Communication from the Commission to the European Parliament and the Council - Second annual report 2007 on the implementation of community assistance under Council Regulation (ec) no 389/2006 of 27 february 2006 establishing an instrument of financial support for encouraging the economic development of the turkish cypriot community {SEC(2008)2469 final}
Date: 2008-09-15
Institutions: European Commission
Subjects: Cyprus, EU aid, aid programme, development aid, economic development, financing of aid

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 15.9.2008 
COM(2008) 551 final 

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT AND THE COUNCIL 

Second Annual Report 2007 on the implementation of Community assistance under 
Council Regulation (EC) No 389/2006 of 27 February 2006 establishing an instrument of 
financial support for encouraging the economic development of the Turkish Cypriot 
community 

{SEC(2008)2469 final} 

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COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT 
AND THE COUNCIL 

Second Annual Report 2007 on the implementation of Community assistance under Council 
Regulation (EC) No 389/2006 of 27 February 2006 establishing an instrument of financial 
support for encouraging the economic development of the Turkish Cypriot community 

1. 

INTRODUCTION 

On 26 April 2004, the Council stated the following: 

“The Turkish Cypriot community has expressed their clear desire for a future within the 
European Union. The Council is determined to put an end to the isolation of the Turkish 
Cypriot  community  and  to  facilitate  the  reunification  of  Cyprus  by  encouraging  the 
economic  development  of  the  Turkish  Cypriot  community.  The  Council  invited  the 
Commission  to  bring  forward  comprehensive  proposals  to  this  end,  with  particular 
emphasis  on  the  economic  integration  of  the  island  and  on  improving  contact  between 
the  two  communities  and  with  the  EU.  The  Council  recommended  that  the  259  million 
euro already earmarked for the northern part of Cyprus in the event of a settlement now 
be used for this purpose.” 

Council Regulation (EC) No 389/2006 establishing an instrument of financial support for 
encouraging  the  economic  development  of  the  Turkish  Cypriot  community1  (hereafter 
the "aid Regulation") was adopted on 27 February 2006. 

This second report covers the period from 1 March until 31 December 2007.  

2. 

PROGRAMMING OF THE ASSISTANCE 

No  additional  resources  requiring  programming  were  made  available  under  the  2007 
budget.  No  reprogramming  was  required  during  the  reporting  period.  Minor  changes 
were  made  to  some  project  fiches  which  did  not  require  modifications  to  the  five 
Commission Decisions adopted in 2006.  

3. 

IMPLEMENTATION MECHANISMS  

The  European  Commission  is  responsible  for  administering  the  assistance.  The 
implementation  mechanisms  were  dictated  by  the ad  hoc  nature  of  this  aid  programme 
and of its beneficiaries. The programme is implemented in an EU Member State but in an 
area that is not under the effective control of that Member State's Government and where 
the application of the EU acquis is suspended.  

A Programme Team of Commission officials and contract agents was set up in 2006 to 
implement the programme as part of the Task Force Turkish Cypriot community within 

1 

OJ L65, 7.3.2006, p.5. 

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DG  Enlargement.  During  the  reporting  period,  the  Programme  Team  was  further 
strengthened. By December 2007 it comprised 27 staff including 3 Commission officials, 
14  contract  agents  and  10  local  staff  provided  by  a  private  contractor  (GTZ)  for 
administrative and logistical support.  

The Programme Team, working in Cyprus on a long-term mission basis, continued to use 
the facilities of the Programme Support Office established in September 2006, located in 
the northern part of the walled city of Nicosia. Office logistics continued to be provided 
by a private contractor (GTZ) under a contract valid until 20 June 2008. The Programme 
Support Office has proven a very important tool in ensuring co-ordination with Turkish 
Cypriot stakeholders and providing a venue for meetings and seminars. Initially selected 
premises  proved  too  small  due  to  the  growing  number  of  staff  needed  to  contract  the 
funds by the end of 2009. A decision was taken in autumn 2007 to move to new premises 
after  necessary  refurbishment2.  The  tender  for  office  management  services  (premises, 
equipment, support staff) after June 2008 was also launched.  

