the key ideas. Moreover, it incorporates the latest

developments and in particular takes into account the (revised) Comprehensive

settlement presented by the UN Secretary General in December of 2002 as well as

the EU’s decision in that same month to invite Cyprus to become a full member of

the Union. I would like to acknowledge here the help of various people who have

both agreed and disagreed with my analysis along the way.

At the PhD stage, I would like to thank Jordi Bacaria (European University

Institute, Autonomous University of Barcelona), Roger Congleton (Center for the

Study of Public Choice, George Mason University), Diego Cordobez (formerly, UN

Secretary General Special Advisor to Cyprus), Bruno Frey (Institute for Empirical

Research in Economics, University of Zurich), Pedro Puy Fraga (Department of

Applied Economics, University of Santiago de Compostella), Alan Hamlin

(Department of Economics, University of Southampton), Dennis Mueller

(Department of Economics, University of Vienna) and Eric Naisser (deceased –

formerly Law School, Rutgers University).

At the latter, publication stage I would also like to thank the editors and

anonymous referees of the following academic journals: International Review of Law

and Economics, Mediterranean Politics and The Cyprus Review. Thanks also to both

Oriol Roca (Department of Applied Economics, Autonomous University of

Barcelona) and Sofoclis Hadjiyiannis, for taking the time to discuss the latest peace

proposal put forward by the UN Secretary General and in particular for illuminating

some of its more practical aspects. Thanks finally to Andreas Theophanous (Research

5

and Development Center, Intercollege) whose genuine interest for the ideas contained

herein have made possible the publication of this monograph.

I would be amiss if I failed to acknowledge a special debt to my family for

their unending patience, support and enthusiasm from the first day I started thinking

about these issues.

A.P.K

February 2003

Barcelona

6

CONTENTS

Chapter 1. Introduction

Chapter 2. A Brief History of the Cyprus Problem

Chapter 3. A Federal Cyprus

Chapter 4. A Viable Solution to the Cyprus Problem

Chapter 5. A Viable Solution in the Context of EU Accession

Chapter 6. Conclusions

References

Annex A. The 1992 United Nations Set of Ideas

Annex B. The Comprehensive Settlement of the Cyprus Problem

Annex C. The European Union’s Position Towards the Cyprus Problem

7

FIGURES

Figure 1. From the Status Quo to a Reunified Cyprus

Figure 2. From the Status Quo to a Federal or Confederal Republic of Cyprus

Figure 3. The Effects of Time on Bargaining for a Solution

Figure 4. The EU’s Pre-accession Strategy

8

CHAPTER 1.

INTRODUCTION

One can speak of, at least, eight broad approaches to the academic analysis of the

Cyprus Problem1:

(i) a descriptive historical approach which sets out to record the train of

events related to the conflict;

(ii) an international relations approach which analyzes the impact of state

interests on the origins and evolution of the conflict;

(iii) a legal approach which puts the conflict within the context of relevant

constitutional and international law;

(iv) a political sociology approach which considers the influence of

domestic political and social factors on the conflict;

(v) a political anthropology approach which focuses on the influence of

customs and traditions on inter-ethnic political relations;

(vi) a psychological approach which analyzes inter-ethnic relations through

the personality, character traits and perceptions of Greek and Turkish

Cypriots;

(vii) a geographical approach which studies the geographical dimension of

the conflict and its possible resolution and finally;

(viii) a political economic approach which examines the economic

implications of the reunification of Cyprus under (some form) of federal

framework.

1 See, Harvey (1989) for a survey of the literature dedicated to the study of the Cyprus Problem. Most of the

more recent research has either been published or reviewed in the pages of The Cyprus Review, launched in

1989.

9

In this monograph, I apply a political economy approach to evaluate the different but

interrelated elements of the Cyprus Problem namely, constitutional arrangements,

security concerns, territorial adjustments, freedom of movement and establishment

and the right of property as well as the issue of a federal versus confederal Cyprus.

My approach is political in that the object of analysis are those constitutions-

institutions or arrangements proposed to allow the peaceful coexistence of the

citizens of a reunified island and economic in that it employs the tools of analysis of

that discipline.

As the quote by James Buchanan (1990) at the beginning of this book

indicates, social interaction requires that individuals live under mutually agreed-upon

rules. The search for these rules constitutes the normative purpose of the political

economy approach I undertake here and requires the positive analysis of alternative

sets of rules. As the title of my study indicates, I am concerned here with those rules

or arrangements which may allow all Cypriots, Greek, Turkish or other, to live

peacefully together in a reunified Cyprus.

Of course, this political economy approach is also related to those others

described that have been brought to bear on the Cyprus Problem. Thus, the historical

experience of living under different rules of the game may illuminate the evaluation

of different rules. In addition, the approach depends on some understanding of the

legal consequences of rules since this defines the extent to which they can constrain

the choices of individuals. Finally, to the extent that it employs the tools of orthodox

economics it parallels those other political economic analyses of the conflict.

Having said this however, my approach differs from previous approaches on

several counts. It takes individuals and not states to be the basic unit of analysis. In

line with this and true to its economic nature, it moreover assumes that rational

individuals may have a taste or preference for their ethnic group and that their

expression of this preference may be influenced by the costs of such expression, as

these emerge from formal institutional structures such as rules, laws and

10

constitutions. As such, it takes a reductionist view of many sociological, cultural and

psychological factors.

I begin my discussion with a brief review of the history of the Cyprus

Problem in chapter 2. For those unfamiliar with the conflict, it would seem prudent

to begin a reading of this study there. Being brief, this review is likely to omit some

details but the aim is to focus on the most important proposals which have been put

forward for the resolution of the conflict. Like all historical accounts, the

interpretation of some events is open to criticism. This said, a sincere effort has been

undertaken for maximum objectivity and neutrality. For this I have largely drawn

from independent scholars as well as the proposals themselves. At the same time I

have not ignored relevant insights put forward by those who have dealt with the

conflict as policymakers.

I then turn my attention in chapter 3 to an analysis of the federal and bicameral

systems which form a central part of the latest United Nations (UN) proposals aiming

at a solution to the conflict namely, the 1992 UN Set of ideas on an overall

framework agreement on Cyprus (hereafter referred to as the Set of ideas) and the

latest and revised Comprehensive Settlement of the Cyprus Problem (hereafter

referred to as the Comprehensive settlement). My analysis centers on the proposed

systems’ ability to enhance the viability of any solution to the Cyprus Problem, as

measured by their capacity to reduce the emergence of permanent tyrannical

majorities or minorities. My analysis leads me to propose alternative constitutional

structures to those currently envisaged. In particular, I argue that a well designed

functional and bicommunal federation would be a better institutional set-up.

Having identified and discussed in chapter 3 the importance of minimizing the

emergence of disaffected majorities or minorities for the viability of any solution, in

chapter 4 I consider four additional factors which I argue may have a direct bearing

on viability namely, the relative capacity of the Greek and Turkish Cypriot sides to

impose costs in the event of either breaking off from inter-ethnic co-operation, the

extent to which each party perceives the solution to be fair, the continuous influence

11

of informal rules which may promote ethnic identification and finally, the judicial

enforcement and legislative maintenance of the agreed-upon solution. The discussion

generates a number of ideas on the important elements of the dispute namely, a

federal versus a confederal solution, security guarantees, territorial adjustments, the

freedom of movement and establishment and the right of property. My main concern

is, again, with the viability of any solution.

The analysis in chapters 3 and 4 allow me to consider the possible effects on

the viability of a solution to the conflict of both the island’s European Union (EU)

pre-accession course and its eventual membership of the EU. In chapter 5 I argue

that through its pre-accession policy for Cyprus, the EU is seeking to contribute

towards a solution to the Cyprus Problem by emphasizing the security and economic

benefits that would be enjoyed by all Cypriots from EU membership and by

attempting to wring concessions from both the Greek and Turkish Cypriot sides.

After identifying this strategy, I discuss several factors that may directly affect the

viability of a final solution to the Cyprus conflict and which are moreover related to

EU accession namely, the likelihood of majority tyranny of the minority, the

presence of effective security guarantees, the perceived fairness of a solution, and

finally, the possible emergence of alternative sources of identity and the “logic of

appropriateness”. The second and third of these factors have important implications

for the EU’s pre-accession strategy while the remaining two suggest that eventual

membership of the EU is likely to increase the viability of a reunified Cyprus.

I conclude this monograph with chapter 6, where I bring together the most

important insights and institutional implications which have been brought to light by

the previous chapters. Given that they form an integral part of the analysis in the

main text, I attach in Annex A and B respectively, the Set of ideas and the revised

Comprehensive Settlement presented by the UN Secretary General in early

December of 2002. In annex C I summarize the EU’s positions vis-à-vis the Cyprus

Problem since the Republic’s application to join the Union in July of 1990.

12

CHAPTER 2.

A BRIEF HISTORY OF THE CYPRUS PROBLEM2

INTRODUCTION

The Republic of Cyprus was established on the 16th

of August 1960 after a five-year

guerilla war launched by the National Organization of Cypriot Fighters (Greek

acronym, EOKA) against Great Britain of which Cyprus was a colony. EOKA’s

struggle took place within the context of British denials to discuss the future status of

the island in a post World War II climate partly characterized by a feeling of anti-

colonialism and increasing demands by subjected peoples for self-determination (a

right recognized by Articles 1, 2 and 55 of the UN Charter). For EOKA, self-

determination could only mean the union of Cyprus with Greece (enosis), an

objective which was clearly shared by the great majority of Greek Cypriots as

indicated by a Church-organized plebiscite in January, 1950. Of the eligible Greek

Cypriot voters, 95.7% signed the petition for union with Greece.

The struggle for enosis led to the polarization of the two communities on the

island for two main reasons. Firstly, despite the fact that EOKA initially confined

itself to attacking the UK forces, the colonial authorities recruited large numbers of

Turkish Cypriots as auxiliary police. Consequently as the casualties mounted so too

did the inter-communal animosities. Secondly and for strategic reasons, Turkey

feared the possibility of a Hellenic island so close to its shores. As a result it

gradually pursued a policy of partition (taksim) and double enosis or, in other words,

the partition of the island and the unification of the resultant parts with Greece and

Turkey respectively. To this end, the policy evolved that the Turkish Cypriots should

2 I have consulted the following secondary sources; Stephens (1966), Kyriakides (1968), Xydis (1973), Ehrlich

(1974), Bitsios (1975), Patrick (1976), Markides (1977), Attalides (1979), Polyviou (1980), Dekleris (1981),

Dentktash (1982), Hitchens (1984), Ertekün (1984), Joseph (1985), McDonald (1989), Clerides (1988-1991),

Drevet (1991), Panteli (1991), Kizilyürek (1993) and Kyle (1997). My primary sources are, of course, the

constitutions themselves, whether actual or proposed, as well as related legal decisions by international or

supranational organizations.

13

shun contacts with the Greek Cypriots and work towards the creation of an

autonomous community. As a result, the Turkish Resistance Organization (Turkish

acronym, TMT) was created.

The war of attrition imposed by EOKA and the gradual acceptance by the

British that they no longer needed Cyprus as a base but only bases in Cyprus led it

finally to relinquish its rule, not to Greece but to an independent Republic of Cyprus.

Thus, in August 1960 it ceded to the Republic of Cyprus 97.2% of the island,

preserving its defense interests through the creation of the Sovereign Base Areas.

THE 1960 CONSTITUTIONAL SETTLEMENT

The new Republic was based on arrangements negotiated by the governments of the

UK, Greece and Turkey, without the direct input of the Greek or Turkish Cypriots.

These arrangements, (elaborated in Zurich and endorsed in London and thus known

as the Zurich and London agreements) included three Treaties and a draft

Constitution whose provisions bound the definitive Constitution later elaborated by a

joint constitutional commission composed of representatives of the two communities

and of the Greek and Turkish governments with legal advisers.

Briefly, the Treaty of Establishment provided for two British Sovereign Base

Areas where the executive and legislative authority is bestowed upon the

Commander of the British Forces in Cyprus. In addition, according to the Treaty,

should the UK divest itself of sovereignty, the lands are to be transferred to the

Republic. The Treaty of Guarantee, excluded partition or union with any other state

and included undertakings by Greece, Turkey and the UK to ensure the maintenance

of the independence, territorial integrity and security of the Republic, and respect of

its Constitution. In the event of a breach of any of these conditions, the guarantor

powers were to ‘consult together with respect to the representations or measures

necessary to ensure observance’ and, if concerted action was not possible, each

reserved the right ‘to take action with the sole aim of re-establishing the state of

14

affairs created by the present Treaty’. Finally, the Treaty of Alliance required the

establishment of military contingents of 950 and 650 men respectively by Greece

and Turkey. These contingents, together with Cypriot military representatives were

to set up and train a 2,000 man Cypriot army.

Insofar as the Constitution is concerned this set up a consociational system based

on the notion of power sharing between the Greek Cypriot majority and the Turkish

Cypriot minority3. As such it requires all persons (including of those minority group

members who where neither Greek nor Turkish) to declare themselves to be

members of either the Greek or Turkish communities. The Armenian, Latin and

Maronite Christian communities which made up 2% of the total population all opted

to be “Greeks”. In addition,

1. The executive was to consist of a Greek Cypriot President and Turkish

Cypriot Vice-President, each with a veto over laws and decisions of the

Council of Ministers and the House of Representatives

2. The Council of Ministers was to consist of seven Greek Cypriots and three

Turkish Cypriots, with one of the key posts of defense, finance or foreign

affairs reserved for a Turkish Cypriot.

3. The House of Representatives was to consist of 35 Greek Cypriot members

and 15 Turkish Cypriot members elected by their respective communities.

Voting on key issues such as the imposition of taxes or duties or the

modification of the electoral law was to require separate majorities.

4. Greek and Turkish Communal Chambers were envisaged to deal with

religious, educational and cultural affairs. In addition, separate municipal

authorities were also to be set up for the administration of the respective

communities in the five largest towns – Nicosia, Famagusta, Limassol,

Larnaca and Paphos.

3 For a discussion of the general features of power sharing or consociational systems, see O’Leary & McGarry

(1995). The classic reference is Lijphart (1977).

15

5. Posts in the judiciary, civil service, police and gendarmerie were to be

appointed in a 7:3 ratio and the army was to be formed in a ratio of 6:4.

6. A Supreme Constitutional Court was established with three judges, one

from each community and a neutral President who was to be chosen jointly by

the Republic’s President and Vice-President.

The 1960 Accords were to some extent perceived as unfair by the Greek Cypriots

who considered them to be more reflective of the relative strengths of Greece and

Turkey than the will of the local population. Turkey’s superiority stemmed from its

relative proximity to Cyprus, its relative size and its relative importance in NATO

(making it less susceptible to US pressure). In the case of the Constitution, many

Greek Cypriots felt that it put excessive limits on majority rule. The Accords were

also seen by many as a betrayal of the cause of enosis.

THE FAILURE OF THE 1960 CONSTITUTION

In the spring of 1961 the Turkish Cypriots argued that the public service was not

being filled in a 70:30 ratio as required by the Constitution and in retaliation the

Turkish Cypriot members of the House refused to support an extension of the tax

laws. In response, the President ordered taxes to be collected under the pre-1960

income tax-law, on the ground that the right to a separate vote on tax matters did not

include ‘the right to use this privilege over other unconnected demands’. Later in this

same year, a vote by the Council of Ministers to establish an army in which soldiers

from the two communities would be integrated was vetoed by the Turkish Cypriot

Vice-President.

Problems also arose over the allocation of funds for the purposes of education

which according to the Constitution was to be organized by each community and be

financed by lump sum transfers from the central government at a ratio of 8:2 for the

Greek and Turkish Cypriot communities respectively, with additional needs to be

16

met by community-based taxes. The Turkish Cypriot community had difficulties in

meeting its needs through its own resources and so turned to greater subsidies from

the center which were resisted by the Greek Cypriots.

Above all, an important dispute arose over the establishment of separate

municipalities. New laws for the separate municipalities were supposed to come into

effect not more than six months after the Constitution but a deadlock emerged. The

Greek Cypriots had accepted the principle of separate municipalities expressed in the

Zurich-London agreements but subject to a review of how the principle worked in

practice. They came to see them as both practically unworkable (since the relatively

small number of Turkish Cypriots to come under each separate municipality would

be unable to finance the necessary local services) and as a politically dangerous step

towards partition. As a result they refused to set them up. Shortly after, the Supreme

Constitutional Court ruled that the pre-1960 income tax law was no longer in force

and that there was therefore no machinery for the assessment or collection of taxes.

These events, together with intense pressures from disappointed Greek Cypriot

unionists, prompted the Greek Cypriot President, in November 1963, to propose

thirteen constitutional amendments which severely reduced many of the rights

granted to the Turkish Cypriots by the 1960 agreements. Adoption of the proposals

would effectively create a unified state with unfettered independence. Thus, the

President proposed,

1. The right of veto of the President and the Vice-President was to be

abandoned.

2. The Vice-President was to deputize for the President in case of temporary

absence or incapacity to perform his duties.

3. The Greek President of the House of Representatives and the Turkish Vice-

President were to be elected by the House as a whole.

17

4. The Vice-President of the House of Representatives was to deputize for the

President of the House in case of his temporary absence or incapacity to

perform his duties.

5. The constitutional provisions regarding separate majorities for the

enactment of certain laws by the House of Representatives were to be

abolished.

6. Unified municipalities were to be established.

7. The administration of justice was to be unified.

8. The division of the security forces into police and gendarmerie was to be

abolished.

9. The numerical strength of the security forces and of the defense forces was

to be determined by law.

10. The proportion of Greek Cypriots and Turkish Cypriots in the composition

of the public services and the forces of the Republic was to be modified in

proportion to the ratio of the population of Greek and Turkish Cypriots.

11. The number of members of the public service commission was to be

reduced from ten to five.

12. All decisions of the Public Service Commission were to be taken by

simple majority.

13. The Communal Chambers would be abolished and a new system devised.

Should the Turkish community however desire to retain its Chamber in the

new system, such a course would be open to it.

These proposals were rejected outright by Turkey. Soon after, in late 1963, fighting

broke out between communal militias with casualties on both sides. A cease-fire line

(the Green line) was established by British troops in the capital Nicosia which, until

today, cuts the city in two. A UN peacekeeping force (UNFICYP) was also stationed

on the island and is still there. The year 1964 was marked by sporadic fighting.

Gradually, many Turkish Cypriots who had until then lived in mixed towns and

18

villages all over the island, fled their homes and took refuge in defended and

increasingly armed enclaves. These enclaves where subjected to a partial embargo by

the government and survived in part due to direct economic transfers from Turkey.

In response to repeated threats of invasion by Turkey, Greece stationed 10,000

troops on the island.

The administration provided for under the Constitution had collapsed since it

led to the withdraw from government of the three Turkish Cypriot ministers and the

boycott of the House by Turkish Cypriot representatives. In the period 1964-65 the

Greek Cypriots incorporated most of the 13 proposed amendments as well as

offering the Turkish Cypriots a Minority Bill of Rights. Over this period, the

National Guard was created with Greek Cypriot soldiers and headed mainly by

officers seconded from the Greek contingent. Conscription was introduced bringing

its strength to 15,000 men.

In March 1965, a report (known as the Plaza report) intended to serve as the basis

for a new solution, was submitted by the UN. Its main points were,

1. That Cyprus should remain an independent state, renouncing its right to

unite with Greece.

2. That it should be ‘demilitarized’. The question of the British bases was set

aside for later consideration.

3. There should be ‘no partition or physical separation of the two

communities’. The Turkish Cypriots ‘wished’ to be physically separated from

the Greek community, but this separation was utterly unacceptable to the

majority community and could not be imposed except by force. Nevertheless,

Turkish Cypriot rights should be guaranteed by the UN and supervised by a

UN Commissioner in Cyprus.

4. A settlement should depend in the first place on agreement between the

people of Cyprus themselves and talks should take place between Greek and

Turkish Cypriots.

19

Although the plan was received sympathetically by the Greek Cypriots and Greece it

was rejected by Turkey and the Turkish Cypriots who insisted that any settlement

should prohibit enosis and separate the two communities geographically under a

federal system of government.

A bloodless coup brought the military junta of the Colonels to power in

Greece in April 1967. In November of the same year, an attack by the Greek Cypriot

National Guard against Turkish Cypriots in the south of the island led to intense

international negotiations and ultimately the withdrawal of all the Greek troops on

the island in excess of the 950 man contingent. In June of the following year,

intercommunal talks began for the creation of a new constitutional order for an

independent Republic. These talks, which continued intermittently for the following

6 years, were violently opposed by Greek and Greek Cypriot unionists.

In November 1973 the military leadership of the Greek junta changed by way

of a coup within a coup which brought the hawks to power. In July 1974, this led to a

coup in Cyprus (executed by the Cypriot National Guard under its Greek

commanders and with the support of increasingly disappointed and disaffected

unionists under the banner of EOKA-B) and the overthrow of the Cypriot

government. While no violence was directed towards the Turkish-Cypriot

community, the coup nevertheless prompted Turkey to invade later that month,

styling its intervention as a peacekeeping operation designed to secure the safety and

constitutional rights of the Turkish-Cypriots. A second invasion, with a much greater

Turkish military presence took place in August and led to the death and

disappearance of thousands, the seizing of 37% of Cyprus and the eventual

displacement of over 200,000 people (160,000 Greek Cypriots and 40,000 Turkish

20

Cypriots). To this day, northern Cyprus is occupied by 30,000 to 35,000 Turkish

troops4.

In November 1974, the UN General Assembly adopted resolution 3212

(XXIX) which provided a framework for a solution to the Cyprus Problem. It urges

the withdrawal of all foreign troops and, in its key provision, calls for the respect of

the sovereignty, independence, territorial integrity and non-alignment of the

Republic of Cyprus, the cessation of all foreign interference, and for the taking of

urgent measures for the return of the refugees to their homes in safety. This

resolution was endorsed by the Security Council in December in its resolution 365

(1974) and thus its implementation was made mandatory.

A BIZONAL AND BICOMMUNAL FEDERATION?

Between 1964 and 1967 Turkey and the Turkish Cypriots publicly maintained that

Cyprus should become a federation divided into two separate territories with each

community having control of all governmental functions within its territory except

federal concerns such as foreign affairs and banking. This was rejected by Greece

and the Greek Cypriots who saw it as just a cover for partition. It also ran against the

Plaza report previously mentioned.

Soon after the Turkish invasion, late in 1974, the idea of a bizonal federation

emerged in the talks of the representatives of the two communities. The Greek

Cypriot side was ready to accept a bizonal federation provided that the Turkish

Cypriots maintained around 25% of the island thereby allowing about half of the

Greek Cypriots displaced to return to their homes. The Turkish Cypriots for their

part, demanded around 33%. Contacts between the two sides where broken off by

the declaration by the Turkish Cypriot leadership of the “Turkish Federated State of

Cyprus” (“TFSC”) in February 1975.

4 The territory seized contained approximately 80 per cent of citrus groves, 65 per cent of wheat fields, 45 per

cent of industry and 67 per cent of tourist installations. The principle port of Famagusta was captured and

21

The Turkish Cypriots presented it as a potential constituent of a future

federated Cyprus. At the same time however, they created all the institutions of an

independent state, including an executive, legislature, courts, police and army all

within a separate constitutional framework. Moreover, they instituted a program to

settle mainland Turks in the north of the island; a program which over the years has

led to the settlement of anything between 40,000 to 90,000 mainland Turks5.

For its part, the UN Security Council responded to the creation of the “TFSC”

by way of resolution 367 (1975), which among other things called for the urgent and

effective implementation of all parts and provisions of General Assembly resolution

3212 (XXIX) as endorsed by Security Council resolution 365 (1974). Moreover, and

in response to the settler program undertaken by the Turkish Cypriot leadership, the

General Assembly issued in November of the same year resolution 3395 (XXX)

which ‘urges’ all parties from unilateral action which changes the demographic

structure of Cyprus. The settlement program continued leading the General

Assembly to later deplore unilateral actions aiming to change the demographic

structure of Cyprus in resolutions 34/30 (1979) and 37/253 (1983).

A meeting between the leaders of the two communities in February 1977 led to a

High Level Agreement which set the parameters for all subsequent negotiations

namely:

1. An independent, non-aligned, bicommunal federal Republic was the

objective.

2. The territory under the administration of each community should be

discussed in the light of economic viability or productivity and land

ownership.

Nicosia international airport was bombed. 5 The UN (Demographic Yearbook, 1993) estimates are 40,000-50,000 while the Department of Statistics and

Research of the Republic puts this figure at 91 000 for 1995. Nobody knows for sure how many settlers there

are (see The Economist, October 4th

1997). A suggestion by the UN Secretary General in November 1992 for a

Cypriot-wide census to be conducted by an independent international agency has not been accepted by the

Turkish Cypriot leadership.

22

3. Questions of principles like freedom of movement, freedom of settlement,

the right of property and other specific matters, are open for discussion, taking

into consideration the fundamental basis of a bicommunal federal system and

certain practical difficulties which may arise for the Turkish Cypriot

community.

4. The power and functions of the federal government will be such as to

safeguard the unity of the country having regard to the bicommunal character

of the State.

This was followed by an equally important second High Level Agreement in May

1979 which stated, among other things, that:

1. The basis for talks will be the 1977 High Level Agreement and the UN

resolutions relevant to the Cyprus question.

2. There should be respect for the human rights and fundamental freedoms of

all citizens of the Republic.

3. The demilitarization of the Republic is envisaged, and matters relating

thereto will be discussed.

4. The independence, sovereignty, territorial integrity and non-alignment of

the Republic should be adequately guaranteed against union in whole or in

part with any other country and against any form of partition or secession.

A series of further talks took place and where followed in November 1983 by a

unilateral declaration of independence by the Turkish Cypriot side under the new

banner of the “Turkish Republic of Northern Cyprus” (“TRNC”). (The opposition

parties voted with the government under duress.) The Turkish Cypriots subsequently

added to their institutions a central bank, although the Turkish lira is used as the

currency of the “TRNC”. The declaration of the “TRNC” led, three days later, to

Security Council Resolution 541 (1983) which, inter-alia, deplores the declaration of

23

the purported secession of part of the Republic of Cyprus, considers the declaration

as legally invalid and calls for its withdrawal, calls for the urgent and effective

implementation of its resolutions 365 (1974) and 367 (1975) and calls on all states

not to recognize any Cypriot state other than the Republic of Cyprus. This is actually

the case since the “TRNC” is only recognized by Turkey.

Resolution 541 (1983) was later reinforced in May 1985 by Security Council

resolution 550 (1985) which condemns all secessionist actions, including the

purported exchange of ambassadors between Turkey and the “TRNC”, reiterates the

call upon all states not to recognize the purported state of the “TRNC” and calls

upon them not to facilitate or in any other way assist the aforesaid secessionist entity.

The resolution also considers any attempt to settle the occupied city of Varosha by

people other than its lawful inhabitants as inadmissible and calls for the transfer of

this area to the administration of the UN.

March 1986 saw the presentation by the UN Secretary General of the Draft

Framework Agreement which attempted to collate all the elements of consensus

from the years of negotiation. The agreement talked of,

1. Two provinces or federated states competent in all matters not assigned to

the federal government. The federal government was to be responsible for

foreign affairs, federal financing (including taxation and customs duties),

monetary and banking affairs, federal economic affairs (including trade and

tourism), post and telecommunications, international transport, natural

resources, federal health and veterinary matters, trading standards, federal

judiciary, appointment of federal officers and federal security and defense.

Ten of these areas were to be designated matters of special concern to the

Turkish Cypriots and hence subject to special voting rights.

2. The President was to be Greek Cypriot and the Vice-President Turkish

Cypriot each having veto rights on laws or decisions of the Council of

24

Ministers in agreed areas whose scope, it was understood, would exceed that

covered by the 1960 Constitution.

3. The Council of Ministers was to consist of seven Greek-Cypriots and three

Turkish-Cypriots with the possibility that the Foreign ministry will be

guaranteed to a Turkish Cypriot. Weighted voting (a simple majority with at

least one Turkish Cypriot vote) would be required to pass laws in one of the

ten designated areas.

4. A bicameral legislature was to be set up with a 7:3 ratio of Greek and

Turkish Cypriot representation, respectively, in the Lower House and an

equal representation of each in the Upper House. Adoption of legislation of

special concern to the Turkish Cypriots would require a majority of each

community’s representatives in both Chambers.

5. A deadlock resolving procedure was to be set up including conciliation

committees drawn from the legislature and ad hoc expert committees. Any

contested matter could be put to a referendum among the members of the

community opposing it. A Constitutional Court would rule on whether bills

were compatible with the charter or discriminated against a community and

adjudicate disputes relating to the distribution of powers and functions.

The two sides disagreed over the territorial adjustments to be made with the Greek

Cypriot side accepting a Turkish Cypriot province ‘of the order of 29 per cent’ and

the Turkish Cypriot side saying that it should be ‘in the order of 29+ per cent’. In

accordance with the 1977 High Level Agreement, the three freedoms were to be

discussed in the light of certain practical difficulties for the Turkish-Cypriot

community. For the Turkish Cypriots this ranged from a right by Greek Cypriots to

continue to own property in the north and to eventually settle there as long as the

Turkish Cypriots remained a majority, to the claim that the only Greek Cypriots who

would be allowed to return would be those economically useful with a license to

work but not of residence and previous property owners may or may not be

25

compensated. Finally, both sides agreed to set a timetable for the withdrawal of non-

Cypriot troops but the security guarantees to be established were to be either

international as demanded by the Greek Cypriots (excluding a role for the guarantor

powers) or according to the Treaties of Guarantee and Alliance as demanded by the

Turkish Cypriots (implying a right of unilateral intervention for Turkey).

The failure of the Draft Framework Agreement led to yet another attempt by

the UN to mediate a solution to the problem in March 1990. This too broke down

over the Turkish Cypriot leadership’s demand that the Greek Cypriot community

recognize their right to self-determination, within the context of federalism. More

specifically, there was a difference of opinion as to whether the Turkish Cypriots

should be defined as a “people” or “community”. In UN terminology, the former

classification is entitled to self-determination while the latter is not. For the Greek

Cypriots, the demand for self-determination could only mean the possibility of

secession.

In response to this the Security Council issued resolution 649 (1990) in March

1990 through which it reaffirmed its previous resolutions and reiterated its support

for the two high-level agreements in which the leaders of the two Communities

pledged themselves to establish a bicommunal and bizonal Federal Republic of

Cyprus that will safeguard its independence, sovereignty, territorial integrity and

non-alignment and exclude union in whole or in part with any other country as well

as any form of partition or secession. In October 1991 and April 1992 respectively,

Security Council resolution’s 716 (1991) and 750 (1992) were issued, which among

other things reiterated the content of resolution 649 (1990) and in particular called

for the creation of a bicommunal and bizonal federation.

In the summer of 1992, the UN Secretary General submitted a “Set of ideas

on an overall framework agreement on Cyprus” (these are reproduced in appendix A

at the end of this book). The Set of ideas by and large incorporated the constitutional

provisions which had been set out in the 1986 Draft Framework Agreement except

that the former includes a preference by Turkish Cypriots for the presidency to rotate

26

between a Greek and Turkish Cypriot and are silent on the issue of weighted voting

in the Council of Ministers. While the Greek Cypriot side accepted the Set of ideas

as a basis for negotiating an overall framework agreement, the Turkish Cypriot side

did not, diverging on several points.

These divergences became clearer in November 1992, when the UN Secretary

General submitted a report entitled “Summary of the current positions of the two

sides in relation to the Set of ideas” (United Nations, 1992). The “Summary“

indicates that the Turkish Cypriot leadership is pushing for a confederal arrangement

whereby constituent states each have their own sovereignty and come together in a

sovereignty association. Moreover it demands more checks and balances in the

federal executive body and in particular that the Council of Ministers be composed

of an equal number of Greek and Turkish Cypriots and operate on the basis of

consensus. Alternatively they argue for the ability of each federated state to enter

into agreements with foreign governments and international organizations without

the prior approval of the federal government (only in their areas of competence).

This same document shows the reluctant acceptance by the Greek Cypriot

side, of a “loose” federal arrangement with a single sovereignty as a basis for

negotiating an overall agreement6. Moreover, it has signaled that both the legislature

and the executive may be excessively burdened by checks and balances and in

particular: they argue that separate majorities in the Lower House are unnecessary

given the composition of the Upper one; they argue against a rotating presidency;

and are against the permanent assignment of a ministry to any community.

Alternatively, while they agree that each federated state should be able to enter into

agreements with foreign governments and international organizations in their areas

6 The terms federation (loose and strong) and confederation are employed by Theophanous (1996). He argues

that a federal state is one which itself is sovereign while in a confederation of states, sovereignty lies with the

component states. On this measure, the Set of ideas describe a federal state, while the posterior position of the

Turkish Cypriots leans towards a confederal arrangement. Insofar as the distinction between a strong or loose

federation, a defining characteristic is seen to be where the constitution assigns residual powers; in a strong

federation these would be assigned to the central government and in a loose federation they would be so to the

regions. According to the Set of ideas (paragraph 8) residual powers are assigned to the two federated states

pointing to a loose federal arrangement.

27

of competence, they argue that these agreements must be channeled through the

Foreign ministry of the federal Republic and that it should be subject to federal

approval.

The Turkish Cypriots, argue that any territorial adjustment must leave 29+ per

cent of the island under Turkish Cypriot administration as opposed to the

(approximately) 28 per cent envisaged in the Set of ideas (which would allow up to

half of the Greek Cypriots displaced by the conflict to return home) and accepted by

the Greek Cypriots as a basis for negotiation. As such the Turkish Cypriots envisage

fewer displaced Greek Cypriots returning to their homes and living under Greek

Cypriot administration. Insofar as security and guarantee considerations are

concerned, the Turkish Cypriot side insisted that there must be a continued Turkish

security guarantee, including a troop presence on the island and a continued legal

right of unilateral intervention by Turkish armed forces. The Greek Cypriot side on

the other hand, denied the unilateral right of intervention and called for the complete

demilitarization of the island with security guarantees to be provided by the

international community.

With respect to the exercise of the three freedoms between the Greek Cypriot

administered and the Turkish Cypriot administered areas, the Greek Cypriot side in

principle defends the unrestricted implementation of these rights in the long run

since it rejects any qualification of them which violates international human rights

law. Having said this it has accepted – as a basis for negotiation – restrictions on the

movement of persons who were or are involved in acts of violence or the incitement

of violence and/or hatred against persons of the other ethnic group. It has also

accepted, as such a basis, several other restrictions to the freedom of establishment

and the right of property. The Turkish Cypriot side points to the 1977 High Level

Agreement’s provision that consideration must be given to “the fundamental basis of

a bicommunal federal system and certain practical difficulties which may arise for

the Turkish Cypriot community” and seems to interpret this to mean that the return

of displaced Greek Cypriots should not be such as to make them a minority in that

28

territory under their control. To this effect, the Turkish Cypriot side has both set out

numerous specific restrictions to the right of property while at the same time warning

that these do not represent an exhaustive list. These restrictions go much further than

those envisaged by the Set of ideas.

The Set of ideas were endorsed by the Security Council in August and November

respectively by way of resolution 774 (1992) and resolution 789 (1992) and the latter

resolution also called on the Turkish Cypriot side to ‘adopt positions which are

consistent with the Set of ideas’. The eventual non adoption by the Turkish Cypriot

leadership of the Set of ideas as a basis for negotiating an overall framework

agreement led to continued efforts by the UN to mediate in the conflict and

eventually to talks between the leaders of the two communities in the summer of

1997 under its auspices. The UN issued a draft document outlining the principles

which it felt should underpin an agreement. The text, which was leaked, contained

the following points:

1. Cyprus should be recognized as the common home of the Greek Cypriot

and Turkish Cypriot communities, whose relationship in the federation would

be one of equals, not majority and minority.

2. The federal state would have a single sovereignty and international

personality, and a single citizenship. This single sovereignty would emanate

equally from the two communities, and one would not be able to claim

sovereignty over the other.

3. The two communities would establish the federation, and residual powers

would remain with the federated states.

4. Political equality would not mean numerical equality in the federal

administration, but would be reflected: (a) in the fact that amendments of the

Constitution would require the approval of both communities; (b) in the

“effective participation” of both communities in “all organs and decisions” of

the federal government; and (c) in further “safeguards” to ensure that the

29

federal government would not be able to adopt any measures against the

interests of one community.

5. The federal government would consist of an executive and a bicameral

legislature. There would be “deadlock-resolving machinery”. Each federated

state would be “administered by one community”, and each would decide on

its own arrangements for government. Each state would have “identical

powers and functions”.

6. The federal Constitution would safeguard the identity, integrity and

security of each community, as well as their political, economic, social,

cultural, linguistic and religious rights.

7. The independence and territorial integrity of the federation would be

safeguarded.

Neither side was happy with the text and eventually the talks failed. The Turkish

Cypriot side insisted that the “TRNC” should be granted prior recognition as a

sovereign state (so that the two sides can be treated as equals in the negotiating

process) before coming together with the Republic of Cyprus in a confederal

arrangement and that it should have the right to conclude international agreements

independently of the federal government. Moreover, it argued that there should be no

reintegration of the two communities, and property issues should be settled by

compensation and exchange. Finally, the Turkish Cypriot side argued for the

continuing presence of Turkish troops and, more generally, that Turkey’s security

guarantee should remain. The Greek Cypriot side on the other hand objected to the

idea of sovereignty emanating from the two communities rather than the “people of

Cyprus” (in doing so it varied its position compared to the Set of ideas), wants

settlers from the Turkish mainland to return to Turkey (accepting the right of

citizenship of those born on the island) and finally, defends the freedom of

movement and the right to own property throughout the island.

30

In June 1998, the UN Security Council reaffirmed by way of resolution 1179

(1998), its position that a Cyprus settlement must be based on a state of Cyprus with

a single sovereignty and international personality and a single citizenship, with its

independence and territorial integrity safeguarded, and comprising two politically

equal communities in a bicommunal and bizonal federation, and that such a

settlement must exclude union in whole or in part with any other country or any form

of partition or secession.

In December 1999 a round of proximity talks were initiated under UN

auspices with the aim of preparing the ground for substantial direct negotiations.

Direct talks began again on the 16th

of January of 2002 and led on the 11th

of

November of the same year to the submission by the Secretary General of the UN of

a “Comprehensive Settlement of the Cyprus Problem”. The two sides submitted their

written comments on the substance of this proposal and in response to these the

Secretary General submitted a revised plan (reproduced in Annex B). The

Comprehensive settlement is more detailed than the Set of ideas with regard to the

main elements of the Cyprus problem and moreover includes provisions which

regulate Cyprus’s relations with the guarantor powers and the EU. The key features

of the Comprehensive settlement are as follows:

1. The relationship between the two communities is not one of majority and

minority but one of political equality. The state is bizonal and composed of a

“common state” and two equal “component states”, one Greek Cypriot and

one Turkish Cypriot.

2. The Treaties of Establishment, Guarantee and Alliance will remain in force.

Cyprus will be demilitarized and there will be a UN peacekeeping operation

to monitor implementation of the new state of affairs. Moreover, there will be

Greek and Turkish contingents stationed on the island in the context of the

Treaty of Alliance.

31

3. There is a single Cypriot citizenship and, in addition, all Cypriot citizens shall

also have internal component state citizenship status which will determine

political rights at the common state level and may do so as well at the

component state one. The component states may limit the establishment of

residence not holding its citizenship status to control the flow of individuals

establishing in its borders for a period of 15 years and thereafter, limit their

number to a maximum of 28 per cent of its population. At the same time, no

later than 25 years after entry into force of the agreement the common state

and component states shall review these restrictions in light of experience.

4. The common state institutions are based on power sharing with representation

either being proportional to the number of people holding the internal

component state citizenship status of each component state with a minimum

level of representation for each (this is the case, for example in the Chamber

of Deputies and the Presidential Council) or requiring an equal number of

individuals from each component state (for example, in the Senate, the

Supreme Court and the common state police). The office of the President will

rotate every ten months among the six members of the Presidential Council

with no more than two consecutive Presidents coming from the same

component state. Transition periods are contemplated for the gradual adoption

of the new institutions.

5. Greek Cypriots and Turkish Cypriots living in specified villages in the other

component state as well as Maronites, Latins and Armenians shall enjoy

cultural and educational rights as well as a degree of representation in the

component states legislatures.

6. Territorial adjustments foresee 28.5 per cent of the territory remaining under

Turkish Cypriot administration. Properties in areas subject to territorial

adjustment will be reinstated but in the case of other properties dispossessed

owners may either have their properties reinstated or may receive

compensation depending among other things, on whether current users are

32

themselves dispossessed owners and the principle of bizonality (a maximum

of 9 per cent and in any given municipality or village and 14 per cent of the

total land area and of the number of residences shall be reinstated to persons

hailing from the other component state). There will be fiscal incentives for

disposed owners to sell, exchange or lease their property. A property board

will act as a clearinghouse of claims of reinstatement, compensation and sale,

exchange or lease of properties. Compensation will be financed by way of a

compensation fund which will issue bonds.

7. A Reconciliation Commission is set up to promote understanding, tolerance

and mutual respect between Greek and Turkish Cypriots.

8. Legislative, executive or judicial acts by any authority prior to the entry into

force of the new state of affairs are recognized as valid.

9. The EU is requested to accommodate the foreseen restrictions on the freedom

of establishment and right of property in the act of accession of Cyprus to the

Union.

10. The Comprehensive settlement together with the conditions for accession to

the EU will be submitted by each side to referendum on the 30th

of March of

2003.

At the time of writing, the Greek Cypriot leadership had accepted the plan as a

basis for negotiation while the Turkish Cypriot leadership had not done so.

THE EU DIMENSION

In the second half of 1990, the Republic of Cyprus submitted a formal application

for full membership of the European Community provoking a strong reaction from

Turkey and the Turkish Cypriot leadership. Among other things, in June 1991, an

agreement was signed for the abolition of passport requirements and provisions

33

made for the creation of a customs union between Turkey and the occupied north.

Moreover, steps were taken to prepare the ground for settlement of the city of

Varosha by people other than its lawful inhabitants7; a threat which was repeated

during 1997 in response to an intensification of the Republic’s defense program.

In March 1995 the EU decided to begin accession negotiations with the

government of the Republic of Cyprus six months after the end of the Inter-

Governmental Conference (meant in part to prepare the Union’s institutions for

enlargement). At the Luxembourg European Council of December 1997, it decided

to open negotiations with the Republic of Cyprus in the spring of the following year.

In March 1998 accession negotiations began with the Republic of Cyprus and it

invited representatives of the Turkish Cypriot community to participate in the

accession negotiations as a part of the Cypriot delegation. The government argues

that the prospect of EU membership may act as a catalyst on the search for a solution

to the conflict and argues that in the event that no solution is agreed to, the Republic

of Cyprus should be admitted to the Union and the application of the acquis

communautaire over the whole territory of the island would be pending the

subsequent re-unification of the island.

These moves are opposed by the Turkish Cypriot leadership which claims that

this would bring indirect enosis by uniting Greek Cypriots and Greece. They say that

Cyprus should enter only after a settlement and after Turkey has become a full

member. They also set as a condition for their participation in Cyprus-EU accession

negotiations, the international recognition of the sovereignty of the “TRNC”. In

response to these developments, both the Turkish Cypriot and Turkish leaderships

threatened to undertake the “partial integration” of the occupied north with Turkey in

the security, defense and foreign policy fields. Thus, a joint declaration between the

authorities of the “TRNC” and Turkey in July 1997 included the point that all steps

taken towards EU accession by the Greek Cypriots will be matched by further

7 Before the Turkish invasion, 80 per cent of Varosha was owned by Greek Cypriots. Since the invasion it has

been deserted.

34

integration between the TRNC and Turkey. Indeed, in August 1997 an “association

agreement” was signed which calls for “gradual economic and financial integration

on security, defense and foreign policy matters” and sets up an “Association

Council” to determine the measures to be taken for partial integration and to monitor

their implementation. When accession negotiations where eventually launched with

the government of the Republic of Cyprus on March 1998, Turkey reacted by lifting

customs barriers and signing a free trade agreement with the “TRNC”.

On the 12th

of December, 2002 Cyprus was invited to accede to the EU while

at the same time the European Council urged the leaders of the two communities to

negotiate a comprehensive settlement in the context of the Comprehensive

Settlement by the 28th

of February 2003. Moreover, the Council expressed its

willingness to accommodate the terms of a settlement in the Treaty of Accession in

line with the principles on which the EU is founded and decided that the application

of the acquis communautaire to the northern part of the island will be suspended

pending a settlement.

35

CHAPTER 3.

A FEDERAL CYPRUS

INTRODUCTION

At the heart of the Set of ideas on an overall framework agreement on Cyprus, lies a

bi-zonal and bicommunal federation where, on the one hand, each community

administers a so called federated state and on the other hand, the powers and

functions of the federal government are constitutionally limited to some areas and,

moreover, a bicameral system may require the consent of ethnic majorities in either

Chamber for decisions to be adopted.

