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USAID/Cyprus 

Operational Plan 

FY 2006 

June 13, 2006 
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Please Note: 

The attached RESULTS INFORMATION is from the FY 2006 Operational Plan and was assembled 

and analyzed by the country or USAID operating unit identified on the cover page. 

The Operational Plan is a "pre-decisional" USAID document and does not reflect results stemming 

from formal USAID review(s) of this document. 

Related document information can be obtained from: 

USAID Development Experience Clearinghouse 

8403 Colesville Road, Suite 210 

Silver Spring, MD 20910 

Telephone: (301) 562-0641 

Fax: (301) 588-7787 

Email: docorder@dec.cdie.org 

Internet: http://www.dec.org 

Portions released on or after July 1, 2006 
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Program Performance Summary FY 2005: Program Narrative (FY 2006): The current situation in 

Cyprus is the consequence of a long history of conflict and tensions that erupted in inter-communal 

violence in the 1960's. Armed fighting took place in 1974, and as a result the island's two major 

communities were physically separated by a fortified and UN-patrolled dividing line. Since 1974, Cyprus 

has remained a divided island with an estimated 800,000 Greek Cypriots living south of the so-called 

"Green Line" in about 63 percent of the land area and about 200,000 Turkish Cypriots living in the north 

and occupying the remaining area. Perhaps half of the population in the north now consists of immigrants 

from Turkey. About 30,000 Turkish troops are stationed in the north and Britain maintains bases covering 

3% of the island's territory. UN brokered attempts to reunify the island on the basis of a negotiated 

settlement have failed. The 2004 UN-brokered Annan Plan referendum was accepted 65% to 35% by the 

Turkish Cypriots but was rejected 76% to 24% by the Greek Cypriots. As a result, the Secretary General 

has suspended his Good Offices Mission and little of consequence has happened since. Further division 

is reflected in income disparity - Greek Cypriot GDP per capita is over $20,000, nearly three times that of 

Turkish Cypriots. Much of this income is generated by the 2.5 million tourists who visit mostly the south of 

Cyprus annually. 

Since 1974, Cyprus has been divided de facto into the Republic of Cyprus-controlled two-thirds of the 

island and the Turkish Cypriot-administered one-third. The Government of the Republic of Cyprus has 

continued as the internationally recognized authority; in practice, its authority extends only to the 

government-controlled areas. Following the 1974 hostilities, the Turkish Cypriots set up their own 

institutions and, in 1983, declared an independent "Turkish Republic of Northern Cyprus" ("TRNC"), which 

only Turkey recognizes. In 2003, several Green Line checkpoints were opened. This has led to some 

increased trade, events and contacts, but the island remains divided. In spite of this division, the 

Republic of Cyprus became a member of the European Union in May 2005, though the Turkish Cypriots 

are not yet included and the aquis communitaire (the body of EU laws and regulations) is suspended in 

the Turkish Cypriot area pending a durable settlement. 

The long-standing, unresolved conflict in Cyprus represents a major foreign policy concern for the U.S., 

whose regional interest is to secure strategic geopolitical stability in the Eastern Mediterranean. The U.S. 

Congress has consistently provided earmarked funds for Cyprus averaging $13-15 million per year. U.S. 

objectives for Cyprus include reunification of the island, reduction of tensions, and promotion of peace 

and cooperation between the two communities. USAID's approach supports these objectives by focusing 

on increasing and strengthening cooperation and mutual tolerance between Greek Cypriots and Turkish 

Cypriots and supporting initiatives that encourage a comprehensive settlement. 

The USAID program in FY 2005 was marked by the end of the successful UNDP-implemented 

Bicommunal Development Program (BDP) and the start of a new, higher level of effort with the Action for 

Cooperation and Trust (ACT) and the new Cyprus Partnership for Economic Growth (CyPEG). 