4. 

IMPLEMENTATION DURING THE REPORTING PERIOD 

4.1. 

General overview  

The  Commission  is  implementing  this  aid  programme  in  a  unique  political,  legal  and 
diplomatic  context.  During  the  reporting  period,  the  Commission  was  confronted  with 
some practical consequences of operating in such an environment. Ad hoc arrangements 
had to be put in place enabling the Commission to proceed with implementation whilst 
respecting principles of sound financial management.  

It  should  be  recalled  that  in  the  case  of  similar  EC  funded  aid  programmes,  financing 
agreements  with  the  government  of  the  beneficiary  country  normally  set  the  rules  and 
conditions under which the assistance shall be implemented. They regulate issues such as 
taxation,  work  and  residence  permits.  For  this  aid  programme  for  the  economic 
development of the Turkish Cypriot community no such agreement exists. Therefore, the 
Commission  has  to  rely,  for  the  implementation  of  this  programme,  on  what  it 
understands  to  be  currently  the  rules  and  conditions  locally  applicable.  These  are  not 
enforceable and might change during the lifetime of a contract. The Commission entering 
into contractual arrangement with its contractors faces thus the risk of having to take on 
liabilities  normally  not  encountered  in  contexts  where  there  is  a  financing  agreement. 
Contractors might cost their services at a higher price to protect themselves from these 
uncertainties. 

The Commission heavily relies on the support of the Turkish Cypriot community to make 
this  programme  a  success,  firstly  in  its  implementation  phase  and  then,  when  the 
sustainability  of  completed  projects  must  be  ensured.  The  Commission  strives  to  instil 
ownership  of  EC  financed  projects  in  local  beneficiaries.  Turkish  Cypriot  experts  are 
involved in drawing up technical specifications and Terms of Reference. Turkish Cypriot 
stakeholders  have  been  actively  involved  in  the  tendering  phase,  with  their  experts 
included  in  tender  evaluation  panels.  After  contracts  are  awarded,  Turkish  Cypriot 
beneficiaries play an active part in Steering Committees. 

2 

The move to new premises took place in June 2008. 

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The  Turkish  Cypriot  community  identified  counterparts  for  each  project.  An  Aid 
Committee  was  set  up.  Turkish  Cypriots  are  not  accustomed  to  EC  procedures.  The 
learning  curve  is  steep  and,  whilst  considerable  progress  has  been  made,  results  are 
mixed  as  regards  absorption  capacity.  More  needs  to  be  done  to  ensure  long-term 
sustainability. The short timeframe the Commission has to contract the aid programme is 
an additional complication. 

Some  of  the  risks  highlighted  in  the  first  annual  report,  in  particular  how  the  overall 
political  context  impacts  on  implementation  of  the  aid,  were  encountered  during  this 
reporting period.  

Problems arose in the reconciliation projects. De-mining started late, due to the Turkish 
Cypriot  leadership's  initial  unwillingness  to  use  the  aid  programme  for  these  activities. 
The History Teaching project (based on the co-operation developed between teachers and 
trade  unions  of  both  communities  during  the  2004-2006  period)  could  not  start  due  to 
reservations of the Government of the Republic of Cyprus as regards the Commission's 
involvement in a project to be implemented by the Council of Europe. 

As regards property, the considerable time required by the Government of the Republic 
of Cyprus to provide information on private Greek Cypriot owners' names added delays 
to  an  already  tight  timescale.  Making  up  the  delay  will  depend,  inter  alia,  on  such 
information being released more rapidly.  

Works, services and supplies are procured according to EC external aid rules. During the 
reporting  period,  the  first  launched  works  tenders  were  negatively  affected  by  the 
decision  of  local  Turkish  Cypriot  contractors  not  to  take  part  in  EC  funded  tenders 
because  the  open,  competitive  approach  to  tendering  under  EC  procurement  rules 
undermined local interests. 

