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Cyprus and the EU - Financial
2003-04-14 07:42:47

By Emilia Christophi-- Nicosia, Apr 14 (CNA) -- On April 16, 2003 Cyprus President Tassos Papadopoulos will sign in Athens, in the presence of European leaders, the Accession Treaty of the Republic of Cyprus with the European Union (EU). The accession will be completed on 1 May 2004.

Cyprus' unique relations with the European Union (EU) are deeply rooted in the island?s culture, traditions and history, as well as in the political, economic and social conditions of today.

This east Mediterranean island, dedicated to the purposes and principles of the UN Charter, especially world peace and security, international cooperation in the economic, social, cultural and other sectors, gained independence from Britain in 1960 and became a member of the United Nations, the Non-Aligned Movement, the Commonwealth, the Council of Europe, the Organisation for Security and Cooperation in Europe and on July 4, 1990, it applied for full membership to the European Economic Communities (EEC).

The relationship between the EU and Cyprus began when the small island expressed interest in the early 1960s, in parallel with the British application for membership to the EEC, to conclude an Association Agreement with the EEC.

The bilateral relations between the EU and Cyprus began with the signing of an Association Agreement on 19 December 1972.

The final goal of the Agreement was the establishment, in two stages and within a period of ten years, of a Customs Union between Cyprus and the EEC. The Agreement came into force on 1st June, 1973.

The Agreement was supplemented by four Financial Protocols concerning financial and technical co-operation which were to be for the benefit of the entire population of the island.

The Turkish invasion of 1974 and occupation of 37 per cent of the island?s territory, delayed the normal implementation of the Association Agreement and in particular its second stage.

The first stage provided for the phased reduction of tariffs on industrial goods and agricultural products.

After successive extensions of the first stage, a Protocol for the second stage of the agreement was signed in Luxembourg on 19 October 1987, thus paving the way towards the progressive realisation of a Customs Union between the two parties. This Protocol, governing the transition to the second stage of the Agreement, the completion of the Customs Union, came into force on 1st January 1988.

It provided for two phases, the first from 1988 to 1997, which provided for the progressive abolition of both parties of tariffs and quantitative restrictions on specified industrial and agricultural products were reduced and the Common Customs Tariff was adopted.

The second phase, from 1997 to 2002, was postponed for practical reasons since Cyprus? accession negotiations began in March 1998.

Prior to the island?s application to join the Union, the Delegation of the European Commission to the Republic of Cyprus was formally opened on 24 May 1990.

On 4 July 1990 the application of the Republic of Cyprus for accession to the European Communities was presented to the Foreign Minister of Italy, Gianni de Michelis, the then President of the Council, by Cyprus Foreign Minister George Iacovou.

Cyprus President George Vassiliou had described the 4th of July 1990 for Cyprus a ?great day? for the island, adding that with its accession application, Cyprus had "formally declared its European orientation, and its desire to participate as actively as possible on an equal footing with the other EC member-states in the historic process of European integration and the building of the common European house of peace, cooperation and prosperity".

The only political party on the island opposing the island's application for accession was left-wing AKEL. The others, rightwing Democratic Rally, the Centre-Right Democratic Party and Socialist EDEK, hailed the decision of the Council of Ministers to go ahead with the application.

The Council accepted the application and sent it for consideration by the Commission on 17 September 1990.

The European Commission, issuing a positive ''avis'', opinion, on Cyprus, in June 1993, recognised the islands "European identity and character" as well as "its vocation to belong to the Community" and considered Cyprus "eligible" for membership.

The concluding section of the Commission's Opinion on Cyprus? application to join the European Community stated the following: ?Cyprus' geographical position, the deep-lying bonds which, for two thousand years, have located the island at the very fount of European culture and civilisation, the intensity of the European influence apparent in the values shared by the people of Cyprus and in the conduct of the cultural, political, economic and social life of its citizens, the wealth of its contacts of every kind with the Community, all these confer on Cyprus, beyond all doubt, its European identity and character and confirm its vocation to belong to the Community?.