The latest Comprehensive settlement avoids the terms federated states or

federal government using instead the terms component states and common state

government. This semantic difference aside, it envisages a bizonal federal state where

the powers and functions of, now, the common state government are constitutionally

limited to some areas. This is in line with the Set of ideas. However, by abandoning

bicommunalism and adopting instead the idea of internal component state citizenship

as the basis of representation in the bicameral system also envisaged, this latest UN

proposal breaks radically with the 1992 one as well as all previous UN proposals and

the High Level Agreements. To my knowledge, neither the Set of ideas nor the

Comprehensive settlement have been subjected to any sort of coherent and

methodical analysis and it is my intention here to undertake this task8.

This chapter is structured as follows. In the next two sections I set out,

respectively, the relevant constitutional proposals which are included in the Set of

ideas and the Comprehensive settlement and, in particular, those provisions that refer

to the allocation of powers and functions between the federal and regional

governments as well as the institution of a bicameral legislature. Having done so, I

36

will consider the various ways that majorities and minorities can be tyrannical and

relate this to the issue of institutional viability. Given this discussion, I will discuss

the implications for the relevant constitutional proposals in the case of Cyprus. I will

then propose an alternative institutional arrangement namely, a bicommunal but

functional federation.

THE SET OF IDEAS: A BIZONAL AND BICOMMUNAL FEDERATION

In this section I set out those paragraphs from the Set of ideas that are pertinent to my

analysis. These generally refer to part III of the Set of ideas which concerns itself

with the “Constitutional aspects of the federation”.

Paragraph 25, states that all powers and functions not vested in the federal

Government will rest with the two federated states (each of which, according to

paragraph 19, will be administered by one of the two main ethnic communities). The

federated states may decide jointly to confer additional powers and functions to the

federal Government or to transfer powers and functions from the federal Government

to themselves. This is reiterated in paragraph 9 of the “Guiding Principles” of the

overall framework agreement and is related to paragraph 21 of the said principles that

states that the federal Government cannot encroach upon the powers and functions of

the two federated states.

Paragraph 26 states that the federal government will have the following

powers and competencies: foreign affairs, the central bank, customs and coordination

of international trade, airports and ports as concerns international matters, federal

budget and federal taxation, immigration and citizenship, defense, federal judiciary

and the federal police, federal postal and telecommunications services, patents and

trademarks, appointment of federal officials and civil servants (on a 70:30 Greek

Cypriot/Turkish Cypriot ratio), standard setting for public health, environment, use

8 See Kyriacou (2000a) for an earlier and more theoretical analysis of the Set of ideas.

37

and preservation of natural resources, and weights and measures and the coordination

of tourism and industrial activities.

The legislature will be composed of a Lower House and an Upper House ...

(paragraph 28). All laws must be approved by both Houses (paragraph 29). The

Lower House will be bicommunal with a 70:30 Greek Cypriot/Turkish Cypriot ratio

(paragraph 30) while the Upper House will have a 50:50 ratio representing the two

federated states (paragraph 31)9. All laws will be approved by a majority in each

House. A majority of the Greek Cypriot or Turkish Cypriot representatives in the

Lower House may decide on matters related to foreign affairs, defense, security,

budget, taxation, immigration and citizenship, that the adoption of a law in the Lower

House will require separate majorities of the representatives of both communities

(paragraph 32).

If the two Houses fail to pass a bill or decision, they will initiate proceedings

to obtain consensus while ensuring the continued functioning of the federal

government. To this end a conference committee will be established. The conference

committee will be composed of two persons each selected by the Greek Cypriot and

Turkish Cypriot groups equally from among the members of the two Houses of the

federal legislature. The text of the legislation or decision agreed to by the conference

committee will be submitted to both Houses for approval (paragraph 34). In the event

the federal budget is not adopted in one or both Houses and until an agreement is

reached by the conference committee and is adopted by both Houses, the provisions

of the most recent federal budget plus inflation shall remain in effect (paragraph 35).

The Council of Ministers will consist of Greek Cypriot and Turkish Cypriot

ministers on a 7:3 ratio and the President and Vice-President (each from a different

9 Arguably, this should be read in conjunction with paragraph 3 (the relationship between the two communities

is not one of majority and minority but one of two communities in the federal republic); paragraph 4 (the

communities are politically equal); paragraph 5 (that this equality will be reflected in the fact that the approval

and amendment of the federal constitution will require the approval of both communities ... and in the equality

and identical powers of the two federated states); paragraph 10 (the federal republic will be one territory

composed of two politically equal federated states) and finally; paragraph 19 (each federated state will be

administered by one community). All this points to the likelihood that paragraph 31 implies that the Upper

House is meant to be constituted by an equal number of Greek and Turkish Cypriot representatives.

38

community) will designate the ministers from the respective communities who will

appoint them by an instrument signed by them both (paragraph 38). The President

and the Vice-President will discuss the preparation of the agenda of the Council of

Ministers and each can include items in the agenda (paragraph 39). Decisions of the

Council of Ministers will be taken by majority but decisions over foreign affairs,

defense, security, budget, taxation, immigration and citizenship – that is, the same

areas where separate majorities of the representatives of both communities may be

required in the Lower House, – will require the approval of both the President and

Vice-President (paragraph 40). Both the President and Vice-President will, separately

or conjointly, have veto powers in the areas of foreign affairs, defense, security, the

budget, taxation, immigration and citizenship and the right to send for

reconsideration any law or decision of the legislature or any decision of the Council

of Ministers (paragraph 42).

The federal judiciary will consist of a Supreme Court composed of an equal

number of Greek Cypriot and Turkish Cypriot judges appointed jointly by the

President and Vice-President with the consent of the Upper House. Its presidency

will rotate between the senior Greek Cypriot and Turkish Cypriot members of the

Supreme Court. (paragraph 43). The Supreme Court will deal with matters arising

under the federal Constitution and federal laws, and will be empowered to fulfill

other judiciary functions related to federal matters attributed to it by the federal

Constitution or federal legislation (paragraph 44). The federal Constitution will

establish the procedure for ascertaining the constitutionality of federal laws and

executive acts, as well as adequate machinery of judicial review to ensure the

compliance of legislative, executive, and judicial acts of the federated states with the

federal Constitution (paragraph 46).

Following the Set of ideas, the two sides have either clarified or altered their

positions (United Nations, 1992). For the purposes of my discussion here it is

important to point out that the Turkish Cypriot side has taken the position that the

Council of Ministers should be composed of an equal number of Turkish and Greek

39

Cypriots and should operate on the basis of consensus. On the other hand the Greek

Cypriot side has argued that given the composition of the Upper House, the provision

for separate majorities in the Lower House is unnecessary.

THE COMPREHENSIVE SETTLEMENT: A BIZONAL FEDERATION

Consider now the relevant provisions from the Comprehensive settlement which are

found in Draft annex I of the Foundation Agreement entitled “Constitution of

Cyprus” and in particular the sections of this annex which refer to “The common

state and the component states” and “The common state institutions” respectively.

Thus Article 13 of Draft Annex I states that the competencies of the common

state will be: external relations, relations with the EU, Central Banking, common

state finance (including budget and all indirect taxes) and common state economic

and trade policy, natural resources, including water resources, meteorology, aviation,

international navigation and the continental shelf and territorial waters of Cyprus,

communications, Cypriot citizenship and immigration, combating terrorism, drug

trafficking, money laundering and organized crime, pardons and amnesties,

intellectual property and weights and measures and antiquities.

Article 14 states that the component states shall exercise within their territorial

boundaries all the competences and functions not vested in the common state. In

relation to this division of powers, Article 3 of Draft Annex I states that the common

state shall fully respect and not infringe upon the powers and functions of the

component states and that each component state shall do likewise with respect to the

common state or the other component state. In addition, there shall be no hierarchy

between the laws of the common state and those of the component states. Unlike the

Set of ideas, nothing is said of the possibility that each component state decide jointly

40

to confer additional powers and functions to the common state government or

transfer powers and functions from the common state government to themselves10

.

Article 15 allows for the conclusion of cooperation agreements between the

component states or the component states and the common state. Moreover, it

stipulates that the component states shall strive to coordinate or harmonize their

policy and legislation in areas such as: tourism, environment, fisheries and

agriculture, industry and commerce, zoning and planning, sports and education,

health, social security and labor, family, company and criminal law and acceptance of

the validity of documents.

Article 21 refers to the composition and election of the common state

Parliament. It is to be bicameral with a Senate and a Chamber of Deputies each of

which will have 48 members elected for five years on the basis of proportional

representation and with the component states serving as electoral precincts. In

particular, the Senate shall be composed of an equal number of senators hailing from

each component state (24 each) elected on a proportional basis from each component

state11

. The Chamber of Deputies shall be composed of deputies from both

component states with seats attributed on the basis of the number of persons holding

internal component state citizenship status of each component state provided that

each component state shall be attributed a minimum of one quarter of the seats (12

seats).

Article 24 states that unless otherwise specified, Parliament will take decisions

by simple majority of members present and voting in both Chambers, including one

quarter of senators present and voting from each component state. Special majorities

requiring at least two fifths of sitting senators from each component state in addition

to a simple majority of deputies present and voting shall be required for: ratification

10

Arguably however, this possibility may emerge under Article 36 which allows for amendments to, among

others, the just stated articles on the division of power between the component state and the common state.

Thus, save for its Basic Articles which establish the bizonal federation , the Constitution can be amended after

the approval by both Chambers of Parliament (see below) and the submission of the amendments to

referendum by a separate majority of the people in each component states.

41

of international agreements on matters which fall within the legislative competence

of the component states; ratification of treaties and adoption of laws and regulations

concerning the airspace, continental shelf and territorial waters of Cyprus; adoption

of laws and regulations concerning citizenship, immigration, water resources and

taxation; approval of the common state budget; election of the Presidential Council

(see below); and other matters.

Articles 25 to 30 regulate the executive branch of government. Article 25 sets

up a six member Presidential Council in which the office of the Head of State would

be vested. The members of the Council would be elected by Parliament for a fixed

five-year term on a single list by special majority. It would be composed

proportionately to the number of persons holding the internal component state

citizenship status of each component state, though at least one third (two members)

must hail from each component state. It is to strive to take decisions by consensus

and when this is not possible and unless otherwise contemplated, by simple majority

with at least one member of the majority coming from each component state. The

members of the Council are to be equal with any one of them placing items on the

agenda. Its President and Vice-President shall not hail from the same component

state and the offices of these two positions are to rotate every ten calendar months

among the members of the Council with no more than two consecutive Presidents to

come from the same component state. Neither the President nor the Vice-President

shall have a casting vote. Each member of the Council is to head a Department

(common state ministry) with the heads of the Departments of Foreign Affairs and

EU affairs coming from different component states.

Article 29 envisages a Public Service Commission composed of an equal

number of persons hailing from both component states. The public service will be

composed proportionately to the population of the component states though at least

one-third of the public servants at every level of the administration must hail from

11

Article 11 of Draft Annex I clarifies that when talking of the component state origins of a person the

criterion shall be the holding of internal component state citizenship status.

42

each component state. Article 30 concerns the common state police and stipulates

that it is to be composed of an equal number of persons from each component state.

Insofar as the judiciary is concerned, Article 35 states that the Supreme Court

will count on an equal number of judges from each component state appointed by the

Presidential Council for a renewable term of seven years12

. The Supreme Court is to

have exclusive jurisdiction over disputes between the component states and between

one or both component states and the common state and between organs of the

common state. It also has exclusive jurisdiction to determine the validity of any

common state or component state law under the Constitution and shall be the appeals

court in all other disputes on matters which involve the interpretation of the

Foundation Agreement, the Constitution, common state laws or treaties binding upon

Cyprus. If a deadlock arises in one of the institutions of the common state preventing

the taking of a decision without which the common state or its institutions could not

properly function, or the absence of which would result in a substantial default on the

obligations of Cyprus as a member of the EU, the Supreme Court may, upon

application of a member of the Presidential Council, the President or Vice-President

of either Chamber of Parliament, or the Attorney-General or the Deputy Attorney

General, take an ad interim decision on the matter, to remain in force until such time

as a decision on the matter is taken by the institution in question. The Supreme Court

is to strive to reach decisions by consensus and issue joint judgments. However, all

decisions of the Supreme Court may be taken by simple majority.

TYRANNICAL MAJORITIES OR MINORITIES, STABILITY AND VIABILITY

Given the employment of majority rule for collective decision-making, a majority

can be tyrannical in several ways and depending on which of these emerges, the

ramifications can affect legislative stability or even threaten the very viability of the

polity. To better understand the ensuing discussion, let us assume that society is

43

made up of three persons called X, Y and Z. To simplify things, let us first assume

that society takes political decisions of the following nature: society must spend less

(option A), the same (option B) or more (option C) on education; we must be less

(A), the same (B) or more (C) permissive of freedom of speech, etc. etc13

. A majority

in this society represents two people in favor.

One way that the majority can tyrannize the minority emerges when the

members of the majority are not identical but no other majority can emerge to

challenge the existing one (Black, 1958). In the context of our three person society

this would be a situation where, for example, person X prefers A to B to C and Y

prefers C to B to A, but person Z prefers either B to C to A or B to A to C. In a

majoritarian system, B is preferred to A (by Y and Z) and B is preferred to C (by X

and again Z). B is called a Condorcet winner against which, by definition, no

alternative majority can be formed. From the point of view of either person X or

person Y, the majority is tyrannical compared to a liberal system where each of them

could adopt their own preferred options (which would be option A in the case of X

and option C in the case of Y.)

A worse kind of tyranny than that of the Condorcet winner is the tyranny of

one majority over another that can occur whenever a unique majority does not exist

(Riker, 1992). By way of illustration assume that person X prefers A to B to C, Z

prefers B to C to A and Y prefers C to A to B. If they now vote according to their

tastes, A beats B (by the votes of X and Y), B beats C (by those of X and Z) and then,

incoherently, C beats A (by those of Z and Y). No matter which alternative wins,

some other majority prefers a losing alternative. Thus if A beats B, C can beat A, B

can beat C and so on. The constant cycling of majority coalitions undermines the

12

Article 6 of the Foundation Agreement itself is more specific since it talks of a Supreme Court of nine

judges, three from each component state and three non-Cypriots. 13

Another way of saying this is that political issues are organized along one dimension from less to more.

44

stability of legislation as the losing majority repeals the legislation at the next

opportunity14

.

The third and worst type of majority tyranny under majority rule can emerge

when the members of the majority have identical preferences (Buchanan, 1954). This

would be the case, for example, if person X and person Z both prefer A to B to C,

while person Y prefers C to B to A. Under these circumstances X and Z can always

outvote Y and adopt A. To the extent that this is the case over all possible choices,

this amounts to the permanent marginalization of the minority and under these

circumstances, the only remaining option for the minority may be revolution

something which may seriously undermine the very viability of the state. Of course

the possibility must also be admitted for the emergence of the permanent tyranny of

the majority by the minority something which is increasingly possible in the presence

of more inclusive voting rules, double majorities or veto powers for minority groups.

Again, the persistent exercise of such powers may hamper the viability of the polity.

While the tyranny of the Condorcet winner may be preferable to that of the

cyclical majority, it can also be said that the tyranny of a cyclical majority is

preferable to permanent tyranny of the majority over the minority (and vice versa).

Indeed, it is the possibility that ordinary majority decisions are subject to reversal that

makes majority rule tolerably acceptable (Buchanan, 1954). Above all, social

decisions must ensure meeting the more general goal of the durability of political

institutions (Miller, 1983; Ordeshook, 1992). In short, it is no use setting up

institutions that promote stability in decision-making if the whole institutional edifice

is unsustainable over time. What emerges from this discussion is that a suitably

designed federal and bicameral system should first and foremost minimize the

14

Cycles are probably not frequent in one dimension (for example, when deciding to spend less, the same or

more on defense) but almost inevitable in two or more (for example, when deciding to spend more on defense

and less on education). Incumbent politicians would then have a strong incentive to reduce dimensions to one,

emphasizing that dimension on which they have previously won. Non-incumbents on the other hand, have a

strong incentive to introduce a second dimension in the hope of dividing previous winners (Riker, 1992). The

removal of race and ethnic issues from the public domain by incumbents may thus enhance legislative stability

(Ordeshook, 1992). Conversely, their introduction by non-incumbents may generate instability.

45

likelihood of permanently tyrannical majorities or minorities emerging. The next

section will evaluate the federal and bicameral systems proposed by the UN for

Cyprus in this light.

IMPLICATIONS FOR THE SET OF IDEAS

AND THE COMPREHENSIVE SETTLEMENT

Avoiding the permanent tyranny of the minority by the majority

One way to avoid the permanent tyranny of the minority by the majority and thus

enhance the viability of the polity is, to decentralize collective decision-making so as

to grant the minority the authority to decide on certain issues. One set of issues that

are likely to be relevant here are “non-divisible” or “non-tradable” ethnic ones such

as nationality, language, territorial homelands and culture (Rabushka and Shepsle,

1972; O’Leary and McGarry, 1995). A reading of paragraph 26 of the Set of ideas

shows that the federal government is not granted the power to decide on issues, like

education, culture, language and religion, over which preferences are, arguably, split

along ethnic lines. This is also the case for the Comprehensive Settlement and in

particular Article 13 of Draft Annex I. As a result, insofar as this power is vested to a

political authority it is done so at the level of the two federated or component states.

This reduces the capacity of the Greek Cypriot majority to tyrannize the Turkish

Cypriot minority even before the government begins its deliberations15

.

Another way to avoid the permanent tyranny of the minority is through

constitutional constraints on the centralized provision of services. One would expect

to find tighter constitutional constraints on the centralized provision of services over

which preferences may be divided along ethnic lines or, in other words, with respect

to which an ethnic group may expect to be a dissident minority (Congleton, Kyriacou

46

and Bacaria, 1998). Conversely, one would expect to find looser constitutional

constraints in the centralized provision of services over which preferences may not

be divided along ethnic lines, that is, with respect to which one expects to oscillate

between the majority and the minority coalition.

A look at those areas that would be attributed to the central government of a

reunified Cyprus under both the Set of ideas and the Comprehensive settlement

indicates that those over which one would a-priori expect a higher degree of inter-

ethnic consensus (for example, central banking, customs and coordination of

international trade, meteorology, airports and ports as concerns international matters,

federal postal and telecommunication services, patents and trademarks) are subject to

relatively fewer checks and balances namely, approval by simple majorities in both

Houses. Conversely, areas where the degree of inter-ethnic consensus may be more

limited (for example, foreign affairs, defense, security, budget, taxation, immigration

and citizenship) are subject to additional safeguards. Insofar as the Comprehensive

Settlement is concerned they may take the form of special majorities in the Senate. In

the case of the Set of ideas these may take the form of separate majorities in the

Lower House, Presidential and Vice-Presidential approval and Presidential and Vice-

presidential vetoes. Indeed, in the extreme case, to pass a proposal under the Set of

ideas requires separate ethnic majorities in the Lower House, another ethnic majority

in the Upper House and the exercise of an ethnic approval or veto power at the

executive level. In other words, the Set of ideas envisage the institutionalization of an

ethnically based multi-cameral system.

This obviously responds to the fears held by the Turkish Cypriot minority that

under majority rule for the whole population they may be potentially permanently

disaffected. Having said this, the Set of ideas seem to ignore the previously raised

point that issues over which preferences are, a-priori, divided across ethnic lines are

left to each ethnic community to decide separately. In addition, the fact that both the

15

By doing so, it also reduces the potential for cycling since it reduces the likelihood that representatives may

trade off issues that they care little about so as to influence those dimensions that are relevant to their ethnic

47

President and Vice-President can include items on the agenda of the Council of

Ministers provides some degree of protection against the exercise of agenda setting

power by the Greek Cypriot majority. Finally, the Set of ideas put the emphasis on

minority protection in apparent ignorance of those decision-making costs that are

inherent to the requirement that decisions be approved by numerous ethnically based

subsets of voters. These decision-making costs reflect the normal political bargaining

which takes place among individuals who must reach a single collective decision

(Buchanan and Tullock, 1962)16

. When these decision-making costs are factored in,

the whole set-up seems overly expensive. This is especially so if one moreover

considers, as Theophanous (2000a) does, the budgetary implications for a small

country such as Cyprus of maintaining four separate Parliaments; one in each

federated or component state and two Chambers at the federal or common state level.

The decision-making costs would be further increased, without any significant

improvement in the ability of the constitutional set up to safeguard the rights of the

Turkish Cypriot minority, by the Turkish Cypriot demand shortly after the Set of

ideas that the Council of Ministers be made up of an equal number of Greek and

Turkish Cypriots and that it operate on the basis of consensus. Alternatively, the

Greek Cypriot view that given the composition of the Upper House, separate

majorities are unnecessary in the Lower one, finds support from the perspective of

decision-making costs. In the strict context of decision-making costs, the

Comprehensive settlement represents an improvement over the Set of ideas since it

does not envisage the need for Presidential or Vice-Presidential approval for

decisions to be taken by the Presidential Council nor does it establish the right of

Presidential or Vice-Presidential vetoes.

groups something which would generate legislative instability (Ordeshook, 1992). 16

It is important to realize that they emerge whenever individuals take collective decisions in any area – ethnic

or other, – since individuals are likely to have different interests or different interpretations of the public good

over issues. This is also true for the members of the same ethnic group who are likely to have different

interpretations of what is ‘good’ for their group and so are faced with the need to reconcile these different

views giving rise to decision-making costs.

48

Although the Comprehensive settlement represents an improvement over the

Set of ideas in terms of decision-making costs it arguably may be less effective in

protecting the minority from the political tyranny of majority at the common state

level. To see this it is necessary to consider in more detail on what basis individuals

acquire political rights in the Comprehensive settlement. As explained above,

political rights at the common state level fundamentally spring from a person’s

internal component state citizenship status. But how is this citizenship status itself

acquired17

?

The Comprehensive settlement elaborates this in Attachment 3 “Constitutional

Law on internal component state citizenship status and component state residency

rights” in Draft Annex II of the Foundation Agreement. Article 1 of this Attachment

states, among other things, that upon entry into force of the Foundation Agreement

Cypriot citizens shall automatically be afforded the internal component state

citizenship status of the component state which at the time administers the territory

where they reside and that Cypriot citizens residing abroad shall be afforded the

internal component state citizenship status of that community (Greek or Turkish) to

which they or their forbearers belonged prior to 1974. The overall effect of these

articles is to afford the internal citizenship status of the Greek Cypriot component

state to members of the Greek Cypriot community and the internal citizenship status

of Turkish Cypriot component state to members of the Turkish Cypriot community.

But Article 2 of the Attachment goes on to say that any Cypriot citizen who

has been a resident in a component state for any seven consecutive years shall be

entitled to apply to change his or her internal component state citizenship status to

that of the component state where he or she resides. Thus in principle, if a person

with the internal component state citizenship status of the Greek (Turkish) Cypriot

component state chooses to reside in the Turkish (Greek) Cypriot component state

17

Political rights at the component state level may similarly depend on holding internal component state

citizenship status (Article 3 of Attachment 3 of Draft Annex II). This said, an individual who does not have this

status may enjoy political rights at this level if he or she lives in specified villages or if he or she is a member

of a religious or other minority (see for example, Article 10 of Draft Annex I of the Foundation Agreement).

49

and does so for seven consecutive years he or she can gain the internal component

state citizenship status of the Turkish (Greek) Cypriot component state and enjoy

political rights at the common (and component state) level as a result. Article 6 of the

attachment goes on to state that a component state may restrict the right to reside of

Cypriot citizens who do not hold its internal component state citizenship status to a

maximum of 28 per cent of its population after a transitional period of fifteen years

(given the demographic weight of each ethnic group, this ceiling is more likely to be

reached in the Turkish Cypriot component state due to returning Greek Cypriots).

Thus, in theory at least, fifteen years after the entry into force of the agreement 28 per

cent of the population of the Turkish Cypriot component state may be made up of

people who hold the internal citizenship status of the Greek Cypriot component state

and, again in theory, seven years later, this 28 per cent could acquire the internal

citizenship status of the other component state.

This of course has important implications for the capacity of the common state

institutions to protect the Turkish Cypriot minority from the political tyranny of the

Greek Cypriot majority. For example, it would mean that in the case of the

Parliament, a number of representatives from the Turkish Cypriot component state in

both the Chamber of Deputies and the Senate would be of Greek Cypriot extraction,

something which may upset the balance of power in either Chamber. At least

formally, representation in all other common state institutions is also possibly

affected. Finally, the adoption of internal citizenship status of the other component

state is likely to affect proportionality in both the public service and the police. This

problem would be exacerbated by the fact that upon acquiring the Turkish Cypriot

component state’s citizenship status, a returning Greek Cypriot would, arguably,

cease to be counted as part of the 28 per cent. This, together with the fact that the

total population of the Turkish Cypriot component state would necessarily be larger

would mean that the right of residency and by extension eventually internal

citizenship in the component state could be extended to an even greater number of

persons from the Greek Cypriot component state. In short then and notwithstanding

50

important practical barriers to the right of return of displaced persons, the

Comprehensive settlement may in the long run be less effective than the Set of ideas

in protecting the Turkish Cypriot minority from the political dominance of the Greek

Cypriot majority at the common state level since it abandons bicommunalism as a

source of political rights and adopts instead the more fluid concept of territorial-

based internal citizenship as the basis of these rights18

.

Avoiding the permanent tyranny of the majority by the minority

Consider now the capacity of the system to avoid the tyranny of the Greek Cypriot

majority by the Turkish Cypriot minority. This situation would emerge if the Turkish

Cypriot minority where to block the passing of legislation desired by the majority on

grounds other than the ethnically discriminatory nature of this legislation. For

18 In practice, the right of return may not be exercised for at least two reasons which spring directly from the

Comprehensive settlement. First, the Comprehensive settlement is silent on the need for inter-jurisdictional

agreements to facilitate the reciprocal provision of what one can call communal public goods such as

education, culture, language and religion. In the absence of such agreements a person who wants to consume

these public goods – at least during the first seven years of residency during which he or she has no political

rights since he or she does not enjoy the internal citizenship status of the other component state and assuming

that he or she does not live in specified villages or is not a member of a religious or other minority, – he or she

must do so in the area administered by his or her ethnic community and this represents a big obstacle to the

establishment of citizens across administrative boundaries. Although such inter-jurisdictional cooperation is

spoken of in the Comprehensive settlement (for example, Article 2 of the Foundation Agreement), it refers to

cooperation in the area of formulating and implementing policies related to the competencies in the areas of

foreign and EU affairs. This said, the freedom of movement would not necessarily be violated by the absence

of the said agreements. Indeed, one would expect to see individuals established in one area to travel to the

other area for employment and or recreational purposes. Second, the right of return may not be exercised given

the treatment received by the right of property in the Comprehensive settlement. Dispossessed owners of

property in the other component state will have their property reinstated subject to several conditions,

otherwise they will receive compensation (see, for example, Article 10 of the Foundation Agreement).

Moreover, in either component state, no more than 9 per cent and in any give municipality or village, no more

than 14 per cent of the total land area and of the number of residences shall be reinstated to persons hailing

from the other component state (Article 16 of Draft Annex VII of the Foundation Agreement). By limiting the

right of property, the Comprehensive settlement inevitably limits the freedom of establishment but it also limits

the freedom of movement and in particular the right of individuals to travel to the other area for recreational

purposes.

51

example, it may do so to obtain redistributive benefits for itself or to obtain

concessions on other unrelated issues.

Minority tyranny may emerge under the Set of ideas when the Turkish Cypriot

Vice-President either withdraws his/her approval of legislation or veto’s it or, when

in some specified areas a majority of Turkish Cypriot representatives vote as a

separate majority in the Lower House or, the Turkish Cypriot community votes as a

block in the Upper House19

. Under the Comprehensive settlement, minority tyranny

of the majority could emerge if the majority in the Senate does not include at least a

quarter of senators present and voting from the Turkish Cypriot component state or,

in the case of certain areas, if it does not include at least two fifths of sitting senators

from the Turkish Cypriot component state, or if in the Presidential Council the

majority does not include at least one member from the Turkish Cypriot component

state. At the outset one can state that the elimination of approval and veto powers at

the executive levels under the Comprehensive settlement reduces the capacity of the

Turkish Cypriot minority to tyrannize the Greek Cypriot majority.

Moreover, to the extent that the minority can tyrannize the majority by holding out

for the redistribution of federal or common state resources then it is important to

consider the redistributive opportunities at that level of government. Insofar as the

Set of ideas is concerned, these possibilities that are instituted, most notably, by

paragraph 86 of the Set of ideas that states,

“A priority objective of the federal republic will be the development of a

balanced economy that will benefit equally both federated states. A major

program of action will be established to correct the economic imbalance and

ensure economic equilibrium between the two communities through special

19

Assuming an equal number of representatives in the Lower and Upper Houses, the fact that only a majority

of Turkish Cypriot representatives would be required in the Lower House while all such representatives may be

required in the Upper House, means that it may be relatively more difficult to tyrannize the Greek Cypriot

majority in the Upper House compared to the Lower House.

52

measures to promote the development of the federated state administered by the

Turkish Cypriot community”.

Insofar as the Comprehensive settlement makes a reference to the economic

development of the northern part of Cyprus it is to recall that, in accordance with the

Presidency Conclusions of the Brussels European Council of 24 and 25 of October, a

program will be established by the Council for the disbursement of 206 million euros

between 2004 and 2005 for the economic development of the northern part of a

reunified Cyprus, in addition to the normal operation of the EU’s structural funds

(Paragraph ix, Appendix E: Requests to the EU with respect to the accession of

Cyprus to the EU). In this context, no comparable redistributive opportunities exist

for Turkish Cypriot from the common state level.

In attempting to redistribute resources to itself or obtain concessions on other

issues by blocking legislation, the Turkish Cypriot minority, like any minority, must

take into account the costs to itself of inaction, the higher these being the lower its

hold-out power and thus the likelihood that it push for such discriminatory

redistribution (Buchanan and Tullock, 1962). In this respect recall that paragraph 35

of the Set of ideas allows for the application of the most recent budget, adjusted for

inflation, in the event of a stalemate. Similarly, Article 1 of Attachment 8 “Law on

common state budget” in Draft Annex III of the Foundation Agreement, states that if

Parliament is unable to approve a budget before the beginning of the fiscal year, the

budget of the previous year adjust by inflation minus 1 per cent shall be carried on to

the next fiscal year, unless the Supreme Court in the exercise of its deadlock

resolving power decides otherwise. One effect of these provisions may be to lead the

Turkish Cypriot minority to discount the expected costs of a stalemate and thus

encourage it to hold out for redistributive gains.

On the other hand, the capacity to apply the most recent budget adjusted for

inflation reduces the ability of virulent minorities from either ethnic group who do

not support the federation, to threaten the viability of the state by freezing the

53

workings of government. The likelihood of this occurring is also reduced by the

institution of majority rule when taking decisions in the bicameral systems envisaged

by either proposal. Unlike more inclusive voting rules, majority rule makes it

difficult for virulent minorities within each ethnic group which may not support the

very concept of a reunified Cyprus, to throw a spanner in the workings of the federal

government. In this they may ironically count on the support of virulent nationalists

in the other ethnic group, who may similarly vote down legislation. The separate

ethnic majorities envisaged under the Set of ideas when voting in some areas and the

minimum required number of representatives from each component state required in

the Senate under the comprehensive settlement are also consistent with this logic.

A FUNCTIONAL AND BICOMMUNAL FEDERATION

Notwithstanding practical obstacles to the right of return being exercised by

displaced persons, I have argued that the bizonal and bicommunal federation

envisaged in the Set of ideas is likely to be more effective in minimizing the risk of

the permanent political tyranny of the Turkish Cypriot minority by the Greek Cypriot

majority than the bizonal system envisaged in the Comprehensive settlement. In this

section I will argue that a well designed bicommunal but functionalist-based federal

system is a better institutional arrangement than either of those proposed by the UN.

In a functional federation political units are defined by the public services they

provide and not necessarily by geographic boundaries or, in other words, they are

organized across functions instead of territories (Frey, 2001). The idea of defining

political units functionally rather than territorially has historical antecedents. The

previous author points to Poland where the organization of jurisdictions on a

functional basis in the past, he argues, contributed to managing potential ethnic and

religious conflict between Catholic, Protestant and Jewish Poles. Another historical

example is the scheme of “extraterritorial national autonomy” put forward in the

beginning of the century for the Austrian empire by Otto Bauer and Karl Renner

54

(Ferrero, 1995). The idea here was to divorce the development of cultural autonomy

from territorial autonomy or independent statehood. In particular, each nation would

be treated as a union of individuals whose names – if they chose voluntarily to be

identified as such, – would be entered into a national register. These individuals

would then be able to administer their cultural affairs in full autonomy, regardless of

their place of residence20

. One final example is, of course, the 1960 constitutional

arrangements for Cyprus itself whereby authority over religious, educational and

cultural affairs was vested in each ethnic group independently of territorial

considerations, not surprisingly, given Greek and Turkish Cypriots at the time lived

in mixed villages and towns all over the island21

.

A functional federation would be superior to a bizonal one basically because it

would allow the Turkish Cypriot community the political autonomy to organize those

areas which are particular to it but without violating the freedom of establishment or

the right to vote. The violation of either of these rights is inevitable in a bizonal

federation so as to avoid placing the Turkish Cypriot community in a numerical and

thus potentially, political minority in the Turkish Cypriot federated or component

state thereby potentially violating its political autonomy to organize the just

mentioned as well as other conceivable areas.

To see this consider that in a bizonal system, the full enjoyment of the freedom of

establishment could, at least in theory, lead to the establishment of Greek Cypriots in

the Turkish Cypriot federated or component state. Given the demographic realities of

the island, if they are then granted political rights at this level they could constitute a

political majority there. One way to avoid putting Turkish Cypriots in a political

minority without limiting the freedom of establishment is by granting Greek Cypriots

living in the north all citizenship rights (including the freedom of movement,

20

Bauer and Renner also referred to their proposal as federalism on the basis of the “personality principle” in

contrast to the usual “territorial principle” (Lijphart, 1977). 21

Dekleris (1981) identifies the functional nature of the Republic of Cyprus established in 1960 and points out

that the idea of functional autonomy for ethnic groups was adopted by the Ottoman Empire by way of the

millet system. Coakley (1994) suggests the legacy of this system may have played a role in enhancing the

55

settlement and ownership) except for the right to vote in that zone following the

regime of permanent residency status in the US (Hadjipavlou-Trigeorgis and

Trigeorgis, 1993). Doing so would preserve the freedom of establishment but at the

cost of sacrificing the right to vote22

.

This trade off between, on the one hand, the full enjoyment of the freedom of

establishment and on the other, the right to vote at the federated or component state

level could be possibly avoided in the context of a bizonal federation by reducing the

area to come under Turkish Cypriot administration so as to allow a majority of Greek

Cypriots to return home under Greek Cypriot administration (Theophanous, 2000a).

Doing so would reduce the likelihood that Turkish Cypriots would find themselves in

a numerical and thus political minority in the zone to be administered by them in the

event of the remaining Greek Cypriots returning to the north under Turkish Cypriot

administration, and would thus obviate the need to limit these peoples’ right to vote.

This said, some sort of formal upper limit to the number of Greek Cypriots

establishing themselves in the north – for example, that they can only make up a

maximum of 49 per cent of residents – would still be necessary in anticipation of

unforeseen developments in the medium to long-run.

Arguably, this goes a long way in explaining the Turkish Cypriot insistence that

“[t]he settlement of Greek Cypriots in the area that will be under Turkish Cypriot

control … shall be subject to a moratorium and the agreed ceiling in order to preserve

the bicommunal and bizonal character of the federal state” (United Nations, 1992).

More recently and most explicitly, the Comprehensive settlement envisages long

acceptability of the non-territorial approach adopted at the founding of the Republic (see this author for

numerous other examples of the “non-territorial” approach to the resolution of ethnic conflict). 22

This would potentially create a legal problem. According to Article 3 of Protocol 1 of the European

Convention for the Protection of Human Rights and Fundamental Freedoms which is to be an integral part of

the Constitution according to the Comprehensive settlement (Article 10 of Draft Annex I of the Foundation

Agreement), ‘The High Contracting Parties undertake to hold free elections at reasonable intervals by secret

ballot, under conditions that will ensure the free expression of the people in the choice of the legislature’. The

European Court of Human Rights has recognized that constitutional arrangements in the Contracting States

may make the right to vote and to stand for elections subject to various conditions but adds that while there is a

wide margin of appreciation, it is for the Court “to satisfy itself that the conditions do not curtail the rights in

question to such an extent as to impair their very essence and deprive them of their effectiveness” (see,

Merrills, 1993, for a discussion of these issues).

56

term limitations to the freedom of establishment to the extent that a maximum of 28

per cent of the population of the relevant component state can hail from the other

component state, albeit with a proviso that such limitations will be reviewed no later

than 25 year after the reunification of the island.

Rather than a bizonal federation, the functional one I advocate would by

definition avoid formal restrictions to resettlement or voting rights while at the same

time allow the provision of communal public goods across Cyprus. It is important to

emphasize that while a functional federation is incompatible with the bizonal side of

UN proposals, it is not incompatible with the bicommunal side included in the Set of

ideas. One could adopt a bicommunal federation where at the same time political

jurisdictions are defined over functions and not territories. Indeed, as I have

previously said this was the case for the Republic of Cyprus as established in 1960.

As it was the case then, each ethnic community could organize the provision of

public goods constitutionally assigned to the community level and offer these to its

members across Cyprus, but unlike the 1960 arrangement, now both communities

could decide the provision of public goods at the federal level by way of a well-

designed bicameral legislature. To avoid the additional cost to the public purse of

maintaining four separate Parliaments, members of the component state legislatures

could designate a number among themselves to the common state Chamber of

Deputies. The overall division of powers between the federal, communal and local

levels could be enforced by a federal constitutional court and the evolution of this

division could be determined by a bicommunal upper house or Senate. This would

offer the Turkish Cypriot minority a strong institutional guarantee against majority

tyranny.

QUALIFICATIONS

Before closing here it is necessary to point out that the functional and bicommunal

federation proposed is not without its problems. Insofar as each community must

57

finance its expenditure by levying taxes on its own tax base the possibility emerges

that the poorer ethnic group may be unable to provide public goods or services that

are specific to it and that it attaches a high value upon. Faced with this situation –

which recall from chapter 2 emerged in Cyprus in the early 1960s, – it may be

reasonable to search for a consensus on a minimum level for such public goods and

services for all ethnic groups, to be financed by some federal redistributive scheme.

While on the spending side, such a redistributive scheme could consist of

lump-sum transfers towards the “poorer” community, it should ideally be financed by

wealthier individuals regardless of their ethnic group. This would increase the

expected cost for any ethnic group of redistributive activities – since it would have to

bear part of the cost of financing these. It would moreover, avoid setting up a system

of “structural redistribution” from relatively wealthy ethnic groups to poorer ones,

something which, over time, may both engrain ethnic awareness and lead to feeling

of resentment from wealthier ethnic groups to the detriment of inter-ethnic co-

operation (Ferrero, 1995; Findlay, 1995)23

.

Another problem is related to the provision of local public goods and to the

organization of local administration in general. This emerged as an important issue

for the Turkish Cypriot community in the inter-communal negotiations in the period

prior to the Turkish invasion (see, Dekleris, 1981). In particular, the Turkish Cypriots

wanted the same control over local public goods as they enjoyed for communal ones.

The Greek Cypriots on the other hand, resisted this since they saw it as a step

towards the partition of the island.

23

This idea stems from the more general point that insofar as formal institutions point self interest and

ethnocentrism in the same direction this will tend to reinforce the latter over time to the detriment of inter-

ethnic cooperation (I explore this fully in Kyriacou, 2002). This applies to the just mentioned case of

“structural redistribution” but it also applies to “proportionality rules” requiring that each ethnic community be

proportionally represented in the civil service. In a more historical context, it has been argued that by granting

rights to groups rather than to individuals, the institutions of feudalism, the Indian caste and the Ottoman millet

systems make members of the group dependent on it for their life chances and as a result increase group

solidarity (Hechter, 1987). Laws that limit the individual’s alternatives outside group boundaries promote

dependence and those that provide new alternatives lessen it. The relevant point here is that relative income

and merit or achievement should be, respectively, the criteria used to finance a minimum level of communal

public goods as well as decide employment in the civil service.

58

The main responsibilities of municipalities in Cyprus are the construction,

maintenance and lighting of streets, the collection, disposal and treatment of waste,

the protection and improvement of the environment and the good appearance of the

municipal areas, the construction, development and maintenance of municipal

gardens and parks and the protection of public health. The Municipal Council has the

authority to promote, depending on its finances, a vast range of activities and events

including the arts, education, sport and social services. Municipalities also have

powers in the areas of streets and buildings regulation, town planning, civil marriages

and sewerage systems. The main sources of revenue are municipal taxes, fees and

duties (professional tax, immovable property tax, hotel accommodation tax, fees for

issuing permits and licenses, fees for refuse collection, fines, etc.), as well as state

subsidies. Taxes, duties and fees represent the major source of revenue while state

grants and subsidies amount to only a small percentage of the income. The central

government, however, usually finances major infrastructure projects undertaken by

the municipalities, but this is dependent very much on each individual project.

At the outset, it is obvious that there is some scope for assigning to each ethnic

community those local government areas which may be particular to it, for example,

arts and education. Putting aside the technical feasibility of the parallel provision of

some local public goods and services by both ethnic communities, the allocation

criterion should be whether the two communities can be reasonably said to be

divided along ethnic lines over such goods. This criterion is arguably not met for the

majority of local services listed above and therefore they should not be

communalized.

To the extent that the two communities can cooperate for the common

provision of local public goods and services this would, surely, have a very positive

effect on inter-ethnic relations24

. Moreover, avoiding the communalization of non-

24

That such co-operation can emerge is obvious from the fact that one of the few areas where the two ethnic

communities have cooperated despite their physical separation is in bicommunal projects in the island’s

divided capital such as the Nicosia sewerage scheme, Nicosia Master Plan, electricity and water projects. The

fact that these projects have been funded from the financial protocols concluded with the EU points to the

59

communal local public goods and services could help mitigate the important problem

of financing local services. By way of illustration, if all local services were

communalized, the limited tax-base of the Turkish Cypriot community would point

to the need of some federal level redistributive scheme which, ultimately, would

mean redistributing wealth from the Greek Cypriot community to the Turkish

Cypriot one. While this may be possible to justify for the maintenance of a minimum

level of strictly communal public services, it may be much more difficult to do so if it

were extended to local public services in general something which could lead to a

feeling of resentment from the Greek Cypriot community. If instead local goods and

services are not communalized then most of their revenue could continue to be raised

locally via taxes which are not ethnically based and are thus less likely to consolidate

ethnic awareness and generate resentment25

.

In sum, efficiency rather than ethnicity should be the overriding criterion in

the provision of non-ethnic local public goods and services. The argument against

the communalization of local public goods would be strengthened in the presence of

additional guarantees for the non-discriminatory provision of such goods via, for

example, a degree of bicommunal representation at the local level as well as

constitutional and or other legal restrictions against the discriminatory treatment of

the members of any ethnic group in areas other than communal ones.

One final problem concerns the bicommunal nature of my proposed system

and the communal basis for political representation that this implies. Bicommunalism

has very strong roots in Cyprus extending back at least to the time when Cyprus was

under Ottoman rule. Any degree of representation in the political or public sphere has

usefulness of budgetary incentives to promote inter-ethnic cooperation. This is recognized by the

Comprehensive settlement which, in a different context to the one discussed here, states that the common state

shall spend no less than 5 per cent of revenue from indirect taxation which is not transferred to the EU to

finance cooperative endeavors between the component states or between municipalities located in different

component states (Article 1 of Attachment 7 “Law on common state taxation and finances” in Draft Annex III

of the Foundation Agreement). 25 Financing local services from local rather than federal taxes is moreover in tune with several well-accepted

normative criteria coming from the literature on fiscal federalism. In particular, I am referring here to the

principles of ‘fiscal equivalence’ (Olson, 1969) or the ‘correspondence principle’ (Oates, 1972), that basically

call for a match between those who receive the benefits of a collective good and those who pay.

60

always been based on ethnicity. At independence, bicommunalism was adopted in

the context of a consociational system with the main aim of guaranteeing group

representation and thereby avoiding the political tyranny of the Turkish Cypriot

community by the Greek Cypriot majority. It is because of the traditional importance

which is placed on bicommunalism by the Turkish Cypriot community and the

previously alluded to problems which emerge when one abandons it in favor of

bizonal solution, that my proposal includes this feature.

This said, a strict communal basis for representation has at least two

disadvantages which must be taken into account. One disadvantage is, simply, that it

is impossible to vote for moderate political representatives outside one’s ethnic group

who may campaign on a supra-ethnic platform or who (especially at the local level)

may put efficient public administration above ethnicity. Of course, such politicians

may emerge within each community but their electoral chances would, arguably, be

improved if they could seek votes from like-minded citizens from all ethnic groups.