4.2. 

Progress by objective 

Financial  assistance  under  the  aid  programme  focuses  on  five  priority  objectives  (see 
Annex  1  for  breakdown  by  objective  and  by  project).  Out  of  the  overall  allocation  of 
€259 million, €240.15 million was allocated to the ope
rational part of the aid programme. 
Key activities and issues during the reporting period were as follows: 

4.2.1.  Objective 1: Developing and restructuring of infrastructure 

During  the  reporting  period,  activities  focused  on  launching  the  service  tenders  for 
preparing  the  conceptual  design  and  tender  documents  for  the  large  works  and  supply 
components to be funded under this priority. 

The launch of the first works tender for the much-needed replacement of asbestos pipes 
in  the  northern  part  of  Nicosia  ran  into  difficulties  which  were  exacerbated  by  the 
decision by local Turkish Cypriot companies not to participate (see point 4.1 above). Few 
offers  were  received  (the  tender's  relatively  low  value  meant  it  did  not  attract  much 
interest from international construction companies), no offer was deemed compliant and 
the tender procedure had to be cancelled3. 

3 

The decision to cancel the tender was taken in February 2008. 

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On  nature  protection,  the  Commission  sought  to  fast-track  the  preparation  of  a 
management plan for the Karpaz peninsula. During summer 2007, the construction of an 
electricity  line  from  the  village  of  Dipkarpaz/Rizokarpazo  to  the  tip  of  the  Karpaz 
peninsula  led  to  concerns  that  haphazard  development  would  undermine  the  area's 
ecological  value,  hence  the  need  to  help  the  Turkish  Cypriot  community  to  rapidly 
prepare  the  management  plan  for  the  Karpaz  specially  protected  area.  The  lack  of 
suitable offers from framework contractors, led to the decision to include this activity in 
the main service tender launched for this purpose4. 

A contract was signed for the “Feasibility study for the rehabilitation of the Lefke mining 
area”. Before the contract was signed, the Commission was informed that a private sector 
company  had  been  awarded  a  concession  to  clean  up  of  the  area,  in  exchange  for  the 
rights to set up a free port area nearby. The Commission signed the contract only when it 
became clear that the chosen consultant was able to operate effectively and deliver on its 
contractual obligations. 

A draft solid waste management plan was completed in the autumn and discussed with 
the  Turkish  Cypriot  community.  This  plan  is  an  important  prerequisite  for  launching 
works  and  supply  contracts  under  the  Solid  Waste  Management  Sector  Programme. 
Options were identified for the location of a new landfill and a waste transfer station.  

In the energy sector, preparation of the first tender for the provision of energy meters fell 
behind schedule due to delays in receiving comments on the technical specifications from 
Turkish  Cypriot  stakeholders.  EC  support  for  a  SCADA5  system  was  delayed  while 
stakeholders considered financing the project from different sources. 

In telecommunications, the planned concept review study was carried out to prepare the 
technical  assistance  to  restructure  the  sector  in  terms  of  regulation  and  network 
operations,  and  the  investments  required  for  enhancing  the  existing  operational 
infrastructure  so  that  it  fully  complies  with  IP6-based  networking  and  can  also  reach 
customers in remote areas. 

The  Traffic  Safety  programme  was  launched, with  the  contracting  of  the  project 
management component. 

4.2.2.  Objective 2: Promoting social and economic development 

In  the  field  of  rural  development,  an  Interim  Rural  Development  Plan  was  prepared, 
resulting in the launch of a pilot call for farmers, focused on improving hygiene on sheep 
and goat farms.  