From 1998 to 2005, the BDP represented the entire USAID effort in Cyprus. When it began, there were 

few contacts between Greek Cypriots and Turkish Cypriots, and those that occurred were strongly 

discouraged by the authorities on both sides and by peer pressure. Its main role was to help foster 

positive and cooperative relations between the Greek Cypriots and Turkish Cypriots by helping them to 

design and implement projects of common interest. The program was rooted in the "contact theory", i.e., 

that positive collaborative experiences should, over time, erode feelings of distrust between people if they 

occur within positive experiential contexts. Early BDP inter-group contacts were very tentative, especially 

because political pressure and peer pressure discouraged them. The BDP arranged contacts in neutral 

locations bringing the sides together in events, meetings, and conferences abroad. Themes were noncontroversial, such as the Nicosia sewer system (which serves both sides of the city), support to the 

Nicosia Master Plan, confronting animal diseases, and environmental and health topics that were difficult 

to oppose. During this time, the BDP also worked with Cypriots to protect their shared environment and 

restore buildings of important cultural significance for both communities. Over time, project development 

progressed from communities undertaking entirely separate projects, to doing mirror projects but using 

only the same methodology, to projects with considerable collaboration, and then to outright joint projects. 

Perhaps the best joint project example is the Madison Dairy Advisory Group, an umbrella organization of 

dairy and agricultural experts whose efforts across Cyprus have led to increased production and quality of 
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Cyprus dairy products. There are similar examples of working and collaborating together among 

professionals, educators, municipal planners, and NGOs. 

Between 1998-2005, the BDP worked with over 300 different Cypriot organizations and supported some 

220 projects. The staff of the program is drawn from both communities and their belief in its principles is 

testament to their commitment to the values of peace and reconciliation on the island. Towards the end 

of the BDP, contacts that were once considered "daring" became commonplace and negative pressures 

tending to prevent that contact were lessened. As there are few other donors in Cyprus, it is fair to say 

that USAID through the BDP has financed and supported virtually all of these efforts and thus has made a 

significant contribution to bridging the gap between the two communities. 

In FY 2005, the USAID program entered a new phase. To ease the economic isolation of the Turkish 

Cypriots and to continue to seek a durable peace settlement, U.S. assistance to Cyprus was increased. 

Due to the increased size and complexity of the USAID program, USAID established the Office of the 

USAID Representative in December 2004. The new USAID program activities consist of ACT and 

CyPEG. 

ACT is a successor to the BDP and will also be implemented by UNDP. Under ACT, the approach will be 

to encourage even more sophisticated, sustained, and complex contact between Turkish Cypriot and 

Greek Cypriot individuals and groups in order to build even greater intercommunity understanding and 

interdependence. ACT will apply the lessons learned from BDP, which include expanding the 

bicommunal approach to one of multicultural understanding and tolerance; to make grant making 

objectives and criteria more clearly defined; to base new programs on sectoral assessments; to define 

goals and strategies in closer collaboration with partners; and to incorporate best practices and resultsbased management. 

The results are too early to judge, but CyPEG has gotten off to a quick start with study tours to the U.S. 

for Turkish Cypriot entrepreneurs, bankers, and educational experts; technical assistance to increase 

trade across the Green Line; advisory services to Turkish Cypriot banks, producers, and tourism interests; 

and technical assistance to organize the first Turkish Cypriot delegation to the Cyprus International Fair 

since 1974. Efforts are underway to improve Turkish Cypriot business practices and strengthen the 

financial system and small and medium enterprises (SMEs); to promote more efficient use by businesses 

and households of water and energy; and to upgrade basic services and infrastructure to EU standards 

and increase capacity to conserve and manage natural and cultural resources for economic growth. The 

prognosis for success is very good. 

Major challenges for Cyprus remain in the persistent and continued division of the island. The disparity of 

income between the north and south is real and impacts negatively on possible political solutions. The 

presence of military forces from Greece and especially Turkey make reconciliation more difficult. 

Membership in the European Union offers hope, but promised funds for Turkish Cypriots have not been 

forthcoming and the full benefits of membership do not extend to Turkish Cypriots pending reunification. 