Another disadvantage is that since each political representative’s constituency is

limited to members of his or her own ethnic group and a large part of politics is about

redistributive issues, this opens up the real possibility that as politicians vie for

redistributive gains for their constituency in the normal course of competitive

electoral politics this may take the form of ethnically discriminatory and inherently

divisive policy proposals. In short, a strict bicommunal system is more likely than not

to strengthen group boundaries and, ultimately, undermine inter-ethnic co-operation.

Having said this I recognize the possibility that by guaranteeing each ethnic group a

minimum degree of representation, communalism may reduce the incentive of

political representatives to play the ethnic card to gain office (Koralka, 1993). As

such it may contribute towards diffusing ethnicity during elections.

The question that emerges is whether the electoral system can be engineered

so that it can both maintain the benefits of bicommunal representation while at the

same time being more open-ended with regards to the possible emergence of inter-

ethnic politics. One-way of doing so is through a system of “cross-voting” whereby

61

electors could vote not only their communal candidates but for candidates standing

on non-communal tickets as well. Other systems include “vote-pooling” and

“preference swapping” at the core of which is to make politicians reciprocally

dependent on the votes of members of groups other than their own (see Reilly and

Reynolds (1999) for an extended discussion of these and other electoral rules which

could be suitable for divided societies).

62

CHAPTER 4.

A VIABLE SOLUTION TO THE CYPRUS PROBLEM:

IN SEARCH OF INSTITUTIONAL VIABILITY

INTRODUCTION

The attainment of a viable solution to the Cyprus Problem has been the declared

objective of many of those engaged with the problem over the years including the

government of the Republic of Cyprus, foreign governments and international

organizations. In the previous chapter I have argued that the viability of a reunified

Cyprus depends on the capacity of institutional mechanisms to minimize the

likelihood of the political tyranny of the minority (majority) by the majority

(minority). In this chapter I will go beyond this to examine other conceivable factors

which may affect the viability of a reunified Cyprus26

. To do so I rely on the

theoretical literature dealing with the issue of institutional viability or maintenance.

A reading of this literature has brought to light at least four factors which may

determine the viability of any solution to the conflict namely:

(i) the relative strength of each community in the non co-operative setting;

(ii) the perceived fairness of the co-operative solution;

(iii) the influence of informal rules and finally;

(iv) the judicial enforcement and legislative maintenance of the terms of co-

operation.

Each of these variables has important implications for the nature of the solution to

the problem and will be discussed both in the historical context of the dispute and

63

mainly by reference to both the Set of ideas and the Comprehensive settlement.

Before turning to these factors I will analyze the status quo situation on the island

from the vantage point of, first, the classical prisoner’s dilemma (PD) game and,

then, a divided PD-game which I will argue better describes the current stand-off

facing the two communities.

THE SOCIAL DILEMMA

A Classical Prisoner’s Dilemma

Consider first one type of dilemma currently facing the Greek and Turkish Cypriot

communities on the island. My use of the word dilemma is deliberate since we will

draw from the literature dealing with the social dilemma facing two individuals

(Bush, 1972; Tullock, 1974; and especially Buchanan, 1975). Figure 1 below

represents the standard PD-game where ti>ri>pi>si for each player i=A and B.

Figure 1. From the status quo to a reunified Cyprus

B

Turkish Cypriot community

A

Greek Cypriot

community

Cooperate Defect

Cooperate

I

(rA, rB)

II

(sA, tB)

Defect

III

(tA, sB)

IV

(pA, pB)

26

This chapter draws on Kyriacou (2000b) but adds several new insights as well as incorporating relevant

implications which emerge from the Comprehensive settlement. See Kyriacou (2001) for a discussion of the

64

In this simple model, the two ethnic communities are faced with two options namely,

the possibility to ‘cooperate’ entailing an acceptance of a solution to the Cyprus

Problem and thus the reunification of the island, and ‘defect’ which entails no such

acceptance and the real possibility of a Hobbesian state of war. The structure of the

model represents the idea that both ethnic communities would be better off

cooperating in a reunified Cyprus rather than arming themselves to the teeth in a

divided one. The movement from a situation of a volatile military stand-off (cell IV)

to one where both ethnic communities cooperate on a reunified island (cell I) reflects

various factors including the enjoyment of a peace dividend (especially for the Greek

Cypriot community) and economic benefits for each community (especially the

Turkish Cypriot one)27

. However, the social dilemma emerges since either ethnic

group has a unilateral incentive to defect, which in the extreme could take the form of

an aggressive and unilateral military action. As a result, the danger exists that the

mutual co-operation outcome and the resultant higher payoffs will be unsustainable

as both ethnic communities cheat thereby moving society to cell IV.

The discussion so far is descriptive of a status quo situation which is

characterized by a high degree of tension and the real possibility of inter-communal

conflict including the possibility that it be generalized into a Greek-Turkish war

within the context of the wider Greco-Turkish feud which apart from Cyprus extends

to disputes in the Aegean Sea concerning territorial waters, airspace, and continental

shelf jurisdiction. Having said this, I will now examine the implications of reducing

the shadow cast on the whole analysis by the threat of anarchy. I will do so because

this is more descriptive of the status quo situation on the island, which is generally

peaceful with conflict limited to international political forums.

ideas developed here in the context of potentially divided multi-ethnic states in general. 27

Defence spending by Greek Cypriots corresponds to approximately 10 per cent of GDP while the figure is

around 2.2 per cent for Turkish Cypriots (the actual figures are not made public). Turkey maintains between 30

and 35 thousand soldiers in the north. The Greek Cypriots enjoy a GDP per head that is more than 3 times

greater than that of the Turkish Cypriots.

65

A Divided Prisoner’s Dilemma

Thus, instead of assuming that non co-operation between Greek and Turkish

Cypriots potentially faces them with a Hobbesian world, consider now the situation

where they are confronted by a limited threat of anarchy. One implication is that

faced with a limited threat of anarchy the two communities would be more reluctant

to enter into a co-operative agreement than if they were faced with such a threat in

full.

This modifies the previous PD-game as illustrated in figure 2 below (where

ti>ri>qi>pi>si for i=A, B). This Figure corresponds to a divisible prisoner’s dilemma

where the common interest in order (co-operation) now co-exists with conflicting

interests about which order will prevail (Heckathorn and Maser, 1987).

Figure 2. From the status quo to a federal or confederal Republic of Cyprus

B

Turkish Cypriot community

A

Greek

Cypriot

community

Cooperate 1 Cooperate 2 Defect

Cooperate 1

I

(rA, qB)

II

(pA, pB)

III

(sA, tB)

Cooperate 2

IV

(pA, pB )

V

(qA, rB)

VI

(sA, tB)

Defect

VII

(tA, sB)

VIII

(tA, sB)

IX

(pA, pB )

66

Thus, rather than faced with a dichotomous decision between anarchy and order, the

two communities are now faced with the choice of limited anarchy (cell IX) and two

conflicting perceptions of order or, in terms of my discussion, co-operation under

two conflicting sets of terms. While the Greek Cypriot community may prefer to

cooperate under terms 1 (cell I), the Turkish Cypriot community may prefer to do so

under the terms 2 (cell V).

In particular, recall that the Greek Cypriots prefer a strong federal

arrangement with fewer checks and balances, the unrestricted enjoyment of the

freedom of movement and settlement and the right of property in the long run, 20 to

25 per cent of the land under Turkish Cypriot administration and the complete

demilitarization of the island with a security guarantee provided by the international

community. Alternatively, the Turkish Cypriots prefer a confederal arrangement

with numerous checks and balances, a permanently limited enjoyment of the

freedom of settlement and the right of property, 29+ to 37 per cent of the island

under Turkish Cypriot administration and, finally, a continued Turkish troop

presence on the island and a legal right of unilateral intervention by Turkish armed

forces.

Agreement requires concessions by each party since otherwise, either may

refuse to cooperate “because (it) judges the constitution to be unfair, to require

excessive concessions.” (Heckathorn and Maser, 1987: 154). However, it is possible

that a community may also refuse to cooperate and holdout for the adoption of rules

that discriminate in its favor. The extent to which such rules are adopted is a function

of the holdout power of the two communities28

. Arguably, the holdout power of the

Greek Cypriot community has traditionally been weaker than the Turkish Cypriot

one for two reasons. First, as time goes by, the Turkish Cypriot leadership’s

28

A similar point has been made by (Schmidt-Trenz, 1989) who argues that the agreement which is eventually

reached depends on the location of the status quo, the more favorable this being to one of the parties, the more

likely that the agreement reached is similarly favorable. Thus, the parties involved have an interest to change

the status quo in their favor, prior to beginning negotiations for a final settlement.

67

“turkification” policy – Turkish settlers, name changes and the like (see, Ioannides,

1991) – increasingly alters the demographic and cultural variables in the north

making it ever more difficult that a mutually acceptable solution to the problem will

be found. Indeed, to the extent that this policy leads to ever more people with

relatively intense ethnic preferences, then this obviously makes it increasingly

difficult to reunify the island under any institutional arrangement. Second, in the

long run the “TRNC” may be offered international recognition as indicated, for

example by the fact that over the years and apart from Turkey, at least nine Islamic

nations have either voted against, or abstained from, UN resolutions which give

international recognition to the government of the Republic of Cyprus. Turkey seems

willing to continue occupying the island with its troops, “judging that over time the

division will come to be acknowledged, if not recognized, by the international

community and the validity of the Greek-Cypriots’ claim to represent the whole

island will be eroded.” (McDonald, 1989: 31).

This said, the eventual accession of Cyprus to the EU in May of 2004 would

significantly strengthen the negotiating position of the Greek Cypriot side for at least

three reasons. First, in view of the EU membership aspirations of Turkey, it will

allow the Greek Cypriots for perhaps the first time in the history of the conflict to

directly apply pressure on the Turkish government to mitigate its wholehearted

support for the positions taken by the Turkish Cypriot leadership thereby

undermining its negotiating strength. Second, EU membership is likely to increase

the sense of material and social well-being of the Greek Cypriot community while

the continuing isolation of the Turkish Cypriot community is likely to lead to the

reverse. This is likely to raise the social pressures in the north, something which

inevitably will reduce the negotiating strength of the Turkish Cypriot leadership.

Third, as a full member of the EU Cyprus would be in a better position to holdout for

a solution which does not derogate from the EU’s founding principles – a solution

closer to its ideal point (see more on this in chapter 5).

68

Thus, through time, the relative position of the Greek Cypriot side has

arguably weakened and as a result it may have been expected to make increasing

concessions in the search for a settlement. Conversely, the Turkish Cypriot side

would have been expected to make increasing demands, which has been the case as

indicated for example, by its relatively recent demands for the creation of a

confederal rather than a federal Cyprus which had previously been its objective. This

trend however, may be halted or even reversed in the post-EU accession period for

the reasons just outlined.

Figure 3. The effects of time on bargaining for a solution

Figure 3 above represents, in utility space, the divided prisoner’s dilemma shown in

figure 2. Again, 1 and 2 represent the preferred terms of settlement of the Greek and

Turkish Cypriot Communities respectively. The effect of time can be envisaged as a

movement along the contract curve from 1 to 2 up until the time of EU accession and

a movement in the opposite direction afterwards. Its worth pointing out that as

Greek Cypriot

Utility

Turkish

Cypriot

Utility

0

2

1

Status Quo 3

4

D

A

C

B

69

drawn, points 1 and 2 indicate that it would be in the interest to both the Greek

Cypriot and the Turkish Cypriot side to accept a solution even if it corresponds to the

ideal point of the other side. This can be seen by the fact that these opposite ideal

points represent points of greater utility than that received in the status quo situation

of limited anarchy. Thus, the Greek Cypriot side should prefer a solution at the ideal

point of the Turkish Cypriot side compared to the status quo since it would receive

0B rather than 0A and the Turkish Cypriot side should prefer a solution at the ideal

point of the Greek Cypriot side compared to the status quo since it would receive 0D

rather than 0C.

Had the ideal points for the Greek Cypriot and Turkish Cypriot sides been

drawn at 3 and 4 respectively, then either side would be indifferent between a

solution at the ideal point of the other side and the status quo. Finally, drawing the

ideal points to the right of 3 (along the contract curve) in the case of the Greek

Cypriot side and to the left of 4 (again on the curve) in the case of the Turkish

Cypriot side would mean that each side would prefer the status quo to a solution at

the ideal point of the other side. The final result depends on the degree of

complementarity between the terms of cooperation envisaged (measured by the

distance between the different ideal points) and the benefits of cooperation relative to

the benefits of the status quo position (measured by the distance of the contract curve

from the status quo). The smaller the degree of complementarity between the terms

of cooperation envisaged by each side and the smaller the expected benefits from

cooperation then the more likely that the status quo position is preferred. The

opposite is true when both the degree of complementarity between the terms of

cooperation and the expected benefits of cooperation are high.

The possibility should also be admitted that even if the shadow cast by the

threat of anarchy may be initially short, it may lengthen over time as the two

communities engaged in co-operation become increasingly interdependent

(Holcombe, 1980). Increasing interdependence makes each individual more

vulnerable if co-operation breaks up (moves the status quo closer to the origin).

70

Consequently, even if we start off from a situation of limited anarchy, the classical

prisoner’s dilemma representation of the social dilemma facing the two communities

may become increasingly relevant as interdependence increases through time. The

possibility that the break down of a reunified Republic may lead to huge losses

relative to those incurred under the actual status quo situation must be in the minds of

Turkish Cypriots (Tsaggaras, 1995). This is related to the issue of security guarantees

which I will address in the next section.

In the context of the social dilemma, whether in the form of a classical

prisoner’s dilemma or of a divided one, four factors can been identified to exert an

influence on the sustainability of the cooperative outcome through time. In particular,

I will argue that the viability of co-operation is affected by, the relative strength of

each community in the non-cooperative setting, the perceived fairness of the

cooperative solution, the influence of informal rules and finally, the judicial

enforcement and legislative maintenance of the terms of co-operation. As stated in

the introduction to this chapter, each of these factors has important implications for

the nature of the solution to the problem and will be discussed within the general

context of both the Set of ideas, the Comprehensive settlement and some of the most

important historical events which make up the conflict.

THE RELATIVE CAPACITY TO IMPOSE COSTS IN THE

NON CO-OPERATIVE SETTING

The viability of inter-ethnic co-operation (the co-operative setting) is enhanced given

one ethnic group fears the costs which the other group may impose upon it in the

event of a breakdown of such co-operation (the non co-operative setting). Costs may

emerge when ethnic groups respond to non co-operative behavior by other groups by

either defecting themselves (reciprocity) or breaking off interactions completely

(exit).

71

Costs from Reciprocity

In a simple two-person interaction over time, each rational person will adhere to the

initial terms of co-operation since, “Each person will recognize that unilateral

defection cannot succeed and that any attempt to accomplish this would plunge the

system back into a position that is less desirable for everyone than that which is

attained upon adherence to contract.” (Buchanan, 1975: 65). Thus, the possibility of

reciprocal reactions by one ethnic group to non co-operative behavior by the other

may enhance the viability of co-operation. An ethnic group that defects may expect

to be punished by likewise behavior by the other group and as a result may refrain

from doing so. The effectiveness of reciprocity as a mechanism which may promote

inter-ethnic cooperation is increased if each group holds all members of the other

group viable for the actions of non-cooperating individual members. If this is so, then

the non-cooperative acts by members of one ethnic group may provoke a spiral of

violence which quickly expands beyond the initial parties and the fear of this induces

inter-ethnic cooperation (Fearon and Laitin, 1996).

Insofar as the Cyprus Problem is concerned, the disciplining effects of

reciprocity are related to the issue of security guarantees. Recall that the Turkish

Cypriots call for a continued Turkish troop presence on the island and a legal right of

unilateral intervention by Turkish armed forces. By and large, this reflects a feeling

of insecurity of the Turkish Cypriot minority, a feeling which is intensified in light of

the violent inter-ethnic conflict of the 1960s (Loizos, 1995) and in particular, the

inability of a multinational UN force to protect Turkish Cypriots during this period

(Güven-Lisaniler and Warner, 1998). The Turkish Cypriots put a premium on the

security considerations relative to the economic benefits that would flow from

reunification. In line with the logic of reciprocity, it has been argued that non co-

operative behavior may be avoided given the threat of unilateral military intervention

by adjacent states (Niskanen, 1990). The problem with this reasoning is that it

72

assumes that the mechanism of reciprocal punishment by the “mother country” in the

case of non co-operative behavior is perfect. There are several reasons that cast doubt

on this assumption.

First, the threat of reciprocity can make the co-operative solution self-

enforcing insofar as it generates a set of stable and self-generating expectations,

which are common knowledge (Ordeshook, 1992) or assuming that no accidents,

mistakes or misinterpretations take place (Fearon and Laitin, 1996). Arguably, at

least the former condition was not met in the case in Cyprus in the pre-invasion

period. The Greek Junta which staged the coup in Cyprus in July 1974 assumed that

the U.S and NATO would not allow Turkey to invade Cyprus, despite the fact that

the Turkish Prime-minister of the time presided over a fragile coalition and the

likelihood that the Turkish General Staff felt humiliated by previous stand-downs and

wanted to get its way (McDonald, 1989).

Second, the sustainability enhancing capacity of a threat of unilateral

intervention in response to non co-operative behavior by one ethnic group may be

compromised by the very existence of such expectations or in other words by the

credibility of the threat. This would be the case in the presence of extremist

individuals in either ethnic group. Armed with the expectation of likely reciprocal

reactions to non co-operative behavior on their part, such individuals may choose to

defect (through relatively cheap terrorist acts) so as to provoke a widening spiral of

violence, the intervention of one or both of the mother countries and ultimately as a

result, the breakdown of co-operation.

Third, the ability of this mechanism to enhance co-operation between the two

groups may be distorted by the wider interests of one or both the “mother countries”.

In this vein consider that beyond its natural interest to protect the Turkish Cypriot

minority on the island, Turkey had the strategic interests of neutralizing the threat of

a predominantly Greek island so close to its shores and obtaining added leverage in

the context of the Greek-Turkish disputes in the Aegean (Papasotiriou, 1998). Its

73

continuing occupation of the north serves these interests but at the cost of efforts to

reunify the island over the years.

A final and related rational for why the reciprocity mechanism may be

imperfect concerns the possible incentive on the part of political representatives to

mobilize ethnic loyalty so as to gain office (Roback, 1989). This could be the case

also for politicians in the “mother country” who may manipulate the presence of

their troops and the right of unilateral intervention to shore up domestic support at

home. This dynamic arguably emerged during the 1974 Turkish invasion which gave

a fillip to a Turkish government threatened by a loss of coalition support (McDonald,

1989).

The possible failure of the reciprocity mechanism tends to lend support to calls

by the Greek Cypriot side for the complete demilitarization of the island as well as its

refusal of a continuing right of unilateral intervention by the mother countries. The

question is whether this provides support for their calls for the provision of a security

guarantee provided by the international community. Compared to a right of unilateral

intervention, the use of force under regional security arrangements must be a result of

decisions that are made by political processes involving checks and balances

increasing the likelihood that the outcome will reflect considered judgment and broad

consensus (Ehrlich, 1974).

Arguably however, the real danger exists that the particular and divergent

interests of the members to the regional security arrangements, may distort their

effectiveness much in the same way that the particular interests of the mother

countries may distort the effectiveness of a right to unilateral intervention. This

possibility must play a big part in the Turkish Cypriot refusal to accept such

guarantees. It points to the need to set up such guarantees made up of processes

which minimize the capability of any one member to manipulate them for partisan

interests. One way of doing this is by endowing an international security force with a

clear mandate to respond decisively (credibly) to violent non co-operative behavior

74

by either ethnic group, subject to the decision of a simple majority of those who are

members to the arrangement.

Both the Set of ideas and the Comprehensive settlement speak of the

demilitarization of a reunified Cyprus although total demilitarization is contemplated

in the latter proposal (for example, Article 8 of the Foundation Agreement) while it

remains an objective in the former one (paragraph 52). Both proposals also enshrine

the continuing application of the Treaties of Alliance and Guarantee in the context of

a solution. In the case of the Treaty of Alliance, the Comprehensive settlement is

more precise speaking of the stationing of Greek and Turkish contingents each not

exceeding a number between 2,500 and 7,500 members. The application of the

Treaty of Guarantee implies the continuing right of unilateral intervention would still

be possible ‘with the sole aim of re-establishing the state of affairs …’ as was the

case when the Republic of Cyprus was founded. However there is a difference

between the two proposals in that only the Comprehensive settlement explicitly

foresees the presence of a UN peacekeeping operation to monitor implementation, to

remain as long as the government of the common state with the concurrence of both

component states does not decide otherwise (Article 8 of the Foundation Agreement).

Arguably this peace keeping force would have first go in restoring the ‘state of

affairs’ agreed to.

Thus, the proposal seems to partly satisfy both Greek and Turkish Cypriot

demands by both allowing the mother powers to intervene unilaterally but only if the

UN peacekeeping operation is unable to enforce compliance with what was agreed

on. This said, the proposal is silent on the decision-making mechanisms under which

the UN force might respond to violent non co-operative behavior by either ethnic

group. To the extent that these mechanisms are such that the credibility of the force is

compromised then this increases the likelihood of unilateral intervention if inter-

ethnic cooperation breaks down.

75

Costs from Exit

Rather then respond to defection by doing likewise, a cheated ethnic group may

instead choose to withdraw completely from interactions with the cheating group and

to seek to establish interactions with other groups. The possibility of completely

withdrawing from interactions with the other ethnic group in the post-solution or

post-constitutional period, increases the cost of non co-operative behavior since “If

you choose the non-cooperative solution, you may find that you have no one to

cooperate with.” (Tullock, 1985: 1081). The threat of secession by a disaffected

minority is a factor promoting constitutional maintenance (Niskanen, 1990).

However, while the availability of exit may make constitutions “self-enforcing”, it

may also reduce the credibility of the commitment to the contract agreed to

(Lowenberg and Yu, 1992). This is especially so within the context of multi-ethnic

states for at least three reasons.

First, recall that the expectation of likely reciprocal reactions to non co-

operative behavior may provide an incentive for extremist members of an ethnic

group to defect through acts of terrorism and thus bring co-operation between ethnic

groups to an end. In the context of an exit option, if now these extremist groups are

also separatists, they may ultimately do so to precipitate a complete break in

interactions between “their” group and the “other” or, in other words, to provoke the

eventual exercise by their group of an exit option.

Second, an exit option may be manipulated by political representatives in the

pursuit of electoral success. Given electoral competition, the availability of a viable

exit option may inevitably lead to calls for it to be exercised. The democratic

institutions of potentially divided multi-ethnic states may have an in-built bias

towards secession. The likelihood that politicians being successful in their efforts

depends on the viability of the exit option, this being increasingly likely if they can

secure the economic association of their ethnic group within a larger trading network

76

such as a regional or international trade regime (Meadwell, 1993; Hardin, 1995;

Hechter, 2000).

Third, a group can strategically employ a right of exit as a way of

renegotiating the terms of co-operation and in particular the distribution of costs and

benefits, in its favor (Sunstein, 1991; Mueller, 1996). Again, this is more likely the

more viable or credible is the threat of exit. The availability of a credible exit option

is not, in itself, inimical to the viability of co-operation. Indeed, insofar as the

original terms of co-operation were biased in favor of one of the parties it may

positively effect the viability of co-operation by enhancing the perceived legitimacy

of the terms of co-operation. On the other hand, if the original terms of co-operation

where perceived to be fair by all parties to the agreement, their alteration via the

strategic use of an exit option by one of the parties may reduce this perception and

consequently have a negative effect on the viability of co-operation.

THE PERCEIVED FAIRNESS OF THE TERMS OF CO-OPERATION

The viability of co-operation may be seen to be affected by the perceived fairness of

the terms of co-operation. Beyond the disciplining effects of reciprocity, the higher

the perceived fairness of an agreement the less likely people are to defect from it

once set up and so the lower the costs of maintaining or enforcing it (North, 1981).

Indeed, the more unfair or unjust an individual’s perception of the system, the higher

the private cost he/she is likely to incur in attempting to change it. With this in mind I

can point to two general factors and four specific ones which may affect individuals’

perceptions of fairness and thus, their willingness to comply with the system. The

two general factors are the degree of voluntariness when entering into the co-

operative agreement and the ideologies of the individuals involved while the four

specific factors are related to changes in property rights, relative prices, relative

incomes and information.

77

The Degree of Voluntariness

Individual perceptions of fairness may be affected by the extent to which the terms of

co-operation were entered into voluntarily, or in other words, in the absence of

coercion. Insofar as an individual considers any agreement which is coercively

imposed to be unfair he/she would be less likely to comply with its provisions. This

concept of fairness is in step with the Lockean vision that considers illegitimate any

non-consensual crossing of “natural boundaries” to individual rights that are assumed

to be definitive and well understood.

A Constitution which is voluntarily agreed upon by all the parties involved

and which moreover is so openly and explicitly, will induce greater compliance

because “[k]eeping promises is dictated undoubtedly by all moral codes …”

(Mueller, 1996: 69). Overt agreement to the Constitution enhances compliance with

its provisions and enhances both it effectiveness and its durability. More generally,

“promise keeping” may be seen in terms of an external ethical constraint which may

limit defections from the co-operative agreement even in large groups (Buchanan,

1975).

Insofar as a general relationship between voluntary agreement and compliance

is concerned, it is instructive to consider the 1960 Agreements which gave birth to

the Republic of Cyprus and which failed shortly afterwards. The Greek and Turkish

Cypriot representatives had no negotiating role in the Zurich conference where the

basic structure of the accords was established (Ehrlich, 1974). They were present at

the London conference were the details where worked out but, they had not been

elected to this position. Moreover, the negotiators were offered a take it or leave it

choice. It is indicative that the 1960 Constitution does not include any statement that

the people are the source of (constitutional or state) authority29

. The imposition of the

29

It has been argued that the 1960 Agreements were in fact ratified by Greek Cypriots since that candidate who

stood - in the first presidential elections - on a platform of opposition to the Agreements was soundly beaten

78

agreements by outside powers without Cypriot participation, contributed to a view of

them as illegitimate by the Greek Cypriot majority (Tornaritis, 1969; Markides,

1977). Surely, this perceived illegitimacy must have negatively affected compliance

with the agreements.

Both UN proposals contemplate the holding of referendums by both

communities for the approval of the solution agreed to and by doing so implicitly

recognize the importance of open and explicit agreement with the terms of the

settlement, which if eventually accepted would, other things being equal, have a

better chance of being sustainable than the 1960 agreements. The Set of ideas

explicitly state that “[the agreement] will be submitted to the two communities in

separate referendums within 30 days of its completion by the two leaders at a high-

level international meeting” (Paragraph 1). The Comprehensive settlement similarly

foresees the holding of a referendum by both sides for the approval of the solution

(Article 1 of Draft Annex IX of the Foundation Agreement). This said, a reading of

the relevant provision points out that Cypriots are to be asked to accept both the

Comprehensive settlement and Cyprus’s accession to the EU simultaneously. Such

full-line forcing is likely designed to increase the likelihood of a yes vote from a

majority given overwhelming support for EU accession across Cyprus. On the other

hand, it is likely to reduce the perceived legitimacy of the agreed upon solution

compared to that legitimacy which would emerge if referendums on the solution and

EU accession were to be held separately.

That individuals may voluntarily agree to cooperate under certain

constitutional arrangements may depend on at least two factors namely, the

availability of exit at the time of negotiating the agreement and the adoption of a

“package deal”. I will turn to the exit option first.

(Necatigil, 1982; Ertekün, 1984). However, much of the legitimacy accorded to the Greek Cypriot president of

the Republic by his election in December 1959 to the post, “was based on the assumption that in reality he had

never given up the struggle for union with Greece and that the acceptance of independence was nothing more

than a tactical move that would eventually lead toward the incorporation of Cyprus within the Greek nation.”

(Markides, 1977: 26).

79

Individuals may voluntarily enter into the agreement insofar as they all

possess viable alternatives to the contract toward which they are negotiating

(Lowenberg and Yu, 1992). In this situation, no party would be able to coerce

another to accept terms of co-operation which are less favorable than the best terms

which may be obtained by striking co-operative agreements with others. The question

is whether both sides to the conflict in Cyprus have viable exit options. In the

absence of a solution, the internationally recognized Republic of Cyprus could

reasonably expect to continue to improve economically, socially and politically even

more so after its accession to the EU and the added security this would provide. On

the other hand, the internationally unrecognized “TRNC” is likely to find itself

increasingly isolated and dependent on Turkey for its survival - a country recall with

EU membership aspirations itself. This suggests that the Greek Cypriot side does

have a viable exit option while the Turkish Cypriot side does not.

Now, assume for the sake of argument, that the “TRNC” is granted

international recognition prior to negotiating a solution to the Cyprus Problem with

the aim of providing the Turkish Cypriots with a viable exit option at the negotiating

stage and thus, in the event of an agreement being reached, increase the degree of

voluntariness on their part and so positively effect the sustainability of the agreement.

The problem with this ‘confederal’ approach is that the Greek Cypriots are likely to

consider the institution of an exit option through the international recognition of the

“TRNC” to be unfair basically because it would amount to the international

recognition and hence legitimation of the forced and uncompensated expulsion of

Greek Cypriots from the north. For this reason, the international recognition of the

‘TRNC’ is likely to reduce the viability of any solution.

Consider next the relationship between voluntariness and the adoption of a

package deal. Voluntariness may be enhanced through the adoption of a complex

network or “package deal” of compromises, side payments, compensations, bribes,

exchanges and trade-offs, which aim to offset the predictable adverse distributional

properties of the proposed changes (Brennan and Buchanan, 1985; Mueller, 1991).

80

Having said this, the possibility should be admitted that some of the potential parties

to the agreement may be unwilling to trade within the greater context of a package

deal with those who are favored by the status quo distribution of entitlements,

because they perceive this status quo distribution to be unjust (Brennan and

Buchanan, 1985). The Greek Cypriot community arguably perceives the status quo

distribution of entitlements to be unjust since it leaves 37 per cent of the island in the

hands of 18 per cent of the population and it does so as a result of the non-

compensated expulsion of individuals, fruit of the 1974 Turkish invasion. This

suggests that a package deal which trades off concessions by the Greek Cypriot

community in other areas in return for territorial adjustments which take as their

starting point the status quo distribution of territory would be perceived as unjust by

Greek Cypriots and as such would be relatively less viable30

.

The possibility of a non-voluntary change of this status quo may lead the

holders of these “unjust” entitlements to voluntarily agree to concessions with

regards to these entitlements (Brennan and Buchanan, 1985). One question which

therefore emerges is whether the Turkish Cypriot community as the holder of unjust

territorial entitlements, are faced with the possibility of a non-voluntary change in

this area. The answer depends on the ability of Greek Cypriots to force such a

change, which in turn depends on the availability of either democratic or non-

democratic channels to this effect. Notwithstanding the normative undesirability of

non-democratic channels, one can state – for the sake of completeness – that these do

not exist given the fact that the current military balance favors the Turkish Cypriots.

Insofar as democratic channels are concerned these are represented by the various

international forums through which the resolution of the conflict is sought, mostly the

UN and more recently the EU. The limited territorial concessions made in the context

of negotiations under UN auspices points to the ineffectiveness of this forum. To the

extent that the EU proves to be a more effective forum to address the unjust

30

This includes package deals which trade-off better territorial arrangements for Greek Cypriots in return for

their acceptance of Turkish Cypriot statehood in the context of a partition-based solution (see, for example,

81

distribution of territorial entitlements created by the 1974 invasion, only time will tell

(see chapter 5 for a full discussion).

Ideological Conviction

One’s perception of the system’s fairness can also be affected by one’s ideological

conviction (North, 1981). Indeed, ideologies may be designed to get people to

conceive the system as just and successful counter-ideologies are those that convince

people that the existing system is unjust and that a just system may emerge from

one’s selfless participation in efforts to change the status quo. A consensus over

classical liberal ideas has exercised a positive influence on the sustainability of the

U.S Constitution. Thus, “The viability of the system from 1787 to today has been

fundamentally influenced by the strength of the heritage of ideas which helped to

define and limit choices.” (North, 1987: 166).

With this in mind I will now sketch out the evolution of nationalist ideologies

in Cyprus in the past half century. The national consciousness of the Turkish Cypriot

minority grew in direct proportion to the rise of Greek Cypriot national

consciousness (Markides, 1977). This was especially relevant for the pre-

independence period where the struggle for enosis led to a nationalist reaction by

Turkish Cypriots. The resultant ideological polarization was aggravated by the

British policy of recruiting Turkish Cypriots in the security forces as a

countermeasure. In the early 1960s, immediately after independence, the ideal of

enosis was still riding high given the immediacy of the struggle and this contributed

to the perceived unfairness of the 1960 Constitution and thus efforts to amend it

(Markides, 1977; Kizilyürek, 1993). These efforts strengthened partitionist views

among the Turkish Cypriot community, which were greatly reinforced by the inter-

ethnic violence during the 1960s leading to the consolidation of those Turkish

Cypriots advocating partition (Attalides, 1976; Markides, 1977). In the late 1960s, an

Bahcheli, 2000).

82

increasingly higher standard of living in Cyprus compared to Greece and the rise of

the Junta in the latter, led to a fading of the ideal of enosis among the Greek Cypriot

community and the adoption by many of the idea of an independent Republic

(Ehrlich, 1974; Peristianis, 1995)31

. Partition continued to be the dominant ideology

in the Turkish Cypriot community which was increasingly concentrated in ever-more

heavily armed enclaves under the control of virulent Turkish nationalists (Attalides,

1976; Markides, 1977).

In the post-invasion period and insofar as the Greek Cypriot community is

concerned, the feeling of betrayal by Greece – due to the role played by the Greek

Junta in the period immediately prior to the 1974 invasion and the absence of military

support from the newly installed democratic government in the face of further

Turkish territorial advances, – led to the retreat of enosis (Stamatakis, 1991). This

was reinforced by the need to shore up the international recognition of the Republic

of Cyprus and the desire to achieve rapprochement with the Turkish Cypriot

community and so avoid the definitive partition of the island (Peristianis, 1995). Over

time however, a new form of hellenocentrism – one not based on the ideal of enosis –

has been gaining ground among Greek Cypriots for several reasons including: the

return of democracy in Greece and its accession to the EU; reduced expectations that

the problem will be justly resolved by way of the UN in accordance with

international law (including international human rights law) and the corresponding

increased perception of Greece as the main ally in the search for an acceptable

solution; a perpetual feeling of insecurity generated by the continuing presence of

Turkish troops in the north of the island and; the increased uncertainty facing

individuals brought about by both rapid economic development and a decay of social

ties and religious convictions (Peristianis, 1995).

Insofar as the Turkish Cypriot community is concerned, Turkish nationalism

was, in some sense, ratified in the aftermath of the Turkish invasion by the increased

31

This fits nicely with the assertion that “however powerful (ideology) may be as an initiating force in

overcoming the free-rider problem and creating revolutionary cadres … it tends to fade over time when it runs

83

feeling of security generated by the defacto partition of the island and the

appropriation of 37 per cent of the island and its resources. However, economic

stagnation has led, over time, to a decline in enthusiasm for partition and increasing

integration with Turkey and the emergence of more moderate views in favor of inter-

communal integration of a mostly economic nature. This dynamic has been mitigated

by the emigration of many Turkish Cypriots and the immigration over the years of

Turkish settlers who, according to McDonald (1989) and Theophylactou (1995), may

be more inclined to have turkocentric views32

.

One idea which springs from this discussion is that the ideological polarization

of both communities over the years has been partly the result of a lack of security

broadly defined in terms of physical, political and economic security. In particular,

ideological polarization in both communities has tended to increase by a feeling of

physical insecurity (in the case of Turkish Cypriots prior to 1974 and for Greek

Cypriots after it) and turkocentrism has moreover been reinforced by a feeling of

political insecurity. The feeling of economic security experienced by the Greek

Cypriot community has tended to dampen enosis-based hellenocentrism while the

economic stagnation experienced by the Turkish Cypriot community in part due to its

economic integration with Turkey has tended to dampen Turkocentrism. This points

to the importance of addressing both sides concerns in the area of physical security,

as well as the need for the political institutions of a reunified Cyprus to avoid the

tyranny of the minority (majority) by the majority (minority). The discussion also

indicates that ideological polarization is likely to be mitigated over time if both

communities experience a sustained period of gradual economic growth in a reunified

Cyprus.

counter to the behavioural sources of individual wealth maximizing …”. (North, 1990: 132ff). 32

In this respect, it has been estimated that 30,379 Turkish Cypriots have emigrated over the period 1974-

1987, while 50,271 Turkish settlers may have immigrated during the period 1974-1989 (Ioannides, 1991). In

the spirit of Hirschman (1970), the exit over time of Turkish Cypriots unsatisfied with the status quo, and the

entry of Turkish settlers who would arguably be more loyal to it, may reduce the possibility that the voice

option will be taken up widely and effectively and, ultimately, the chances of a change in the status quo

situation in the “TRNC”.

84

Ideological polarization could also be mitigated by the official recognition and

apology for the wrongs committed against the other community in the past and the

revision of school curriculum so that emphasis is put on common rather than divisive

elements. The Set of ideas envisages the latter (see paragraph 8 in its attached

Appendix) while the Comprehensive settlement makes provision for both the latter

and the former through the creation of a Reconciliation Commission composed of

Greek and Turkish Cypriots whose aims include the preparation of a comprehensive

report on the history of the Cyprus Problem and the drafting of guidelines for

publications and school textbooks so as to promote mutual understandings of

different perspectives on the past (Article 2 of Draft Annex VIII of the Foundation

Agreement).

Four Specific Factors Advanced by Douglass North

Apart from these two general factors which I put forward here, North (1981) lists

four specific factors which he argues may alter one’s perceptions of justice or

fairness;

- an alteration in property rights which denies individuals access to resources

which they had come to accept as customary or just;

- a decline in the terms of exchange in a factor or product market away from

what had come to be regarded as a just exchange ratio;

- a decline in the relative income position of a particular group in the labor force

and;

- a reduction in information costs that results in individuals perceiving that

different and more favorable terms of exchange may prevail elsewhere.

Because the parties have expressed their positions on the right of property and the

related freedom of establishment in relative detail, I will focus here on the first factor

85

above. Insofar as the other three are concerned one can briefly suggest that the

perceived justice of any solution to the conflict on the part of individual citizens

would be increased insofar as this contributes and is linked to a favorable evolution

in factor prices (for example, wages and interest rates), retail prices and one’s relative

income position in the labor force. A negative evolution of these economic variables

would have the opposite effect on individual’s perceived justice of a solution. The

last factor is related to the information available to Cypriots on both sides of the

Green Line about the terms of exchange available “on the other side”. One would

expect well informed individuals to be aware of any differential in the terms of

exchange and this can be expected to influence the perceptions of fairness and hence

viability of the system or regime within which they currently live.

A reading of the Set of ideas and even more so the position taken by the

Turkish Cypriot side shortly afterwards reveals severe limits to the freedom of

establishment and the right of property ranging from the expropriation of the

properties of displaced persons and their corresponding compensation at below

current market values, to the imposition of a moratorium and an upper limit on the

right of establishment of Greek Cypriots in the north so as to preserve the

bicommunal and bizonal character of the federated state. Similarly and in more

detail, the Comprehensive settlement envisages long term limitations to the freedom

of establishment to the extent that a maximum of 28 per cent of the population of the

relevant component state can hail from the other component state, albeit with a

proviso that such limitations will be reviewed no later than 25 year after the

reunification of the island. Insofar as property rights are concerned the proposal

envisages maximum levels of reinstatement to persons hailing from the other

component state (no more than 9 per cent in any give municipality or village, no

more than 14 per cent of the total land area and of the number of residences of any

86

component state), the expropriation of properties and the compensation of their

original owners at current prices33

.

To the extent that the terms of a solution to the Cyprus Problem formally limit

the right of property and the freedom of establishment they obviously would deny

people access to resources which they had come to accept as customary or just

thereby mitigating their perceived justice and ultimately compromising the viability

of co-operation. This points to the need to reduce restrictions to the freedom of

establishment and access to property. In this vein, the ability to revise restrictions on

the freedom of establishment in the long run could have a positive effect. Moreover,

one can also reduce the negative effect on viability by decreasing the area to come

under Turkish Cypriot administration to allow a majority of Greek Cypriots to return

home under Greek-Cypriot administration.

THE INFLUENCE OF INFORMAL RULES

The viability of a co-operative agreement may also be seen to be affected by the

continuing influence of informal rules; a phenomenon known as path dependence.

Thus, while the formal rules may be changed by a revolution, the informal norms

such as customs and traditions which provide legitimacy to a set of rules change only

gradually (North, 1994). The legitimacy of the new rules in the post-revolutionary

33

An interesting legal question which emerges here is whether a solution can be adopted which violates

individual property rights as they were enjoyed prior to the Turkish invasion. The European Court of Human

Rights (ECHR) has found Turkey responsible for the continuing violation of a Greek Cypriot’s right to enjoy

her property peacefully and said that Turkey exercises effective overall control in the occupied part of the

island (Case of Loizidou v. Turkey, 40/1993/435/514). However, a reading of the judgement shows that this

right of property may be violated in the public interest. Paragraph 48 points to Article 1 of protocol 1 of the

European Convention of Human Rights that states, “Every natural or legal person is entitled to the peaceful

enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and

subject to the conditions provided for by law and by the general principles of international law.” This points to

the possibility that a settlement may violate property rights in the public interest. Indeed, it is likely to

influence the ECHR’s decision if, as is envisaged in the Comprehensive settlement, it is asked to strike out any

proceedings currently before it concerning affected properties (Article 5 of Draft Annex VII of the Foundation

Agreement). Its also worth mentioning the inclusion in the Comprehensive settlement of a ‘past acts’ provision

which recognizes as valid any legislative, executive or judicial act by any authority prior to the entry into force

of the Agreement (Article 12 of the Foundation Agreement). Among other things, this refers to administrative

87

period may initially be small thereby increasing the cost of maintaining the post-

revolutionary status quo but this legitimacy increases as informal norms gradually

adjust to the new formal rules and so the costs of maintaining the new order fall

through time34

.

Implicit in the above argument is that the influence of informal rules on

individual behavior may be high when different formal rules are initially adopted but

will fall over time. But this may not necessarily be the case. In particular, informal

rules may compete with formal rules in the co-ordination of social action. Indeed,

“because social action is coordinated also by a variety of informal norms or

undescribed evolutionary processes that can coincide with more insidious things

such as ethnicity, language, and race [constitutions] must be designed to compete

with other things for the political-economic organization of society.” (Ordeshook,

1992: 148).

Two questions arise here. First whether it is important for the viability of the

system that the formal rules which regulate co-operation should be designed to

compete with informal ones and, if so, how formal rules should be designed so that

they can be more competitive? The answer to the first question is, emphatically, yes,

since, it is clear that insofar as informal rules regulating intra-ethnic relations

promote ethnic identification, they may lead to sub-optimal outcomes. Ethnic

identification may lead ethnic groups to co-ordinate their actions (either

spontaneously or because of the actions of political representatives) to the detriment

of other ethnic groups. This obviously represents a threat to inter-ethnic co-operation

since it points to the existence of forces that may facilitate the co-ordination of

defection and thus the break down of co-operation. The possibility that inter-ethnic

co-operation may be undermined by the influence of informal rules points to the

need for competitive formal rules for such co-operation.

decisions in both the north and south of the island which have granted rights on the properties of displaced

persons to others. 34

This reasoning is consistent with the assertion that the longer a constitution has been enforced the greater the

tradition and respect behind it and therefore the more likely that it will be followed (Olson, 1984).

88

This still leaves the question of how formal rules which promote inter-ethnic

co-operation can be designed to out-compete informal rules which promote the intra-

ethnic kind. The existence of transaction costs in family, market or political

relations, creates a demand for mechanisms to reduce these which can be met by

ethnicity-based informal rules (Wintrobe, 1995). In particular, ethnic mores and

customs, like a common language or religion, are likely to reduce individuals’ costs

of transactions with one another (Hardin, 1995; Congleton, 2000). In the market,

common traits may act as a screening device allowing individuals to predict the

contractual behavior of trading partners whereas traditional codes of conduct or

informal rules may act as substitutes to contract law (Landa, 1981). Informal rules

may survive then despite large changes in the formal rules, because they resolve

basic social, political or economic exchange problems among participants (North,

1990). This points to the need for formal rules to out-compete informal ones which

while they may resolve basic exchange problems they may do so at the cost of inter-

ethnic cooperation.

Insofar as informal rules survive because they solve basic exchange problems

in the market then they could be undermined by the efficient enforcement of

property rights in the market by non-ethnic institutions. Conversely, the value of

ethnic networks – as mechanisms which may mitigate the contractual enforcement

problem, – arises when a (central) state’s enforcement activities become increasingly

ineffective (Pejovich, 1993; Congleton, 1995). The efficient enforcement of property

rights by non-ethnic institutions would arguably reduce the need to rely on informal

rules which may favor intra-ethnic cooperation. Both the Set of ideas and the

Comprehensive settlement leave the enforcement of property rights and civil law in

general to the federated or component states, something which is reminiscent of the

1960 Constitution which set up the Republic of Cyprus and which entrusted civil

cases (where all parties came from one ethnic group), to courts made up of judges

from that group (Article 159). By doing so it arguably foregoes the possibility for

ethnically neutral institutions to provide non-discriminatory protection of property

89

rights across ethnic groups, something which could undermine informal rules which

may be inimical to inter-ethnic co-operation but survive because they resolve basic

economic exchange problems.