As  for  human  resources  development,  a  small  pilot  project  for  supplying  to  supply  IT 
equipment  to  three  primary  schools  ran  into  difficulties  and  had  to  be  cancelled  due  to 
local suppliers not bidding. A two-day workshop was organised on leadership training for 
head  teachers.  Arrangements  were  also  concluded  with  the  European  Training 

4 

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The  Commission  signed  the  service  contract  "Technical  assistance  for  management  and  protection  of 
potential Natura 2000 sites in the northern part of Cyprus" in April 2008. 
Supervisory Control and Data Acquisition  
Internet Provider 

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Foundation so that it can provide support to the Commission in implementing the human 
resources development sector programme. 

Upgrading  of  urban  and  local  infrastructure  is  undertaken  in  joint  management  with 
UNDP. Work started on the last phase of the restoration of the Bedestan building in the 
walled city of Nicosia. Villages were identified for pilot projects such as restoration of 
village squares. However, a project to restore the water supply in a small village had to 
be cancelled as no local contractors bid. 

the 

implementation  mechanism 

Implementation of the "Micro and small enterprise loan programme" ran into difficulty 
as 
the  Commission  Decision 
(implementation via a grant agreement with a development bank and a service contract) 
did  not  prove  feasible  and  will  need  to  be  reviewed.  This  resulted  from  the 
incompatibility  between  the  profit-oriented  nature  of  development  banks  and  the 
requirement  deriving  from  the  EC  Financial  Regulation  that grants  should  not  generate 
profits.  

laid  down 

in 

4.2.3.  Objective 3: Fostering reconciliation, confidence building measures, and support to civil 

society 

A grant agreement was signed to support the Committee on Missing Persons (CMP). The 
EC contribution is the largest single financial contribution to the CMP. In 2007, the CMP 
reached  the  important  stage  of  starting  to  return  remains  of  missing  persons  to  their 
families. A website in three languages (English, Greek and Turkish) was also developed 
with EC support. The first call for proposals to support civil society was launched.  

Successful implementation in this area  is heavily  dependent  on the political  context. In 
this respect, the following problems were encountered: 

(1) 

Demining:  the  grant  agreement  was  signed  with  UNDP  in  March  2007  but 
implementation  was  effectively  blocked  until  July  due  the  Turkish  Cypriot 
leadership's  reservations.  Their  initial  position  was  that  demining  should  be 
funded  through  different  budgetary  means  as  in  the  2004-2006  period7  and  not 
under the €259 million aid programme. Add itionally, an agreement was reached 
only  in  December  2007  between  UNFICYP  and  the  Turkish  Army  on  releasing 
the  information  (e.g.  mining  maps)  required  for  demining  activities  to  be 
implemented  at  full  speed.  UNDP  had  deployed  a  demining  team  in  situ  since 
April  soon  after  contract  signature.  These  delays  caused  additional  costs  not 
foreseen at the beginning. 

(2) 

History teaching project: the Commission signed the contract in July 2007 but the 
Council of Europe did not countersign as it did not deem itself to be in a position 
to implement the project. The Republic of Cyprus put forward objections, saying 
that  the  way  the  project  was  structured  and  funded  altered  its  previous  existing 
co-operation  framework  with  the  Council  of  Europe  and  had  requested  the 

7 

€5 million was deployed for demining in Cyprus through a pilot project/preparatory action during the 2004-
2006 period. 

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conclusion  of  formal  arrangements  (through  the  signing  of  a  memorandum  of 
understanding)8 not acceptable to the Council of Europe. 

(3) 

Academy  of  Political  Studies:  although  the  contract  was  signed  during  the 
reporting  period,  the  Council  of  Europe  decided  to  delay  implementation  until 
after the Republic of Cyprus Presidential elections in February 2008. 

4.2.4.  Objective 4: Bringing the Turkish Cypriot community closer to the European Union 

The  main  achievement  to  report  is  the  finalisation  of  the  first  call  for  proposals  for 
scholarships  for  the  2007/2008  academic  year  105  scholarship  were  available  (25  for 
teachers,  80  for  undergraduates),  but  only  39  applications  were  received  leading  to  the 
award of  only 30 grants  (for 15 teachers  and 15 undergraduate students). The low take 
up,  particularly  by  undergraduates,  was  imputed  to  the  scheme's  novelty  and  lack  of 
sufficient  time  to  advertise  it  properly.  Moreover,  local  universities  would  lose  fee 
income from undergraduate students leaving for a year abroad, hence their reluctance to 
promote the scheme to their students. The programme has been extended to postgraduate 
students for the 2008/2009 academic year, for which the call was launched in September.  