The European Council of December 1993 in Luxemburg invited the Commission to open substantive discussions with the government of Cyprus to help it prepare for the accession negotiations.

Subsequently, the European Council at its meetings at Corfu and Essen in June and December 1994 respectively, confirmed the next phase of enlargement of the Union would incorporate Cyprus and Malta.

Moreover, the Council at its Cannes meeting (June 1995) was more specific, deciding that the EU would begin accession negotiations with Cyprus six months after the conclusion of the 1996 Intergovernmental Conference. This decision was confirmed at the European Councils in Madrid (December 1995) and Florence (June 1996).

Furthermore, the Dublin European Council (13-14 December 1996) confirmed its Madrid conclusion regarding the timetable for enlargement.

On 17 July 1995 the Union adopted the precise arrangements for the structured dialogue involving EU meetings of heads of state and government, ministers, political directors and experts as well as possible alignment with the Union?s declarations, and association with the Union?s demarches and the implementation of joint actions.

Since then many dozens of structured dialogue meetings have taken place both in Cyprus and in member states on Internal and Justice Affairs, the Internal Market, the Environment, Transport, Education and Culture, Research and Development, Economic and Fiscal Matters, Health and Social Affairs, and Political Affairs.

The purpose of the structured dialogue was to provide a vital forum for close exchanges of views and an in depth examination of progress made by Cyprus with regard to the harmonisation of its legislation, policies and practices leading to accession.

On 12 March 1998 the then Cyprus President Glafcos Clerides presented to the European Council Presidency a formal proposal inviting the Turkish Cypriots to appoint representatives as full members of the team negotiating the accession of Cyprus to the European Union. The proposal, however, was not been taken up.

Accession negotiations with Cyprus and five countries of Central and Eastern Europe were officially launched in March 1998. Former Cyprus President, George Vassiliou, was appointed as Chief Negotiator and Coordinator of the Harmonisation Process.

The first phase was completed by the end of 1999 and the second phase of substantial negotiations was conducted on a chapter by chapter basis.

On December 4, 2002, Cyprus became the first of the EU candidate countries to have concluded accession negotiations, after an agreement reached regarding the chapter Budgetary and other Financial Provisions.

Vassiliou said he was pleased with the agreed arrangements which meet Cyprus' goals since the Commission responded in a positive manner.

EU Chief Negotiator with Cyprus Leopold Maurer said that Cyprus has ''a very good performance, probably one of the best of all the candidate countries'' regarding harmonisation and applying the acquis communautaire.

With the accession negotiations completed with Cyprus in December 2002, the European Council of Copenhagen in December 12-13 said it will welcome Cyprus as a new member of the EU from 1 May 2004 together with nine other countries.

On April 9, 2003 the European Parliament approved by an overwhelming majority the accession of the Republic of Cyprus to the Union.
Euro MPs cast their vote on a report by Rapporteur on Cyprus for the island's accession, Jacques Poos, as follows: of the 562 votes cast, 507 were in favour, 29 against and there were 26 abstentions.

What remains is the signing of the Accession Treaty on Wednesday, 16 April, in Athens, and the ratification of the island's accession to the EU by the national parliaments of the 15 EU member-states.

Financial Cooperation
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The assistance provided to Cyprus by the European Union, and the opportunities for participation in common programmes, falls into three categories, Financial Protocols, EU Pre-Accession Financial Regulation, (2000-2004) and loans from the European Investment Bank.

Cyprus and the then EEC signed in 1977 four protocols on financial and technical cooperation providing the country with financial assistance estimated at 210 million Euro in loans, grants and contributions to risk capital formation.