Consider now the implication which emerges from the suggestion that

informal rules promoting intra-ethnic cooperation may survive because they solve

basic exchange problems in the family (Wintrobe, 1995). Poor parents may transmit

ethnically based informal rules to their children in return for their obedience in later

life in the form of direct support and attention in their old age, as well as indirect

support by making decisions based on their preferences. Being poor they are less

able to “buy” this support through bequests and so they must rely on informal rules.

By implication then one would expect to see less ethnically based parental

indoctrination in societies with generous pension or social security (Wintrobe, 1995).

More generally, it has been argued that to the extent that ethnic groups have

traditionally provided social security to their members then the emergence of the

welfare state may have reduced individual incentives for group identification

(Hechter, 1987). Given my discussion in the previous chapter I would add that if this

has happened it is because the basis of entitlement in the welfare state is some non-

ethnic criterion like relative income.

JUDICIAL ENFORCEMENT AND LEGISLATIVE MAINTENANCE

To the extent that the usefulness of reciprocity or exit to promote viability is limited,

the perceived fairness of the terms of the co-operation falls and ethnicity-based

informal rules continue to exert a competing influence on individual perceptions of

legitimacy, then the sustainability of the co-operative solution may increasingly rely

on a fourth factor namely, that of judicial enforcement and legislative maintenance.

Insofar as judicial enforcement is concerned, it is interesting to consider the

experience of the Supreme Constitutional Court charged with enforcing the 1960

Constitution. The Supreme Constitutional Court decided to adopt the civil-law

90

practice of issuing a single opinion rather than the common law practice of

dissenting opinions since dissenting opinions would weaken the Court’s ability to

lessen friction (Ehrlich, 1974). During the two and a half years of the functioning of

the 1960 Constitution, the Court acted as a moderating influence as indicated by the

fact that it filed over one hundred cases many of which involved “significant issues

between Greeks and Turks”.

However, when the Council of Ministers – rather than establish separate

Turkish Cypriot municipalities as foreseen in the Constitution – invoked a pre-

independence statute and declared that the five main towns were “improvement

areas” to be governed by special boards thereby giving the Turkish Cypriots little

control of their own sectors of the towns, the Turkish Communal Chamber applied to

the Supreme Constitutional Court for a ruling that the Council’s order was void and

the Court upheld this but for the first time the Greek Cypriot judge dissented. And

when – in response to the Greek Cypriot refusal to establish separate Turkish Cypriot

municipalities – this Turkish Communal Chamber adopted its “own Municipal Law”,

the Court ruled (on the same day) that this was also unconstitutional, the Turkish

Cypriot judge dissented.

The dissent of both the Greek Cypriot and Turkish Cypriot members of the

Court on decisions which came out “against” the position of their group must have

surely damaged the credibility of the Court and as such undermined its ability to act

as a moderating influence. One way to respond to this could be by increasing the

number of judges sitting on the Court to include at least three members from each

community. This would permit the emergence of a moderate majority across ethnic

lines. It is arguably more difficult for the moderate line to be taken by a judge if he or

she is the only one sitting on the Court from his community since he or she is more

likely to be under strong pressure to “represent” the interest of his community rather

than limit him or herself to enforcing the Constitution. The Comprehensive

settlement seems to recognize as such by envisaging a Supreme Court of 9 judges,

three from each component state and three non-Cypriots (Article 6 of the Foundation

91

Agreement). It moreover follows the 1960 practice of issuing joint judgments

(Article 35 of Draft Annex I of the Foundation Agreement).

With respect to the legislative maintenance of the constitutional order, a

compound republic of countervailing constitutional guardians has been advocated

(Wagner, 1993). In particular this refers to a federal system where the executive,

legislative and judicial branches are separated, with the legislature itself divided into

different branches (see also Lowenberg and Yu, 1992 ; Ordeshook, 1992). The

constitutional provisions contained in the UN proposals contain some features of a

compound republic namely, a federal system with a separation of powers among the

executive, a two-house legislature and an independent judiciary. In addition, the

proposals envisage that the Constitution of a reunified Cyprus can only be amended

either with the approval of both federated states (Article 9 of the Set of ideas) or after

amendments have been adopted by both Chambers of Parliament and approved by

separate majority of the people in each component state (Article 36 of Draft Annex I

of the Foundation Agreement). This gives each federated or common state a veto and

provides a powerful tool in favor of the status quo situation established by any

mutually accepted settlement of the Cyprus Problem.

92

CHAPTER 5.

A VIABLE SOLUTION TO THE CYPRUS PROBLEM

IN THE CONTEXT OF EUROPEAN UNION ACCESSION

INTRODUCTION

On the 12th

of December 2002 Cyprus was invited to accede to the EU and is likely

to do so in May of 2004. This was the culmination of a series of moves and decisions

by both the government of the Republic of Cyprus and the EU that began with

Cyprus’s official application to become a member on the 4th

of July of 1990. It

should be seen against a background that includes intercommunal talks under UN

auspices and a growing frustration by Greek Cypriots with the lack of progress

achieved. The government of the Republic has maintained that the prospect of EU

membership may act as a catalyst on the search for a solution to the conflict and

argued that in the event that no solution is agreed to, the Republic of Cyprus should

be admitted to the Union. The application of the acquis communautaire over the

whole territory of the island would then be pending the subsequent re-unification of

the island. These positions were adopted by the European Council in December 2002.

These moves are opposed by the Turkish Cypriot leadership because, they

argue, they would bring about the realization of enosis, albeit indirectly. They argue

that Cyprus should enter only after a settlement and after Turkey has become a full

member. They also set as a condition for their participation in Cyprus-EU accession

negotiations, the international recognition of the sovereignty of the “TRNC”. In

response to developments, both the Turkish Cypriot and Turkish leaderships had

threatened to undertake the “partial integration” of the occupied north with Turkey in

the security, defense and foreign policy fields. When accession negotiations were

eventually launched with the government of the Republic of Cyprus, Turkey reacted

by lifting customs barriers and signing a free trade agreement with the “TRNC”.

93

Moreover, the Turkish Cypriots rejected the invitation by the government of the

Republic to participate in the accession negotiations as a part of the Cypriot

delegation.

In this chapter, I will focus my discussion on the effects of the prospect of EU

membership and eventual membership itself on the viability of a solution to the

Cyprus Problem. In particular, I will identify the EU’s pre-accession strategy vis-à-

vis Cyprus and evaluate it in the light of the need to attain a viable solution to the

Cyprus Problem. Moreover, I will discuss how eventual membership of the EU may

increase the viability of a solution35

.

THE EU’S PRE-ACCESSION STRATEGY

In this pre-accession stage, the EU seems to be attempting to contribute towards the

solution of the Cyprus Problem by adopting a carrot and stick approach with respect

to both the Greek and Turkish Cypriot sides (see also, Neisser, 1996; Papasotiriou,

1998)36

. Insofar as the carrot is concerned, the EU basically argues that accession to

the Union will increase the security and economic well-being of all Cypriots

regardless of their ethnic origins and has pointed to those economic benefits which

could flow to the Turkish Cypriot administered sector in the form of a participation

in European Structural Funds as well as the Common Agricultural Policy. Beyond

these funds the EU has agreed to disburse 206 million euros between 2004 and 2006

for the economic development of northern Cyprus in case of the accession of a

reunified island.

35

A previous version of this chapter, which does not incorporate the December 2002 decision to admit Cyprus

to the EU or the Comprehensive settlement, was published as Kyriacou (2000c). Other scholars have examined

Cyprus-EU relations. Their historical evolution has been documented by Gaudissart (1996) and Joseph (1999)

among others. The economic consequences of Cyprus’s accession to the EU have been considered by, for

example, Kranidiotis et al (1994). Stavrinidis (1999) has undertaken a critique of the EU’s policy towards the

Cyprus Problem. The possible links between EU accession and ethnic or national identities, political and civic

cultures on the island have been discussed by Peristianis (1998) and Mavratsas (1998). The possible

contribution of the EU to the resolution of the conflict has been briefly discussed by Nicolaides (1993) and

more recently by Theophanous (2000a, b, c). 36

See appendix C for a summary of the EU’s position towards a solution to the Cyprus Problem.

94

At the same time the EU has applied the stick to the Turkish Cypriot side in

several ways. Firstly, the EU has reinforced the international standing of the

government of the Republic of Cyprus by recognizing it as the sole legal government

on the island. Moreover it supports a solution to the Cyprus Problem in accordance

with relevant UN resolutions. Further, in the early stages of the island’s accession

course it had signaled that while the fundamental interests of each community must

be preserved by the settlement, the institutional provisions of any settlement must

assure the fundamental freedoms enshrined in its constituting Treaty, in particular

the freedom of movement of factors of production, goods and services, the freedom

of establishment and universally recognized political, social and economic rights.

The Union opened up accession negotiations with the government of the Republic of

Cyprus as the sole recognized interlocutor and has invited the Republic to become a

member independently of a solution to the conflict.

The stick has also been applied to the Greek Cypriot side. Thus, early on in

the pre-accession period the EU had maintained that the accession of the island to the

EU implies a lasting settlement to the Cyprus Problem. More recently, the Union had

decided that Cyprus will be admitted to the Union even in the absence of a political

settlement but “taking into account all relative factors” (which likely refers to the

efforts made by both communities in search for a solution). Moreover, it has always

maintained its preference for the accession of a united island and until relatively

recently several Member States had expressed their resistance towards the admission

of a divided island into the Union. Finally, although in the past it has stated that a

solution to the conflict must assure the fundamental freedoms enshrined in its

constituting Treaty, it has recently expressed support for the Comprehensive

settlement presented by the UN Secretary General and has expressed its willingness

to accommodate the terms of a settlement in the Treaty of Accession, albeit

rhetorically, “in line with the principles on which the EU is founded” 37

.

37

I say rhetorically because by supporting the Comprehensive settlement the EU is also supporting violations

to its fundamental rights. In particular, the Comprehensive settlement violates the right of establishment

95

.

THE PRE-ACCESSION STRATEGY:

MUTUAL BENEFITS AND MUTUAL CONCESSIONS

Given this discussion consider now the effect of the EU’s strategy on the status quo

situation on the island. One way of illustrating this is through the divided PD-game

presented in chapter 4. Recall that in a divided PD-game, a common interest in order

(co-operation) co-exists with conflicting interests about which order will prevail and,

in particular, the parties are faced with the choice of limited anarchy and two

conflicting perceptions of order and that agreement requires concessions by each

party38

.

The divided PD-game is represented in utility space in figure 4 below. Each

community is faced with the choice of limited anarchy (represented by the status quo

situation) or co-operation under two conflicting sets of terms 1 and 2. In particular

and repeating from chapter 4, the Greek Cypriot side prefers a strong federal

arrangement with fewer checks and balances, the unrestricted enjoyment of the

freedom of movement and settlement and the right of property in the long run, 20 per

cent to 25 per cent of the land under Turkish Cypriot administration and the

complete demilitarization of the island with a security guarantee provided by the

(Article 43 of the Treaty Establishing the EC) and both the general right to vote and stand for office (enshrined

in Article 3 of Protocol 1 of the European Convention for the Protection of Human Rights and Fundamental

Freedoms which according to Article 6 of the Treaty on EU is to be respected by the EU) as well as the more

specific right to vote and to stand as a candidate in municipal elections in the Member State in which one

resides (Article 19 of the Treaty Establishing the EC). The right of establishment is clearly violated by the

requirement that only 28 per cent of the population of the relevant component state can hail from the other

component state. As for the right to vote it is violated by the fact that a person from one component state who

chooses to live in the other will not enjoy political rights there unless he or she adopts that component state’s

citizenship status (something one can only do after seven consecutive years of residency there) or unless he or

she lives in specified villages or is a member of a religious or other minority. Thus, during the first seven years

of residency in the other component state an individual will be unable to vote and to stand as a candidate at the

component state level and the possibility exists that he or she will also be unable to do so at the local level.

Admittedly, Article 19 allows for derogations from the right to vote and to stand as a candidate in municipal

elections in the Member State in which one resides where warranted by problems specific to a Member State.

However, by incorporating the European Convention for the Protection of Human Rights and Fundamental

Freedoms the EU should, arguably, ensure that any derogations must ‘not curtail the rights in question to such

an extent as to impair their very essence and deprive them of their effectiveness’.

96

international community (terms 1). Alternatively, the Turkish Cypriot side prefers a

confederal arrangement replete with checks and balances, a permanently limited

enjoyment of the freedom of settlement and the right of property, 29+ per cent to 37

per cent of the island under Turkish Cypriot administration and, finally, a continued

Turkish troop presence on the island and a legal right of unilateral intervention by

Turkish armed forces (terms 2).

Figure 4. The EU’s Pre-accession Strategy

The approach to the Cyprus Problem taken by the EU may have several effects on

this divided prisoner’s dilemma. First, to the extent that accession can, as the EU

argues, increase the security and well being of all Cypriots it will lead to an outward

shift of the contract curve and so, a-priori, shift the ideal points of the Greek and

Turkish Cypriots respectively to 1’ and 2’. How is one to read this shift? Given

38

Anayiotos (1991) has employed a similar framework to examine the bargaining between Greek and Turkish

Cypriots prior to the application for EC membership.

Greek Cypriot

Utility

Turkish

Cypriot

Utility

0

2’

1’

Status Quo

2

1

97

points 1’ and 2’ are, respectively, above points 1 and 2 then both parties would

prefer any solution between terms 1’ and 2’ (which implies EU membership) to

solutions between terms 1 and 2. This reflects the economic and security benefits

which may derive from EU membership under any solution between the ideal points

of the two sides.

Second, the EU has over time applied pressure on the Turkish Cypriot side to

move along the contract curve, away from 2’ and towards 1’. In particular the EU

has always maintained that it has no intention to afford the “TRNC” international

recognition and that it does not support efforts towards a confederal solution to the

problem. Early on in the accession course its position was that any solution must

assure fundamental rights and freedoms. And in the latter stages of this course it has

declared its acceptance of the accession of the island regardless of the status of the

Cyprus Problem, a position which it has ratified by inviting Cyprus to become a

member independently of a solution. But the EU has also pressured the Greek

Cypriot community for it to move away from 1’ towards 2’. In the beginning of

Cyprus’s accession course it signaled to the Greek Cypriots that membership was

conditional on a resolution to the conflict but this position was abandoned later on

(in part, it could be argued, due to the threat of a Greek veto of the eastern

enlargement). While Cyprus has been invited to accede to the EU independently of a

solution, the preference is still for a reunified Cyprus to accede and to facilitate this

outcome, the EU is willing to accept a solution which deviates from the fundamental

freedoms enshrined in its constituting Treaty (freedom of establishment and the right

to vote) to the detriment of Greek Cypriot positions.

In sum then, the EU’s pre-accession strategy seems to be to pressure each side

to the conflict into making concessions and thus move away from its ideal point and

towards some intermediate point between 1’ and 2’; a point which describes a non-

confederal reunified Cyprus where, if need be, fundamental freedoms are violated.

One could argue that in the interests of regional stability the EU (and the U.S.) would

like to see a peaceful solution to the Cyprus issue and that the contents of the package

98

deal (that is, the point reached on the contract curve) are of secondary importance39

.

If this is indeed the underlying position of the EU in the matter then it is a short-

sighted one since it ignores the fact that regional stability can only be attained to the

extent that the solution to the Cyprus Problem is a viable one (Theophanous, 2000c).

This points to the importance of identifying how the prospect of EU accession as well

as eventual membership of the EU can affect the attainment of a viable solution to the

conflict. To shed some light on this issue and by way of my discussion in chapters 3

and 4 above, I will now identify those factors which can affect the viability of any

solution to the Problem and which are related to EU membership. In particular I will

argue that viability can be enhanced:

(i) insofar as the likelihood of majority tyranny of the minority is reduced;

(ii) in the presence of sufficient security guarantees;

(iii) to the extent that the chosen solution is perceived to be fair;

(iv) through the emergence of supra-ethnic sources of identity and the “logic of

appropriateness”.

The second and third of these factors have important implications for the EU’s pre-

accession strategy while the first and fourth suggest that eventual membership of the

EU is likely to increase the viability of a reunified Cyprus.

THE LIKELIHOOD OF MAJORITY TYRANNY OF THE MINORITY

As already stated in chapter 3, a minority which is permanently marginalized in the

normal course of democratic politics is likely to reject the very concept of inter-

ethnic co-operation within the context of a multi-ethnic state leading to the state’s

39

On a more critical note, Stavrinidis (1999) has argued that the EU has adopted a ‘pragmatic approach’

towards Cyprus based above all on the need to avoid antagonizing Turkey even at the cost of, on the one hand,

no progress on the Cyprus issue and, on the other, of undermining both its declared principles on the promotion

of democracy and human rights and the emergence of an efficient Common Foreign and Security Policy.

99

disintegration. The viability of co-operation would thus be enhanced to the extent

that the EU provides a formal institutional framework that reduces the likelihood of

the tyranny of the Turkish Cypriot minority by the Greek Cypriot majority.

One way that it may do so is through article 13 of the Treaty establishing the

European Community that allows the Council, acting unanimously to take

appropriate action to combat discrimination based on sex, racial or ethnic origin,

religion or belief, disability, age or sexual orientation. More importantly, Article 7 of

the Treaty of the EU, as amended by the Treaty of Nice, states that if a Member State

seriously and persistently breaches the principles of liberty, democracy, respect for

human rights and fundamental freedoms, and the rule of law, the European Council

acting by qualified majority may decide to suspend certain of the rights deriving

from the application of the Treaty on EU to the Member State in question, including

the voting rights of the representative of the government in the Council. Article 7

surely increases the cost to any Member State, of violating these rights and as such

decreases the likelihood of majority tyranny emerging.

The likelihood of the permanent tyranny of the Turkish Cypriot minority by

the Greek Cypriot majority can also be mitigated to the extent that the policy

discretion of the future central government in a reunified republic is constrained. In

this vein, Nicolaides (1993) has argued that since the EU’s internal market bans

discrimination and establishes free and open markets for goods and services, this

makes the economic discrimination of minorities more difficult. Similarly, this

author argues that the successive steps to deepen the Union (by expanding the policy

competencies of the Union in areas such as monetary policy, external affairs and

security, education, culture, etc.), gradually reduce the policy discretion of the

central government of a future reunified Cyprus thereby mitigating the possibility

that Turkish Cypriots are “turned into second-class citizens by the central

government as they fear”.

Finally, the possible emergence of the permanent tyranny of the Turkish

Cypriot minority by the Greek Cypriot majority can be mitigated by decentralizing

100

collective decision-making so as to grant the minority the authority to decide on

issues over which its preferences differ markedly from those of the majority. The EU

envisages the creation of an ever-closer union among the peoples of Europe in which

decisions are taken as openly as possible and as closely as possible to the citizen

(Article 1 of the Treaty on EU) and in accordance with the principle of subsidiarity

(Preamble and Article 2 of the Treaty of the EU). This suggests that the Union

provides an institutional framework that can accommodate decentralized collective

decision-making and as such, can potentially reduce the likelihood of the permanent

tyranny of the minority by the majority40

.

SECURITY GUARANTEES

The attainment of a viable agreement to the conflict is strongly dependent on the

institution of effective security guarantees for both communities in a future reunified

Cyprus. The Turkish Cypriots put a premium on the security considerations relative

to the economic benefits that would flow from reunification. Recall from my

discussion in the previous chapter that the huge losses which could emerge from the

breakdown of a reunified Republic are likely to be in the minds of Turkish Cypriots.

The Greek Cypriot community is also concerned with security and, in particular,

desires some firm guarantee that the island will not suffer a repeat of the 1974

Turkish invasion (Papasotiriou, 1998). Apart from the security interests of each

community, this last author has pointed to Turkey’s strategic interest of neutralizing

the threat of a predominantly Greek island so close to its shores.

Given this range of security interests, Papasotiriou has advocated entrusting

the future security of a reunified and demilitarized Cyprus to a NATO force. Of

course, given the decision by the European Council in December 1999 to set up a

40

It is interesting to note that according to an attached protocol (protocol 30 annexed to the Treaty establishing

the European Community), the application of the principle of subsidiarity should not violate the Union’s acquis

communautaire. The attached protocol would thus tend to be inconsistent with the bizonal federation envisaged

in the Comprehensive settlement since it places limits on the freedom of establishment and the right to vote.

101

rapid reaction force of up to 60 000 troops by 2003, another provider of security

guarantees in Cyprus may be the EU itself. Regardless of the institution that

eventually provides these guarantees after a settlement is reached, there are two

points worth making here.

First, given the primacy placed on security concerns by the different parties,

the satisfaction of these concerns could go someway towards eliminating a large

obstacle standing in the way of the reunification of the island (Papasotiriou, 1998.)41

.

If this is accepted, then the important thing is to make an explicit commitment to

provide these in the event of a settlement so as to facilitate its attainment. In the case

of the EU, this would mean adopting a firm commitment to do so as an integral part

of its pre-accession strategy.

Second, and again by reference to chapter 4, the guarantees have to be

credible if they are to satisfy each party’s security concerns. They therefore should

incorporate processes that minimize the capability of any one member to manipulate

them for partisan interests (something which, incidentally, tends to undermine the

UN’s attractiveness as a guarantor of security). One way of doing this is by

endowing the international security force with a clear mandate to respond decisively

(credibly) to violent non-cooperative behavior by either ethnic group, subject to the

decision of a simple majority of those who are members to the arrangement.

THE PERCEIVED FAIRNESS OF A SOLUTION

As I have already argued in chapter 4, the viability of any agreement may be seen to

be directly related to its perceived fairness. Thus, the higher the perceived fairness of

an agreement, the less likely people are to defect from it and the lower the costs of

maintaining or enforcing it. My previous discussion points to several factors which

may affect the perceived fairness of a solution and which may be relevant here.

41

Similarly, and after examining forty-one cases of civil war in the twentieth century, Walter (1997) concludes

that third party enforcement of a peace treaty is a necessary condition for achieving a civil war settlement.

102

First, I have argued that the perceived justice of a solution is likely to be

increased if it is approved by both communities in separate referendums. However,

the Comprehensive settlement ties the approval of a solution with the decision to

accede or not to the EU – a case of full-line forcing. As I have said, while this may

be intended to increase the likelihood of a yes vote from a majority in each

community given overwhelming support for EU accession across Cyprus this is

likely to reduce the perceived legitimacy of the agreed upon solution compared to

that legitimacy which would emerge if referendums on the solution and EU

accession where to be held separately.

Second, the international recognition of the “TRNC” with the view of creating

a confederal Cyprus would be perceived as unfair by the Greek Cypriots since what

the Turkish Cypriots pretend to be their part of this confederation is the result of the

forced and uncompensated expulsion of Greek Cypriots from the north. The EU’s

position against such international recognition is consistent with this and insofar as it

contributes to avoiding the creation of a confederation would make a positive

contribution to the viability of reunified Cyprus.

Third, I have already argued that the Greek Cypriot community is likely to

perceive any “package deal” arrangement which is based on the status quo

distribution of territory created by the 1974 Turkish invasion as unjust, thereby

compromising the viability of any agreement based on this distribution. Recall that

the possibility of a non-voluntary change in the status quo distribution may lead the

holders of unjust entitlements to make concessions with regards to this distribution,

thereby increasing the perceived fairness of the agreement and consequently

increasing its viability. The relevant question that emerges is whether the EU has

provided a more effective democratic channel through which to force such a change.

My previous discussion suggests that while the EU has generally pressured the

Turkish Cypriot side to be more accommodating in its positions it has not applied

any specific pressure on it as the holder of unjust territorial entitlements. Moreover,

that pressure which has been applied has been undermined by either the linking of

103

accession with the prior resolution of the conflict or by adopting a certain studied

ambiguity on this question. While this policy approach may have been designed to

keep the pressure on the Greek Cypriot side as well, it reduces the likelihood of

concessions from the Turkish Cypriots as the holders of unjust territorial

entitlements and consequently may reduce the viability of any agreement reached.

The latest decision to invite Cyprus to join the Union independently of a settlement

and – assuming that no solution is found until then – the actual accession of Cyprus,

reinforces the Greek Cypriot side’s negotiating position (for the reasons alluded to in

chapter 4), something which may allow for concessions to be drawn in this area

thereby increasing the viability of any solution.

Fourth, I have argued that insofar as the final solution to the conflict violates

the freedom of establishment it is likely to be perceived as unfair by Greek Cypriots

thereby negatively affecting the viability of any solution. The feeling of unfairness

would be exacerbated by the fact that the citizens of other EU countries are likely to

be able to fully enjoy this freedom42

. Thus, the situation could emerge that displaced

Greek Cypriots who have moreover been dispossessed of their properties in the north

would be unable to fully enjoy the freedom of establishment there whereas the

citizens of other EU member states would not face this limitation. The EU’s

willingness to accommodate derogations to such freedoms in the context of a solution

is probably motivated by the desire to facilitate a solution such that a reunified island

can accede to the Union, but it comes at a cost of foregoing the opportunity to push

for a solution which avoids such derogations; a solution which I have argued is likely

to be a more viable one. Again, the decision to invite Cyprus to join the Union

regardless of a settlement and even more so the actual accession of Cyprus prior to a

42

Except citizens of Greece and Turkey (when it eventually becomes a member). According to the

Comprehensive settlement, Greek citizens will be able to make up a maximum of 10 per cent of the number of

resident Cypriot citizens who hold the internal component state citizenship status of the Greek Cypriot

component state and the same condition applies to the Turkish national vis-à-vis the Turkish Cypriot

component state (see Article 2 of Attachment 5 “Law on Aliens, Immigration and Asylum” in Draft Annex III

of the Foundation Agreement).

104

solution may allow for concessions to be drawn in this area thereby increasing the

viability of any solution43

.

The desirability of avoiding derogations to the freedom of establishment does

not, of course, exclude the possibility of temporary derogations in this area.

Temporary derogations from the application of the rules or, in other words,

extensions in the time period allowed for transition to new rules may be desirable in

themselves so as to allow for the gradual adjustment of individuals’ expectations. In

the particular context discussed here, temporary derogations may moreover, help

maintain the Turkish Cypriot’s sense of security. Unfortunately, rather than

envisaging a temporary derogation to the freedom of establishment with an explicit

“expiry date”, the Comprehensive settlement includes a proviso that the 28 per cent

ceiling placed on the freedom of establishment will be reviewed no later than 25

years after the reunification of the island.

THE EU AS A SOURCE OF SYMBOLIC UTILITY

AND THE LOGIC OF APPROPRIATENESS

Individuals may act to define what they are in a way they find desirable, that is, in

return for “symbolic utility” (Nozick, 1989). In the particular case of ethnicity, they

may find their identification with their ethnic group desirable basically because of a

need to transform the contingency of their finite life into the continuity which comes

from the relative immortality of the group (Pagano, 1995). In this sense, nationalism

43

To this end, the Greek Cypriot side could arguably make use of what has been called “the community trap”

(Schimmelfennig, 2001). Applied here, the basic idea is that the Greek Cypriot side – from the relative security

that membership would afford it – could expose inconsistencies between, on the one hand, the readiness of the

EU to accept indefinite restrictions to fundamental rights and freedoms in the context of a solution and, on the

other, its own founding principles and its explicit policy with regards to all new members that any derogations

from the acquis communautaire be limited and temporary in nature. In short, the EU could find itself

rhetorically entrapped.

105

has a strong affinity with religion. Indeed, the crisis of both religion and Marxism

may have potentially favored the reemergence of nationalism44

.

One way to limit the excesses of nationalism is by supplying alternative

means of obtaining symbolic utility, such as for example the ecological movement as

a source of satisfaction from saving the world (Pagano, 1995). For my purposes here

it is probably worth suggesting that to the extent that a pluralist and ethnically

diverse EU can be perceived as an alternative source of symbolic utility, it may

reduce the intensity of ethnocentrism over time and so make a positive contribution

to the viability of a reunified Republic of Cyprus. A similar point has been made by

Peristianis (1998) who argues that Cyprus’s accession to the EU may foment the

gradual incorporation into its people’s identity of the liberal/democratic values upon

which the Union is based (including the resolution of internal conflict by peaceful

means, tolerance and respect for civil rights).

Membership of the EU may have a mitigating effect on ethnocentric behavior

for another related reason stemming from what March and Olsen (1989) have called

the “logic of appropriateness”. The basic idea is that individuals associate specific

action with specific situations by rules of appropriateness. What is appropriate is

defined by political and social institutions and transmitted through socialization. In

this context then the liberal/democratic values which frame acceptable or appropriate

behavior in the EU are likely to condition the behavior of Cypriots in a reunified

Cyprus. Outright ethnocentric or communal-based behavior is likely to run against

what is considered appropriate in the EU and this may help mitigate such behavior

through time. On the other hand, insofar as the EU accommodates indefinite

derogations to its founding principles in the context of a solution to the Cyprus

problem then this is likely to undermine its capacity to frame what is appropriate or

acceptable behavior45

.

44

The concept of symbolic utility is consistent with Anderson's (1983) view of the nation as an "imagined

community". 45

The logic of appropriateness also drives the concept of the “community trap” previously discussed.

106

CHAPTER 6.

CONCLUSIONS

The analysis contained in the previous pages has brought to light numerous insights

which, arguably, should be taken into consideration by those who desire the

foundation of a viable reunified Cypriot Republic. I will end this monograph by

bringing together the most important institutional implications reached and I will do

so by reference to the Set of ideas and the Comprehensive settlement and on the

basis of those factors identified as influencing the viability of any solution. In

particular, the viability of a reunified Cyprus is likely to be increased by an

institutional structure which: minimizes the likelihood of the tyranny of the minority

by the majority and vice versa; provides effective security guarantees in the case of a

breakdown in inter-ethnic cooperation; is perceived as fair by both parties to the

conflict; out-competes informal rules coordinating intra-ethnic cooperation to the

detriment of the inter-ethnic kind and; which allows for the effective judicial

enforcement and legislative maintenance of the rules of the game.

The viability of any solution to the conflict is likely to be increased insofar as

the constitutional structure adopted can minimize the risk of the tyranny of the

minority (majority) by the majority (minority) emerging. The constitutional

provisions envisaged by the Set of ideas may in the long run be more effective than

those envisaged in the Comprehensive settlement in protecting the Turkish Cypriot

minority from the political dominance of the Greek Cypriot majority at the common

state level since the former adopts bicommunalism as a source of political rights

while the latter adopt the more fluid concept of territorial-based internal citizenship.

On the other hand, by abandoning the executive approval and veto powers envisaged

by the Set of ideas, the Comprehensive settlement reduces the capacity of the Turkish

Cypriot minority to tyrannize the Greek Cypriot majority. The Comprehensive

settlement also reduces the likelihood of such tyranny emerging since it avoids the

107

institution of a major program of action “to correct the economic imbalance and

ensure economic equilibrium between the two communities”, a program recall that is

instituted by Paragraph 86 of the Set of ideas and that provides an incentive to the

Turkish Cypriot minority to hold out, as a block, for redistributive gains. Both UN

proposals institute majority rule across both Chambers of the legislature and this

reduces the chances that a majority composed of both Greek and Turkish Cypriots

may be tyrannized by virulent minorities from either ethnic group that reject the very

idea of a reunified Cyprus. Finally, a reunified Cyprus as an EU member is likely to

be a more viable entity under either UN proposal since the EU’s Constitution

provides additional safeguards against majority tyranny of the minority by increasing

the cost of such actions, reducing the policy discretion of the central government of a

reunified Cyprus and accommodating decentralized collective decision-making.

With respect to the need to provide effective security guarantees, my analysis

leads me to favor the demilitarization of the island and the presence of an

international force with a clear and credible mandate to deal decisively with violent

peace-threatening behavior by members of either community. My analysis does not

support the institution of a unilateral right of intervention from other states.

Regardless of the organization which undertakes to provide these security guarantees

(UN, NATO, EU), I have argued that it is important to offer an explicit commitment

to provide security in the event of a settlement so as to facilitate its attainment. If the

EU where to play such a role this would mean adopting a firm commitment to do so,

as an integral part of its pre-accession strategy. Both the Set of ideas and the

Comprehensive settlement speak of the demilitarization of a reunified Cyprus but at

the same time both proposals also enshrine the continuing application of the Treaties

of Alliance and Guarantee in the context of a solution. The Comprehensive

settlement explicitly foresees the presence of a UN peacekeeping operation to

monitor implementation and this force is likely to have first go in restoring the ‘state

of affairs’ agreed to in the case of a break-down in inter-ethnic cooperation. The

proposal is silent on the decision-making mechanisms under which the UN force

108

might respond to violent non co-operative behavior by either ethnic group. To the

extent that these mechanisms are such that the credibility of the force is compromised

then this increases the likelihood of unilateral intervention if inter-ethnic cooperation

breaks down.

The direct relationship between the perceived fairness of a solution and its

viability points to the importance of securing open and explicit agreement from the

members of both the Greek and Turkish Cypriot communities. By contemplating the

holding of referendums by both communities for the approval of the solution agreed

to, both UN proposals would, other things being equal, have a better chance of being

viable than the 1960 agreements which did not seek such approval. This said, the

Comprehensive settlement would require Cypriots to accept both the Comprehensive

settlement and Cyprus’s accession to the EU simultaneously. Such full-line forcing is

likely meant to increase the likelihood of a yes vote from a majority but it would do

so at the cost of reducing the perceived legitimacy of the agreed upon solution

compared to that legitimacy which would emerge if referendums on the solution and

EU accession were to be held separately.

The analysis moreover suggests that the foundation of a confederal Cyprus by

way of the prior international recognition of the “TRNC” is likely to be perceived as

unfair by the Greek Cypriots since what the Turkish Cypriots pretend to be their

component state in such a confederation is fruit of the relatively recent and violent

expulsion of individuals from their properties. In addition, the perceived unfairness

by Greek Cypriots of the current distribution of territorial entitlements is likely to

undermine any package deal solution which takes this distribution of entitlements as

its starting point. To date, neither the UN nor the EU have to date proved to be

effective forums through which to obtain territorial concessions from the Turkish

Cypriot side. The latest decision to invite Cyprus to join the EU independently of a

settlement and – assuming that no solution is found until then – the actual accession

of Cyprus, reinforces the Greek Cypriot side’s negotiating position and may allow for

109

concessions to be drawn in this area more in line with the demographic weight of

each community thereby increasing the viability of any solution.

Any solution which violates fundamental rights and freedoms is not likely to

be perceived as fair and this will negatively affect its viability. Both the Set of ideas

and the Comprehensive settlement explicitly foresee severe limits to the freedom of

establishment and the right of property. The feeling of unfairness which would

emanate from them would be exacerbated by the realization that all EU citizens

except displaced Greek Cypriots would be able to fully enjoy the freedom of

establishment in the Turkish Cypriot federated or component state. The EU’s

willingness to accommodate such restrictions is surely motivated by the desire to

facilitate a solution such that a reunified island can accede to the Union but it comes

at a cost of foregoing the opportunity to push for a solution which avoids such

derogations. On the other hand, the decision to invite Cyprus to join the Union

regardless of a settlement and even more so the actual accession of Cyprus prior to a

solution may allow for concessions to be drawn in this area thereby increasing the

viability of any solution.

The viability of any solution is likely to be increased insofar as the institutions

agreed to can undermine the continuing influence of informal rules which may be

inimical to inter-ethnic cooperation. One desirable feature here is the non-

discriminatory enforcement of property rights and civil law in general by ethnically

neutral institutions. Both UN proposals assign enforcement authority in these areas to

the federated or component state and as such forego these possible benefits. A second

desirable feature is the provision of some minimum agreed-to level of welfare

protection taking as the basis of entitlement some non-ethnic criterion such as

relative income.

The agreed upon solution could be more effectively enforced by a

Constitutional Court which adopts the civil-law practice of issuing a single opinion

(rather than the common law one of dissenting opinions) and which moreover is

composed by at least three members from each community to facilitate the

110

emergence of a moderate majority when decisions are being taken. The Supreme

Court envisaged by the Comprehensive settlement satisfies these requirements. The

agreed upon solution could, moreover, be maintained by a compound republic of

countervailing constitutional guardians and in particular by a federal and bicameral

system which observes the separation of powers. Both UN proposals are consistent

with this and moreover require that the Constitution can only be amended either with

the approval of both federated states (Set of ideas) or after amendments have been

adopted by both Chambers of Parliament and approved by separate majority of the

people in each component state (Comprehensive settlement) something which gives

each federated or common state a veto and provides a powerful tool in favor of the

status quo situation established by any mutually accepted settlement of the Cyprus

Problem.

I will end this monograph by reiterating the main merits of an alternative

institutional proposal which I have argued is superior to those put forward by the UN.

In particular I have advocated the adoption of a functional and bicommunal

federation. Being federal in nature such a system can enhance the viability of a

federal Republic by reducing the likelihood of a permanently disaffected minority

emerging. By having a functional and not a territorial basis however, it can avoid

violating the right of property as well as avoid putting up formal barriers to the

freedom of establishment and the right to vote and, as such, it can accommodate the

voluntary return of all displaced persons to their homes and allow them to exercise

their voting rights once there. This would increase the perceived fairness of a solution

and thus its viability. It would also avoid the need for a reunified Cyprus as a

member of the EU to derogate from principles which are fundamental to the Union.

A functional federation is by definition inconsistent with a bizonal solution but it can

accommodate bicommunalism. While bicommunalism can protect the group rights of

the Turkish Cypriot minority it may undermine inter-ethnic co-operation over time.

To avoid this the crux of the system could be preserved but electoral rules could be

111

engineered so as not to hinder the emergence of inter-ethnic political cooperation in

the future.

112

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ANNEX A.

THE 1992 UNITED NATIONS SET OF IDEAS

ON AN OVERALL FRAMEWORK AGREEMENT ON CYPRUS

1. The leader of the Greek Cypriot community and the leader of the Turkish Cypriot

community have negotiated on an equal footing, under the auspices of the mission of good

offices of the Secretary-General, the following overall framework agreement on Cyprus

which constitutes a major step towards a just and lasting settlement of the Cyprus question.

The overall framework agreement will be submitted to the two communities in separate

referendums within thirty days of its completion by the two leaders at a high-level

international meeting.

I. OVERALL OBJECTIVES

2. The overall framework agreement is an integrated whole which, when it is approved by

both communities in separate referendums and the provisions contained in the transitional

arrangements have been implemented, will result in a new partnership and a new

constitution for Cyprus that will govern the relations of the two communities on a federal

basis that is bi-communal as regards the constitutional aspects and bi-zonal as regards the

territorial aspects. The overall framework agreement is based on the 1977 and 1979 high-

level agreements, relevant United Nations resolutions, in particular Security Council

resolutions 367 (1975), 649 (1990), 716 (1991) and 750 (1992), and the guiding principles

set out below.

3. The overall framework agreement recognizes that Cyprus is the common home of the

Greek Cypriot community and of the Turkish Cypriot community and that their relationship

is not one of majority and minority but one of two communities in the federal republic of

Cyprus. It safeguards the cultural, religious, political, social and linguistic identity of each

community.

4. The overall framework agreement ensures that the Cyprus settlement is based on a State

of Cyprus with a single sovereignty and international personality and a single citizenship,

with its independence and territorial integrity safeguarded, and comprising two politically

equal communities as defined in paragraph 11 of the Secretary General's report of 3 April

1992 (S/23780) in a bi-communal and bi-zonal federation, and that the settlement must

exclude union in whole or in part with any other country or any form of partition or

secession.

5. The overall framework agreement acknowledges and ensures the political equality of the

two communities. While political equality does not mean equal numerical participation in all

branches and administration of the federal government, it will be reflected in the fact that the

approval and amendment of the federal constitution will require the approval of both

119

communities; in the effective participation of both communities in all organs and decisions

of the federal government; in safeguards to ensure that the federal government will not be

empowered to adopt any measures against the interests of one community; and in the

equality and identical powers and functions of the two federated states.

6. The overall framework agreement provides for functions and powers of the federal

government, including its structure, composition and functioning of its three branches, that

will ensure the effective participation of the two communities and the effective functioning

of the federal government, which will require an appropriate deadlock-resolving machinery.

7. The two communities acknowledge each other's identity and integrity, and commit

themselves to work actively to achieve a new relationship based on mutual respect,

friendship and co-operation. Toward this end, the two communities agree to change all

practices incompatible with this commitment and to refrain from any action which would

impair the efforts for a negotiated settlement. They pledge to launch immediately a

programme of action to promote goodwill and closer relations between them (see appendix).

II. GUIDING PRINCIPLES

8. The bi-communal and bi-zonal federation will be established freely by the Greek Cypriot

and Turkish Cypriot communities. All powers not vested by them in the federal government

will rest with the two federated states.

9. The federal constitution will come into force after its approval by the two communities in

separate referendums and can only be amended with the approval of both federated states.

10. The federal republic will be one territory composed of two politically equal federated

states.

11. The federal republic will have one sovereignty which is indivisible and which emanates

equally from the Greek Cypriot and Turkish Cypriot communities. One community cannot

claim sovereignty over the other community. The federal republic will have one

international personality and one citizenship regulated by federal law in accordance with the

federal constitution.

12. The federal constitution will safeguard the identity, integrity and security of each

community as well as their political, economic, social, cultural, linguistic and religious

rights. All citizens will be equal under the law.

13. The federal republic will be secular. Religious functionaries will be prohibited from

holding elected or appointed political office in the federal government or in the federated

states.

14. The federal republic will maintain special ties of friendship with Greece and Turkey and

will accord most favoured nation treatment to Greece and Turkey in connection with all

120

agreements whatever their nature. The federal republic will continue the membership in the

Commonwealth.

15. The official languages of the federal republic will be Greek and Turkish. The English

language may also be used.

16. The federal republic will have its own flag to be agreed upon. The federal flag will be

flown on federal buildings and federal locations to the exclusion of all other flags. Each

federated state will have its own flag.

17. The holidays to be observed by the federal government will be agreed upon and

embodied in the federal constitution. Each federated state will observe the federal holidays

as well as those established by it.

18. The two federated states will have identical powers and functions.

19. Each federated state will be administered by one community.

20. Each federated state will decide on its own governmental arrangement in a manner

consistent with the federal constitution.

21. The federal Government cannot encroach upon the powers and functions of the two

federated states.

22. Security, law and order and the administration of justice in its territory will be the

responsibility of each federated state in a manner consistent with the federal constitution.

23. The two federated states will cooperate in the preservation and / or use of historical sites

and religious shrines of both faiths to be agreed to during the transitional period.

III. CONSTITUTIONAL ASPECTS OF THE FEDERATION

24. The powers, functions and structure of the federal Government will be in conformity

with the overall objectives and guiding principles set out above.

A. Powers and functions to be vested in the federal Government

25. The federal Government will have the powers and functions listed below. All powers

and functions not vested in the federal Government will rest with the two federated states.

The federated states may decide jointly to confer additional powers and functions to the

federal Government or to transfer powers and functions from the federal Government to the

federated states.

26. The federal Government will have the following powers and functions:

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(a) Foreign affairs (the federated states may enter into agreements with foreign Governments

and international organizations in their areas of competence. The representation in foreign

affairs will reflect the bi-communal nature of the federal republic);

(b) Central bank functions (including the issuance of currency);

(c) Customs and the coordination of international trade;

(d) Airports and ports as concerns international matters;

(e) Federal budget and federal taxation;

(f) Immigration and citizenship;

(g) Defense (to be discussed also in connection with the Treaties of Guarantee and of

Alliance);

(h) Federal judiciary and federal police;

(i) Federal postal and telecommunications services;

(j) Patents and trademarks;

(k) Appointment of federal officials and civil servants (on a 70:30 Greek Cypriot/Turkish

Cypriot ratio);

(l) Standard setting for public health, environment, use and preservation of natural resources,

and weights and measures;

(m) Coordination of tourism and industrial activities.

27. The federal powers and functions will be executed by the federal Government or, in

accordance with agreements, through delegation to the federated states.

B. Structure, composition and functioning of the federal Government

1. The Legislature

28. The legislature will be composed of a lower house and an upper house. The presidents of

the lower house and of the upper house cannot come from the same community. The

president and vice-president of each house will not come from the same community.

29. All laws must be approved by both houses.

30. The lower house will be bi-communal with a 70:30 Greek Cypriot / Turkish Cypriot

ratio.

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31. The upper house will have a 50:50 ratio representing the two federated states.

32. All laws will be adopted by majority in each house. A majority of the Greek Cypriot or

Turkish Cypriot representatives in the lower house may decide, on matters related to foreign

affairs, defence, security, budget, taxation, immigration and citizenship, that the adoption of

a law in the lower house will require separate majorities of the representatives of both

communities.