4.2.5.  Objective  5:  Preparing  the  Turkish  Cypriot  community  to  introduce  and  implement  the 

acquis communautaire 

This  priority  objective  is  mainly  implemented  through  the  Commission's  Technical 
Assistance Information Exchange Instrument (TAIEX). 

By the end of 2007, 122 events were organised involving 197 experts. Assistance focused 
mainly  on  the  five  areas  below.  Much  of  this  was  also  complementary  to  related 
investment projects and grant schemes funded from other parts of the aid programme. 

•  Support  for  the  implementation  of  the  Green  Line  Regulation,  in  particular  through 
mobilising phytosanitary experts to oversee planting, growing, harvesting and trade in 
potatoes. 

•  Agriculture, in particular the analysis of existing policies and the reforms required for 
the  future  introduction  of  the  acquis.  Identifying  priorities  for  the  Interim  Rural 
Development Programme was a key activity. 

•  Environment,  in  particular  identifying  priority  areas  for  future  training  and  capacity 
building  relating  to  the  acquis.  Work  on  designating  the  boundaries  of  the  nature 
protection  areas  with  future  potential  Natura  2000  status  is  a  case  in  point  where 
management plans under Objective 2 are foreseen. 

•  Food  safety,  where  activities  included  support  for  the  Turkish  Cypriot  community's 
response  to  the  foot-and-mouth  disease  outbreak  on  the  island  in  October  2007; 
assessing future investment needs to meet veterinary standards in both animal health 
and  veterinary  public  health;  and  priorities  for  future  training  and  capacity  building 
concerning the acquis.  

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At the time of adoption of this report, the project continues to be blocked. Over a year has elapsed and the 
contract will have to be modified to take account of the changed situation.  

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•  Statistics,  including  a  needs  analysis  for  developing  a  more  reliable  and  comparable 
data  set  for  the  northern  part  of  Cyprus  which  would  support  the  creation  of  island-
wide statistics, in line with EU standards, following reunification.  

Under this priority objective, a project was also launched to review the current state of 
play on how existing environment services are delivered and to suggest improvements. 

4.2.6.  Unallocated Technical Assistance and Programme Reserve Facility 

No use was made of this facility during the reporting period. 

4.2.7.  Financial  assistance  to  cover  administrative  expenditure  under  Article  4(3)  of  the  aid 

regulation 

A total of €18.85 million (i.e. 7.2% of the overa ll financial allocation) was earmarked to 
help  the  Commission  implement  the  aid  programme.  Assistance  covers  costs  of  staff 
involved in the implementation of the programme (contract agents and detached national 
experts) and their mission costs, as well as costs linked to the Programme Support Office. 
Contracts were signed to assist the Commission in the contracting process,  e.g. writing 
Terms of Reference, assessing proposals, etc. 

4.3. 

Financial execution (contracts and payments) 

Annexes  2  and  3  list  respectively  contracts  signed  during  the  reporting  period  and  in 
total.  

4.3.1.  Contracting 

During the reporting period, a total of €17.5 m illion was contracted. Of this, around €17 
million was contracted under the operational part of the aid programme and around €0.5 
million for supporting activities under Article 4(3) of the aid Regulation.  

By the end of 2007, nearly € 33 million was contracted in total. Of this amount, around 
€31.2  million  was  contracted  under  the  ope rational  part  and  around  €1.8  million  for 
supporting  activities.  Annex  4  shows  the  breakdown  of  contracts  under  the  operational 
part and supporting activities. 

4.3.2.  Payments 

During the reporting period, the Commission disbursed to its contractors a sum of around 
€8.1 million and spent around €0.9 mill

ion on staff and mission costs9. 