The Cyprus USAID program consists of a single objective but is an integrated program with only two 

activities, ACT and CyPEG, both aimed at the same Strategic Objective: Conditions to foster a durable 

settlement are strengthened. ACT directly aims to build on the successes of BDP, which has built up 

several bicommunal models of trust, and to strengthen the culture of mutual understanding. The CyPEG, 

while focusing on the Turkish Cypriot community, also directly supports the SO but with an entirely 

different approach - to increase the parity of economic opportunity. Thus these two efforts are mutually 

supportive of the same goal. 

Women and girls have been involved at all stages and to a great extent in the planning and 

implementation of BDP activities. Many NGOs supported by BDP and ACT are woman-led and/or focus 

on women's issues. 
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FY 2006 Program 

SO: 233-0410 Conditions to foster a durable settlement are strengthened 

Mitigate Conflict and Support Peace 

Mitigate Conflict and Support Peace ($11,400,000 ESF, $6,996,100 ESF carryover, $5,585,199 ESF prior 

year recoveries). The successful Bicommunal Development Program (BDP), which began in March 1998 

and ended in FY 2005, was followed immediately by the new Action for Cooperation and Trust (ACT). 

ACT will support a wide range of bicommunal and partnership activities in the broad areas of education, 

civil society and sustainable development. All activities will promote tolerance and mutual understanding, 

encourage civic engagement on issues of island-wide interest, such as HIV/AIDS, and assist Cypriots to 

design and implement island-wide initiatives to solve common problems. Activities will include 

organizational networking, cultural heritage conservation, natural resource protection and preservation, 

youth and education projects, and strengthening of civil society. USAID will undertake this program 

through a cooperative agreement with UNDP. 

In addition, USAID will continue the Cyprus Partnership for Economic Growth (CyPEG) which began in 

FY 2004. CyPEG is aimed at contributing to beneficial economic and commercial interaction between the 

Turkish Cypriot and Greek Cypriot communities and enabling the Turkish Cypriot economy to bear the 

costs of the future settlement. USAID will continue to support activities that strengthen the Turkish 

Cypriot economy by improving enterprise competitiveness at the firm and sector levels, facilitating access 

to capital, improving the environment in which banks and businesses operate, further professionalizing 

and upgrading the small and medium enterprise (SME) sector, enhancing vocational training, improving 

cultural heritage and natural resource management, and improving resource efficiency. Principal 

contractors: Bearing Point, International Resources Group, and CORE International (all primes). 

FY 2007 Program 

SO: 233-0410 Conditions to foster a durable settlement are strengthened 

Mitigate Conflict and Support Peace 

Mitigate Conflict and Support Peace ($10,800,000). ACT will continue its efforts to foster partnerships 

and interaction between the Turkish Cypriot and Greek Cypriot communities, through joint projects and 

initiatives. In the event a durable peace settlement is achieved, the program will shift its efforts towards 

direct support of that settlement. UNDP will continue as the prime cooperator with USAID. 

CyPEG will expand its reach into the Turkish Cypriot economy through greater emphasis on modernizing 

the banking system, efforts to stimulate the growth of SMEs, improved resource efficiency, enhanced 

vocational training, and improved cultural heritage and resources conservation and management. 

Principal contractors: Bearing Point, International Resources Group, CORE International, and others to 

be determined. 
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Results Framework 

233-0410 Conditions to foster a durable settlement are strengthened 

Program Title: Cyprus Reconciliation 

 4.1.1: Strengthened culture of mutual understanding 

 4.1.2: Increased parity of economic opportunity 

Discussion: The first ever Strategy Statement for Cyprus was completed about the time of this Annual 

Report submission. In the Strategy, Strategic Objective 4.1 was renamed from "Special Iniatives" to 

"Conditions to foster a durable settlement are strengthened." In addition, the following Intermediate 

Results were introduced in the strategy: IR 4.1.1, Strengthened culture of mutual understanding and IR 

4.1.2, Increased parity of economic opportunity.