33. Separate Greek Cypriot and Turkish Cypriot majorities will be required to constitute a

quorum in each house. If a quorum is not attained in either house on two consecutive

meetings because of the absence of a majority of one or both communities, the president of

the relevant house will call a meeting in no less than five days and no more than ten days. At

that meeting, a majority of the upper house will constitute a quorum. In the lower house,

30% of the total membership will constitute a quorum.

34. If the two houses fail to adopt a bill or decision, they will initiate proceedings to obtain a

consensus while ensuring the continued functioning of the federal government. To this end,

a conference committee will be established. The conference committee will be composed of

two persons each selected by the Greek Cypriot and Turkish Cypriot groups equally from

among the members of the two houses of the federal legislature. The text of the legislation

or decision agreed to by the conference committee will be submitted to both houses for

approval.

35. In the event the federal budget is not adopted in one or both houses and until an

agreement is reached by the conference committee and is adopted by both houses, the

provisions of the most recent federal budget plus inflation shall remain in effect.

2. The Executive

36. The federal executive will consist of a federal president, a federal vice-president, and a

federal council of ministers. The president and the vice president will symbolize the unity of

the country and the political equality of the two communities.

(On the question of the election of the president and vice-president, the two sides have

expressed different positions. The Greek Cypriot side prefers a system under which the

president is elected by popular universal suffrage. The Turkish Cypriot side prefers a system

under which the president rotates between the two communities).

37. To facilitate the effective launching of the federal government and for the initial eight

years, the president and vice-president will also be the heads of their respective federated

states.

38. There will be a council of ministers composed of Greek Cypriot and Turkish Cypriot

ministers on a 7:3 ratio. The president and vice-president will designate the ministers from

their respective communities who will appoint them by an instrument signed by them both.

One of the following three ministries, that is foreign affairs, finance, or defence, will be

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allocated to a Turkish Cypriot minister. The president and the foreign minister will not come

from the same community.

39. The president and the vice-president will discuss the preparation of the agenda of the

council of ministers and each can include items in the agenda.

40. Decisions of the council of ministers will be taken by majority vote. However, decisions

of the council of ministers concerning foreign affairs, defence, security, budget, taxation,

immigration and citizenship will require the concurrence of both the president and the vice-

president.

41. Arrangements related to the implementation of foreign policy and the composition of the

foreign service will be set out in the federal constitution.

42. The president and the vice-president will, separately or conjointly, have the right to veto

any law or decision of the legislature concerning foreign affairs, defence, security, budget,

taxation, immigration and citizenship. The president and vice-president will have the right,

separately or conjointly, to return any law or decision of the legislature or any decision of

the council of ministers for reconsideration.

3. The Judiciary

43. The federal judiciary will consist of a supreme court composed of an equal number of

Greek Cypriot and Turkish Cypriot judges appointed jointly by the president and vice-

president with the consent of the upper house. The supreme court will sit as the federal

constitutional court and the highest court of the federation. Its presidency will rotate between

the senior Greek Cypriot and Turkish Cypriot members of the supreme court. Lower federal

courts may be established in each federated state.

44. The supreme court will deal with matters arising under the federal constitution and

federal laws, and will be empowered to fulfil other judiciary functions related to federal

matters attributed to it by the federal constitution or federal legislation.

45. Each federated state will have its own judiciary to deal with matters not attributed to the

federal judiciary by the federal constitution.

46. The federal constitution will establish the procedure for ascertaining the constitutionality

of federal laws and executive acts, as well as adequate machinery of judicial review to

ensure the compliance of legislative, executive, and judicial acts of the federated states with

the federal constitution.

C. Fundamental rights, including the three freedoms, and political, economic, social,

and cultural rights

47. All universally recognised fundamental rights and freedoms will be included in the

federal constitution.

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48. The freedom of movement, the freedom of settlement and the right to property will be

safeguarded in the federal constitution. The implementation of these rights will take into

account the 1977 high-level agreement and the guiding principles set out above.

49. The freedom of movement will be exercised without any restrictions as soon as the

federal republic is established, subject only to non-discriminatory normal police functions.

50. The freedom of settlement and the right to property will be implemented after the

resettlement process arising from the territorial adjustments has been completed. The

federated states will regulate these rights in a manner to be agreed upon during the

transitional period consistent with the federal constitution.

51. Persons who are known to have been or are actively involved in acts of violence or in

incitement to violence and/or hatred against persons of the other community may, subject to

due process of law, be prevented from going to the federated state administered by the other

community.

IV. SECURITY AND GUARANTEE

52. The security of the federal republic and of the Greek Cypriot and Turkish Cypriot

federated states will be guaranteed.

53. The demilitarization of the federal republic remains an objective.

54. The 1960 Treaties of Guarantee and of Alliance continue in force and will be

supplemented in a document to be appended as set out below.

55. The Treaty of Guarantee will ensure the independence and territorial integrity of the

federal republic and exclude union in whole or in part with any other country and any form

of partition or secession; ensure the security of the Greek Cypriot and the Turkish Cypriot

federated states; and ensure against the unilateral change of the new constitutional order of

the federal republic by either community.

56. A numerical balance of Greek and Greek Cypriot troops and equipment on the one hand

and of Turkish and Turkish Cypriot troops and equipment on the other hand will be achieved

within ______ months after the overall framework agreement has been approved by the two

communities in separate referendums.

57. A timetable will be established for the further reduction to an agreed level of the Greek

Cypriot and the Turkish Cypriot units and for the withdrawal of all non-Cypriot forces not

provided for under the Treaty of Alliance. This timetable will be fully implemented prior to

the establishment of the federal republic and in phases parallel to the implementation of the

programme of action set out in annex.

58. The Treaty of Alliance will provide for the stationing in Cyprus of Greek and Turkish

contingents of equal size and equipment not exceeding ______ persons each. The Greek

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contingent will be stationed in the federated state administered by the Greek Cypriot

community and cannot enter the federated state administered by the Turkish Cypriot

community. The Turkish contingent will be stationed in the federated state administered by

the Turkish Cypriot community and cannot enter the federated state administered by the

Greek Cypriot community.

59. The federal republic will maintain a federal force consisting of a Greek Cypriot and a

Turkish Cypriot unit of equal size and equipment not exceeding the size of the Greek and

Turkish contingents, under the joint overall command of the president and the vice-

president. The Greek Cypriot unit will be stationed in the federated state administered by the

Greek Cypriot community. The Turkish Cypriot unit will be stationed in the federated state

administered by the Turkish Cypriot community. The president and the vice-president will

jointly decide on the locations of the units.

60. There will not be any reserve force and any military or paramilitary training of civilian

groups.

61. The Greek Cypriot and Turkish Cypriot units will promote mutual respect, friendship,

and closer relations between the two communities and foster their welfare by carrying out

joint social service activities throughout the federal republic.

62. Each federated state and the federal republic will have a police force. All paramilitary

activities and the ownership of weapons other than those licensed for hunting will be

outlawed throughout the federal republic and any infraction will be a federal offense. The

importation or transit of weapons and other military equipment other than that duly

approved by the federal government will be prohibited.

63. Immediately after the approval of the overall framework agreement by the two

communities in separate referendums, an interim monitoring committee will be established

composed of the three guarantor powers, the two communities and the United Nations

Peace-keeping Force in Cyprus (UNFICYP) which will be responsible for:

(a) Monitoring the achievement of the agreed numerical balance of Greek and Greek Cypriot

troops and equipment on the one hand and Turkish and Turkish Cypriot troops and

equipment on the other hand to be implemented within ______ months after the overall

framework agreement has been approved by the two communities in separate referendums;

(b) Monitoring the achievement of the agreed timetable for the further reduction to the

agreed level of Greek Cypriot and Turkish Cypriot units and the withdrawal of all non-

Cypriot forces not provided for in the Treaty of Alliance prior to the establishment of the

federal republic.

64. The Treaty of Guarantee, in a manner consistent with the principles of the Conference on

Security and Co-operation in Europe (CSCE), with which the federal republic will affirm its

commitment, will provide for a supervision and verification committee comprising

representatives of the guarantor powers and of the federal president and federal vice-

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president. The United Nations will provide the support personnel to assist the supervision

and verification committee in carrying out its functions.

65. The supervision and verification committee will be responsible for investigating any

development which in the view of either the federal president or federal vice-president or

any guarantor power is a threat to the security of either community or of the federal republic

through on-site inspection and other methods the supervision and verification committee

deems necessary. The supervision and verification committee will make recommendations

for rectifying any situation it has established to be in contravention of the arrangements

covered by the Treaties of Guarantee and of Alliance. The parties will be obligated to

implement these recommendations promptly and in good will.

66. The United Nations Security Council will be requested to revise the mandate of

UNFICYP, including support of the supervision andverification committee.

V. TERRITORIAL ADJUSTMENTS

67. The Greek Cypriot and Turkish Cypriot communities agree on the territories of the

federated states administered by each, taking into account the 1977 high-level agreement.

68. The map attached hereto sets out the territories of the two federated states. The territorial

agreement shall be respected and will be included in the federal constitution.

69. Persons affected by the territorial adjustments will have the option of remaining in the

area concerned or relocating to the federated state administered by their own community.

70. All necessary arrangements for the relocation of persons affected by territorial

adjustments will be satisfactorily implemented before resettlements are carried out. The fund

to be established related to displaced persons will be available for this purpose.

71. The territorial adjustment will not affect the water resources available to each federated

state. The water resources available throughout the federation will be allocated to the two

federated states at a proportion at least equal to their respective current demand.

VI. DISPLACED PERSONS

72. The property claims of Greek Cypriot and Turkish Cypriot displaced persons are

recognized and will be dealt with fairly on the basis of a time-frame and practical

regulations based on the 1977 high-level agreement, on the need to ensure social peace and

harmony, and on the arrangements set out below.

A. Areas that will come under Greek Cypriot administration

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73. The first priority will be given to the satisfactory relocation of and support for Turkish

Cypriots living in the area that will come under Greek Cypriot administration and to

displaced persons returning to that area.

74. Turkish Cypriots who in 1974 resided in the area that will come under Greek Cypriot

administration will have the option to remain in their property or to request to receive a

comparable residence in the area that will come under Turkish Cypriot administration.

Turkish Cypriot displaced persons currently residing in the area that will come under Greek

Cypriot administration will have the option to receive comparable residence in that area, to

return to their former residence, or to receive a comparable residence in the area that will

come under Turkish Cypriot administration.

75. A bi-communal committee will be established immediately after the overall framework

agreement has been approved in the referendums to arrange for suitable housing for all

persons affected by the territorial adjustments.

B. Other areas under Greek Cypriot and Turkish Cypriot administration

76. Each community will establish an agency to deal with all matters related to displaced

persons.

77. The ownership of the property of displaced persons, in respect of which those persons

seek compensation, will be transferred to the ownership of the community in which the

property is located. To this end, all titles of properties will be exchanged on a global

communal basis between the two agencies at the 1974 value plus inflation. Displaced

persons will be compensated by the agency of their community from funds obtained from

the sale of the properties transferred to the agency, or through the exchange of property. The

shortfall in funds necessary for compensation will be covered by the federal Government

from a compensation fund obtained from various possible sources such as windfall taxes on

the increased value of transferred properties following the overall agreement, and savings

from defense spending. Governments and international organizations will also be invited to

contribute to the compensation fund. In this connection, the option of long-term leasing and

other commercial arrangements may also be considered.

78. Persons from both communities who in 1974 resided and / or owned property in the

federated state administered by the other community or their heirs will be able to file

compensation claims. Persons belonging to the Turkish Cypriot community who were

displaced after December 1963 or their heirs may also file claims.

79. Current permanent residents of Cyprus who at the time of displacement owned their

permanent residence in the federated state administered by the other community and who

wish to resume their permanent residence at that location may also select the option to

return.

80. Current permanent residents of Cyprus who at the time of displacement rented their

permanent residence in the federated state administered by the other community and who

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wish to resume their permanent residence in that area will be given priority under the

freedom of settlement arrangements.

81. All claims must be filed within six months after the approval of the overall framework

agreement.

82. ______ thousand displaced persons who elect to return to their former permanent

residence will be processed by the federated state concerned each year for ______ years. In

addition, Maronites who in 1974 had their permanent residence in the federated state under

the administration of the Turkish Cypriot community may elect to return to their properties.

The two federated states will review the situation at the conclusion of the above mentioned

period in the light of the experience gained.

83. This period will begin after the resettlement and rehabilitation process arising from

territorial adjustments are essentially completed.

84. The settlement of those who select to return will take place after the persons who will be

affected have been satisfactorily relocated. If the current occupant is also a displaced person

and wishes to remain, or if the property has been substantially altered or has been converted

to public use, the former permanent resident will be compensated or will be provided an

accommodation of similar value.

85. Persons who are known to have been actively or are actively involved in acts of violence

or incitement to violence and / or hatred against persons of the other community may,

subject to due process of law, be prevented from returning to the federated state

administered by the other community.

VII. ECONOMIC DEVELOPMENT AND SAFEGUARDS

86. A priority objective of the federal republic will be the development of a balanced

economy that will benefit equally both federated states. A major programme of action will

be established to correct the economic imbalance and ensure economic equilibrium between

the two communities through special measures to promote the development of the federated

state administered by the Turkish Cypriot community. A special fund will be established for

this purpose. Foreign Governments and international organizations will be invited by the

Security Council to contribute to this fund.

87. To help promote a balanced economy, persons may be employed throughout the federal

republic at equal pay.

88. To protect in particular the federated state administered by the Turkish Cypriot

community, special measures and safeguards will be adopted to avoid adverse economic

effects resulting from the establishment of the federal republic, for example as a result of the

adoption of one currency and the establishment of one customs frontier.

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89. Each federated state may, in addition to federal taxation, establish and administer its own

tax regime and determine tax rates in line with its economic objectives and needs.

90. In line with annex F, part II, of the Treaty of Establishment, the federal republic will

accord most favoured nation treatment to Greece and Turkey in connection with all

agreements whatever their nature.

91. A bi-communal committee will be established as part of the transitional arrangements to

prepare the special programmes and measures envisaged above prior to the establishment of

the federal republic. The United Nations Development Programme (UNDP) will provide the

committee with support. The committee may request other expert assistance as required.

92. Matters related to the membership of the federal republic in the European Economic

Community will be discussed and agreed to, and will be submitted for the approval of the

two communities in separate referendums. (This paragraph relates exclusively to

arrangements that might be put in place in Cyprus and in no way impinges upon the

prerogatives of the European Community and its member states in matters concerning

membership in the Community).

VIII. TRANSITIONAL ARRANGEMENTS

93. Immediately after the approval in separate referendums of the overall framework

agreement on Cyprus, the following transitional arrangements will be carried out to

implement the overall framework agreement, including the preparation and putting into

force of the federal constitution. All transitional arrangements will be fully implemented in

an 18- month period.

94. In line with this overall framework agreement, bi-communal committees will be

established immediately to implement the provisions related to the preparation and putting

into force of the federal constitution and electoral law, the establishment of the federal civil

service, property settlement claims, economic development and safeguards, arrangements

related to the territorial adjustments to take effect at the time the federal republic is

established, and the programme of action set out in the appendix. Furthermore, a committee

composed of the representatives of the guarantor powers and the two communities will be

established to supplement the Treaties of Guarantee and of Alliance. The United Nations

will assist each committee in fulfilling its functions. Each side may employ foreign experts.

95. In addition, a committee composed of the leaders of the two communities and a

representative of the Secretary-General of the United Nations will be established

immediately to work out the transitional arrangements procedures foreseen herein and to

ensure that the functions of the above mentioned committees are implemented in an

effective and timely manner. Furthermore, this committee will, within 30 days of its

completion by the two leaders at a high-level international meeting, organize separate

referendums to approve the overall framework agreement, and, at the appropriate time

during the transitional period, organize separate referendums to approve the federal

constitution and the elections of federal officials with the assistance of and verification by

the United Nations.

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96. During the transitional period, the current arrangements for the administration of the

day-to-day internal affairs of each side will continue, unless modified by the provisions of

the overall framework agreement. In matters affecting Cyprus as a whole, such as

international trade and tourism, the same principle shall apply on the understanding that

these matters will be administered on an interim basis in the common interest. To this end,

interim procedures will be agreed to by the two communities.

97. During the transitional period, external affairs shall be conducted in a manner which

accords with the principles contained in the overall framework agreement and in consensus

with the leaders of the two communities. Arrangements shall be made for joint delegations,

in particular to international meetings.

98. The statutes, laws, regulations, rules, contracts currently in effect on both sides shall be

considered valid to the extent they are not inconsistent with the overall framework

agreement. The federal government may review prior international agreeements to

determine whether any action should be taken in respect thereto.

99. Each community will prepare its federated state constitution and electoral law in line

with the federal constitution and electoral law, and will organize its federated state

governmental arrangements which shall both come into being at the same time that the

federal republic is established.

100. The date of entry into force of the federal constitution will be specified therein and will

be the date on which the federal republic comes into being.

IX. NOTIFICATION TO THE UNITED NATIONS

101. As soon as the overall framework agreement has been approved in separate

referendums by each community, the leaders of the two communities will address a letter to

the Secretary-General of the United Nations transmitting to him the text of the overall

framework agreement with the request that he submit the letter and the overall framework

agreement to the Security Council so that the Council may take note of the decision of the

two communities to establish a federal republic in the manner described in the overall

framework agreement.

Appendix

As soon as the overall framework agreement has been approved by the two communities in

separate referendums the following programme of action to promote goodwill and close

relations between the two communities will be implemented.

1. The flow of persons and goods, services, capital, communication, and international

assistance from and / or to Cyprus will take place on an equal basis throughout Cyprus and

any restrictions to the contrary will be lifted.

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2. All restrictions on travel by members of the Turkish Cypriot community will be lifted.

The two communities will agree on interim procedures.

3. The restrictions on the movement of tourists will be lifted.

4. Objections to the participation in international sport and cultural activities will be lifted.

5. The freedom of movement will be facilitated subject, by way of agreement between the

two communities, only to minimal procedures.

6. Pending the establishment of the federal republic, Varosha will be placed under United

Nations administration and a programme of action for its restoration will be prepared and

implemented.

7. All military modernization programmes and strengthening of positions will cease. The

two sides will cooperate with UNFICYP in extending the unmanning of positions along the

buffer zone to all areas where the troops of both sides remain in close proximity to each

other. The freedom of movement of UNFICYP throughout Cyprus will be ensured.

8. A bi-communal committee will be established to review the textbooks used in schools on

each side and make recommendations for the removal of material that is contrary to the

promotion of goodwill and close relations between the two communities. The committee

may also recommend positive measures to promote that objective.

9. Both communities will promote goodwill and close relations between them and friendly

relations with Greece and Turkey.

10. Both communities will, within the limits of their authority, terminate all current or

pending recourse before an international body against the other community or Greece or

Turkey.

11. A bi-communal committee will be established to survey the water situation in Cyprus

and make recommendations on ways of meeting the water needs of Cyprus, including from

external sources. The committee may request expert assistance as required.

12. A bi-communal committee will be established to prepare and launch a programme of

action for the restoration of historical and religious sites throughout Cyprus. The committee

may request expert assistance as required.

13. A bi-communal committee will be established to undertake a population census of both

communities. The committee may request expert assistance as required.

14. The two communities undertake to support the efforts of the Committee on Missing

Persons to reach early conclusions wherever possible on the fate of the missing persons. To

this end, the Committee is requested to undertake without delay the investigation of all cases

of missing persons and, to this end, to reassess the criteria for arriving at conclusions on the

fate of the missing.

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ANNEX B.

COMPREHENSIVE SETTLEMENT OF THE CYPRUS PROBLEM

(Revised version)

We, the democratically elected leaders of the Greek Cypriots and the Turkish Cypriots,

through negotiations under the auspices of the Secretary-General of the United Nations in

which each side represented itself, and no-one else, as the political equal of the other, have

freely agreed to settle the Cyprus Problem in all its aspects in the following comprehensive

manner:

Article 1 Foundation Agreement

1. The main articles of the appended Foundation Agreement are hereby agreed, as is the

substance of the specially marked parts of the Annexes thereto and the map delineating the

boundary between the <component states>. The Draft Annexes as a whole are hereby

accepted as a basis for agreement to be finalized no later than 28 February 2003.

2. The finalization of all Draft Annexes shall be accompanied and facilitated by the

appended measures.

3. The Secretary-General is invited to certify the results of the finalization process, and to

include his suggestions, if any are indispensable, to finalize the Agreement.

4. That finalized Foundation Agreement shall be submitted by each side to referendum on 30

March 2003, together with other specified matters related to the coming into being of the

new state of affairs, including accession to the European Union.

5. Should the Foundation Agreement not be approved at the separate simultaneous

referenda, it shall be null and void, and the commitments undertaken in this Comprehensive

Settlement shall have no further legal effect.

Article 2 Treaty on matters related to the new state of affairs in Cyprus

Upon entry into force of the Foundation Agreement, the Co-Presidents of Cyprus shall, on

invitation and in the presence of the Secretary-General of the United Nations (or his

representative), sign the appended Treaty with Greece, Turkey and the United Kingdom,

which shall be registered as an international treaty in accordance with Article 102 of the

Charter of the United Nations.

Article 3 Matters to be submitted to the United Nations Security

Council for decision The Secretary-General of the United Nations is invited to request the

Security Council to take decisions as appended.

Article 4 Conditions of accession to the European Union

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Pursuant to the willingness of the European Union to accommodate the terms of a

comprehensive settlement and to assist its implementation, as expressed in the conclusions

of the Brussels European Council of 24 and 25 October, the requests to the European Union

to attach the appended Protocol to the Act concerning the conditions of accession of Cyprus

to the European Union, and to include the appended paragraph in the conclusions of the

Copenhagen European Council, are hereby agreed.

Glafcos Clerides Rauf Denktash

For the Greek Cypriot side For the Turkish Cypriot side

***

The Hellenic Republic, the Republic of Turkey, and the United Kingdom of Great Britain

and Northern Ireland hereby agree with this Comprehensive Settlement of the Cyprus

Problem, and commit themselves to sign together with Cyprus the appended Treaty on

matters related to the new state of affairs in Cyprus, which shall be registered as an

international treaty in accordance with Article 102 of the Charter of the United Nations.

Signature Signature Signature

Hellenic Republic United Kingdom Republic of Turkey

of Great Britain and Northern Ireland

***

Witnessed by

Kofi A. Annan

Secretary-General of the United Nations

Appendices to the Comprehensive Settlement of The Cyprus Problem:

* Appendix A: Foundation Agreement

* Appendix B: Measures to accompany and facilitate the finalization process

* Appendix C: Treaty between Cyprus, Greece, Turkey and the United Kingdom on

matters related to the new state of affairs in Cyprus

* Appendix D: Matters to be submitted to the United Nations Security Council for

decision

* Appendix E: Requests to the European Union with respect to the accession of Cyprus

to the European Union

APPENDIX A

FOUNDATION AGREEMENT

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i. Affirming that Cyprus is our common home and recalling that we were co-founders of the

Republic established in 1960

ii. Resolved that the tragic events of the past shall never be repeated and renouncing forever

the threat or the use of force, or any domination by or of either side

iii. Acknowledging each other's distinct identity and integrity and that our relationship is not

one of majority and minority but of political equality

iv. Deciding to renew our partnership on that basis and determined that this new partnership

shall ensure a common future in friendship, peace, security and prosperity in an independent

and united Cyprus

v. Underlining our commitment to international law and the principles and purposes of the

United Nations

vi. Committed to respecting democratic principles, individual human rights and fundamental

freedoms, as well as each other's cultural, religious, political, social and linguistic identity

vii. Determined to maintain special ties of friendship with, and to respect the balance

between, Greece and Turkey, within a peaceful environment in the Eastern Mediterranean

viii. Looking forward to joining the European Union, and to the day when Turkey does

likewise

ix. Welcoming the Comprehensive Settlement freely reached by our democratically elected

leaders on all aspects of the Cyprus Problem, and its endorsement by Greece and Turkey,

along with the United Kingdom

We, the Greek Cypriots and the Turkish Cypriots, exercising our inherent constitutive

power, by our free and democratic, separately expressed common will adopt this Foundation

Agreement.

Article 1 The new state of affairs

1. This Agreement establishes a new state of affairs in Cyprus.

2. The treaties listed in this Agreement bind Cyprus, and the attached <common state>

legislation indispensable for the functioning of the <common state> shall apply upon entry

into force of this Agreement.

3. The Treaty of Establishment, the Treaty of Guarantee, and the Treaty of Alliance remain

in force and shall apply mutatis mutandis to the new state of affairs. Upon entry into force of

this Agreement, Cyprus shall sign a Treaty with Greece, Turkey and the United Kingdom on

matters related to the new state of affairs in Cyprus, along with additional protocols to the

Treaties of Guarantee and Alliance.

4. Cyprus shall sign and ratify the Treaty of Accession to the European Union.

5. Cyprus shall maintain special ties of friendship with Greece and Turkey, respecting the

balance established by the Treaty of Guarantee and the Treaty of Alliance and this

Agreement, and as a European Union member state shall support the accession of Turkey to

the Union.

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6. Any unilateral change to the state of affairs established by this Agreement, in particular

union of Cyprus in whole or in part with any other country or any form of partition or

secession, is prohibited. Nothing in this Agreement shall in any way be construed as

contravening this prohibition.

Article 2 The State of Cyprus, its <common state> government, and its <component

states>

1. The status and relationship of the State of Cyprus, its <common state> government, and

its <component states>, is modeled on the status and relationship of Switzerland, its federal

government, and its Cantons. Accordingly:

a. Cyprus is an independent state in the form of an indissoluble partnership, with a

<common state> government and two equal <component states>, one Greek Cypriot and

one Turkish Cypriot. Cyprus has a single international legal personality and sovereignty and

is a member of the United Nations. Cyprus is organized under its Constitution in accordance

with the basic principles of rule of law, democracy, representative republican government,

political equality, bi-zonality, and the equal status of the <component states>.

b. The <common state> government sovereignly exercises the powers specified in the

Constitution, which shall ensure that Cyprus can speak and act with one voice

internationally and in the European Union, fulfill its obligations as a European Union

member state, and protect its integrity, borders and ancient heritage.

c. The <component states> are of equal status. Within the limits of the Constitution, they

sovereignly exercise all powers not vested by the Constitution in the <common state>

government, organizing themselves freely under their own Constitutions.

2. The <component states> shall cooperate and co-ordinate with each other and with the

<common state>, including through Cooperation Agreements, as well as through

Constitutional Laws approved by the legislatures of the <common state> and the

<component states>. In particular, the <component states> shall participate in the

formulation and implementation of policy in external and European Union relations on

matters within their sphere of competence, in accordance with Cooperation Agreements

modeled on the Belgian example. The <component states> may have commercial and

cultural relations with the outside world in conformity with the Constitution.

3. The <common state> and the <component states> shall fully respect and not infringe

upon the powers and functions of each other. There shall be no hierarchy between the laws

of the <common state> and those of the <component states>. Any act in contravention of the

Constitution shall be null and void.

4. The Constitution of Cyprus may be amended by separate majority of the voters of each

<component state>in accordance with the specific provisions of the Constitution.

Article 3 Citizenship

1. There is a single Cypriot citizenship. Special majority <common state> law shall regulate

eligibility for Cypriot citizenship.

2. All Cypriot citizens shall also enjoy internal <component state> citizenship status. Like

the citizenship status of the European Union, this status shall complement and not replace

Cypriot citizenship. A <component state> may tie the exercise of political rights at its level

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to its internal <component state> citizenship status, and may limit the establishment of

residence for persons not holding this status in accordance with this Agreement.

3. Political rights at the <component state> level shall be exercised based on internal

<component state> citizenship status. A component state may tie the exercise of political

rights at its level to its internal <component state> citizenship status.

4. During the first four years after entry into force of this Agreement, a <component state>

may establish a moratorium on the establishment of residence for persons not holding the

internal <component state> citizenship status of the relevant <component state>. Thereafter,

pursuant to Constitutional Law, a <component state> may limit the establishment of

residence for persons not holding its internal <component state> citizenship status, if the

number of residents hailing from the other <component state> has reached 8% of the

population of a village or municipality between the 5th

and 9th

years and 18% between, the

10th

and 15th

years. Thereafter, any limitations shall be permissible only if 28% of the

population of the relevant <component state> hails from the other <component state>. No

later than 25 years after entry into force of this Agreement, the <common state> and the

<component states> shall review the relevant Constitutional Law in light of experience.

Article 4 Fundamental rights and liberties

1. Respect for human rights and fundamental freedoms shall be enshrined in the

Constitution. There shall be no discrimination against any person on the basis of his or her

gender, ethnic or religious identity, or internal <component state> citizenship status.

Freedom of movement and freedom of residence may be limited only where expressly

provided for in this Agreement.

2. Greek Cypriots and Turkish Cypriots living in specified villages in the other <component

state> shall enjoy cultural and educational rights and shall be represented in the <component

state> legislature.

3. The rights of religious and other minorities, including the Maronite, the Latin and the

Armenian, shall be safeguarded in accordance with international standards, and shall include

cultural and educational rights as well as representation in <common state> and <component

state> legislatures.

Article 5 The <common state> government

1. The <common state> Parliament composed of two chambers, the Senate and the Chamber

of Deputies, shall exercise the legislative power:

a. Each Chamber shall have 48 members. The Senate shall be composed of an equal number

of Senators from each <component state>. The Chamber of Deputies shall be composed in

proportion to persons holding internal <component state> citizenship status of each

<component state>, provided that each <component state> shall be attributed no less than

one quarter of seats.

b. Decisions of Parliament shall require the approval of both Chambers by simple majority,

including one quarter of voting Senators from each <component state>. For specified

matters, a special majority of two-fifths of sitting Senators from each <component state>

shall be required.

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2. The Office of Head of State is vested in the Presidential Council, which shall exercise the

executive power:

a. The Presidential Council shall comprise six members elected on a single list by special

majority in the Senate and approved by majority in the Chamber of Deputies. The

composition of the Presidential Council shall be proportional to the number of persons

holding the internal <component state> citenship status of each <component state>, though

no less than one-third of the members of the Council must come from each <component

state>.

b. The Presidential Council shall strive to reach decisions by consensus. Where it fails to

reach consensus, it shall, unless otherwise specified, take decisions by simple majority of

members voting, provided this comprises at least one member from each <component

state>.

c. The members of the Council shall be equal and each member shall head a department. The

heads of the Departments of Foreign Affairs and European Union Affairs shall not come

from the same <component state>.

d. The offices of President and Vice-President of the Council shall rotate every ten calendar

months among members of the Council. No more than two consecutive Presidents may

come from the same <component state>. The President, and in his absence or temporary

incapacity, the Vice-President, shall represent the Council as Head of State and Head of

Government. The President and Vice-President shall not enjoy a casting vote or otherwise

increased powers within the Council.

e. The [executive heads] of the <component states> shall be invited to participate without a

vote in all meetings of the Council in the first ten years after entry into force of the

Agreement, and thereafter on a periodical basis.

3. The Central Bank of Cyprus, the Office of the Attorney-General and the Office of the

Auditor-General shall be independent.

Article 6 The Supreme Court

1. The Supreme Court shall uphold the Constitution and ensure its full respect.

2. It shall be composed of nine judges, three from each <component state> and three non-

Cypriots.

3. The Supreme Court shall, inter alia, resolve disputes between the <component states> or

between one or both of them and the <common state>, and resolve on an interim basis

deadlocks within the institutions of the <common state> if this is indispensable to the proper

functioning of the <common state>.

Article 7 Transitional <common state> institutions

1. The <common state> institutions shall evolve during transitional periods, after which

these institutions shall operate as described above.

2. Upon entry into force of this Agreement, the leaders of the two sides shall become Co-

Presidents of Cyprus for thirty calendar months. Each Co-President shall be confirmed by

their respective <component state> legislature, which may instead elect another person as

Co-President, and which shall elect a replacement should the office of Co-President fall

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vacant. The Co-Presidents shall exercise the executive power during the first year, assisted

by a Council of Ministers which they shall appoint. For the following two years, the

executive power shall be exercised by a Council of Ministers elected by Parliament, and the

Co-Presidents shall together hold the office of Head of State.

3. <component state> legislatures to be elected within 40 days of entry into force of this

Agreement shall each nominate 24 delegates (reflecting the political composition of their

legislature) to a transitional <common state> Parliament to operate for one year.

4. A transitional Supreme Court shall assume its functions upon entry into force of this

Agreement.

Article 8 Demilitarization

1. Bearing in mind that:

a. The Treaty of Guarantee, in applying mutatis mutandis to the new state of affairs

established in this Agreement and the Constitution of Cyprus, shall cover, in addition to the

independence, territorial integrity, security and constitutional order of Cyprus, the territorial

integrity, security and constitutional order of the <component states>

b. The Treaty of Alliance shall permit Greek and Turkish contingents, each not exceeding

[insert figure between 2,500 and 7,500 prior to the signature of the Comprehensive

settlement] all ranks, to be stationed under the Treaty of Alliance in the Greek Cypriot

<component state> and the Turkish Cypriot <component state> respectively;

c. Greek and Turkish forces and armaments shall be redeployed to agreed locations and

adjusted to agreed levels, and any forces and armaments in excess of agreed levels shall be

withdrawn;

d. There shall be a United Nations peacekeeping operation to monitor the implementation of

this Agreement and use its best efforts to promote compliance with it and contribute to the

maintenance of a secure environment, to remain as long as the government of the <common

state>, with the concurrence of both <component states>, does not decide otherwise;

e. The supply of arms to Cyprus shall be prohibited in a manner that is legally binding on

both importers and exporters; and

f. A Monitoring Committee composed of the guarantor powers, the <common state>, and

the <component states>, and chaired by the United Nations, shall monitor the

implementation of this Agreement,

Cyprus shall be demilitarized, and all Greek Cypriot and Turkish Cypriot forces, including

reserve units, shall be dissolved, and their arms removed from the island, in phases

synchronized with the redeployment and adjustment of Greek and Turkish forces.

2. There shall be no paramilitary or reserve forces or military or paramilitary training of

citizens. All weapons except licensed sporting guns shall be prohibited.

3. Neither <component state> shall tolerate violence or incitement of violence against the

<common state>, the <component states>, or the guarantor powers.

4. Cyprus shall not put its territory at the disposal of international military operations other

than with the consent of Greece and Turkey or the consent of both <component states>.

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5. These provisions do not prejudice the provisions of the Treaty of Establishment, the

Treaty of Guarantee, the Treaty of Alliance, the mandate of the United Nations

peacekeeping operation and the provisions of the Constitution on <common state> and

<component state> police and the Joint Investigation Agency.

Article 9 <component state> boundaries and territorial adjustment

1. The territorial boundaries of the <component states> shall be as depicted in the map

which forms part of this Agreement.

2. Areas subject to territorial adjustment which are legally part of the Greek Cypriot

<component state> upon entry into force of this Agreement, shall be administered during an

interim period no longer than three years by the Turkish Cypriot <component state>.

Administration shall be transferred under the supervision of the United Nations to the Greek

Cypriot <component state> in agreed phases, beginning 90 days after entry into force of this

Agreement with the transfer of administration of largely uninhabited areas contiguous with

the remainder of the Greek Cypriot <component state>.

3. Special arrangements shall safeguard the rights and interests of current inhabitants of

areas subject to territorial adjustment, and provide for orderly relocation to adequate

alternative accommodation in appropriate locations where adequate livelihoods may be

earned.

Article 10 Property

1. Claims by property owners dispossessed by events prior to entry into force of this

Agreement shall be resolved in a comprehensive manner in accordance with international

law, respect for the individual rights of dispossessed owners and current users, and the

principle of bi-zonality.

2. In areas subject to territorial adjustment, properties shall be reinstated to dispossessed

owners.

3. In areas not subject to territorial adjustment, the arrangements for the exercise of property

rights, by way of reinstatement or compensation, shall have the following basic features:

a. Dispossessed owners who opt for compensation or whose properties are not reinstated

under the property arrangements shall receive full and effective compensation on the basis

of value at the time of dispossession adjusted to reflect appreciation of properties in

comparable locations;

b. Current users, being persons who have possession of properties of dispossessed owners as

a result of an administrative decision, may apply for and shall receive title if they agree in

exchange to renounce their title to a property, of similar value and in the other <component

state>, of which they were dispossessed;

c. Persons may also apply for and shall receive title to properties which have been

significantly improved provided they pay for value of the property in original state;

d. There shall be incentives for owners to sell, lease or exchange properties to current users

or other persons from the <component state> in which a property is located;

e. Properties not covered by the above shall be reinstated five years after entry into force of

this Agreement (three years for vacant properties), provided that no more than an agreed

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percentage of the area and residences in either <component state> and an agreed percentage

in any given municipality or village (other than villages specifically designated in this

Agreement) shall be reinstated to owners from the other <component state> and

f. Current users who are Cypriot citizens and are required to vacate property to be reinstated

shall not be required to do so until adequate alternative accommodation has been made

available.

4. Property claims shall be received and administered by an independent, impartial Property

Board, composed of an equal number of members from each <component state>, as well as

non-Cypriot members. No direct dealings between individuals shall be necessary.

Article 11 Reconciliation Commission

1. An independent, impartial Reconciliation Commission shall promote understanding,

tolerance and mutual respect between Greek Cypriots and Turkish Cypriots.

2. The Commission shall be composed of men and women, in equal numbers from each

<component state>, as well as at least one non-Cypriot member, which the Secretary-

General of the United Nations is invited to appoint in consultation with the two sides.

Article 12 Past acts

1. Any act, whether of a legislative, executive or judicial nature, by any authority [...] in

Cyprus whatsoever, prior to entry into force of this Agreement, is recognized as valid and,

provided it is not inconsistent with or repugnant to any other provision of this Agreement or

international law, its effect shall continue following entry into force of this Agreement. No-

one shall be able to contest the validity of such acts by reason of what occurred prior to entry

into force of this Agreement.

2. Any claims for liability or compensation arising from acts prior to this Agreement shall,

insofar as they are not otherwise regulated by the provisions of this Agreement, be dealt with

by the <component state> from which the claimant hails.

Article 13 Entry into force and implementation

1. This Agreement shall enter into force at 00:00 hours on the day following confirmed

approval by each side at separate simultaneous referenda conducted in accordance with the

Agreement.

2. Upon entry into force of this Agreement, there shall be ceremonies throughout the island

at which all flags other than those prescribed in the Constitution are lowered, the flags of

Cyprus and of the <component states> raised in accordance with the Constitution and

relevant legislation, and the anthems of Cyprus and of the <component states> played.

3. Upon entry into force of this Agreement, the Co-Presidents shall inform the United

Nations that henceforth the membership rights and obligations of Cyprus in the United

Nations shall be exercised in accordance with the new state of affairs. The agreed flag of

Cyprus shall be raised at United Nations Headquarters.

4. This Agreement shall be implemented in accordance with the binding timeframes laid

down in the various parts of the Agreement and reflected in the calendar of implementation.

Article 14 Annexes

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The above main articles are reflected in detailed legal language in the Annexes which form

an integral part of this Agreement.

DRAFT ANNEX I: CONSTITUTION OF CYPRUS

Part I: BASIC ARTICLES

Article 1 The State of Cyprus

1. Cyprus is an independent and sovereign state with a single international legal personality

and a <common state> government and consists of a Greek Cypriot <component state> and

a Turkish Cypriot <component state>.

2. The independence, territorial integrity, security, and constitutional order of Cyprus shall

be safeguarded and respected by all.

3. Union of Cyprus in whole or in part with any other country, any form of partition or

secession, and any other unilateral change to the state of affairs established by the

Foundation Agreement and this Constitution is prohibited.

4. Cyprus shall be organised under this Constitution in accordance with the basic principles

of rule of law, democracy, representative republican government, political equality of Greek

Cypriots and Turkish Cypriots, bizonality and the equal status of the <component states>.

Article 2 The <component states>

1. The <component states> are of equal status. Each <component state> exercises its

authority within the limits of this Constitution and its territorial boundaries as set out in the

attachment to this Constitution.

2. The <component states> shall organize themselves freely within the limits of this

Constitution and in conformity with the basic principles of rule of law, democracy, and

representative republican government under their own Constitutions.

3. The identity, territorial integrity, security and constitutional order of the <component

states> shall be safeguarded and respected by all.

Part II: GENERAL PROVISIONS

Article 3 Constitution as supreme law

1. This Constitution, having been democratically adopted by the Greek Cypriots and the

Turkish Cypriots through their separately expressed common will, is the supreme law of the

land and is binding on all authorities of the <common state> and the <component states>.

Any act by the <common state> or either <component state> in contravention of this

Constitution shall be null and void.

2. The <common state> shall fully respect and not infringe upon the powers and functions of

the <component states> under this Constitution. Each <component state> shall fully respect

and not infringe upon the powers and functions of the <common state> or the other

<component state> under this Constitution. There shall be no hierarchy between the laws of

the <common state> and those of the <component states>.

3. The Supreme Court shall uphold this Constitution and ensure its full respect by the organs

of the <common state> and the <component states>.

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Article 4 Rule of law

1. The law is the basis of and limitation for all acts of government at all levels.

2. All acts of government at all levels shall conform with the principles of public interest,

proportionality and good faith.

3. The <common state> as well as the <component states> shall respect international law,

including all treaties binding upon Cyprus, which shall be considered an integral part of this

Constitution.

Article 5 Secular nature of Cyprus and its <component states>

1. The State of Cyprus and its <component states> are secular.

2. Religious functionaries shall not hold elected or appointed political or public office.

Article 6 Demilitarisation of <common state> and <component states>

1. The <common state> and the <component states> shall be demilitarized. There shall be

no paramilitary or reserve forces or military or paramilitary training of citizens.

2. Cyprus shall not put its territory at the disposal of international military operations other

than with the consent of Greece and Turkey or the consent of the governments of both

<component states>.

3. All weapons, except licensed sporting guns, shall be prohibited.

4. Neither <component state> shall tolerate violence or the incitement of violence against

the <common state>, the <component states>, or the guarantor powers by persons, groups or

organisations operating within its boundaries.

5. The provisions of this Article are without prejudice to the provisions of the Treaty of

Establishment, the Treaty of Guarantee, the Treaty of Alliance, the mandate of a UN

peacekeeping operation in Cyprus and the provisions of this Constitution on <common

state> and <component state> police and the Joint Investigation Agency.

Article 7 Flags and anthems

1. The flag of Cyprus shall be [insert description of agreed flag], as attached to this

Constitution. The flag of Cyprus shall be flown alone or together with the flag of the

European Union on <common state> government buildings

2. The anthem of Cyprus shall be [insert name of agreed anthem], as attached to this

Constitution.

3. The <component states> shall have their own anthems and flags. The <component state>

flag shall be flown on <component state> government buildings, along with and in the same

manner as the flag of Cyprus and, if <component state> lw so provides, that of the European

Union. No other flag shall be flown on <component state> government buildings or public

property.

Article 8 The official languages and promulgation of official acts

1. The official languages of the <common state> are Greek and Turkish. The use of English

for official purposes shall be regulated by law.

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2. Legislative, executive, administrative and judicial acts and documents of the <common

state> shall be drawn up in all official languages and shall, unless otherwise provided, be

promulgated by publication in the official Gazette of Cyprus in all official languages.

3. All persons shall have the right to address the authorities of the <common state> in any of

the official languages and to be addressed in that same language.

4. The official languages of the <common state> shall be taught mandatorily to all secondary

school students.

Article 8 Official Holidays of the <common state>

1. The National Holiday of Cyprus shall be the day of the referenda on the Foundation

Agreement.

2. In addition to Sundays, the following official holidays shall be observed throughout

Cyprus:

a. 1 January (New Year's Day);

b. 1 May (Labour Day);

c. 25 December (Christmas);

d. Good Friday;

e. Easter Monday;

f. The first day of Ramadan/Sheker Bayram;

g. The first day of Kurban Bayram; and

h. The birthday of the Prophet Mohammed.

3. Each <component state> shall determine and observe its own holidays in addition to those

of the <common state>.

4. Public servants of the <common state> shall be entitled to observe, in addition to the

above, the official holidays of either one <component state> or the other.

Part III: FUNDAMENTAL RIGHTS AND LIBERTIES

Article 10 Fundamental Rights

1. In accordance with Article 4(3) of this Constitution, the European Convention for the

Protection of Human Rights and Fundamental Freedoms and its Additional Protocols which

are in force for Cyprus and the United Nations Covenant on Civil and Political Rights shall

be an integral part of this Constitution.

2. There shall be no discrimination against any person on the basis of his or her gender,

ethnic or religious identity, or internal <component state> citizenship status.

3. There shall be freedom of movement and freedom of residence throughout Cyprus, except

as otherwise expressly provided in this Constitution or any other parts of the Foundation

Agreement or a Constitutional Law.

4. The rights of religious and other minorities, including the Maronite, the Latin and the

Armenian, shall be safeguarded. The <common state> and the <component states> shall,

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within their respective spheres of competence, afford minorities the status and rights

foreseen in the European Framework Convention for the Protection of National Minorities,

in particular the right to administer their own cultural and educational affairs and to be

represented in the legislature.