By  the  end  of  2007,  the  Commission  had  disbursed  to  its  contractors  a  total  a  sum  of 
around €12.29 million and had spent around €1.24  million on staff and mission costs. 

4.4.  Monitoring  

During  the  reporting  period,  the  Commission  set  up  an  Implementation  Review 
Mechanism  (IRM)  involving  Turkish  Cypriot  beneficiaries.  The  IRM's  aim  is  to 

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Expenditure  for  staff  and  missions  are  accounted  separately  from  other  support  expenditure,  due  to  the 
specific nature of these activities 

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periodically  review  progress  towards  achieving  programme  objectives  and  to  support 
effectiveness  and  quality  in  the  implementation  of  the  aid  programme  for  the  Turkish 
Cypriot  community.  It  also  aims  to  maximise  ownership  of  the  programme  by  Turkish 
Cypriot beneficiaries, a crucial prerequisite for ensuring success in implementation and 
sustainability. 

The first meeting of the IRM took place on 20 September 2007. Afterwards, a series of 
action points were established to speed up and improve programme implementation, their 
achievement being closely monitored via regular meetings between the Programme Team 
and Turkish Cypriot beneficiaries and stakeholders.  

4.5. 

Information, Publicity and Visibility 

Visibility is important to show to the Turkish Cypriot community at large that the EU is 
supporting  them.  During  the  reporting  period,  15  press  releases10  were  issued,  in 
particular to highlight the launch of calls for proposals and projects. Two interviews were 
given to Turkish Cypriot media. Three main visibility events were organised: 1) a "Bon 
Voyage"  reception  (attended  by  the  Turkish  Cypriot  leader  Mehmet  Ali  Talat);  for  the 
students and teachers awarded a community scholarship for the 2007/2008 academic year 
2)  a  ceremony  marking  six  years  of  successful  co-operation  between  UNDP  and  the 
Commission, on the occasion of the signature of the last grant agreement planned under 
by  the  programme;  and  3)  the  launch  of  the  EC-funded  website  of  the  Committee  on 
Missing  Persons.  Leaflets  were  produced  to  publicise  certain  projects  and  a  website 
developed to promote the community scholarship scheme. 

Additionally, the DG Enlargement website:  
http://ec.europa.eu/enlargement/turkish_cypriot_community/index_en.htm  continues  to 
be  used  to  publicise  the  aid  programme  and  includes  the  text  of  the  aid  Regulation  the 
Commission Financing Decisions and related documents.  

4.6. 

Consultations with the Government of the Republic of Cyprus 

In a statement inserted in the Council Minutes when the aid Regulation was adopted, the 
Commission, taking into account the existing political situation in Cyprus and the aim of 
integrating and reunifying the island, "declared its readiness to consult the Government 
of  the  Republic  of  Cyprus  about  the  major  aspects  of  the  implementation  of  assistance 
under  this  Regulation.  The  Commission  also  declared  its  readiness  to  consult  the 
Government  of  the  Republic  of  Cyprus  if  feasibility  studies  leave  doubt  as  to  whether 
actions to be financed under this regulation might affect property rights." 

After  the  programming  phase,  meetings  were  held  with  representatives  of  the 
Government of the Republic of Cyprus, in particular when senior Commission officials 
visited  the  island.  There  were  seven  such  visits  during  the  reporting  period.  Working 
level meetings were also held with representatives of line ministries, particularly in the 
fields of environment, energy and telecommunications with a view to taking into account 
island-wide  planning  aspects,  where  appropriate  in  line  with  Recital  8  of  the  aid 
Regulation. 

10 

17 press releases were issued in total since the start of implementation. 