The total amount of the two Financial Protocols (30 and 44 million ECU respectively) was used to finance infrastructure development projects in Cyprus such as the Sewage system in Nicosia and the pedestrianisation of Ledra and Onasagoras Streets and Kyrenia Avenue on both sides of the old part of the divided city of Nicosia, as well as the Southern Conveyor Project ? Phase I, water supply and waste water treatment project, the construction of two power units at the Dhekelia power plant.

Part of the resources of the above financial protocols were also used for projects which benefited both communities on the island.

The Third Financial Protocol, totaling 62 million Euro, was signed in 1989 and was used for financing projects in the productive sectors to facilitate their adjustment of the new competitive conditions arising from the Cyprus-EC Protocol for Customs Union. The risk capital revenue is being used for the creation of joint ventures with partners of EU countries.

The EU financial assistance of Cyprus? accession course in the period 1994-1999 was based in the utilisation of one part of the limited funds of the 4th Financial Protocol.

More specifically, grants of 7,45 million Euro have been given for the use of technical assistance by the EU in harmonisation issues and for the funding of Cyprus? participation in EU Programmes.

The overall sum which has been tied up from the Fourth Financial Protocol including the bi-communal plans, reached the sum of 9,57 million Euro.

During the period 2004-2004 Cyprus is expected to receive 57 million Euro in pre-accession aid on the basis of the relevant EU regulation concerning ?the implementation of operations in the framework of the pre-accession strategy?.

Loans by the European Investment Bank (EIB)
-----------------------------
Cyprus has in the last years made use of the loans provided by the EIB in the context of the 4th Financial Protocol and through other programmes of granting loans. More specifically in the context of the 4th Financial Protocol, 50 million Euro has been given to the Cyprus Development Bank for the period 1996-1999 to provide financial assistance to the Small and Medium sized Enterprises.

In addition, in the context of the Mediterranean programme MEDA, the sewerage projects of Ayia Napa/Paralimni (approx. 9 million Cypriot pounds), Limassol (2nd Phase, 7 million Cypriot pounds) and Paphos (19 million Cypriot pounds will be provided) have been financed with a subsidised rate of interest (up to 3 percentage units).

In the context of financial assistance for pre-accession aid to the candidate states, a loan of 100 million Euro has been given for the financing of the upgrading of the national network of highways (Dhekelia-Famagusta, Nicosia-Kokkinotrimithia, etc). A loan to the Electricity Authority of 100 million Euro for the financing of the Electricity Production Station at Vasiliko has also been approved.

EU programmes and Cyprus
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Apart from the four financial protocols, Cyprus has been assisted from its participation in various community programmes and initiatives open to third non-EU countries.

It participates in the 5th Framework Programme for Research and Development, Leonardo da Vinci II (training), Socrates, (Education), Youth, Media II Media Plus (Audiovisual), Multi-annual Programme for SMEs.

For Cyprus' participation in the afore-mentioned EU Programmes, the government of the Republic of Cyprus contributes financially to their implementation, a part of which is covered by the EU in the framework of the 4th Financial Protocol and the New Financial Regulation.

More specifically, the Life (Environment) Programme is mentioned in the context of which in the last eight years substantial assistance for the support of environmental programmes has been provided, with the aim of adjusting Cyprus? environmental policy to the acquis communautaire. From 1992 until 1999 it has been calculated that the grants which have been given to Cypriot organisations surpass the amount of 3 million Euro.

Moreover, in the context of the MEDA Programme (Euro-Mediterranean Partnership) Cypriot municipalities, educational institutions, chambers of commerce and other organisations which participate in a number of sub-programmes have benefited. Due to the decentralised way these Programmes are run and of the nature of the projects which are financed, it is difficult to calculate the exact amount of financial assistance the Cypriot organisations have benefited from.

Other programmes Cyprus has benefited from, without any financial contribution are: Synergy (Energy), EC Investment, Partners Scheme (Promoting Common Enterprises) and International Research Co-operation.|

CNA/EC/GP/2003
ENDS, CYPRUS NEWS AGENCY
14/04/2003

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