5. Greek Cypriots residing in the Karpas villages of Rizokarpaso/Dipkarpaz, Agialousa/Yeni

Erenköy, Agia Trias/Sipahi, Melanarga/Adacay, and Maronites residing in the villages of

Agia Marina/Gurpinar, Asomatos/Özhan, Karpasha/Karpasa and Kormakiti/Koruçam, and

Turkish Cypriots residing in the Tillyria villages of Amadhies/Gunebakan,

Limnitis/Yesilyirmak, Selemani/Suleymaniye, Xerovounos/Kurutepe and Agios

Georgios/Madenliköy, as well as the Mesaoria villages of Pyla and [insert other villages

with more than 20% Turkish Cypriots in 1960 should they fall within the area of territorial

adjustment] shall, within the <component states> in which these villages are situated, enjoy

the right to administer their own cultural and educational affairs and to be represented in the

<component state> legislature..

Article 11 Citizenship

1. There is a single Cypriot citizenship.

2. All persons holding Cypriot citizenship shall also enjoy internal <component state>

citizenship status as provided for by Constitutional Law. Such status, like the European

Union citizenship status, is complementary to and does not replace Cypriot citizenship.

3. Where any provision of this Constitution or of the Foundation Agreement refers to the

<component state> origins of a person (or where a person hails from), the criterion shall be

the holding of internal <component state> citizenship status. No one may hold the internal

<component state> citizenship status of both <component states>.

Article 12 Exercise of political rights

Cypriot citizens who are at least 18 years old shall enjoy political rights at the <common

state> level and exercise them based on their internal <component state> citizenship status.

Part IV: THE <COMMON STATE> AND THE <COMPONENT STATES>

Article 13 Competences and functions of the <common state>

1. The <common state> shall, in accordance with this Constitution, sovereignly exercise

legislative and executive competences in the following matters:

a. External relations, including conclusion of international treaties and defence policy;

b. Relations with the European Union;

c. Central Bank functions, including issuance of currency, monetary policy and banking

regulations;

d. common state> finances, including budget and all indirect taxation (including customs

and excise), and <common state> economic and trade policy;

e. Natural resource, including water resources;

f. Meteorology, aviation, international navigation and the continental shelf and territorial

waters of Cyprus;

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g. Communications (including postal, electronic and telecommunications);

h. Cypriot citizenship (including issuance of passports) and immigration (including asylum,

deportation and extradition of aliens);

i. Combating terrorism, drug trafficking, money laundering and organised crime;

j. Pardons and amnesties;

k. Intellectual property and weights and measures; and

l. Antiquities

2. Incidental to the above competences and to other provisions of this Constitution, the

<common state> shall exercise legislative and executive competences over <common state>

administration (including public service, <common state> police, as well as its independent

institutions and officers); <common state> elections and referenda; offences against

<common state> laws; administration of justice by the Supreme Court; <common state>

property, including public works for <common state> facilities and expropriation; and like

matters which are clearly incidental to the specified powers of the <common state>.

3. The <common state> shall, as appropriate, entrust the implementation of its laws

including the collection of certain forms of taxes, to <component state> authorities.

4. Obligations of the <common state> under international treaties shall be implemented by

the <common state> or <component state> authority which enjoys legislative competence in

the subjec matter to which the treaty pertains.

5. The <common state> shall confer upon the <component states> a portion of its revenue

from indirect taxation as provided for by special majority law.

Article 14 Competences and functions of the <component states>

1. The <component states> shall, within the limits of this Constitution, sovereignly exercise

within their territorial boundaries all competences and functions not vested by this

Constitution in the <common state>.

2. The <component states> shall have primary criminal jurisdiction over offences against

<common state> laws, unless such jurisdiction is reserved for the Supreme Court of Cyprus

by <common state> legislation.

3. The police of a <component state> shall be stationed and operate exclusively within that

<component state> and shall be responsible for the protection and enforcement of law and

order and public safety within that <component state>, including offences against <common

state> laws, without prejudice to the functions of the <common state> police and the Joint

Investigation Agency. A Constitutional Law shall regulate the strength and equipment of

<component state> police and a Cooperation Agreement between the <common state> and

the <component states> shall provide for cooperation on police matters.

Article 15 Cooperation and coordination

1. Where expressly provided for in this Constitution, legislative matters may be regulated in

a manner binding upon the <common state> and the <component states>, through

Constitutional Laws. Such laws shall be approved by the legislatures of the <common state>

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and the <component states> in accordance with procedures set down in a Constitutional Law

and shall have precedence over any other <common

state> of <component state> laws.

2. The <component states> may conclude agreements with each other or with the <common

state>. Such agreements may create common organizations and institutions on matters

within the competence of the parties.

3. The <component states> shall strive to coordinate or harmonize their policy and

legislation, including through agreements, common standards and consultations wherever

appropriate, in particular on the following matters:

a. Tourism;

b. Protection of the environment and use and conservation of energy and natural resources,

including water;

c. Fisheries and agriculture;

d. Industry and commerce, including insurance, consumer protection, professions and

professional associations;

e. Zoning and planning, including for overland transport;

f. Sports and education;

g. Health, including regulation of tobacco, alcohol and drugs, and veterinary matters;

h. Social security and labour;

i. Family, company and criminal law; and

j. Acceptance of validity of documents.

4. Either <component state> or any branch of the <common state> government may initiate

the coordination or harmonization process.

5. Agreements on such coordination or harmonization shall be approved by the competent

branch of the <component state> governments and, if <common state> participation is

required, by the competent branch of the <common state>.

6. The <common state> shall support, both financially and logistically, cooperative

endeavours between the <component states> or between municipalities and villages located

in different <component states>.

7. The <common states> and the <component states> shall accept valid documents issued by

government authorities and educational, medical and other public service institutions.

Article 16 Joint Investigation Agency

There shall be a Joint Investigation Agency, comprising <common state> and <component

state> police personnel and reporting to the Attorney-General. Its composition and

functions, as well as the strength and equipment of the <common state> and <component

state> police, shall be regulated by Constitutional Law.

Article 17 External relations

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1. Cyprus shall maintain special ties of friendship with Greece and Turkey, respecting the

balance established by the Treaty of Guarantee and the Treaty of Alliance and the

Foundation Agreement.

2. The <component states> shall be consulted on <common state> decisions on external

relations that affect their competences.

3. The <component states> may appoint representatives on commercial and cultural matters,

who shall be accredited as part of diplomatic missions of Cyprus.

4. The <component states> may also conclude agreements on commercial and cultural

matters with authorities of States that have relations with Cyprus, provided that such

agreements do not cause prejudice to Cyprus, the authority of the <common state>

government, or the other <component state>, and are compatible with the European Union

membership of Cyprus.

5. In the exercise of the powers conferred by paragraphs 3 and 4 of this Article, the

following procedures shall be observed:

a. The <component states> shall use the channel of the <common state> ministry of foreign

affairs for contacts at a political level with foreign governments; and

b. The <component states> may have direct contacts with sub-entities or subordinate

authorities of other states. In this case they shall inform the <common state> ministry of

foreign affairs upon starting negotiations on any agreement with such authorities and

continue to advise on the progress and outcome of such negotiations.

6. A Cooperation Agreement between the <common state> and the <component states> on

external relations shall regulate the implementation of this Article.

Article 18 Cyprus as a member of the European Union

1. Cyprus shall be a member of the European Union.

2. The governments of the <component states> shall participate in the formulation of the

policy of Cyprus in the European Union.

3. Cyprus shall be represented in the European Union by the <common state> government in

its areas of competence or where a matter predominantly concerns an area of its competence.

Where a matter falls predominantly or exclusively into an area of competence of the

<component states>, Cyprus may be represented either by a <common state> or a

<component state> representative, provided the latter is able to commit Cyprus.

4. Obligations of Cyprus arising out of European Union membership shall be implemented

by the <common state> or <component state> authority which enjoys legislative

competence for the subject matter to which an obligation pertains. Where the acquis

communautaire prescribes the creation of single national administrative structures, such

structures and the necessary regulations will be established at <common state> level. The

establishment of other administrative structures necessary for the implementation of the

acquis communautaire will be decided on the basis of efficiency requirements.

5. If a <component state> fails to fulfil obligations of Cyprus vis-à-vis the European Union

within its area of competence and Cyprus may be held responsible by the Union, the

<common state> shall, after notification of no less than 90 days (or a shorter period of

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indispensable according to the European Union requirements), take necessary measures in

lieu of the defaulting <component state>, to be in force until such time as that <component

state> discharges its responsibilities.

6. Paragraphs 2-5 of this Article shall be the subject of a Cooperation Agreement between

the <common state> and the <component states>.

7. Amendments to the treaties on which the European Union is founded or acts of accession

of any applicant states to the European Union which require ratification by all member states

of the European Union, shall be ratified by Cyprus unless this is opposed by each of the

legislatures of the <common state> and the <component states>. The President or the Vice-

President of the Presidential Council shall be entitled to sign the respective instrument of

ratification and thereby bind Cyprus.

8. No provision of this Constitution shall invalidate laws, acts or measures by the <common

state> or the <component states> required by the obligations of European Union

membership, or prevent laws, acts or measures by the European Union, or institutions

thereof, from having the force of law throughout Cyprus.

Part V: <COMMON STATE> INSTITUTIONS

Article 19 Eligibility and incompatibility and discharge of duties

1. Unless otherwise provided by this Constitution or law, a person shall be qualified to be

elected or appointed to serve in the <common state> institutions if he or she is a citizen of

Cyprus and has reached the age of 18.

2. Unless otherwise provided by this Constitution or law, no person may be a member of

more than one branch of the <common state> government or the <common state>

government and a <component state> government.

3. Persons elected to or appointed to serve in the <common state> institutions shall act in the

best interests of the <common state>.

Article 20 <common state> immunities and exemptions

1. Members of Parliament, the Presidential Council, the Supreme Court and the Board of the

Central Bank of Cyprus, as well as the Independent Officers, shall enjoy immunity from

arrest or judicial prosecution unless <common state> law provides otherwise.

2. <common state> property used for official purposes shall be exempt from the application

of <component state> legislation, including taxation. Such property shall be under the direct

and sole authority of the <common state>. The <component states> shall assist the

<common state> police in assuring the safety of <common state> property located within

their territorial boundaries.

Section A: The Legislature

Article 21 Composition and election of Parliament

1. The <common state> Parliament shall be composed of two Chambers: the Senate and the

Chamber of Deputies.

2. Each Chamber shall have 48 members, elected for five years on the basis of proportional

representation. The <component states> shall serve as electoral precincts unless special

149

majority law provides otherwise, in which case each precinct may have no less than ten

seats.

3. The Senate shall be composed of an equal number of senators from each <component

state>. The people of each <component state> shall elect, on a proportional basis, 24

members of the Senate.

4. The Chamber of Deputies shall be composed of deputies from both <component states>,

with seats attributed on the basis of the number of persons holding internal <component

state> citizenship status of each <component state> provided that each <component state>

shall be attributed a minimum of one quarter of the seats.

5. The Maronite, Latin and Armenian minorities shall each be represented by no less than

one deputy. Members of such minorities shall be entitled to vote for the election of such

deputies irrespective of their place of residency in Cyprus. Such deputies shall be counted

against the quota of the <component state> where the majority of the members of the

respective minority reside.

Article 22 Organisation

1. The law shall regulate the time and duration of the ordinary sessions of the <common

state> Parliament. At any time, the Presidential Council or one quarter of sitting members of

either Chamber may convene Parliament for an extraordinary session.

2. Each Chamber shall elect a President and two Vice-Presidents, one from each

<component state>, for a period of one year. The Presidents of the two Chambers shall not

come from the same <component state>. The Vice President who does not come from the

same <component state> as the President of the relevant Chamber shall be the First Vice-

President of that Chamber.

3. Each Chamber shall organise its own committees in accordance with the law.

4. Each Chamber shall require the presence of a majority of sitting members in order to take

decisions.

5. The law shall regulate the obligation of members of Parliament to attend meetings and the

consequences of failure to do so without authorization.

Article 23 Powers

1. Parliament shall legislate and take decisions.

2. Parliament shall approve international treaties for

ratification, except where it has delegated that power to the Presidential Council.

3. Parliament shall elect and oversee the functioning of the Presidential Council.

4. Parliament may by special majority refer to the Supreme Court allegations of

impeachment regarding members of the Presidential Council and of organs of the

independent institutions, and independent officers, for grave violations of their duties or

serious crimes.

5. Parliament shall adopt the <common state> budget.

Article 24 Procedure

150

1. Unless otherwise specified, decisions of Parliament need the approval of both Chambers

with simple majority of members present and voting, including one quarter of senators

present and voting from each <component state>.

2. A special majority comprising at least two fifths of sitting senators from each <component

state>, in addition to a simple majority of deputies present and voting, shall be required for:

a. Ratification of international agreements on matters which fall within the legislative

competence of the <component states>

b. Ratification of treaties and adoption of laws and regulations concerning the airspace,

continental shelf and territorial waters of Cyprus;

c. Adoption of laws and regulations concerning citizenship, immigration, water resources

and taxation;

d. Approval of the <common state> budget;

e. Election of the Presidential Council; and

f. Other matters which specifically require special majority approval pursuant to other

provisions of this Constitution.

3. The law shall provide for a conciliation mechanism between the Chambers of Parliament.

Section B: The Executive

Article 25 The Presidential Council

1. The Office of Head of State is vested in a six-member Presidential Council, which shall

exercise the executive power.

2. The members of the Presidential Council shall be elected by Parliament for a fixed five-

year term on a single list by special majority.

3. Members of the Presidential Council shall not hold any other public office or private

position.

4. The members of the Presidential Council shall continue to exercise their functions after

expiry of their term in office until a new Council has been elected.

5. In the event of a vacancy in the Council, a replacement shall be elected by Parliament by

special majority for the remainder of the term of office.

6. The composition of the Presidential Council shall be proportional to the number of

persons holding the internal <component state> citizenship status of each <component

state>, though at least two members must hail from each <component state>.

7. The Presidential Council shall strive to reach all decisions by consensus. Where it fails to

reach consensus, it shall make decisions by simple majority of members voting unless

otherwise stated in this Constitution. Such majority must in all cases comprise at least one

member from each <component state>.

8. The members of the Presidential Council shall be equal. Any member of the Council shall

be able to place an item on the agenda of the Council.

151

9. The Presidential Council may, where appropriate, invite the [executive heads] of the

<component states> to participate without a vote in its meetings.

10. The Presidential Council shall suggest candidates or appoint members for European

Union and international bodies, including the European Commission, the European Human

Rights Court in Strasbourg, the European Court of the Communities in Luxembourg and the

European Court of First Instance.

Article 26 The President and the Vice-President of the Council

1. The President and Vice-President of the Council shall not hail from the same <component

state>.

2. The offices of the President and Vice-President of the Council shall rotate every ten

calendar months among members of the Council on the basis of time spent on the Council

since last serving in either office and with no more than two consecutive Presidents to come

from the same <component state>. Among members of the Council who have spent equal

time on the Council without having served as President or Vice-President, a lot shall be

drawn, unless the members concerned agree to an order of precedence.

3. The Vice-President of the Council shall assume the duties of the President in the absence

or temporary incapacity of the President.

4. The President of the Council shall convene and chair the meetings of the Presidential

Council.

5. Neither the President nor the Vice President of the Council shall have a casting vote.

Article 27 The Departments

1. Each member of the Presidential Council shall head a department.

2. Departments shall be attributed by decision of the Council. Where the Council is unable

to reach a decision, departments shall be attributed on the basis of time spent on the Council;

among members who have spent equal time, a lot shall be drawn.

3. The heads of the Departments of Foreign Affairs and European Union Affairs shall not

hail from the same <component state>.

4. The heads of department shall prepare and execute decisions of the Presidential Council.

Article 28 Representation of the Presidential Council

1. The President of the Council shall represent the Presidential Council as Head of State.

2. In representing the Presidential Council as Head of State, the President shall attend

official functions, sign and receive credentials of diplomatic envoys, and confer the honours

of Cyprus.

3. The President of the Council shall represent Cyprus at meetings of heads of government,

unless the Presidential Council, deciding with separate majorities of members from each

<component state>, designates another member.

4. The heads of the relevant Departments/Secretariats/Ministries shall represent Cyprus at

meetings of government ministers unless otherwise provided for by law or by agreement

between the <common state> and the <component states>.

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5. Where an international meeting is likely to address vital interests of a <component state>,

and the Council representative to that meeting hails from the other <component state>, the

Council shall, upon special request of a majority of Council members from the interested

<component state>, appoint a member from that <component state> to accompany the

Council representative, provided delegations to such meetings may comprise more than one

person.

6. Any representative of Cyprus at international meetings shall be bound by decisions of the

Presidential Council. Where the Council has appointed one of its members to accompany its

representative in accordance with paragraph 5 of this Article, the representative of Cyprus

shall exercise any discretion in concord with such member.

Article 29 The administration of the <common state>

1. A Public Service Commission composed of men and women hailing in equal numbers

from each <component state> shall have authority to appoint and promote <common state>

public servants. It shall take its decisions in accordance with the law.

2. The composition of the public service shall, where not otherwise specified in this

Constitution or special majority law, be proportional to the populationof the <component

states>, though at least one-third of the public servants at every level of the administration

must hail from each <component state>.

3. A public servant of the <common state> may not simultaneously serve as a public servant

of a <component state>.

Article 30 The <common state> police

The <common state> shall have a police composed of an equal number of personnel hailing

from each <component state>. The <common state> police shall control Cyprus’ border and

protect <common state> officials, buildings and property, as well as foreign dignitaries and

diplomatic missions.

Section C: Independent Officers and Institutions

Article 31 Central Bank of Cyprus

1. The Central Bank of Cyprus shall be independent and operate in accordance with

European Union requirements.

2. It shall issue currency, determine monetary policy and the prime lending rate, and regulate

and supervise the banking sector.

3. The Central Bank shall be governed by a Board of three members, one of whom shall be

the Governor. At least one member shall hail from each <component state> the third

member may be a non-Cypriot.

4. The Governor and the other two members of Board shall be appointed by the Presidential

Council for a term of seven years.

5. The law may provide for the establishment of branches of the Central Bank in each

<component state>, and for inclusion of branch directors in the Board of the Central Bank.

6. All decisions of the Board of the Central Bank shall be taken by simple majority.

Article 32 Other independent officers

153

1. The Attorney-General and the Deputy Attorney-General and the Auditor-General and the

Deputy Auditor-General shall be appointed by the Presidential Council for a non renewable

term of office of nine years but no longer than until their 75th birthday.

2. The Attorney-General and the Auditor-General shall not hail from the same <component

state> nor shall the Attorney-General and the Deputy Attorney-General or the Auditor

General and the Deputy-Auditor General.

Article 33 The office of the Attorney-General and the Deputy

Attorney-General

[insert article]

Article 34 The office of the Auditor-General and the Deputy Auditor-General

[insert article]

Section D: The Judiciary

Article 35 The Supreme Court of Cyprus

1. The Supreme Court of Cyprus shall count an equal number of judges from each

<component state> among its members. The Presidential Council shall appoint the judges,

for a renewable term of office of seven years, in accordance with criteria and procedures

stipulated in a special majority law which shall also fix the number of judges.

2. The Supreme Court shall have exclusive jurisdiction over disputes between the

<component states> and between one or both <component states> and the <common state>

and between organs of the <common state>.

3. The Supreme Court shall have exclusive jurisdiction to determine the validity of any

<common state> or <component state> law under this Constitution or any question that may

arise from the precedence of Constitutional laws. Upon request of <component state> courts

or other <common state> or <component state> authorities it may do so in the form of a

binding opinion.

4. The Supreme Court shall be the appeals court in all other disputes on matters which

involve the interpretation of the Foundation Agreement, this Constitution, <common state>

laws (including administrative decisions of the <common state>), or treaties binding upon

Cyprus.

5. The Supreme Court shall have primary jurisdiction over violations of <common state>

law where provided by <common state> legislation.

6. If a deadlock arises in one of the institutions of the <common state> preventing the taking

of a decision without which the <common state> or its institutions could not properly

function, or the absence of which would result in a substantial default on the obligations of

Cyprus as a member of the European Union, the Supreme Court may, upon application of a

member of the Presidential Council, the President or Vice-President of either Chamber of

Parliament, or the Attorney-General or the Deputy Attorney-General, take an ad interim

decision on the matter, to remain in force until such time as a decision on the matter is taken

by the institution in question. In so acting, the Supreme Court shall exercise appropriate

restraint.

154

7. The Supreme Court shall decide on the organization of its work. If it chooses to divide

itself into Chambers for the treatment of certain cases, such Chambers shall always include

an equal number of judges from each <component state>.

8. The Supreme Court shall strive to reach its decisions by consensus and issue joint

judgments of the Court. However, all decisions of the Supreme Court may be taken by

simple majority.

Part VI: AMENDMENTS OF THIS CONSTITUTION

Article 36 Amendments of this Constitution

1. Amendments of this Constitution, including the attachments which are an integral part of

it, shall be considered and adopted by the <common state> legislature after consultation with

the governments of the <component states> and interested sectors of society.

2. The Basic Articles of this Constitution cannot be amended.

3. After adoption by both Chambers of Parliament, proposed amendments shall be submitted

to referendum for approval by separate majority of the people in each <component state>.

4. Amendments shall enter into force 90 days after their approval, unless the amendment

otherwise provides.

Part VII: TRANSITIONAL PROVISIONS

Article 37 <component state> institutions

1. No later than 40 days after entry into force of the Foundation Agreement, the <component

states> shall elect the members of their legislatures and other popularly elected officials in

accordance with the <component state> Constitution and legislation approved in referenda.

2. The newly elected members of the <component state> institutions shall assume office

within ten days of their election.

Article 38 Transitional <common state> Parliament

1. Each newly elected <component states> legislature shall, without delay designate from

among its membership 24 delegates to the <common state> Parliament. To this effect, each

group in a <component state> legislature shall designate as many delegates as corresponds

to its proportional strength in the legislature.

2. The transitional parliament shall exercise the constitutional functions and prerogatives of

the <common state> Parliament during the first year after entry into force of the Foundation

Agreement in accordance with the procedural provisions in this Constitution regarding the

Senate.

3. No later than ten calendar months after entry into force of the Foundation Agreement, the

senators and deputies shall be elected in accordance with this Constitution. The newly

elected Parliament shall assume its functions one year after entry into force of the

Foundation Agreement.

Article 39 Transitional <common state> Head of State

1. For a transitional period of thirty calender months, the office of the Head of State shall be

vested in the Co-Presidency.

155

2. Upon entry into force of the Foundation Agreement, the leaders who have signed the

Comprehensive Settlement on behalf of the Greek Cypriots and the Turkish Cypriots shall

become Co-Presidents of Cyprus. Each <component state> legislature, as soon as it is

constituted, shall confirm the Co-President from its <component state> or elect another

person to the office.

3. In case of resignation or permanent incapacity of either leader, the legislature of the

relevant <component state> shall elect a replacement. If such resignation or incapacity

occurs before the legislature of the relevant <component state> has been elected, the most

senior judge from that <component state> selected for or appointed to the Supreme Court

shall assume the role of Co-President.

4. The Co-Presidents shall alternate every calendar month in representing the Co-Presidency

as Head of State.

Article 40 Transitional <common state> government

1. The Co-Presidents shall exercise the executive power during the first year of the

transitional period in accordance with the relevant provisions for the Presidential Council.

They shall act and decide by consensus.

2. The Co-Presidents shall name six Cypriot citizens to head the departments of the

<common state> government during the first year of the transitional period. The heads of

departments shall be confirmed by Parliament through simple majority. They shall exercise

the functions of the executive, which the Co-Presidents shall delegate to them, in accordance

with the procedures provided for in this Constitution for the Presidential Council.

3. One year after entry into force of the Foundation Agreement, the newly elected

Parliament shall elect a Council of Ministers composed of six members. The provisions of

this Constitution for the Presidential Council shall apply mutatis mutandis to the election,

functioning and powers (other than those vested in the Head of State) of the Council of

Ministers.

4. During a second phase of the transitional period, the Council of Ministers shall act as the

Government of the <common state> of Cyprus while the functions of Head of State shall

continue to be vested in the Co-Presidency.

5. Thirty calendar months after entry into force of the Foundation Agreement, the Council of

Ministers shall become the Presidential Council in accordance with the provisions of this

Constitution, assuming also the function of Head of State, for a remaining three and a half

years, during which time the rotation period for the offices of President and Vice-President

shall be seven months.

Article 41 Participation of [executive heads] of <component states> in meetings of

Presidential Council

During the first ten years after entry into force of the Foundation Agreement, the [executive

heads] of the <component states> shall be invited to participate without a vote in meetings

of the Council of Ministers and, later, the Presidential Council.

Article 42 Entry into force of accession treaty to the European Union

156

The referenda approving, together with the Foundation Agreement, the conditions of

accession of Cyprus to the European Union, shall authorise and oblige the Co-Presidents to

sign and ratify the Treaty providing for the accession of Cyprus to the European Union.

Article 43 Transitional Board of the Central Bank

The members of the transitional Board of the Central Bank selected in accordance with

Appendix B of the Comprehensive Settlement shall assume their functions immediately

upon entry into force of the Foundation Agreement and shall remain in office for 15

calender months, when they shall be replaced by the Board appointed in accordance with the

provisions of this Constitution by the Council of Ministers elected by the two chambers of

the Parliament. The transitional Board shall exercise the powers provided for the Board in

the Constitution until the regularly appointed Board takes office.

Article 44 Judges of the transitional Supreme Court

The judges of the transitional Supreme Court selected in accordance with Appendix B of the

Comprehensive Settlement shall assume their functions immediately upon entry into force of

the Foundation Agreement and shall remain in office for 15 calendar months, when they

shall be replaced by the judges appointed in accordance with the provisions of this

Constitution by the Council of Ministers elected by the two chambers of Parliament. The

transitional Court shall exercise the powers provided for the Supreme Court in the

Constitution until the regularly appointed Supreme Court takes office one year after entry

into force of the Foundation Agreement.

Article 45 Public Service

The Law shall specify implementation procedures and timeframes, not exceeding [insert

figure] years from the entry into force of the Foundation Agreement, for the full

implementation of the provisions of this Constitution relating to the composition of the

public service for the different branches of that service.

Article 46 Responsibility for debts incurred prior to the entry into force of the

Foundation Agreement

The <common state> shall assume responsibility for debts incurred prior to the entry into

force of the Foundation Agreement other than debts to Greece or Turkey or debts from

purchase of armaments, which shall be assumed by the relevant <component state>. Special

majority law may provide for reimbursement of the <common state> by the <component

states>.

Article 47 Teaching of official languages

The mandatory teaching of the official languages of the <common state> to all secondary

school students prescribed in Article 7(4) shall commence no later than three years after

entry into force of the Foundation Agreement.

Article 48 State-owned property

Public property of the <common state> is listed in an attachment to this Constitution. Other

public property is the property of the <component state> in which it is located.

Part VIII: ADDITIONAL PROVISIONS

[insert further articles]

157

ATTACHMENT 1: MAP OF CYPRUS AND ITS <COMPONENT STATES>

[insert topographic map, indicating agreed <component state> boundary]

ATTACHMENT 2: FLAG OF CYPRUS

[insert image of agreed flag]

ATTACHMENT 3: ANTHEM OF CYPRUS

[insert agreed anthem]

ATTACHMENT 4: PROPERTY OF THE <COMMON STATE>

[insert agreed list/description of property of <common state>]

DRAFT ANNEX II: CONSTITUTIONAL LAWS

The attachments of this Annex shall be Constitutional Laws upon entry into force of the

Foundation Agreement, able to be amended in accordance with the Constitution.

ATTACHMENT 1: CONSTITUTIONAL LAW ON THE ELABORATION AND

ADOPTION OF CONSTITUTIONAL LAWS

[insert text]

ATTACHMENT 2: CONSTITUTIONAL LAW ON POLICE MATTERS AND THE

JOINT INVESTIGATION AGENCY

Article 1 <component state> police

Each <component state> police may not number more than 700 police personnel plus six

police personnel per thousand <component state> inhabitants. The <component state> police

may only carry weapons appropriate for normal police civilian duties.

Article 2 Joint Investigation Agency

There shall be a Joint Investigation Agency comprising <common state> and <component

state> police personnel, hailing in equal numbers from each <component state>, and

reporting to the Attorney-General of the <common state>. It shall combat terrorism, drug

trafficking, money laundering and organised crime. It shall also investigate alleged

violations of police duties by <common state> or <component state> police, or of Article

6(3) and (4) of the Constitution, upon request of any <common state> or <component state>

authority.

Article 3 Cooperation

The Joint Investigation Agency and the <common state> police shall cooperate with each

other and with the police of the <component states> pursuant to the Cooperation Agreement

on police matters between the <common state> and the <component states>.

[insert further articles]

ATTACHMENT 3: CONSTITUTIONAL LAW ON INTERNAL <COMPONENT

STATE> CITIZENSHIP STATUS AND <COMPONENT STATE> RESIDENCY

RIGHTS.

158

Article 1 Internal <component state> citizenship status upon entry into force of the

Foundation Agreement

1. Upon entry into force of the Foundation Agreement, Cypriot citizens shall automatically

be afforded the internal <component state> citizenship status of the <component state>

which at that time administers the territory where they reside.

2. Persons residing, at the time of entry into force of the Foundation Agreement, in the

Maronite villages of Agia Marina/Gurpinar, Asomatos/Ozhan, Karpasha/Karpasa, and

Koramakiti/Korucam, the Mesaoria village of Pyla and the Karpas Villages of

Rizokarpaso/Dipkarpaz, Agialousa/Yeni Erenkoy, Agia Trias/Sipahi, Melanarga/Adacay

may, within one year of that date, elect to have the internal <component state> citizenship

status of the other <component state>.

3. Cypriot citizens residing abroad shall be afforded the internal <component state>

citizenship status of the Greek Cypriot <component state> if they or their forebears belonged

to the Greek Cypriot community before 1974, or the internal <component state> citizenship

status of the Turkish Cypriot <component state> if they or their forebears belonged to the

Turkish Cypriot community before 1974.

Article 2 Acquisition of internal <component state> citizenship status

1. Persons acquiring Cypriot citizenship shall also acquire the internal <component state>

citizenship status of the <component state> in which they reside, provided they have resided

there for seven years preceding their naturalisation. If this requirement is not fulfilled, they

shall acquire the internal <component state> citizenship status of the <component state> in

which they have resided longer.

2. Any Cypriot citizen who has been resident in a <component state> for any seven

consecutive years shall be entitled to apply to change his/her internal <component state>

citizenship status to that of the <component state> where s/he resides.

Article 3 Exercise of political rights at the <component state> level

A <component state> may restrict, within the limits of European Union law and this

Constitution, the exercise of political rights at its level to persons holding its internal

<component state> citizenship status.

Article 4 Supreme Court injunctions on entry or residence

A <component state> may apply to the Supreme Court of Cyprus for an injunction barring a

person who does not hold its internal <component state> citizenship status from entering or

residing in that <component state>. The Supreme Court shall grant the injunction if the

relevant person has been, or is actively engaged, in acts of violence or incitement to violence

and his/her presence in that <component state> would be a danger to public safety or public

order.

Article 5 Permissible limitation on residency of non-Cypriots

The <component states> may, within the limits of international law, European Union law

and this Constitution, establish rules and regulations on establishment of residence by non-

Cypriots more restrictive than those of the <common state>.

Article 6 Permissible limitation on residency of Cypriots

159

1. A <component state> may restrict the right to reside of Cypriot citizens who do not hold

its internal <component state> citizenship status, if the number of such residents has reached

28% of its population

2. No later than 25 years after the entry into force of this Agreement, the <common state>

and the<component states> shall review the relevant Constitutional Law in light of

experience.

3. Any restrictions on residency shall not prevent the freedom of movement throughout

Cyprus, including the right of any Cypriot citizen to temporarily (i.e. no more than an

average of three nights a week) stay or holiday in their own properties or any other

accommodation anywhere in Cyprus.

Article 7 Permissible transitional limitations on residency

1. Without prejudice to the provisions of the above Article, <component states> may, during

a transitional period of 15 years after entry into force of the Foundation Agreement, further

restrict the establishment of residence, on a non-discriminatory basis, of Cypriot citizens

who do not hold the relevant internal <component state> citizenship status.

2. Permissable restrictions include a moratorium on such residence during the first four years

after entry intro force of the Foundation Agreement. Thereafter, there may be restrictions if

the number of such residents has reached 8% of the population of a village or municipality

between the 5th

and 9th

years and 18% between the 10th

and 15th

years.

3. Within the permissible limit, priority shall be given first to persons to whom properties

have been reinstated by order of the Property Board, and their families; second to other

persons who were inhabitants of the relevant municipality or village before 1963 or 1974

respectively, and their families; and third to the heirs of either category of persons.

4. There shall be no limitations for establishment of residence by former inhabitants and

their descendants in the Tillyria villages of Amadhies/Gunebakan, Limnitis/Yesilyirmak,

Selemani/Suleymaniye, Xerovounos/Kurutepe and Agios Georgios/Madenlikoy, the

Maronite villages of Agia Marina/Gurpinar, Asomatos/Ozhan, Karpasha/Karpasa and

Kormakiti/Korucam, the Mesaoria villages of Pyla and [insert other villages with more than

20% Turkish Cypriots in 1960 should they fall within the area of territorial adjustment] and

the Karpas villages of Rizokarpaso/Dipkarpaz, Agialousa/Yeni Erenkoy, Agia Trias/Sipahi,

Melanarga/Adacay.

[insert further articles]

DRAFT ANNEX III: <COMMON STATE> LEGISLATION UPON ENTRY INTO

FORCE OF THE FOUNDATION AGREEMENT

The attachments to this Annex shall be <common state> legislation upon entry into force of

the Foundation Agreement, able to be amended in accordance with the Constitution.

ATTACHMENT 1: LAW ON THE ANTHEM, FLAG, INSIGNIA AND HONOURS

OF CYPRUS (AND THEIR USE)

[insert text]

ATTACHMENT 2: LAW ON CONDUCT OF EXTERNAL RELATIONS

Article 1 Composition of diplomatic missions of Cyprus

160

1. The heads of mission of Cyprus to the United Nations in New York, the United Nations in

Geneva, the European Union, Greece, Turkey, the United Kingdom, France, the United

States, Russia and China shall hail in equal numbers from each <component state>.

2. This Article shall be fully implemented no later than [three] years after entry into force of

the Foundation Agreement.

[insert further articles]

ATTACHMENT 3: LAW ON CONDUCT OF EUROPEAN UNION RELATIONS

[insert text]

ATTACHMENT 4: LAW ON CYPRIOT CITIZENSHIP

Article 1 General provisions

This Law determines the conditions for the acquisition [and loss] of Cypriot citizenship, in

accordance with the terms of the Foundation Agreement, the Constitution and international

and European Union standards.

Article 2 [Dual citizenship]

[insert article, if any.]

Article 3 Cypriot citizenship upon entry into force of the Foundation Agreement

1. Upon entry into force of the Foundation Agreement, the following persons shall be

considered citizens of Cyprus:

a. Any person who held Cypriot citizenship in 1960 and his or her descendants;

b. Any person who enjoyed permanent residence in Cyprus for at least seven years before

reaching the age of 18 and for at least one year during the last five years;

c. Any person who is married to a Cypriot citizen and has enjoyed permanent residence for

at least two years in Cyprus; and

d. Minor children of the persons in the above categories who enjoy permanent residence in

Cyprus.

In addition to the above, persons whose names figure on a list handed over to the Secretary-

General of the United Nations by each party to the Comprehensive Settlement by 10 March

2003 shall be citizens of Cyprus. Each side’s list may number no more than 33,000 persons,

inclusive of spouses and children, unless there are specific reasons preventing such spouses

and children from being considered citizens of Cyprus.Applicants shall be included on the

list based on the length of their residence in Cyprus.

Article 4 Acquisition of Cypriot citizenship

Cypriot citizenship is acquired in accordance with the provisions of this law:

a. Automatically by birth, where either parent is a Cypriot citizen;

b. By naturalisation; or

c. [insert additional articles, if any].

Article 5 Acquisition by naturalisation

161

A foreigner may submit a request for acquisition of Cypriot citizenship if s/he fulfils the

following conditions:

a. S/he has reached 18 years of age;

b. S/he has enjoyed permanent residence in Cyprus for at least seven consecutive years,

including for no less than four years after entry into force of the Foundation Agreement,

before submitting a request;

c. [S/he has knowledge of one of the official languages of Cyprus];

d. S/he is not the object of a security measure or a protective measure to remove him/her

from Cyprus undertaken by an authority of the <common state> or the <component states>

in accordance with their respective laws; and

e. S/he was not sentenced to a term of imprisonment for a premeditated criminal act for

longer than one year within seven years of the submission of the request.

Article 6 Acquisition by facilitated naturalization

Cypriot citizenship may be acquired through facilitated naturalisation:

a. Upon request, by spouses of persons who have or acquire Cypriot citizenship in

accordance with these provisions, provided they have been married for at least two years; or

b. Automatically by minor children of persons who acquire Cypriot citizenship in

accordance with these provisions.

Article 7 Loss of Cypriot citizenship

[insert article, if any]

Article 8 Passports

1. The Citizenship Board shall issue passports to Cypriot citizens in accordance with these

provisions.

2. During an interim period of [insert number of days], the Citizenship Board shall stamp

travel documents of citizens issued prior to entry into force of the Foundation Agreement,

testifying to the recognition of these documents by Cyprus.

Article 9 The Citizenship Board

1. The Citizenship Board shall be composed of three persons hailing from each <component

state> and the chairs shall rotate on an annual basis.

2. For the first two years of its operation, the Citizenship Board shall, in addition, comprise

two non-Cypriots who are not citizens of Greece, Turkey or the United Kingdom. The non-

Cypriots may simultaneously serve on the Aliens Board.

3. The members of the Citizenship Board shall be appointed by the Presidential Council and

confirmed by Parliament by special majority.

Article 10 Implementation of this law

1. The Citizenship Board shall be entrusted with the implementation of this law and shall

adopt rules and regulations for this purpose.

162

2. The Citizenship Board shall appoint and supervise agents who shall process requests

relating to Cypriot citizenship, in accordance with this law and its rules and regulations.

Article 11 Review of decisions on citizenship

1. There shall be a right of appeal to the Citizenship Board from decisions by agents of the

Board regarding citizenship.

2. Decisions of the Citizenship Board are subject to review by the Supreme Court.

Article 12 Transitional rules and regulations

Until the <common state> Parliament adopts detailed rules and regulations governing

citizenship, the Citizenship Board shall adopt such rules and regulations in accordance with

these provisions and the abovementioned international instruments, bearing in mind the

obligations of Cyprus under the Treaty of Accession to the European Union.

[insert further articles]

ATTACHMENT 5: LAW ON ALIENS, IMMIGRATION AND ASYLUM

Article 1 General provisions

This Law prescribes the conditions for residency, immigration and asylum, in accordance

with the terms of the Foundation Agreement, the Constitution and international and

European Union standards.

Article 2 Entry and residency rights of Greek and Turkish nationals

1. Cyprus shall grant equal treatment to Greek and Turkish nationals with respect to entry

and residency rights to the extent permissible under European Union law and the conditions

of accession of Cyprus to the European Union.

2. The Aliens Board shall not authorise further immigration of Greek nationals if the number

of permanent residents who are Greek nationals has reached 10 % of the number of resident

Cypriot citizens who hold the internal <component state> citizenship status of the Greek

Cypriot <component state> nor shall it authorize further immigration of Turkish nationals if

the number of permanently resident Turkish nationals has reached 10% of the number of

resident Cypriot citizens who hold the internal <component state> citizenship status of the

Turkish Cypriot <component state>.

3. Upon entry into force of the Foundation Agreement, the Aliens Board shall authorize the

<component states> to grant permanent residence rights to nationals of Greece and Turkey

up to the level agreed in the previous paragraph. Persons who do not receive permanent

residence may apply for financial assistance to relocate to their country of origin if they have

lived in Cyprus for no less than [five] years. Such assistance shall be in the form of cash

grants payable on their arrival in their country of origin, within five years of entry into force

of the Foundation Agreement. The amount of the grant shall be in accordance with a scale,

based on a figure of no less than 10,000 Euros for a household of four.

Article 3 Asylum

The Aliens Board shall grant asylum in accordance with the 1951 Geneva Convention on the

Status of Refugees and its 1967 Protocol, the 1997 Dublin Convention on Asylum Seekers,

the 1950 European Convention for the Protection of Human Rights and Fundamental

163

Freedoms and its additional protocols which are in force for Cyprus, as well as other

relevant international instruments in force for Cyprus.

Article 4 The Aliens Board

1. The Aliens Board shall be composed of three persons hailing from each <component

state> and the chairs shall rotate on an annual basis.

2. For the first two years of its operation, the Aliens Board shall, in addition, comprise two

non-Cypriots who are not citizens of Greece, Turkey or the United Kingdom. The non-

Cypriots may simultaneously serve on the Citizenship Board.

3. The members of the Aliens Board shall be appointed by the Presidential Council and

confirmed by Parliament by special majority.

Article 5 Implementation of this law

1. The Aliens Board shall be entrusted with the implementation of this law and shall adopt

rules and regulations for this purpose.

2. The Aliens Board shall appoint and supervise agents who shall process requests relating

to immigration, asylum, deportation or extradition in accordance with this law and its rules

and regulations.

Article 6 Review of decisions on immigration, asylum, deportation and extradition

1. There shall be a right of appeal to the Aliens Board from decisions by agents of the Board

regarding immigration, asylum, deportation or extradition.

2. Decisions of the Aliens Board are subject to review by the Supreme Court.

Article 7 Transitional rules and regulations

Until the <common state> Parliament adopts detailed rules and regulations governing

immigration, asylum, deportation and extradition, the Aliens Board shall adopt such rules

and regulations in accordance with these provisions and the abovementioned international

instruments, bearing in mind the obligations of Cyprus under the Treaty of Accession to the

European Union.

[insert further articles]

ATTACHMENT 6: LAW ON THE CENTRAL BANK

Part I: TRANSITIONAL PROVISIONS

Article 1 Exchange of deposits of citizens and residents of Cyprus

The Central Bank of Cyprus shall exchange deposits held by citizens and residents of

Cyprus in Turkish lira in banks in Cyprus into Cyprus pounds at the rate at which the Bank

of Turkey shall credit the relevant amounts to the Bank of Cyprus in Euros.

[insert further articles]

ATTACHMENT 7: LAW ON <COMMON STATE> TAXATION AND FINANCES

Article 1 Transfer to <component states>

164

1. The <common state> shall confer upon the <component states>, in proportion to their

population, no less than 50% of revenue from indirect taxation which is not transferred to

the European Union.

2. The <common state> shall spend no less than 5% of revenue from indirect taxation which

is not transferred to the European Union to finance cooperative endeavours between the

<component states> or between municipalities located in different <component states>.

[insert further articles]

ATTACHMENT 8: LAW ON <COMMON STATE> BUDGET

Article 1 Carry over of previous budget

If Parliament is unable to approve a budget before the beginning of the fiscal year, the

budget of the previous year, adjusted by inflation minus 1%, shall be carried on to the next

fiscal year, unless the Supreme Court in the exercise of its deadlock resolving power decides

otherwise.

[insert further articles]

ATTACHMENT 9: LAW ON INTERNATIONAL TRADE, CUSTOMS AND EXCISE

[insert text]

ATTACHMENT 10: LAW ON AVIATION AND AIRSPACE MANAGEMENT

[insert text; text shall take into account the vital interests and legitimate concerns of

neighbouring states, the geographical position of the island of Cyprus in the Eastern

Mediterranean, the terms of treaties binding on Cyprus upon entry into force of the

Foundation Agreement, and the relevant principles and rules of international law]

ATTACHMENT 11: LAW ON INTERNATIONAL NAVIGATION, TERRITORIAL

WATERS, AND CONTINENTAL SHELF

[insert text; text shall take into account the vital interests and legitimate concerns of

neighbouring states, the geographical position of the island of Cyprus in the Eastern

Mediterranean, the terms of treaties binding on Cyprus upon entry into force of the

Foundation Agreement, and the relevant principles and rules of international law]

ATTACHMENT 12: LAW ON WATER RESOURCES

[insert text; text shall include provisions ensuring that the natural water resources of Cyprus

shall be equitably shared between the <component states>.