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As  for  property  rights,  during  the  reporting  period,  a  few  small  infrastructure  projects 
were initiated, mainly for upgrading urban and local infrastructure where implementation 
is in joint management with UNDP. To this end, the Commission requested the support 
of the Republic of Cyprus to confirm the names of private owners. The time required by 
the Republic of Cyprus to answer such requests is proving long. This risks becoming a 
major stumbling block putting investment projects at risk. Obtaining the private owners' 
names is only the first step. The Commission must then request and receive their consent 
before signing works contracts. 

5. 

CONCLUSIONS 

During the reporting period, activities focused on: 

(1) 

(2) 

Reaching  cruising  speed  in  implementation:  preparatory  measures  in  terms  of 
preparing tender documents, as well as calls for proposal for grant schemes and 
works  and  service  contracts  were  launched.  All  direct  agreements  non  entailing 
calls for proposals as mentioned in the Commission Decisions were signed with 
UNDP  and  the  Council  of  Europe  with  the  exception  of  the  History  Teaching 
project where the Council of Europe did not countersign. 

Consolidating the  implementation mechanisms by recruiting additional staff and 
putting  in  place  the  required  implementation  procedures.  Due  to  programme's 
specific  nature  and  the  context  in  which  the  Commission  is  operating,  this  has 
entailed tailor-made arrangements.  

Implementation is and remains difficult because of the unique context within which the 
Commission  is  operating.  Some  of  the  challenges  identified  in  the  first  annual  report 
were encountered also during the course of 2007 and remain valid for the remainder of 
the implementation period: 

(1) 

Tight contracting deadlines and squeezing of the programme duration:  

(a) 

(b) 

Contracting of large-scale infrastructure investments within three years is 
proving challenging due to the lack of previous project preparation.  

Activities planned to be carried out on an annual basis can only take place 
for three consecutive years (2007-2009) rather than the originally planned 
five  (2005-2009).  2009  will  be  the  last  year  when  call  for  proposals  for 
grant  schemes  for  farmers,  schools,  local  communities,  civil  society 
organisations,  etc.  will  be  launched.  The  last  call  for  the  scholarship 
scheme will be in September 2008. Additional funding will be needed to 
continue to support the Turkish Cypriot community after 2009.  

(2) 

Property issue: the location of most planned infrastructure investments has yet to 
be  determined.  Given  the  amount  of  property  owned  by  Greek  Cypriot  private 
owners11, some investments would be able to proceed only if these owners give 
their consent. The considerable time required by the Government of the Republic 

11 

It  is  estimated  that  78%  of  privately  owned  land  in  the  northern  part  of  Cyprus  belongs  to  Greek  Cypriot 
private owners. 

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(3) 

(4) 

of Cyprus to provide information on private owners' names and the need to obtain 
consent  has  to  be  factored  into  an  already  very  tight  implementation  schedule. 
Reserve projects will be prepared, in order to mitigate the risks of some projects 
not being able to go ahead due to the owners' lack of consent, but this might not 
be  a  sufficient  mitigating  measure  to  ensure  contracting  of  all  the  planned 
investment projects. 

Low  absorption  capacity  by  the  beneficiary  community:  the  Turkish  Cypriot 
community is small and not well-equipped in terms of structures to receive such 
large  resources  in  such  a  short  time.  Despite  increasing  ownership  and  co-
operation, results are still mixed on this front. 

Co-operation  between  the  Turkish  Cypriot  and  Greek  Cypriot  communities:  the 
programme's  success  of  the  programme  in  attaining  the  overall  objective  of 
facilitating the reunification of Cyprus depends greatly on successful co-operation 
between the two communities on the island. Political issues not directly related to 
the aid programme per se but, rather, to the overall political context might induce 
either  community  to  block  implementation  of  certain  parts  of  the  programme. 
Implementation  would  be  greatly  facilitated  by  progress  on  the  reunification 
process.  The  decision  taken  by  the  two  Leaders  to  start  their  full-fledged 
negotiations on 3 September 2008, under the good offices mission of the United 
Nations  Secretary-General  will  create  a  positive  framework  for  facilitating  the 
implementation and the success of this aid programme. 

EN 

11 

   EN