ATTACHMENT 13: LAW ON NATURAL RESOURCES

[insert text]

ATTACHMENT 14: LAW ON POSTAL SERVICES

[insert text]

ATTACHMENT 15: LAW ON COMMUNICATIONS

[insert text]

ATTACHMENT 16: LAW ON METEOROLOGY

165

[insert text]

ATTACHMENT 17: LAW ON WEIGHTS AND MEASURES

[insert text]

ATTACHMENT 18: LAW ON INTELLECTUAL PROPERTY

[insert text]

ATTACHMENT 19: LAW ON ANTIQUITIES

[insert text]

ATTACHMENT 20: LAW ON ELECTION TO POPULARLY ELECTED

<COMMON STATE> OFFICES

[insert text; text shall include privisions on eligibility and incompatibility for members of

<common state> institutions]

ATTACHMENT 21: LAW ON <COMMON STATE> IMMUNITIES AND

EXEMPTIONS

[insert text]

ATTACHMENT 22: LAW ON <COMMON STATE> ADMINISTRATION

[insert text]

ATTACHMENT 23: LAW ON OFFICIAL LANGUAGES

[insert text]

ATTACHMENT 24: LAW ON <COMMON STATE> POLICE AND JOINT

INVESTIGATION AGENCY

[insert text]

ATTACHMENT 25: LAW ON LEGISLATIVE PROCEDURE AND ON

PROCEDURE FOR AMENDMENTS OF THE CONSTITUTION

[insert text; should include, inter alia, regulation of procedure for consultation of

<component state> governments and other interested sectors of society.]

ATTACHMENT 26: LAW ON ADMINISTRATION OF JUSTICE

Article 1 Judges of the Supreme Court

1. The Supreme Court judges shall not hold any other public office in the <common state>

or either <component state>.

2. The judges shall not serve beyond their 75th birthday.

3. The Presidential Council shall appoint the judges from among the candidates listed by the

Judiciary Board, three judges hailing from each of the <component states> and three non-

Cypriot judges who shall not be citizens of Greece, Turkey or the United Kingdom.

4. In case of a vacancy, the Presidential Council shall appoint a replacement for the

remainder of the term of office upon suggestion of the Judiciary Board, without altering the

composition of the Court as prescribed in this Article.

166

Article 2 The Chief Justice

The Supreme Court Judges shall elect from among their number a Chief Justice for a

renewable three-year term of office.

Article 3 Seniority of judges

The Chief Justice shall be considered the most senior Supreme Court judge. Among the

other judges, seniority shall be determined firstly by time served in office and by age in case

of equal time served.

Article 4 Judiciary Board

1. The Judiciary Board shall comprise the three most senior <common state> Supreme Court

judges, each being the most senior of the group of judges from each of the <component

states> and the non-Cypriot judges respectively; the Attorney-General and Deputy Attorney-

General of the <common state> and the Attorney-General, the head of the highest court and

the President of the Bar Association of each <component state>.

2. If the most senior judge from any group in the transitional Supreme Court is also the head

of the highest <component state> court, the second most senior judge from the relevant

group shall take his/her place on the Judiciary Board.

3. The Judiciary Board shall decide on a list of names by a two-thirds majority.

Article 5 Partial periodic renewal of the Supreme Court

1. To ensure partial periodic renewal of the Supreme Court, the terms of office of the

original members shall be as follows:

a. Three years for one judge from each <component state> as well as one non-Cypriot judge;

b. Six years for one judge from each <component state> as well as one non-Cypriot judge;

and

c. Nine years for one judge from each <component state> as well as one non-Cypriot judge.

2. If the judges in each group cannot agree among themselves who shall hold each term of

office, a lot shall be drawn among each group of judges.

Article 6 Transitional Supreme Court

1. The provisional Judiciary Board shall be composed of the Attorney-General, the head of

the highest court and the President of the Bar Association of each <component state>.

2. The Cypriot judges may maintain any functions as <component state> judges during their

one-year term of office on the transitional Supreme Court to the extent that their tasks at the

Supreme Court shall allow it. They shall give priority to their tasks as judges of the Supreme

Court of Cyprus.

3. The non-Cypriot judges on the transitional Supreme Court shall be remunerated like

judges of the International Court of Justice.

[insert further articles]

ATTACHMENT 27: LAW ON <COMMON STATE> OFFENCES

167

[insert text; i.e. criminal code on terrorism, drug trafficking, money laundering, organized

crime and offences against <common state> laws]

ATTACHMENT 28: LAW ON IMPEACHMENT

[insert text; text shall include provisions that cases alleging impeachment shall be referred to

the Supreme Court; the Supreme Court shall determine the appropriate punishment]

DRAFT ANNEX IV: COOPERATION AGREEMENTS BETWEEN <COMMON

STATE> AND <COMPONENT STATES> UPON ENTRY INTO FORCE OF THE

FOUNDATION AGREEMENT

The attachments to this Annex shall be Cooperation Agreements between the <common

state> and the <component states> upon entry into force of the Foundation Agreement.

These agreements may be amended by agreement of the <common state> and both

<component states>.

ATTACHMENT 1: COOPERATION AGREEMENT ON EXTERNAL RELATIONS

[insert text]

ATTACHMENT 2: COOPERATION AGREEMENT ON EUROPEAN UNION

RELATIONS

Article 1 Scope of agreement

This agreement regulates decision-making and representation of Cyprus in European Union

matters which predominantly or exclusively fall within the competence of the <component

states>.

Article 2 Duty to inform

The <common state>shall inform the <component states> without delay on all issues

relating to European integration in areas of competence of the <component states>. This

duty shall include the transmission of:

a. Documents, reports, and notices of the organs of the European Union;

b. Documents, reports, and notices on informal meetings at ministerial level;

c. Documents and information on cases pending before the European Court of Justice; and

d. Reports of the permanent representation of Cyprus to the European Union.

Article 3 Decision-making

1. In matters referred to in Article 1, the <common state> shall consider opinions of the

<component states> given in due time. In case of consistent opinion of both <component

states> given in due time, this opinion shall be legally binding on the <common state> in

negotiations and voting. The <common state> may only deviate from this opinion if there

are mandatory reasons with regard to foreign affairs.

2. In the case of persistent inconsistencies in matters referred to in Article 1, coordination

with respect to the position of the <common state> shall be undertaken by the Coordination

Group. The Coordination Group shall comprise a representative of each of the members of

the Presidential Council in charge of Foreign Affairs and European Union relations, and

168

representative of each <component state>. The decisions of the Coordination Group shall be

binding on the relevant representative in the European Union.

3. The position taken by the Coordination Group may be changed only in exceptional

circumstances. If the position taken by the Coordination Group needs to be urgently adapted

in the course of a meeting of a European Union organ, the respective representative shall

immediately inform the Coordination Group. If a revised decision of the Coordination

Group cannot be obtained in time, the representative of Cyprus shall abstain, except in cases

where s/he has received clear freedom to choose the position that will most likely address

the general interests of Cyprus as a whole. It is understood that in such circumstances, the

vote given by the Cyprus representative will have been final.

Article 4 Representation

1. Cyprus may be represented in the European Union either by a representative of the

<common state> or a representative of a <component state>.

2. The representatives shall be appointed by the Presidential Council upon suggestion of the

Coordination Group.

3. The representatives of Cyprus in the Council of the European Union shall be notified to

its General Secretariat. Such representatives attending meetings shall have the exclusive

right to make legally binding declarations.

4. Cyprus will be represented in the European Parliament according to proportional

representation, provided that each <component state> is attributed no less that one third of

Cypriot seats in the European Parliament.

Article 5 Legal action

1. In case of an unlawful act or failure to act of organs of the European Union or another

member state concerning matters in the areas of competence of the <component states>,

Cyprus shall bring an action before the European Court of Justice upon request of the

<component state>. Such request is to be addressed to the Presidential Council and shall

include all information relevant to a legal action before the European Court of Justice.

2. The costs of such legal action shall be borne by the <component state> requesting the

action.

Article 6 Adaptation

The <common state> and the <component states> shall adapt this Agreement by consensus

to take account of further developments of European integration or other needs that may

arise.

Article 7 Presidency

Prior to Cyprus exercising the Presidency of the European Union, the Coordination Group

shall propose specific modalities to the Presidential Council.

Article 8 Disputes resulting from the application of this agreement

Any dispute resulting from the application of this Agreement shall be decided by the

Supreme Court of Cyprus.

[insert further articles]

169

ATTACHMENT 3: COOPERATION AGREEMENT ON POLICE MATTERS

[insert provisions on cooperation arrangements between <component state> police, between

<component state> police and <common state> police, and regarding joint investigation

agency; these provisions should create a cooperation committee; they should, inter alia,

address the issue of hot pursuit]

DRAFT ANNEX V: LIST OF INTERNATIONAL TREATIES BINDING ON

CYPRUS UPON ENTRY INTO FORCE OF THE FOUNDATION AGREEMENT

[insert list of treaties; Charter of the United Nations, Treaty of Establishment, Treaty of

Guarantee and Treaty of Alliance shall be included in the list; further treaties shall be listed

in accordance with the following guidelines:

• There shall be a presumption of inclusion of all multilateral instruments and all bilateral

instruments, other than with Greece and Turkey; either side may raise objections with

respect to a specific instrument provisionally listed on grounds of incompatibility with the

Comprehensive Settlement or the Foundation Agreement;

• Instruments with Greece and Turkey in areas not related to defence shall be examined and,

unless incompatible with the Comprehensive Settlement or the Foundation Agreement, shall

be included in the list;

• Instruments with Greece and Turkey on defence matters shall not be included in the list,

unless otherwise agreed.]

DRAFT ANNEX VI: TERRITORIAL ARRANGEMENTS

Article 1 Delineation of <component state> boundaries

1. The boundaries of the <component states> shall be as depicted in the attached map.

2. [insert text describing in detail the course of the agreed boundary]. In towns (namely

Nicosia and Famagusta), the final boundary shall be demarcated in such a way as to take

into account as an overriding concern the ownership of properties in the area of the

boundary. Functionality of street use and administration shall also be a consideration. Any

inconsistency between this description and the map shall be decided by consensus by a

committee, or, where they are unable to reach consensus, by the Supreme Court of Cyprus.

3. The committee shall comprise [insert figure] representatives of each <component state>

and at least one non-Cypriot. The committee shall be appointed upon entry into force of the

Foundation Agreement, and shall demarcate the boundary on the ground.

Article 2 Access and connecting roads

[indicative text to be modified in accordance with agreed map]

Applying to both suggested maps:

1. Civilian traffic on direct connecting roads between the main part of a <component state>

and a non-contiguous part, as well as on direct connecting roads through a non-contiguous

part of a <component state>, may only be restricted pursuant to an injunction of the

Supreme Court.

2. The road connecting Pyrogi and Athienou is under the territorial administration of the

Greek Cypriot <component state> for its entire length. The Turkish Cypriot <component

170

state> shall be entitled to construct an underpass or overpass for access to

Louroujina/Akincilar.

3. The Greek Cypriot <component state> shall be entitled to construct a road under its

territorial administration between Kontea and Kalopsida, across the territory administered by

the Turkish Cypriot <component state> south of Köüklia and to expropriate the necessary

land in exchange for full and effective compensation, in cooperation with the Turkish

Cypriot <component state>. The <component states> shall agree on the location of any

necessary underpasses or overpasses to be built at the expense of the Greek Cypriot

<component state>.

Article 4 Phasing of territorial adjustment

1. Areas within the agreed territorial boundaries of a <component state> which are subject to

territorial adjustment, while legally part of that <component state> upon entry into force of

the Foundation Agreement, shall be administered during an interim period no longer than

three years by the other <component state>, by which time, administration shall have been

completely transferred.

2. Administration shall be transferred in agreed phases as depicted on the attached map.

Transfer shall begin 90 days after entry into force of the Foundation Agreement with the

transfer of administration of the following largely uninhabited areas contiguous with the

remainder of the relevant <component state>: [insert description of areas]. Remaining areas

shall be transferred as follows: [insert transfer timeframes and arrangements for remaining

areas].

3. The <component states> shall render full cooperation to the United Nations which, in

conformity with its mandate, shall supervise activities relating to the transfer of areas subject

to territorial adjustment and contribute to the maintenance of a secure environment.

4. During the phasing period, the areas under the administration of the Greek Cypriot

<component state> and the Turkish Cypriot <component state> shall be clearly marked as

follows: [insert text]. During this period, the agreed crossing points shall be as follows:

[insert text]

Article 5 Current inhabitants

1. The following special arrangements shall safeguard the rights and interests of current

inhabitants of areas subject to territorial adjustment, and provide for orderly relocation to

adequate alternative accommodation (in accordance with Annex VII) in appropriate

locations where adequate livelihoods may be earned:

a. persons to be relocated shall be registered by household, including details of their current

occupation or means of livelihood;

b. communities may request to be relocated as a community;

c. persons with sufficient financial means shall vacate properties no later than [one] month

prior to the agreed date of transfer of administration of the relevant area;

d. persons without sufficient financial means shall receive no less than [three] months notice

of the date for relocation once alternative accommodation has been identified; during this

time they may access this alternative accommodation to prepare for their arrival;

171

e. persons to be relocated who do not have sufficient financial means shall be provided with

transport for the members of their household and their belongings, as necessary; and

f. special arrangement shall be made for families with young children, the elderly and the

disabled.

2. Persons other than Cypriot citizens who, pursuant to an administrative decision by an

authority in Cyprus, enjoyed permanent residence in areas subject to territorial adjustment

may apply for financial assistance to relocate to their country of origin. Such assistance shall

be in the form of cash grants payable upon their arrival in their country of origin, within

five years of entry into force of the Foundation Agreement. The amount of the grant shall be

in accordance with a scale, based on a figure of no less than 10,000 Euros for a household of

four.

Article 6 Relocation Board

1. Relocation pursuant to Article 5 shall be managed by a Relocation Board, comprising of

five persons, including one representative of each <component state> and three non-

Cypriots who are not citizens of Greece, Turkey or the United Kingdom and of whom one

shall be a United Nations representative. The latter is invited to chair the Board. The

Secretary-General of the United Nations is invited to appoint the non-Cypriot members of

the Board.

2. The <component states> shall each nominate a representative of their authority competent

for housing and property issues, their authority competent for employment/economic issues,

their <component state> police and each of the local authorities for the areas subject to

territorial adjustment, to cooperate and liaise with the relocation Board and attend extended

planning meetings at the request of the Board.

3. Among other responsibilities, the Relocation Board shall verify that alternative

accommodation is ready for inhabitation before setting dates for relocation. It shall initiate

arrangements with the competent authorities in the receiving municipalities to ensure that

persons relocating there are assisted in establishing a livelihood in those municipalities.

4. The Relocation Board shall also work closely with the Property Board regarding decisions

on reinstatement in the areas subject to territorial adjustment and the identification of

alternative accommodation. When planning the construction of alternative accommodation,

special consideration shall be given to requests of communities wishing to relocate as a

community.

5. The Relocation Board shall adopt rules and regulations in accordance with these

provisions. The <component states> shall fully respect and implement the decisions of the

Relocation Board in a timely manner, and adopt any necessary legislation or regulations to

ensure their enforcement.

Article 7 Properties

Properties located in areas subject to territorial adjustment shall be handled in accordance

with the provisions of Attachment 4 of Annex VII.

ATTACHMENT 1: MAP OF TERRITORIAL ADJUSTMENT

172

DRAFT ANNEX VII: TREATMENT OF PROPERTY AFFECTED BY EVENTS

SINCE 1963

Part I: GENERAL ARTICLES

Article 1 General provisions

1. The provisions in this Annex and its attachments deal with properties which were affected

as a consequence of intercommunal strife, military action or the unresolved division of the

island between December 1963 and entry into force of the Foundation Agreement and

introduces an extraordinary regime to deal with these properties. The provisions in this

Annex and its attachments will continue to apply to such properties until all matters covered

by these provisions have been closed by the Property Board or the Supreme Court.

2. Terms used in this Annex and its attachments are defined in Attachment 1.

3. Provisions of this Annex and its attachments shall be referred to hereinafter as 'these

provisions'.

Article 2 The Cyprus Property Board

These provisions, unless otherwise stated, shall be implemented by the Cyprus Property

Board. Its composition, powers and procedures, as well as the obligations of the <common

state> and the <component states> in relation to it, are further regulated in Attachment 2.

Article 3 Property in areas subject to territorial adjustment

Property located in areas subject to territorial adjustment is regulated by Attachment 4.

Where there are no specific provisions in Attachment 4, the other provisions of this Annex

shall apply.

Article 4 Religious sites

1. The Churches and Evkaf shall be entitled, without exception and within three years of

entry into force of the Foundation Agreement, to reinstatement of any affected property

owned by them which was used as a religious site in 1963 or 1974.

2. This Article shall not limit the right of Churches and Evkaf to claim compensation in lieu

of reinstatement for any affected property under these provisions.

Part II: REGULATION OF EXERCISE OF PROPERTY RIGHTS

Article 5 Suspension of dealings, proceedings or alterations with respect to affected

property

1. Any transaction, dealing, or any proceeding in any court or legal or administrative body,

or any physical alterations (apart from minor or emergency maintenance), with respect to

any affected property shall be suspended or prohibited upon entry into force of the

Foundation Agreement, until the Property Board:

a. Authorises such dealing, proceeding or physical alteration to continue or occur;

b. Refers the dealing or proceeding to another competent court or authority; or

c. Makes a final determination in relation to the property.

173

2. The <common state> and the <component states> shall, pursuant to Article 37 of the 1950

European Convention for the Protection of Human Rights and Fundamental Freedoms,

request the European Court of Human Rights to strike out any proceedings currently before

it concerning affected property.

Article 6 Claims and applications

1. A dispossessed owner shall be entitled to claim compensation for his/her title to property

or the reinstatement of his/her property or apply for assistance in arranging the sale, long-

term lease or exchange of his/her property.

2. Current users of affected properties who are themselves dispossessed owners or persons

who own significant improvements to affected properties may apply to receive title to such

properties.

3. Current users of properties to be reinstated may apply to benefit from the special measures

detailed in Attachment 3.

4. All such claims and applications shall be made to the Property Board within the time limit

specified and shall be processed and determined in accordance with these provisions.

5. All payments required as a condition for the transfer of title or reinstatement shall be

made to the Property Board within three years of the relevant decision of the Property

Board, unless the decision specifies an earlier date. Transfer of title or reinstatement shall

not take effect until all stipulated payments are made in full. Failure to make payments

within the specified period may result in loss of or modifications to rights with respect to the

property.

Article 7 Liability for damage

Persons responsible for serious damage to or destruction of properties shall be liable to the

dispossessed owner and/or the Property Board for the cost of the damage up to the market

value of the property. In addition, the Property Board may fine such persons and take other

punitive measures, including modifying decisions previously made in their favour.

Section A: Compensation

Article 8 Entitlement to full and effective compensation

1. Any dispossessed owner shall be entitled to claim full and effective compensation as

determined by the Property Board in accordance with international standards (hereinafter

referred to as ''compensation'') in exchange for transfer of title to the affected property to the

Property Board.

2. Entitlements to compensation shall be assessed and paid by the Property Board at current

value unless otherwise specified in these provisions.

3. Compensation shall be paid in the form of compensation bonds drawn on a compensation

fund. The establishment of the Compensation Fund, issuing and use of bonds shall be

regulated by the provisions in Attachment 2.

4. Dispossessed owners of properties which, according to the following provisions, are not

reinstated shall be entitled to compensation.

Article 9 Property owned by institutions

174

Title to affected properties, other than religious sites, which are owned by institutions shall

be transferred to the Property Board in exchange for compensation.

Article 10 Property used for public benefit purposes

Title to an affected property which is being used for a purpose in the public benefit upon

entry into force of the Comprehensive Settlement which objectively justifies compulsory

acquisition shall be transferred to the <common state> or the relevant <component state> in

exchange for payment of the current value by the relevant authority to the dispossessed

owner through the Property Board.

Article 11 Property required for military purposes

Title to any affected property which is specified in the Additional Protocols to the Treaty of

Alliance, or any attachment thereto, as being required for military purposes shall be

transferred to the <component state> in which it is located, in exchange for payment of the

current value by the relevant <component state> through the Property Board.

Article 12 Property currently used by dispossessed owners

1. A dispossessed owner who is the current user of an affected property of similar current

value to a property of which s/he was dispossessed and has been using the affected property

on a continuous basis for at least ten years, may apply to the Property Board to receive title

to that property in exchange for title to the property of which s/he was dispossessed.

2. The application shall be granted if the current value of the affected property no greater

than 50% more than the current value of the property of which s/he was dispossessed.

3. If the current value of the affected property is more than 50% greater than the current

value of the property of which the current user was dispossessed, the Property Board shall

assist the dispossessed owner and the current user to reach an amicable agreement. If this

fails, the Property Board may grant or refuse the exchange, taking into account the

arguments of both sides, or partition the property as appropriate.

4. If the current value of the affected property is less than that of the property of which the

current user was dispossessed, s/he may claim compensation for the difference in value.

5. If the current value of the affected property is more than the current value of the property

of which the current user was dispossessed, s/he shall pay the difference to the Property

Board prior to the transfer of title.

Article 13 Property currently used by subsequent purchasers from dispossessed

owners

1. Any purchaser (or his/her successors in title) of an affected property, which was assigned

to a dispossessed owner (hereinafter ''the vendor'') and was of a similar current value to a

property of which the vendor was dispossessed, shall have the same rights and obligations as

the vendor would have had according to Article 12 with respect to the affected property,

provided that s/he and the vendor and any predecessors in title have collectively been current

users of the affected property on a continuous basis for at least ten years. Title to the

property of which the vendor was originally dispossessed shall be transferred to the Property

Board; if the current value of the affected property is less than that of the property of which

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the vendor was originally dispossessed, the vendor may claim the difference in

compensation.

2. The above provision does not apply if the Property Board cannot obtain title to the

property of which the vendor was dispossessed because the vendor has already legally

disposed of it.

Article 14 Significantly improved property

The owner of a significant improvement to an affected property may apply to receive title to

that property, in exchange for payment of the current value of the affected property without

the improvement. The Property Board shall order transfer of title after payment of

compensation to the dispossessed owner at the current value for his/her interest in the

property.

Section B: Reinstatement into possession

Article 15 Eligibility for reinstatement

Affected properties which do not fall into the above categories shall be generally eligible to

be reinstated.

Article 16 Agreed levels of reinstatement

1. In either <component state>, no more than 9%, and in any given municipality or village,

no more than 14% of the total land area and of the number of residences shall be reinstated

to persons hailing from the other <component state>.

2. Eligible claimants shall be awarded reinstatement based on priority in descending order of

age, until the agreed levels are reached.

3. These limitations shall not apply to religious sites or to villages which were

predominantly inhabited by Maronites in 1974 or the Karpas villages of

Rizokarpaso/Dipkarpaz, Agialousa/Yeni Erenkoy, Agia Trias/Sipahi, Melanarga/Adacay.

Article 17 Moratorium for reinstatement

No order of the Property Board shall require reinstatement of affected property to a

dispossessed owner before a date which is:

a. Three years after the Foundation Agreement enters into force, for property which is vacant

at that date; or

b. Five years after the Foundation Agreement enters into force, in all other cases.

Article 18 Improvements on reinstated property

1. The owner of any improvement with a market value of more than 10% of the current

value of a property to be reinstated may apply for compensation for his/her interest in the

property.

2. The dispossessed owner shall be entitled to retain any improvement on the affected

property after reinstatement, provided s/he pays the market value of the improvement to the

Property Board.

3. The dispossessed owner shall not be required to make such a payment if s/he satisfies the

Property Board that the improvement is inappropriate for or irrelevant for his/her intended

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future use of the property for his/her own purposes, provided the intended future use is more

or less similar to its use prior to dispossession. If the Property Board subsequently finds that

the dispossessed owner or any successor in title makes use of the improvement, the Property

Board may pursue him/her to recover the amount of compensation paid to the owner of the

improvement under paragraph 1 of this Article.

Section C: Sale, exchange and long-term lease

Article 19 Option to sell, exchange or lease

1. Properties eligible for reinstatement may be sold, exchanged or leased on a long-term

basis (20 years or longer) to current users or other people hailing from the <component

state> in which the property is located, at any time prior to the final determination on

reinstatement, in accordance with these provisions.

2. Dispossessed owners and current users may seek the assistance of the Property Board

with the sale, exchange or lease of such properties.

Article 20 Incentives for dispossessed owners to sell, exchange or lease

Dispossessed owners shall be offered incentives to sell, exchange or lease on a long-term

basis their properties according to Article 18, including:

a. Exemptions for such properties from being counted for the purposes of determining when

agreed levels of reinstatement have been reached;

b. Exemptions from taxes, governmental fees, charges and duties payable on signing of

instruments, or on completion and registration of transfers or leases of such properties;

c. Exemptions or substantial reductions in taxes on capital gains derived from transfers or

from rental income under such leases;

d. Exemptions from any incidental taxes, governmental fees, charges and duties relating to

sale, exchange or lease of such properties;

e. Exemptions from property taxes for the duration of such leases; and

f. Such other additional incentives as the <common state> and the <component states> may

choose to provide.

Part III: LOSS OF USE

Article 21 Compensation for loss of use

Any claims for compensation for loss of use of an affected property for any period

commencing with dispossession shall be considered by the <component state> from which

the claimant hails, taking into account:

a. Benefits previously enjoyed by the dispossessed owner on the grounds of his/her

displacement; and

b. Any entitlements received by or payable to the dispossessed owner, whether before or

after the Foundation Agreement, for the period of lost use.

Part IV: JUDICIAL REVIEW

Article 22 The Property Court

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1. A Property Court shall be established with power to conduct final judicial review of

decisions of the Property Board.

2. The Property Court shall be composed of an uneven number of judges. This number shall

be specified by the Chief Justice of the Supreme Court after consultation with members of

the Supreme Court, and shall include an equal number of judges from each of the

<component states> and no less than three non-Cypriot judges who are not citizens of

Greece, Turkey or the United Kingdom. The Chief Justice and judges of the Property Court

shall be chosen in the same manner and for the same term of office as judges of the Supreme

Court, unless the Supreme Court decides otherwise.

3. Decisions of the Property Board shall not be subject to appeal or challenge in any

<component state> court or otherwise, except by way of judicial review by the Property

Court in accordance with the law and these provisions.

4. Decisions of the Property Court shall not be subject to further review or appeal to the

Supreme Court.

5. An application for judicial review of a Property Board decision may be made to the

Property Court by any party with a legal interest in the decision or the property in question,

within 60 days of publication of the decision by the Property Board in accordance with its

rules.

6. The Property Court shall have power to levy fees upon parties for procedural steps in

initiating and contesting matters before it.

7. The Property Court shall continue in operation until such time as the Supreme Court may

decide to assume its functions.

Part V: AMENDMENT

1. These provisions may be amended by the executive heads of the <component states>

acting by consensus and with the approval of the legislatures of both <component states>.

2. The text of any proposed amendment shall be agreed between the executive heads of the

<component states> and submitted in identical form to each <component state> legislature.

It shall come into force 30 days after its approval by both legislatures.

ATTACHMENT 1: DEFINITIONS

Article 1 Definitions

In Annex VII and its attachments, the following terms are defined as:

1. Affected property - immovable property in Cyprus which the owner, being a natural or

legal person, left or of which s/he lost use and control as a consequence of intercommunal

strife, military action or the unresolved division of the island between December 1963 and

entry into force of the Foundation Agreement, and which has not since been reinstated to the

owner (or his/her heir, personal representative or successor in title), and over which s/he has

not regained use and control. Affected property shall not include any property which was

voluntarily sold, transferred or otherwise permanently disposed of by the owner, to a person

who was able to gain effective control over the property, including through compulsory

acquisition or expropriation (provided such compulsory acquisition or expropriation was

carried out in accordance with international standards, including through payment of full and

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effective compensation). The onus of proof of any such voluntary transfer or lawful

expropriation shall lie with the transferee or his/her successor in title. In the absence of

evidence to the contrary for the individual case in question, dispossession shall be presumed

to have been unlawful and/or involuntary. People who are not successors in title of

dispossessed owners and have not been able to gain effective control over the relevant

affected property shall be treated in the same manner as the dispossessed owners themselves

would be.

2. Alternative accommodation - residential housing for people affected by the return and

reinstatement of owners, who satisfy eligibility requirements. Such accommodation shall at

least be of a level which is comfortable by reasonable modern standards (including being

connected to public utilities where available, such as water and electricity); provides a

reasonable ratio of living space for the number of household members which it must

accommodate; is no less than [insert minimum number of square metres for an individual

and minimum number of square metres for each additional person]; and, where practicable,

is comparable to the residence which the recipient is vacating or which s/he possessed prior

to his/her displacement (up to a maximum standard to be defined in regulations of the

Property Board).

3. Current user - a person who has been granted a form of right to use or occupy property by

an authority under a legal or administrative process established to deal with property

belonging to dispossessed owners, or any member of his/her family who has a derivative

right to use or occupy such property, or his/her heir or successor in title. The definition does

not include any person who occupies or uses a property without any legal, administrative or

formal basis, nor any person using or occupying property under a lease contract from a

private person, nor any military force, body or authority.

4. Current value - value of a property at time of dispossession, plus an adjustment to reflect

appreciation based among other things on increase in average sale prices of properties in

Cyprus in comparable locations in the intervening period up to the date of entry into force of

the Foundation Agreement. The current value of a property shall be assessed as at the date of

entry into force of the Foundation Agreement. This value shall bear interest, at the same rate

as interest on compensation bonds, from the date of entry into force of the Foundation

Agreement until compensation bonds are issued.

5. Dispossessed owner - a natural or legal person who, at the time of dispossession, held a

legal interest in the affected property as owner or part owner, or his/her legal heir, personal

representative or successor in title, including by gift.

6. Institutions - entities other than natural persons, including privately or publicly-owned or

controlled bodies, such as public or private trusts, religious institutions; military forces and

companies (other than sole corporations).

7. Market rent - the amount of rent which could be charged for a property on the open

market, based on an assessment of market rents paid for comparable properties in

comparable locations at the time of assessment.

8. Market value - the amount for which a property could be sold on the open market, based

on an assessment of purchase prices or amounts paid for comparable propertie] in

comparable locations at the time of assessment.

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9. Original state - the state or condition of affected property at the time of dispossession of

the dispossessed owner, not including improvements subsequently made by any party,

assessed at current value.

10. Property - immovable property, being land and fixtures attached to land (or an ownership

interest or undivided share in such a property)].

11. Reinstatement - restitution through the award of legal and physical possession to the

dispossessed owner, so as to enable him/her to exercise effective control over such property,

including use for his/her own purposes.

12. Religious site - a mosque, church, chapel, cemetery, monastery, shrine, tomb or other

place of worship.

13. Significant improvement - an improvement (including any new construction on vacant

land) to an affected property, which was made between the time of dispossession and 31

December 2001, or based on a building permit issued prior to 31 December 2001, and of

which the market value is greater than the value of the affected property in its original state.

For the purposes of determining the ownership of the improvement, it shall not be

considered as having attached to the land; the owner of the improvement, is the natural or

legal person who paid for the improvement or his/her heir, personal representative or

successor in title. The burden of proof concerning the value, ownership and date of

construction of any improvement lies on the owner of the improvement.

14. Sufficient financial means - income (taxable or otherwise) of more than X (X being the

amount required to meet mortgage payments) or wealth of more than Y (Y being the amount

required to purchase the currently-used property or alternative accommodation).

Entitlements and interests in affected property shall be taken into account for the purposes of

calculating wealth. The Property Board shall determine the amounts of X and Y and revise

the amounts annually, based on market figures and expert input.

15. Use for own purposes - use and enjoyment of affected property by a person, his/her

family member, employee or representative (other than a tenant) through regular personal

use (not necessarily as a permanent residence). Use for own purposes shall not include

selling, renting, transferring by gift or otherwise disposing of an interest in affected property.

16. Vacant - not used or occupied by a current user or any member of his/her family or

successor in title who has a derivative right to use or occupy such property.

ATTACHMENT 2: THE CYPRUS PROPERTY BOARD AND COMPENSATION

ARRANGEMENTS

Section A: Establishment, operation, powers, staff and costs of The Cyprus Property

Board

Article 1 Establishment and conduct of the Cyprus Property Board

1. There shall be an independent, impartial, administrative body known as the Cyprus

Property Board (hereafter the 'Property Board').

2. The Property Board shall act in accordance with the principles and terms of the

Foundation Agreement and in particular with these provisions.

Article 2 Membership

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1. The Property Board shall be composed of a total of seven members, being two members

hailing from each <component state> and three non-Cypriot members who are not citizens

of Cyprus, Greece, Turkey or the United Kingdom.

2. Members shall be legally qualified and of high moral and professional standing. Members

shall be prohibited from holding any other <common state> or <component state> office

during their membership of the Property Board.

3. The Cypriot and non-Cypriot members’ remuneration shall be at the level of nine-tenths

of the salary of the Cypriot and non-Cypriot judges of the Supreme Court respectively.

4. Within 30 days of entry into force of the Foundation Agreement, the Co-Presidents shall

appoint by consensus the initial members of the Property Board. For subsequent

appointments, the members shall be appointed by the executive heads of the <component

states> acting by consensus.

5. The members shall elect from among their number a presiding member, who shall preside

over the Board for a period of three years or until the end of his/her term, whichever is the

sooner.

6. The members of the Property Board shall be appointed for a term of three years. At the

end of each three-year term, each member shall be replaced or reappointed for a further

term. Members may resign with 90 days prior notice. The Supreme Court may remove any

member upon the application of the <common state> or either <component state> in case of

misconduct or grave breach of the member's duties. In case of any vacancy, a new member

shall be appointed within 45 days of notice of the vacancy or of its occurrence, whichever is

the sooner.

7. If there is failure to agree on the appointment of any member of the Property Board in the

time specified under these provisions, the Secretary-General of the United Nations or his

representative, is invited to appoint a replacement member to hold office for a minimum of

eighteen calendar months.

Article 3 Powers

The Property Board body shall have the power to:

a. Receive and rule on claims for affected property;

b. Decide any question or dispute before it regarding claims, entitlements of dispossessed

owners, current users or owners of improvements, allegations of sale under duress, property

valuation, right of first refusal or title to or other rights in respect of affected property;

c. Decide in individual cases on, and set and revise scales and values for the purposes of

calculating compensation for affected property and improvements; rent, sale and purchase

amounts; entitlements to alternative accommodation and other amounts under these

provisions;

d. Demand and receive prompt, full and unhindered access to any and all records, archives,

databases or other information regarding property in Cyprus, and to any and all property in

Cyprus for the purpose of inspection, valuation and assessment related to its tasks and

operation, and to receive copies or extracts of information, without fee, tax or other charge;

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e. Order or procure the registration of interests in affected property or correction of entries in

the relevant Land Titles Register or other records, based on entitlements under these

provisions or other applicable law;

f. Refer any question arising in respect of an affected property to another competent court or

authority, as appropriate and for finalisation or any interim or other ruling;

g. Order the suspension of any proceeding in any court or other authority, or any physical

alterations (other than minor or emergency maintenance) with respect to affected property;

h. Order or procure the completion of any steps as required to transfer interests in affected

property or, where necessary, partition affected property, under these provisions or other

applicable law;

i. Issue legally binding orders to competent <common state> or <component state> bodies as

required to implement its decisions;

j. Acquire and deal with affected property in a responsible manner under these provisions,

including the administration and disposal of affected property transferred to it or coming

under its control;

k. Facilitate the provision and allocation of alternative accommodation;

l. Assist persons, upon their request, in the sale, lease or exchange of affected property;

m. Collect damages from and issue fines against any persons found responsible for

damaging or destroying affected property;

n. Administer and/or supervise a preferential loans scheme under these provisions;

o. Adopt such rules, regulations, procedures, forms and other instruments as required for the

performance of its functions;

p. Consult and seek recommendations from qualified experts to assist in the performance of

its functions, including experts in valuation, economics, law, property markets, quantity and

land surveying, registration, mapping and others; and

q. Perform other tasks, including those which may be assigned to it by the <common state>

or either <component state>, or which are incidental or related to the performance of its

functions.

Article 4 Obligations of the <common state> and the <component states> in respect of

the Property Board

1. The <common state> and the <component states> shall take all steps as required to

implement these provisions in good faith and in a timely manner.

2. In order to fulfil their obligations under these provisions, the <common state> and the

<component states> shall, among other things:

a. Cooperate fully with the Property Board, and respect, recognize and comply with its

decisions in accordance with their legally binding nature including by officially publishing

its decisions at the request of the Property Board;

b. Implement the decisions of the Property Board fully and promptly;

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c. Cooperate with other relevant institutions dealing with affected property under these

provisions;

d. Provide the Property Board with prompt, full and unhindered access to any and all

records, archives, databases or other information regarding property in Cyprus, and to any

and all property in Cyprus for the purpose of inspection, valuation and assessment related to

its tasks and operation, and to provide copies or extracts of information, without fee, tax or

other charge;

e. Adopt special measures, including at the request of the Property Board, to ensure the

physical protection of property from damage or destruction; and

f. Act otherwise as necessary to respect property rights.

3. The <common state> and the <component states> shall adopt and enforce any legislation,

regulations, procedures, orders, instructions, practice notes and other legislative instruments

as necessary or appropriate to acknowledge the binding force of Property Board decisions,

and ensure their enforcement and implementation, including as necessary through local

administrative bodies, police or other agents. Such legislative instruments shall be drafted in

consultation with the Property Board.

4. In case the <common state> or a <component state> fails within

one year after entry into force of the Foundation Agreement to adopt laws for enforcement

and implementation of decisions of the Property Board, the Property Board shall issue rules

providing for enforcement and implementation of its decisions, which shall come into force

as binding legislative instruments of the <common state> or the relevant <component state>,

and which shall remain in force until the <common state> or the relevant <component state>

enacts effective laws in fulfilment of its obligations under these provisions.

Article 5 Obligations of <common state> and <component state> courts and competent

authorities

1. The courts, administrative bodies and other authorities of the <common state> and the

<component states> shall cooperate with the Property Board and acknowledge the legally

binding force of its decisions, and shall take any steps as necessary to implement and

enforce its decisions.

2. If the Property Board refers a question to a court or other competent authority, such court

or authority shall hear and determine the claim on its merits and shall not reject or refuse to

decide the claim solely on the grounds that the claim is out of time or that any applicable

limitation period has expired.

3. The <component states> shall put land for alternative accommodation at the disposal of

the Property Board, including, where necessary, through expropriation (against full and

effective compensation). In allocating such land, the <component states> shall take into

account the need for relocating persons, in particular those from areas subject to territorial

adjustment, to be able adequately to earn their livelihood.

Article 6 Staff

The Property Board shall employ a director who, under the supervision of the members of

the Property Board, shall be responsible for the administration and management of the work

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of the Property Board. The director may employ staff qualified in law, valuation, land titles,

records management, economics, accountancy, information technology, mediation and other

forms of dispute resolution, property management and other technical and relevant fields, to

assist and perform the work of the Property Board.

Article 7 Costs

1. The costs of establishing and running the Property Board shall be met by the <common

state>, which may request contributions from the guarantor states and other international

donors.

2. The Property Board shall prepare an annual budget for its running costs in accordance

with the relevant public service scales of remuneration and, in the case of non-Cypriot

employees, United Nations guidelines. The <common state> shall pay the budgeted amount

for such running costs to the Property Board before the beginning of each financial year.

Any surplus funds at the end of each financial year shall be repaid to the <common state>,

and any shortfall shall be met by the <common state>.

3. The Property Board shall submit its running costs and other accounts to independent audit

each financial year, and the audit report shall be publicly available.

4. Should any additional task or function be assigned to the Property Board, the <common

state> or any <component state> which assigns such task or function shall provide or

procure the provision of resources to enable the Property Board to perform the task or

function.

Article 8 Period of operation of the Property Board

1. Ten years after entry into force of the Foundation Agreement, the Property Board shall be

wound up. If the Property Board by that date has not completed determination of all claims

or any other task before it, the Supreme Court may extend the period of operation of the

Property Board for one year at a time. In case of such an extension, the Supreme Court may

order retention by the Property Board of specified assets to enable it to continue its work in

accordance with these provisions.

2. The Property Board may decide, by majority of five to two and subject to the approval of

the [executive heads] of the <component states> acting by consensus, to wind itself up on a

date earlier than ten years after commencement of its operations, provided that its work has

been completed or appropriate provision has been made for transfer to a competent body of

any outstanding functions or matters.

3. The Supreme Court may, upon application by the Property Board or by the [executive

heads] of the <component states> acting by consensus, extend the period of operation of a

specific section or sections of the Property Board for one year at a time, in order to enable

completion of a specified function, and may order retention by that section or sections of

specified assets to enable the continuation of work. Notwithstanding any such limited

extension of operation of a particular section or sections, the Property Board shall be

considered to be wound up for the purposes of these provisions, unless the Supreme Court

orders otherwise.

4. For the purposes of hearing and determining disputes over claims, entitlements of

dispossessed owners, current users or owners of improvements, property valuation, right of

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first refusal, or title to or other rights in respect of property, the relevant section of the

Property Board shall continue in operation for as long as the Supreme Court deems fit.

5. Prior to its winding-up, the Property Board shall make arrangements for the completion of

any tasks or functions assigned to it under these provisions, including any claims or disputes

which are pending or which may arise in future. For this purpose, it may refer or request the

Supreme Court to assign specified claims or cases to other competent bodies or courts or to

a section of the Property Board, which will continue in operation by order of the Supreme

Court. The obligation to ensure or make arrangements for completion of any tasks or

functions under these provisions shall also apply to any section of the Property Board which

continues in operation for any extended period.

6. At the time of winding-up of the Property Board and each of its sections, each

<component state> shall purchase any property or assets located within that <component

state> which are still held by the Property Board, and which are no longer required for the

purpose of carrying out its functions or the functions of any section which continues to

operate for an extended period under this Article. Purchase shall be at a price equal to

current value at the time of sale and the proceeds shall be deposited in the Compensation

Fund.

Section B: Handling of property transferred to or via the Property Board

Article 9 Handling of property transferred to or via the Property Board

1. The Property Board shall receive transfer of title to affected property which is:

a. Not claimed by a dispossessed owner within the time period set by these provisions for

submission of claims;

b. Owned by a dispossessed owner who receives compensation from the Property Board or

title to another property in exchange for his/her title; or

c. Owned by a dispossessed owner who disposed of his/her interest in an affected property

of which s/he was the current user, in exchange for transfer of title to such affected property

to the subsequent purchaser (or his her successors in title) in accordance with Article 12.

2. In disposing of property transferred to it under these provisions, the Property Board shall,

in this sequence:

a. Offer the property for sale to the current user at current value;

b. Offer the property for sale to persons hailing from the <component state> in which the

property is located, at current value, including potentially in exchange for compensation

bonds;

c. Use it as alternative accommodation; or

d. Otherwise dispose of it in a prudent manner, at market value, to generate funds for

compensation purposes.

3. In all cases and at all times, the Property Board shall supervise management of property

transferred to it or otherwise under its control in a prudent manner and in accordance with

these provisions.

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4. All funds generated from the sale or use of affected property held by the Property Board

shall be deposited into the Compensation Fund.

Section C: Decision-making and claims for affected property

Article 10 Decision-making

1. The Property Board shall aim to reach all decisions by consensus. If the members are

unable to reach consensus on a decision, the decision shall be taken by majority vote.

2. The Property Board shall consider any relevant material or evidence put before it in

respect of any claim for affected property or any other matter which is within its jurisdiction

or decision-making power.

Article 11 Claims procedure

1. A dispossessed owner shall be entitled to file a claim with the Property Board for

recognition of his/her interest in or title to affected property. In filing a claim for recognition

of an interest or title, a claimant shall also specify how s/he seeks to exercise his/her

property rights, namely by way of:

a. Compensation;

b. Reinstatement; or

c. Sale, exchange or lease.

2. A current user of an affected property who is also a dispossessed owner, or a person who

owns a significant improvement to an affected property may apply to receive title to such

properties.

3. Claims or applications for transfer of title must be filed within a period of one year,

commencing on a date to be determined by the Property Board which shall be no later than

one year after entry into force of the Foundation Agreement. The decision fixing the relevant

date shall be published in the Official Gazettes of the <common state> and the <component

states>, in the most widely circulated newspaper of each <component state> and in any other

such appropriate manner as determined by the Property Board.

4. A claim or application shall be filed together with certified copies of any available

evidence of the claimant's or applicant's interest in or title to the affected property.

5. Holders of a part interest in or title to an affected property shall, wherever possible, file

joint claims.

6. A dispossessed owner who does not file a claim within the stipulated period and can show

good cause why s/he did not or was not able to do so, is entitled to compensation.

7. Further detailed requirements for the filing and determination of claims and applications

in respect of affected property shall be set out in rules, regulations, procedures, forms,

evidence and any other instruments adopted by the Property Board in accordance with these

provisions.

Article 12 Determination of claims and applications

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1. Upon receipt of any claim for affected property, the Property Board shall, following any

necessary investigation and verification, determine whether the claimant has a lawful

interest in the property.

2. Upon receipt of any application with respect to affected property, the Property Board

shall, following any necessary investigation and verification, determine whether the

applicant has a sufficient interest in the property under these provisions.

3. If the Property Board determines that the claimant or applicant is not the sole

dispossessed owner or person with an interest in the affected property, it shall make

reasonable efforts to contact the other interested parties, including the current user, before

deciding the claim or application.

4. The Property Board shall then determine whether the claimant or applicant is entitled to

exercise his/her rights in the manner requested in the claim or otherwise under these

provisions.

5. In its decision, the Property Board shall, if possible, state the name and interest of any

other holder of a lawful interest in the property. Where it has been unable to locate or

contact such persons before deciding the claim or application, it shall publish its decision in

an appropriate manner.

6. In its decision, the Property Board shall also indicate the steps necessary for the execution

or implementation of the decision and, where appropriate, shall order that they be taken

within specified time frames.

7. If the Property Board decides that a claimant or applicant has no legal interest in the

claimed affected property, it shall reject the claim or application. At the same time, it may

decide on the interests of the other parties to the proceedings and issue orders with respect to

the property as appropriate.

Article 13 Decisions on reinstatement

1. Upon determination that a property is eligible to be reinstated, the Property Board shall

inform the claimant of its decision. It shall hold the case as pending until all claims for

reinstatement have been reviewed, in order to determine the priority for reinstatement in

accordance with Article 15 of Annex VII.

2. The Property Board shall endeavour to determine the eligibility of all claims for

reinstatement before issuing final decisions on reinstatement. If the determination of

eligibility in some cases is delayed, because of exceptional circumstances, the Property

Board may issue final decisions on reinstatement as soon as it has determined the eligibility

of at least 90% of the claims for reinstatement. Reinstatement shall only be granted in the

delayed cases if the agreed levels for reinstatement have not yet been reached, irrespective

of the priority that the claimant might otherwise have had.

3. The Property Board shall issue final decisions on reinstatement of properties that are not

subject to the agreed levels of reinstatement in Article 15 of Annex VII as soon as it has

determined their eligibility for reinstatement.

4. Upon issuing a final decision on reinstatement, the Property Board shall inform the

current user of the affected property of the decision, of his/her obligation to vacate the

affected property and of his/her rights to alternative accommodation; it may also inform the

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authorities of the relevant <component state> responsible for enforcement and

implementation of the decision.

5. Reinstatement shall only occur after the current user has been provided with alternative

accommodation or the final deadline for vacating the property as determined by the Property

Board in accordance with Attachment 3 has expired, whichever is the sooner.

Section D: Assistance with sale, exchange or lease

Article 14 Assistance with sale, exchange or lease

1. A dispossessed owner may request the Property Board for assistance in connection with:

a. Sale of an interest in affected property;

b. Exchange of affected property for another property of similar value in the <component

state> from where he/she hails;

c. Purchase of an interest in affected property; or

d. The leasing of affected property.

2. A current user or other person may request the Property Board for assistance in

connection with the purchase, exchange or acquisition of a leasehold interest in a property,

which, if available, could enable him/her to vacate the affected property.

3. The Property Board shall maintain a register of interested dispossessed owners, current

users and others who wish to engage in sale, exchange or lease transactions and keep a

record of such transactions.

4. Upon the request of a dispossessed owner, current user, or other person wishing to engage

in a sale, exchange or lease transaction, the Property Board may:

a. Offer basic advice and assistance on options and implications of sale, exchange or lease

transactions;

b. Provide services through mediation to facilitate sale, exchange or lease transactions

between interested parties, on an anonymous or open disclosure basis, as preferred by the

parties; or

c. Provide information about potential sale, exchange or lease counterparts from its sale,

exchange and lease register, to other bona fide interested parties, in cases where the relevant

person has given consent to disclosure of such information.

Article 15 Standard form lease

The Property Board shall provide on request a standard form of lease agreement.

Article 16 Sale, exchange and lease: other assistance

1. The Property Board shall refer any interested party on request to a list of real estate agents

of a high professional standard, who are acting in one or both <component states> and who

can assist persons seeking advice regarding sale, exchange or lease transactions in one or

both <component states>.

2. Subject to these provisions, the Property Board's involvement in a sale, exchange or lease

transaction shall be limited to conveying information between the counterparts to the

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potential transaction. The Property Board shall not be responsible for negotiation or

completion of contractual arrangements, nor any resulting dispute or loss.

Section E: Compensation fund and bonds

Article 17 Compensation Fund

A Compensation Fund shall be established in the Central Bank of Cyprus and administered

by the Property Board. The <common state> shall provide the initial capital of X [insert

figure] to the Fund. In addition, the Fund shall receive all proceeds from the use or disposal

of property that has been transferred to the Property Board and contributions from

international donors.

Article 18 Use of compensation bonds

1. The Property Board shall issue bonds drawn on the Compensation Fund, known as

'compensation bonds'.

2. Compensation bonds shall bear interest of X % [insert figure] per year .

3. Compensation bonds may be used by holders for the following purposes:

a. To purchase affected property from the holdings of the Property Board at current value; or

b. To procure the payment by the Property Board of a deposit for purchase of alternative

accommodation on the open market; or

c. For sale to any person, who thereby acquires all entitlements of the initial holder.

4. Compensation bonds and interest thereon shall be guaranteed by the <common state>.

5. X years [insert figure] after entry into force of the Foundation Agreement, compensation

bonds shall be redeemable for cash from the Compensation Fund. Thereafter, the

Compensation Fund shall be wound up and the <common state> shall receive any surplus

remaining in the Fund or cover its deficit, as applicable. Proceeds of any subsequent sale of

affected property from the holdings of the Property Board shall go directly to the <common

state>, which shall be obliged to pay any compensation which may be awarded by the

Property Board after the winding-up of the Compensation Fund.

ATTACHMENT 3: MEASURES IN FAVOUR OF CURRENT USERS

Section A: Extension of deadlines for vacating affected property

Article 1 Property occupied by current users with sufficient financial means

1. A current user of a property designated for reinstatement, with sufficient financial means,

may apply to the Property Board for an extension to enable him/her to continue to use the

property for his/her own purposes for up to three years after the Property Board's decision.

2. An application for an extension shall be granted by the Property Board unless and up to

the time when it is found that the current user is not using the property for his/her own

purposes, or that the current user has immediate access to alternative accommodation.

3. The Property Board may extend the time limit under this Article in cases of urgent

humanitarian need, as determined by the Property Board.

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4. The current user shall pay market rent to the Property Board for the period of continued

use of the affected property from the date of the Property Board's decision on eligibility for

reinstatement.

5. At the end of the period fixed by the Property Board, the current user shall vacate the

affected property.

Article 2 Property occupied by current users without sufficient financial means

1. A current user of a property designated for reinstatement, without sufficient financial

means, who is a Cypriot citizen and is using the property for his/her own purposes, shall not

be required to vacate the property until alternative accommodation is made available for

them or until they are able, including through the provision of preferential loans or other

assistance, to buy or lease on the market a property which meets the standard of alternative

accommodation.

2. Such current users may apply to the Property Board for:

a. Assistance to purchase or lease alternative accommodation, in the form of preferential

loans under these provisions; or

b. In cases of urgent humanitarian need and where not eligible for preferential loans, the

allocation of low-cost or cost-free alternative accommodation from the holdings of the

Property Board. The Property Board shall grant such applications to persons meeting its

criteria, provided that alternative accommodation is available in its holdings.

3. Current users of properties designated for reinstatement, without sufficient financial

means, who are not citizens of Cyprus but enjoy permanent residence and are using the

property for his/her own purposes, may apply for social housing or other housing assistance,

or for financial assistance from the <component state> of which they enjoy permanent

residence. Such current users shall not be required to vacate the property until such housing

or financial assistance is available, up to a maximum of two years after the Property Board's

decision on eligibility for reinstatement.

4. The Property Board shall charge rent to any current user without sufficient financial

means, up to the maximum amount possible based on his/her income and wealth.

Article 3 Payment of rent to dispossessed owner up to reinstatement

The Property Board shall pay market rent to the dispossessed owner, effective from the date

of the decision of the Property Board that the property is eligible for reinstatement up to the

date on which reinstatement occurs.

Section B: Preferential loans

Article 4 Preferential loans

1. The Property Board shall oversee and administer a preferential loans scheme with the

assistance of international and local banks, the <common state>, the <component states>

and other donors. The <common state> shall provide funds from its budget to support the

scheme.

2. Under this scheme, preferential loans shall be made available on favourable terms for

dispossessed owners, current users of affected property and owners of significant

improvements to affected property who are Cypriot citizens and who are without sufficient

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financial means, in order to facilitate the purchase, lease or reconstruction of property

(including the purchase of significantly improved property) or make payments required

under these provisions.

3. Loans under this scheme will be made available to people who meet the criteria on

condition that they agree to a 20 year moratorium on sale of any property which they

purchased or reconstructed or for which they received title after making a payment to the

Property Board with preferential loan funds. This moratorium period may be shortened or

waived with the authorization of the Property Board.

Section C: Right of first refusal

Article 5 Right of first refusal for current user and others in sales of affected property

1. For a transitional period of 20 years after entry into force of the Foundation Agreement,

any sale of an affected property to a person who has not enjoyed permanent residence for at

least three years in the <component state> in which such property is located, is subject to a

right of first refusal by a current user, who is a Cypriot citizen, at the proposed contract

price. Such right shall apply:

a. For as long as the current user continues to use such property, and

b. For five years thereafter, if the current user has vacated it to allow reinstatement of the

dispossessed owner.

2. If the current user does not exercise the right of first refusal under the previous paragraph,

any other person hailing from the <component state> in which the relevant property is

located shall have a secondary right of first refusal, at the contract price.

3. Rights of first refusal under this Article may be exercised within 45 days after the

dispossessed owner signs a sales contract with a potential purchaser, and at the same price as

stated in any such contract.

4. Any dispute regarding rights of first refusal shall be referred to the Property Board. The

<component states> shall enact harmonized legislation as required to regulate and ensure

enforcement of contracts concluded under these provisions for rights of first refusal, and

otherwise between current users and persons hailing from different <component states>.

ATTACHMENT 4: PROPERTY LOCATED IN AREAS SUBJECT TO

TERRITORIAL ADJUSTEMENT

Article 1 Application of these provisions to property in areas subject to territorial

adjustment

The Articles in this Attachment shall prevail over the other provisions of Annex VII and its

other attachments in relation to affected property and other property in areas subject to

territorial adjustment. Where there are no specific provisions in this Attachment, the other

provisions of Annex VII and its other attachments shall apply.

Article 2 Reinstatement of dispossessed owners

1. Subject to the modalities and conditions established in this Attachment, any dispossessed

owner of a property in areas subject to territorial adjustment shall be entitled to

reinstatement.

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2. The Property Board shall issue final decisions on reinstatement of properties located in

areas subject to territorial adjustment, as soon as it has determined that property is eligible

for reinstatement and shall order that such reinstatement take place as soon as the current

user has been relocated, but no later than three years after entry into force of the Foundation

Agreement.

3. The general moratorium and agreed maximum levels on reinstatement under Annex VII

shall not apply to areas subject to territorial adjustment nor shall provisions permitting

transfer of properties to a current user or a subsequent purchaser.

4. The Property Board shall deal with claims regarding affected property of dispossessed

owners currently living in areas subject to territorial adjustment, the claims of the current

owners of those properties and the claims of dispossessed owners of affected properties in

areas subject to territorial adjustment, in that order of priority.

Article 3 Improved properties

1. The dispossessed owner of any improved property shall pay the market value of any

improvement worth more than 10% of the value of the property in its original state to

Property Board. The owner of the improvement is entitled to seek compensation from the

Property Board for its market value.

2. If the dispossessed owner satisfies the Property Board that an improvement worth less

than the value of the property in its original state is inappropriate for his/her intended use of

the property which is similar to the use prior to dispossession, the dispossessed owner shall

not be required to pay for the improvement. The Property Board may recover any

compensation paid to the improver if it subsequently finds that the dispossessed owner

makes use of the improvement.

3. Where the market value of the improvement is greater than the value of the property in its

original state and the dispossessed owner is not prepared to pay for it, the owner of the

improvement may apply to receive title to the property in exchange for payment of the

current value of the property in its original state. The dispossessed owner shall retain a right

of first refusal for a period of 20 years after entry into force of the Foundation Agreement,

for any contract for sale, exchange or long-term lease of the property, at the proposed

contract price.

Article 4 Owners of property in areas subject to territorial adjustment who wish to

leave

An owner of property in an area subject to territorial adjustment who vacates such property

after entry into force of the Foundation Agreement may claim compensation from the

Property Board for such property at current value in exchange for his/her title to such

property, provided s/he can produce evidence of ownership before 1974 or of bona fide

transfer from the 1974 owner.

Article 5 Current users of property in areas subject to territorial adjustment

1. A current user of property in an area subject to territorial adjustment who is a Cypriot

citizen may choose to:

a. Remain in that area and purchase property there;

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b. Receive alternative accommodation in that area, if entitled under these provisions (see

Attachment 3);

c. Claim reinstatement of his/her own affected property; or

d. Be relocated in the other <component state> and purchase property or receive alternative

accommodation there, if entitled under these provisions (see Annex VI).

A current user who is not a Cypriot citizen may seek housing or financial assistance from the

<component state> in which s/he enjoys permanent residence or apply for assistance

according to Annex VI.

DRAFT ANNEX VIII: RECONCILIATION COMMISSION

Article 1 Establishment

1. There shall be an independent, impartial Reconciliation Commission.

2. The authorities of the <common state> and the <component states> shall render the

Commission full cooperation and shall issue instructions to that effect to all concerned.

Article 2 Aims

With the objective of promoting understanding, tolerance and mutual respect between Greek

Cypriots and Turkish Cypriots, the Reconciliation Commission shall, inter alia:

a. Promote a dispassionate dialogue between Greek Cypriots and Turkish Cypriots regarding

the past, by addressing, inter alia, historical perspectives, experiences, and memories;

b. Prepare a comprehensive report on the history of the Cyprus Problem as experienced and

interpreted by Greek Cypriots and Turkish Cypriots;

c. Make specific recommendations for action by the <common state> and the <component

states> aimed at promoting reconciliation, including guidelines for publications and school

textbooks so as to promote mutual understanding of different perspectives on the past;

d. Make recommendations for the implementation of the requirement in the Constitution for

the teaching of the official languages to all secondary school students; and

e. Make recommendations on guidelines for the observance of secular public holidays by the

<component states>.

Article 3 Powers

1. In furtherance of these aims the Reconciliation Commission may, among other things:

a. Convene public or private hearings and set up research groups or committees to discuss

and/or inquire into questions, facts, events and time periods related to its work;

b. Receive information from varied sources, from parties, governments or individuals inside

or outside Cyprus;

c. Consult experts in relevant fields;

d. Request and receive prompt, full and unhindered access to any and all records, archives or

information;

e. Prepare and publish interim reports, findings and recommendations;

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f. Adopt and publish rules, regulations and procedures required for the performance of its

functions; and

g. Perform other tasks which may be incidental or related to the performance of its

functions.

2. The Commission shall have no prosecutorial or other criminal legal function or powers.

3. The Commission may decide to protect the confidentiality of its sources and proceedings.

4. The work, proceedings, reports and recommendations of the Commission shall be without

prejudice to the work of other existing bodies or committees, including the Committee on

Missing Persons in Cyprus.

Article 4 Composition

1. The Reconciliation Commission shall be composed of [five/seven/nine] men and women,

including at least one non-Cypriot member, committed to reconciliation in Cyprus and

possessing appropriate integrity, credibility and expertise. The Cypriot members shall hail in

equal numbers from each <component state>.

2. The Secretary-General is invited to appoint the members of the Commission, after

consultation with the two sides and the public, and to appoint any replacements in the same

way.

3. The Commission shall be assisted by a group of qualified staff.

Article 5 Duration

1. The process of consultation for appointment of the members of the Reconciliation

Commission shall commence no later than 60 days after entry into force of the Foundation

Agreement. The Commission members shall be appointed within a further 60 days and be

inaugurated within a further two weeks.

2. Unless the Secretary-General, in consultation with the two sides and the members of the

Commission, decides to grant an extension of up to six months, the Commission shall

submit its final report on its conclusions and recommendations no later than 30 October

2005.

Article 6 Costs

The costs of establishing and running the Reconciliation Commission shall be met by the

<common state>, which may request contributions from the guarantor powers and other

international donors.

Article 7 Recommendations and reports

1. The Reconciliation Commission shall submit its reports and recommendations to the

Secretary-General of the United Nations, the <common state> and the <component states>.

2. The final report and all recommendations by the Reconciliation Commission shall be

given wide dissemination by the <component states>. The final report shall be published in

English, Greek and Turkish. The findings of the final report shall be reflected in relevant

school textbooks

Article 8 Follow-Up Procedures

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1. After the submission of the Commission’s final report, a follow-up committee, appointed

[insert method of appointment], shall monitor the implementation of the Commission’s

recommendations.

2. The authorities of the <common state> and each <component state> shall be required to

submit reports every 120 days to the committee on the implementation of recommendations.

Such reports shall explain the reasons for failure to implement specific recommendations.

[insert additional articles as necessary; including, inter alia, on procedures for public

consultation regarding appointment of members; immunities; the giving of evidence;

remuneration of Commission members, etc]

DRAFT ANNEX IX: COMING INTO BEING OF THE NEW STATE OF AFFAIRS

Article 1 Conduct of separate simultaneous referenda

1. Each side shall organise a referendum on 30 March, asking the following question:

''Do you:

i) Approve the Foundation Agreement and all its Annexes, including the Constitution of

Cyprus;

ii) Approve the Constitution of the [Greek Cypriot/Turkish Cypriot] <component state> and

the provision as to the laws to be in force for the <component state>

iii) Approve the terms of the draft Treaty between Cyprus, Greece, Turkey and the United

Kingdom on matters related to the new state of affairs in Cyprus, and require the signature

by the Co-Presidents of the Treaty;

iv) Approve the accession of Cyprus to the European Union in accordance with the

conditions of accession laid down in the draft Treaty concerning accession of Cyprus to the

European Union, and require the signature and ratification by the Co-Presidents of the

Treaty?

Yes [ ]

No [ ]''

2. The documents to be approved or being referred to in the referendum question shall be

made available free of charge to any voter so requesting in Greek, Turkish or English and

shall be placed on a common website in the same languages.

Article 2 Entry into force of the Foundation Agreement

At 00:00 hours the day after confirmation by the Secretary-General of its approval at

separate simultaneous referenda, the Foundation Agreement shall immediately enter into

force, thereby bringing into being a new state of affairs.

Article 3 Flag-raising ceremonies

Upon entry into force of the Foundation Agreement, there shall be ceremonies throughout

the island at which all flags other than those prescribed in the Constitution shall be lowered,

the flags of Cyprus and of the <component states> shall be raised in accordance with the

Constitution of Cyprus and relevant legislation, and the anthems of Cyprus and of the

<component states> shall be played.

195

Article 4 The United Nations

Upon entry into force of the Foundation Agreement, the Co-Presidents shall inform the

United Nations that henceforth the membership rights and obligations of Cyprus in the

United Nations shall be exercised in accordance with the new state of affairs. The agreed

flag of Cyprus shall be raised at United Nations Headquarters.

DRAFT ANNEX X: CALENDAR OF IMPLEMENTATION

[insert calendar of implementation of obligations in the Foundation Agreement, as well as in

other parts of the Comprehensive Settlement.]

APPENDIX B

MEASURES TO ACCOMPANY AND FACILITATE THE FINALIZATION

PROCESS

During the period between the signature of the Comprehensive Settlement and the separate

simultaneous referenda to approve the Foundation Agreement, the following provisions shall

be applied:

Article 1 Finalization of Foundation Agreement

1. The two leaders shall make the finalization of the Foundation Agreement by no later than

28 February 2003 their primary aim and the primary aim of their authorities.

2. The two leaders shall restrict their activities, and the activities of their authorities, to

business strictly indispensable for the functioning of their authorities. All actions shall take

into account the letter and spirit of the draft Foundation Agreement.

3. Any indispensable business in the field of foreign relations shall be conducted in close

consultation between the two leaders and shall promote the common interests of the two

sides. There shall be no state visits.

Article 2 Committees to finalize Foundation Agreement

Upon signature of the Comprehensive Settlement, the two leaders shall appoint persons to

participate in bilateral committees, which shall be chaired by United Nations representatives

and shall make recommendations by consensus, prior to the end of the finalization period, on

the finalization of the Annexes to the Foundation Agreement.

Article 3 Flag and anthem competition

A competition shall be conducted to conceive a flag and anthem for Cyprus, and a bilateral

committee, chaired by the United Nations, shall make recommendations by consensus to the

two leaders from among entries received.

Article 4 <component state> constitutions and legislation

1. Each side shall, without delay, make necessary preparations on <component state>

matters to be put to referendum together with the Foundation Agreement. To this end,

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a. Each side shall prepare a draft <component state> constitution consistent with the draft

Constitution of Cyprus.

b. Each side shall prepare a provision specifying those laws that shall become laws of the

respective <component state>, provided that such laws do not fall within the agreed sphere

of competence of the <common state> and are also otherwise compatible with the

Foundation Agreement.

c. Each side shall include the following provision in the draft <component state>

constitution:

i) ''<component state> laws adopted pursuant to a provision put to referendum together with

the Foundation Agreement and this Constitution shall, as from entry into force of the

Foundation Agreement, be applied in this <component state> with such modifications as

may be necessary to bring them into conformity with the Foundation Agreement and the

Constitution of this <component state>.

ii) No provision in any such law which is contrary to or inconsistent with any provision of

the Foundation Agreement or this Constitution shall so continue to be in force.

iii) The term ''modification'' in the above paragraphs includes amendment, adaptation and

repeal.''

Article 5 Measures to promote confidence

Steps shall be taken without delay to lift restrictions on trade, movement of tourists, and

participation in international sporting and cultural activities.

Article 6 Freedom of movement of UNFICYP

Any restrictions on the freedom of movement of UNFICYP shall be terminated with

immediate effect.

Article 7 Selection of Board of Central Bank

1. The two leaders shall by consensus select the three members of the transitional Board of

the Central Bank who shall assume their duties immediately upon entry into force of the

Foundation Agreement of a period of 15 calendar months.

2. If the two leaders fail to do so by 31 January 2003, the Secretary-General of the United

Nations is invited to select the members of a transitional Board.

Article 8 Transitional Supreme Court judges

1. The two leaders shall by consensus select, from a list of candidates presented by the

presumed members of the transitional Judiciary Board, three non-Cypriot judges and three

judges from each side to sit on the transitional Supreme Court of Cyprus who shall assume

their duties immediately upon entry into force of the Foundation Agreement for a period of

15 calendar months.

2. The presumed members of the transitional Judiciary Board in accordance with the

provisions of the draft law shall within 30 days of signature of the Comprehensive

Settlement meet upon the invitation of the United Nations in order to propose candidates for

the transitional Supreme Court.

197

3. If the two leaders fail to do so by 31 January 2003, the Secretary-General of the United

Nations is invited to select the judges of the transitional Supreme Court.

Article 9 Import and distribution licenses

The two sides shall conclude arrangements, without prejudice to the application of European

Union law, for the purpose of ensuring that the Foundation Agreement and the new state of

affairs shall not be construed as altering rights enjoyed by businesspeople under import

and/or distribution licenses prior to entry into force of the Agreement, and that such licenses

shall where possible be construed as licensing such persons to continue operating their

businesses in their <component state> after entry into force of the Foundation Agreement.

Article 10 Economic harmonization

The two sides shall conclude arrangements to promote economic harmonization.

Article 11 Missing persons

The two leaders shall without delay take steps to conclusively resolve the issue of missing

persons. Both sides shall cooperate fully with the Committee on Missing Persons in Cyprus,

in accordance with its terms of reference and keeping in mind their agreement reached on 31

July 1997. Each side shall carry out and conclude any and all necessary inquiries, including

exhumations.

APPENDIX C

TREATY BETWEEN CYPRUS, GREECE, TURKEY AND THE UNITED

KINGDOM ON MATTERS RELATED TO THE NEW STATE OF AFFAIRS IN

CYPRUS

Cyprus, the Hellenic Republic, the Republic of Turkey and the United Kingdom of Great

Britain and Northern Ireland,

i. Welcoming the Comprehensive Settlement of the Cyprus Problem and the approval of the

Foundation Agreement through separate referenda by the Greek Cypriots and the Turkish

Cypriots, and the decision for Cyprus to accede to the European Union and

ii. Desiring to contribute to a peaceful and harmonious future for Cyprus and for Cyprus to

be a bridge of friendship between Greece and Turkey within a peaceful environment in the

Eastern Mediterranean

Adopt the following provisions:

Article 1 Approval of Foundation Agreement

The annexed Foundation Agreement is herewith approved and agreed and shall be

considered an integral part of this Treaty.

Article 2 Monitoring Committee

1. The parties agree on the creation of a Monitoring Committee composed of one

representative of each guarantor power, two representatives of the <common state>

government (one hailing from each <component state>), one representative of each

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<component state> and, pursuant to a decision of the United Nations Security Council, one

representative of the United Nations who shall chair the committee.

2. The Monitoring Committee shall monitor the implementation of the Foundation

Agreement, and may make recommendations regarding any development which may

endanger its implementation.

Article 3 Additional Protocol to the Treaty of Guarantee

The annexed Additional Protocol to the Treaty of Guarantee is herewith approved and

agreed, and shall enter into force together with this Treaty.

Article 4 Additional Protocol to the Treaty of Alliance

The annexed Additional Protocol to the Treaty of Alliance is herewith approved and agreed

by the parties concerned, and shall enter into force for them upon signature together with

this Treaty.

Article 5 Transitional Security Arrangements

The annexed Transitional Security Arrangements are herewith approved and agreed by the

parties concerned, and shall enter into force for them upon signature together with this

Treaty.

Article 6 Entry into force

1. This treaty shall enter into force upon signature.

2. The parties shall proceed as soon as possible to the registration of this Treaty with the

Secretariat of the United Nations, in accordance with Article 102 of the Charter of the

United Nations.

DRAFT ANNEX I: FOUNDATION AGREEMENT

[insert text of Foundation Agreement as approved in separate simultaneous referenda]

DRAFT ANNEX II: ADDITIONAL PROTOCOL TO THE TREATY OF

GUARANTEE

Cyprus, Greece, Turkey and the United Kingdom of Great Britain and Northern Ireland have

agreed as follows:

Article 1

1. The Treaty of Guarantee shall apply mutatis mutandis to the new state of affairs

established in the Foundation Agreement and the Constitution of Cyprus, thereby covering,

in addition to the independence, territorial integrity, security and constitutional order of

Cyprus, the territorial integrity, security and constitutional order of its <component states>.

2. ''Constitutional order'' shall mean the Constitution of Cyprus, as the case may be, the

Constitution of each <component state>, including any amendments to any of them in

accordance with the provisions for amendment laid down in the relevant constitution.

Article 2

This Protocol shall enter into force upon signature.

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Signature Signature Signature Signature

Cyprus Hellenic Republic Republic of Turkey United Kingdom of Great Britain

and Northern Ireland

DRAFT ANNEX III: ADDITIONAL PROTOCOL TO THE TREATY OF

ALLIANCE

Cyprus, Greece and Turkey

i. Bearing in mind that in accordance with the Foundation Agreement and its Constitution,

Cyprus shall be demilitarized

ii. Reaffirming their pledge to resist any attack or aggression against the independence or the

territorial integrity of Cyprus

Have agreed as follows

Article 1

The Treaty of Alliance shall apply and operate mutatis mutandis in accordance with the new

state of affairs established in the Foundation Agreement and the Constitution of Cyprus,

taking into account in particular the demilitarization of Cyprus.

Article 2

There shall be no Tripartite Headquarters. The provisions of the Treaty of Alliance shall

apply mutatis mutandis to the commanders of the Greek and Turkish contingents, who shall

consult and cooperate in the performance of their functions pursuant to the Treaty.

Article 3

The Greek and Turkish contingents, each not exceeding [insert figure between 2,500 and

7,500 prior to the signature of the Comprehensive Settlement] all ranks, shall be permitted to

be stationed under the Treaty of Alliance in the Greek Cypriot <component state> and the

Turkish Cypriot <component state> respectively. The composition, equipment, locations and

activities of the Greek and Turkish contingents shall be as specified in the Attachment to this

Additional Protocol.

Article 4

This Protocol shall enter into force upon signature and shall have precedence over other

provisions of the Treaty of Alliance.

Signature Signature Signature

Cyprus Hellenic Republic Republic of Turkey

Attachment: Composition, equipment, locations and activities of Greek and Turkish

contingents

ATTACHMENT 1: COMPOSITION, EQUIPMENT, LOCATIONS AND

ACTIVITIES OF GREEK AND TURKISH CONTINGENTS

Article 1 Composition

The composition of each contingent for all services shall be equivalent in terms of structure

and strength and shall consist of a headquarters, formed units and individuals. The

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composition of the contingents shall include the following types of units up to the maximum

indicated strength:

Type of Unit Maximum Strength

Armoured Battalion

Infantry Battalion

Engineer Company

Artillery Battalion

Signal Company

Aviation Battalion (Helicopter)

Air Defence Battery

Support Unit

Medical Unit

Brigade HQ

[…]

[…]

Article 2 Weapons and equipment

The contingents shall have equivalent weapons and equipment commensurate with the type

and number of units. Their weapons and equipment shall include the following, up to the

maximum indicated number, with limitations notably concerning armoured vehicles, heavy

weapons and artillery systems and offensive weapons such as attack helicopters:

Type of Weapon/Equipment Maximum Number

Battle tanks (medium)

Infantry fighting vehicles including APCs

(main gun up to 25 mm)

Towed artillery pieces (up to 155 mm calibre)

Air defence missiles (short range up to

7000m)

[…]

[…]

Article 3 Activities

The contingents shall be restricted to typical peacetime activities for formed military units,

mainly encompassing training within the compounds and military quarters, maintenance of

equipment and material, ceremonies and parades and training in designated training fields.

Article 4. Location of facilities and training fields

The agreed designated military facilities and training fields shall in any case not be in areas

which prior to entry into force of the Foundation Agreemen were within the buffer zone, or

in areas of the Greek Cypriot <component state> which are or have been subject to territorial

201

adjustment pursuant to the Foundationa Agreement, or in the area of the Turkish Cypriot

<component state> south of the highway connecting north Nicosia with Famagusta.

Article 5 Facilities

The designated military facilities in which troops and equipment shall be based are the

following:

Contingent Location[27]

(with grid reference)

Number of

Troops

Greek

Turkish

Article 6 Training fields

The designated training fields for each contingent are the following:

Contingent Location[28]

(with grid reference to 4 digits)

Greek

Turkish

Article 7 Movement

The contingents shall move troops in the <component state> in which they are located by the

most direct route between points of embarkation, garrisons and training areas and shall not

approach the boundary between the <component states>, or areas which prior to entry into

force of the Foundation Agreement were within the buffer zone, or the areas of the Greek

Cypriot <component state> which are or have been subject to territorial adjustment pursuant

to the Foundation Agreement, or in the area of the Turkish Cypriot <component state> south

of the highway connecting north Nicosia and Famagusta, unless the existing road

infrastructure necessitates otherwise.

Article 8 Notice

The contingents shall inform each other and the United Nations in writing 14 days in

advance of the timing, location and purpose of any ground, air or maritime movement of

troops, including for field training. A movement of troops shall be defined as more than

three military transport vehicles with a capacity of three passengers or more in each vehicle.

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[insert additional articles as necessary]

DRAFT ANNEX IV: TRANSITIONAL SECURITY ARRANGEMENTS

Article 1 Dissolution of Greek Cypriot and Turkish Cypriot forces, including reserve

units

All Greek Cypriot and Turkish Cypriot forces, including reserve units, shall be dissolved,

and their arms removed from the island, in accordance with a timetable which shall

commence no later than five months following the signature of the Treaty on matters related

to the new state of affairs in Cyprus [''T-day''] and shall be carried out as follows:

a. [From T-day + 150 to T-day + 270: 20 per cent; (4 months)]

b. [From T-day + 271 to T-day + 450: 25 per cent; (6 months)]

c. [From T-day + 451 to T-day + 630: 25 per cent; (6 months)]

d. [From T-day + 631 to T-day + 870: 30 per cent; (8 months)]

Article 2 Adjustment of Greek and Turkish forces

Greek and Turkish forces and armaments shall be redeployed to agreed locations and

adjusted to agreed levels, and any excess forces and armaments withdrawn, in accordance

with a timetable which shall commence no later than five months following T-day and shall

be carried out as follows:

a. [From T-day + 150 to T-day + 270: 20 per cent; (4 months)]

b. [From T-day + 271 to T-day + 450: 25 per cent; (6 months)]

c. [From T-day + 451 to T-day + 630: 25 per cent; (6 months)]

d. [From T-day + 631 to T-day + 870: 30 per cent; (8 months)]

Article 3 Redeployment from areas subject to territorial adjustment prior to transfer

of administration

Notwithstanding the above, any forces and armaments shall be redeployed so as to vacate

areas subject to territorial adjustment prior to the dates agreed in the Foundation Agreeement

for the transfer of those areas.

APPENDIX D

MATTERS TO BE SUBMITTED TO THE UNITED NATIONS SECURITY

COUNCIL FOR DECISION

I.

Pursuant to the terms of the Comprehensive Settlement of the Cyprus Problem, the

Secretary-General of the United Nations shall, upon certification by him of the Foundation

Agreement and the finalized Annexes thereto, request the Security Council to take decisions

to enter into force simultaneously with the Foundation Agreement, in which the Security

Council would:

1. endorse the Foundation Agreement and, in particular;

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a. take formal note that any unilateral change to the state of affairs established by the

Foundation Agreement, in particular union of Cyprus in whole or in part with any other

country or any form of partition or secession, is prohibited; and

b. acknowledge the political equality and distinct identity of Greek Cypriots and Turkish

Cypriots and the equal status of their <component states> in the State of Cyprus; and

2. prohibit the supply of arms to Cyprus in a manner that is legally binding on both

importers and exporters;

3. decide to maintain a United Nations peacekeeping operation in Cyprus, which shall

remain so long as the government of the <common state>, with the concurrence of both

<component states>, does not decide otherwise, and shall be authorized to deploy and

operate freely throughout Cyprus with the following mandate

''to monitor the implementation of the Foundation Agreement and use its best efforts to

promote compliance with it and contribute to the maintenance of a secure environment; and

in particular:

a. to monitor and verify compliance with the security provisions in the Foundation

Agreement, including:

i) the dissolution of all Greek Cypriot and Turkish Cypriot forces, including reserve units,

and the removal of their arms from the island;

ii) the adjustment of Greek and Turkish forces and armaments to agreed equal levels;

b. to monitor and verify compliance with the provisions in the Foundation Agreement

pertaining to the police of the <common state> and <component states>;

c. to use its best efforts to ensure the fair and equal treatment under the law of persons from

one <component state> by the authorities of the other;

d. to supervise the activities relating to the transfer of areas subject to territorial adjustment;

e. to chair, and provide administrative support to, the Monitoring Committee to be

established under the Treaty between Cyprus, Greece, Turkey and the United Kingdom on

matters related to the new state of affairs in Cyprus;

f. to implement its mandate through, for example, conducting patrols and establishing

positions and roadblocks, as well as receiving complaints, making inquiries, presenting

facts, giving formal advice and making representations to the authorities."

II.

The authorities of the <common state> and of the <component states>, as well as the Greek

and Turkish contingents stationed on the island, shall cooperate with the United Nations

operation. The cost of the operation to the United Nations shall be borne by Cyprus.

APPENDIX E

REQUESTS TO THE EUROPEAN UNION WITH RESPECT TO THE ACCESSION

OF CYPRUS

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PROTOCOL REQUESTED TO BE ATTACHED TO THE ACT CONCERNING

THE CONDITIONS OF ACCESSION OF CYPRUS TO THE EUROPEAN UNION

i. Taking into account the Comprehensive Settlement of the Cyprus Problem between the

Greek Cypriot side and the Turkish Cypriot side of [insert date] and the terms of the

Foundation Agreement between the Greek Cypriots and the Turkish Cypriots of [insert date]

ii. Taking into account the Treaties of Guarantee and Alliance, the Additional Protocols

thereto, and the Treaty of Establishment

iii. Bearing in mind and respecting the demilitarization of Cyprus

iv. Considering that the Act concerning the conditions of accession of Cyprus to the

European Union shall not prevent the implementation of the Foundation Agreement, and

shall accommodate its terms in line with the principles on which the European Union is

founded

v. Bearing in mind that Cyprus shall take all appropriate measures, whether in general or

particular, to ensure the fulfillment of the obligations arising out of European Union

membership, in line with the specifications of the Act of accession and this Protocol, and

that transitional periods agreed during the accession negotiations shall apply to the

<common state> and to the two <component states>, subject to the division of powers as

laid down in the Foundation Agreement

vi. Underlining that the political equality of Greek Cypriots and Turkish Cypriots, the equal

status of the two <component states>, and the prohibition on any unilateral change to the

state of affairs established by the Foundation Agreement, fall within the terms of Article

6(1) of the Treaty of the European Union

vii. Recognizing the need to protect the balance between Greek Cypriots and Turkish

Cypriots in Cyprus, the bi-zonal character of the State of Cyprus and the identity of the

<component states>

viii. Underlining that accession to the European Union shall benefit Greek Cypriots and

Turkish Cypriots alike and promote development to help reduce economic disparities

ix. Recalling that, in accordance with the Presidency Conclusions of the Brussels European

Council of 24 and 25 October, a programme will be established by the Council, with

disbursement of 206 million euros between 2004 to 2006, in support of the economic

development of the northern part of a reunited Cyprus, and that this programme shall be

established in addition to the normal operation of the European Union's structural funds

x. Taking into account the special relations of Greek Cypriots and Turkish Cypriots with

Greece and Turkey respectively

xi. Bearing in mind that, as a European Union member state, Cyprus shall apply the rules of

the European Union-Customs Union with Turkey, thereby according European Union

treatment to Turkey in the fields where this is provided for

xii. Wishing to accord, to the extent compatible with the European Union membership of

Cyprus, similar rights for Greek and Turkish nationals vis-à-vis Cyprus

The High Contracting Parties have agreed as follows:

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Article 1 Arrangements relating to property and residency rights

The provisions of the Treaty shall not preclude the application of restrictions, on a non-

discriminatory basis, on:

a. The right of natural persons who have not been resident for at least three years in the

Turkish Cypriot <component state>, and for legal persons, to purchase real property in the

Turkish Cypriot <component state> without permission of the competent authorities of the

Turkish Cypriot <component state>

b. The right of Cypriot citizens to reside in a <component state> of which they do not hold

internal <component state> citizenship status, if

i) The number of such residents has reached 28% of the population of a <component state>;

or

ii) During a transitional period of 15 years, the number of such residents has reached a

certain percentage of the total population of a municipality or village; the relevant

percentage shall be 0% for the first 4 years after entry into force of the Foundation

Agreement,8% between the 5th

and 9th

years and 18% between the 10th

and 15th

years;

c. The right of Greek nationals to reside in Cyprus, if the number of resident Greek nationals

has reached 10 % of the number of resident Cypriot citizens who hold the internal

<component state> citizenship status of the Greek Cypriot <component state>

d. The right of Turkish nationals to reside in Cyprus, if the number of resident Turkish

nationals has reached 10% of the number of resident Cypriot citizens who hold the internal

<component state> citizenship status of the Turkish Cypriot <component state>.

Article 2 Safeguard measures

1. Where, in exceptional circumstances, the operation of the European Union's internal

market characterised by the abolition, as between Member States, of obstacles to the free

movement of goods, persons, services and capital, cause, or threaten to cause, serious

economic difficulties in the Turkish Cypriot <component state>, the competent Cypriot

authorities may take the appropriate safeguard measures for a period of three years. These

measures may be prolonged with the consent of the Commission. Such measures shall be

proportional and shall not constitute disguised restrictions on trade.

2. If measures taken in the circumstances referred to in paragraph 1 have the effect of

distorting the conditions of competition in the internal market, the Commission shall,

together with Cypriot representatives, examine how these measures can be adjusted.

3. By way of derogation from the procedure laid down in Articles 226 and 227 of the Treaty

establishing the European Community, the Commission or any Member State may bring the

matter before the European Court of Justice if it considers that Cyprus is making improper

use of the powers provided for in paragraph 1.

Article 3 Entry and residency rights of Turkish nationals

The European Union shall authorise Cyprus to accord equal treatment regarding entry and

residency rights with respect to its territory to Greek and Turkish nationals without prejudice

to policies and arrangements applying to entry and residency rights of Turkish nationals in

other member states of the European Union. Rules of implementation for such entry and

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residency rights for Turkish citizens shall be negotiated between the Commission, Cyprus

and Turkey within a year of entry into force of the Foundation Agreement.

Article 4 The European Security and Defence Policy

The participation of Cyprus in the European Security and Defence Policy shall fully respect

the provisions of the Foundation Agreement and the provisions of the Treaties of Guarantee

and Alliance and the Additional Protocols thereto, and in no sense undermine those

provisions.

PARAGRAPH REQUESTED TO BE INCLUDED IN THE CONCLUSIONS OF THE

COPENHAGEN EUROPEAN COUNCIL

The European Union undertakes to adopt special measures, including financial aid, to

contribute to the alignment of Turkish Cypriot legislation to the acquis communautaire, to

the enhancement of administrative capacity in the Turkish Cypriot <component state>, and

to the narrowing of economic disparities within Cyprus.

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ANNEX C.

THE EUROPEAN UNION’S POSITION TOWARDS

A SOLUTION TO THE CYPRUS PROBLEM

The Positions taken by the European Union

In June 1993, the European Commission (1993) makes it clear that it is only dealing with the

internationally recognized government of the Republic and finds Cyprus eligible for EU

membership …

… states that EU accession would increase the security and well being of all Cypriots and

points in particular to the economic benefits for the Turkish Cypriot administered sector in

the form of a participation in European Structural Funds as well as the Common Agricultural

Policy …

… states that its integration with the Community implies a lasting settlement to the Cyprus

Problem …

… states that while the fundamental interests of each community must be preserved by the

settlement, the institutional provisions of any settlement must assure the fundamental

freedoms enshrined in its constituting Treaty, in particular the freedom of movement of

goods, persons, services, and capital, the right of establishment and the universally

recognized political, social and economic rights …

… and gives its support to the UN Secretary General in his search for a solution to the

problem.

The Commission’s opinion is endorsed by the General Affairs Council in October 1993.

In June 1994, the European Observer Serge Abou shares the May 1993 opinion of the UN

Secretary General Boutros Boutros-Ghali that puts the blame for the lack of progress

towards a solution on the Turkish Cypriot side (see Agence Europe, nº. 6251, 15th

June,

1994).

The European Council meeting at Corfu in June 1994, decides that Cyprus would be

involved in the next enlargement of the EU and this is confirmed at its Essen summit in

December 1994.

The international status of the government of the Republic of Cyprus is reinforced by the

European Court of Justice in July 1994 through its decision that exports from the “TRNC”

had to be accompanied by phytosanitary certificates from the government of the Republic of

Cyprus.

In March 1995, the General Affairs Council, decides that accession negotiations would

commence six months after the end of the Intergovernmental conference and this is

confirmed by the European Council at its summits in June and December 1995 at Cannes

and Madrid respectively and in June and December 1996 in Florence and Dublin.

In July 1997, the Commission (1997) in its Agenda 2000, points out that the EU is

determined to play a positive role in bringing about a just and lasting settlement in

accordance with the relevant UN resolutions …

… states that agreement on a political settlement would permit a faster conclusion to the

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negotiations (the implication being that even in the absence of a political settlement the

negotiations will be concluded, albeit at a relatively later date).

The Luxembourg European Council in December 1997 decides to open accession

negotiations with Cyprus in the spring of 1998, and does so on the 30th

of March.

The Helsinki European Council in December 1999 underlines that a political settlement will

facilitate the accession of Cyprus to the EU but states that if no settlement has been reached

by the completion of accession negotiations, the Council’s decision on accession will be

made without the above being a precondition and taking account all relevant factors.

… but the EU has at no stage undertaken a binding commitment to end accession

negotiations within a given period and some Member States have indicated their hesitation to

vote for the accession of a divided island into the Union (see, for example, Agence Europe

Nº. 7339, 9th

and 10th

of November, 1998).

Greece, a Member State of the Union, has threatened to veto the forthcoming enlargement

towards the countries of Central and Eastern Europe, if Cyprus is not admitted.

The European Council meeting in October 2002 reiterates its preference for a reunified

Cyprus to enter the EU supports the efforts of the UN Secretary General for reaching a

solution and will accommodate the terms of such a comprehensive settlement in the Treaty

of Accession in line with the principles on which the European Union is founded. In the

absence of a settlement the decisions to be taken by the Copenhagen European Council in

December will be based on the Helsinki European Council of 1999 …

… moreover and in case of the accession of a reunified Cyprus it agreed to establish a

programme of € 206 million for the economic development of northern Cyprus to be

disbursed in the period 2004-2006.

The European Council meeting in December 2002 invited Cyprus to become a member of

the European Union as of 1 May 2004 …

… believes that the Comprehensive settlement presented by the UN Secretary General offer

a unique opportunity to reach a settlement …

… recalls its willigness to accommodate the terms of a settlement in the Treaty of Accession

in line with the principles on which the EU is founded …

… decided that in the absence of a settlement the application of the acquis to the northern

part of the island …

… and invited the Commission, in consultation with the government of Cyprus, to consider

ways of promoting the economic development of the northern part of Cyprus and bringing it

closer to the Union.