REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Fourth Annual Report 2009 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
Date: 2010-09-20
Institutions: European Commission
Subjects: Cyprus, EU aid, aid programme, development aid, economic development, financial instrument, financing of aid

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EUROPEAN COMMISSION 

Brussels, 20.9.2010 
COM(2010) 468 final 

REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND 
THE COUNCIL 

Fourth Annual Report 2009 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 

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1. 

INTRODUCTION 

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. On 
the  basis  of  this  regulation,  €259  million  was  allocated  from  the  2006  Community 
budget.  

This fourth report covers the period from 1 January until 31 December 2009.  

2. 

PROGRAMMING OF THE ASSISTANCE 

Under the 2009 budget € 2.5 million was programmed for scholarships, schools and 
technical assistance2. 

3. 

IMPLEMENTATION MECHANISMS  

The European Commission is responsible for administering the assistance primarily 
through centralised management; some projects are in joint management with UNDP 
(United  Nations  Development  Programme).  The  programme  is  implemented  in  an 
EU Member State 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 Support Team was set up in 2006 to implement the programme within 
the Commission's Directorate-General for Enlargement (DG Enlargement). Working 
on  a  long-term  mission  in  Cyprus,  it  uses  the  EU  Programme  Support  Office 
(EUPSO)  established  in  September  2006,  located  in  the  northern  part  of  Nicosia. 
This  office  provides  a  venue  for  meetings  and  seminars  with  Turkish  Cypriot 
stakeholders.  It  also  allows  direct  supervision  of  contractors.  Office  logistics 
continue  to  be  provided  by  a  private  contractor  (Deutsche  Gesellschaft  fur 
Technische Zusammenarbeit - GTZ) under a contract running until June 2012. The 
Representation of the Commission in Cyprus also provides a venue for meetings and 
seminars. 

During the reporting period, staffing of the Programme Team slightly increased. By 
December 2009 it comprised 41 staff including 3 Commission officials, 26 contract 
agents and 12 local staff provided by GTZ for administrative and logistical support.  

4. 

IMPLEMENTATION DURING THE REPORTING PERIOD 

4.1. 

General overview  

The  Commission  implements  the  programme  in  a  unique  political,  legal  and 
diplomatic  context.  Ad  hoc  arrangements  are  needed  to  allow  the  Commission  to 

1 
2 

OJ L65, 7.3.2006, p.5. 
Commission Decision n°C(2009)7569 of 8 October 2009. 

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implement  the  programme  while  respecting  the  principles  of  sound  financial 
management.  

Generally  in  EU-funded  aid  programmes,  a  Financing  Agreement  with  the 
Government of the beneficiary country establishes the legal framework under which 
the  assistance  is  implemented,  regulating  issues  such  as  taxation  and  work  and 
residence  permits.  No  such  agreement  exists  for  this  programme.  Therefore,  the 
Commission  has  to  rely  on  what  it  understands  to  be  the  rules  and  conditions 
currently  applicable  locally.  The  possibilities  of  enforcement  might  therefore  be 
difficult and might change during the lifetime of a contract. The lack of a Financing 
Agreement  means  that  the  Commission,  in  entering  into  contractual  arrangement 
with its contractors, takes on more risks than it would normally encounter. 

Because  of  the  political  context,  enforcement  of  recovery  orders  for  amounts  to  be 
recovered  from  Turkish  Cypriot  entities  (in  case  of  non-compliance  with  terms  of 
contract)  may  be  difficult.  The  Commission  has  adopted  measures  to  mitigate  this 
risk including intensive monitoring and support, revised payment conditions, linking 
advance payments with proof of signed procurement contracts and the extensive use 
of bank guarantees. 

The  Commission  relies  on  the  support  of  the  Turkish  Cypriot  community  to  make 
this  programme  a  success  and  in  particular  to  ensure  its  sustainability  in  the  long-
term. Turkish Cypriot experts were involved in drawing up technical specifications 
and  terms  of  reference  and  took  part  in  tender  evaluation  panels.  Turkish  Cypriot 
beneficiaries play a key role in project steering committees.  

In the year 2009, the bulk of the €259 million allocation was contracted bringing the 
overall contracting rate to 99% based on 880 separate contracts.  

€10  million  from  savings  in  contracting  and  funds  earmarked  for  two  projects  that 
could not proceed were reallocated to water infrastructure, preparation to implement 
the acquis and SME support. 

Sustainability, in particular with regard to infrastructure projects, remains a matter of 
concern.  

Property issues were addressed for all large scale infrastructure projects, primarily by 
locating projects on public land. 

There was a political change in the northern part of Cyprus in April 2009 as a result 
of the National Unity Party (UBP) prevailing in the "parliamentary" elections. 

4.2. 

Progress by objectives  

The  overall  objective  of  the  Aid  Programme  is  to  facilitate  the  reunification  of 
Cyprus  by  encouraging  the  economic  development  of  the  Turkish  Cypriot 
community  with  particular  emphasis  on  the  economic  integration  of  the  island,  on 
improving  contacts  between  the  two  communities  and  with  the  EU,  and  on 
preparation of the implementation of the EU law. 

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4.2.1.  Objective 1: Developing and restructuring of infrastructure 

The  Programme Support  Team  tendered out  and  contracted  €72.6  million  of  works 
contracts  for  water/wastewater  infrastructure  projects  in  2009  bringing  the  total 
allocation for the water sector to around €84 million. The main works to be funded 
were  new  sewerage  networks  and  wastewater  treatment  plants  in  Famagusta  and 
Morphou/Güzelyurt, and a seawater desalination plant at Sirianokhori/Kümkoy. The 
latter contract was signed with a suspensive clause to allow time to secure from the 
Turkish Cypriot leadership adequate assurance firstly of free and unrestricted access 
to  the  construction  site  and  secondly  of  their  assistance  for  smooth,  efficient  and 
effective implementation. A contribution agreement was signed with UNDP for the 
co-financing  of 
treatment  plant  at  Mia 
Milia/Haspolat. Other contracts include the replacement of ageing water distribution 
pipes and the supply of equipment for the local water testing laboratory. 

the  new  bi-communal  wastewater 

Underperformance of the design consultant meant that the work to finalise contract 
documents,  invite  and  evaluate  tenders,  finalise  budgets  and  negotiate  contracts 
(including  with  UNDP  for  Nicosia  wastewater  treatment  plant)  for  water  sector 
projects was effectively compressed into less than eight months up to the contracting 
deadline. In  addition,  the  team  supervised  finalisation  of designs  for  wastewater 
investment projects for Nicosia, Kyrenia and Lefke. 

On nature protection, a first cycle of training was completed in accordance with the 
training strategy. Public information meetings were held for all six potential Natura 
2000  areas.  Draft  management  plans  were  prepared  for  five  of  the  six potential 
Natura 2000 areas. The scope of the project was extended to cover the preparation of 
a management plan for a seventh site. Contracts for supply of equipment as well as 
for construction of facilities for management and protection had been concluded for 
€3.5 million. 

In  the  solid  waste  sector,  the  main  activities  focused  on  tender  dossier  preparation 
and tendering of four works and six supply contracts. Nine of these ten tenders were 
successfully  completed  and  contracts  were  signed.  The  tenth  contract  will  be 
implemented by UNDP. Work on the three main construction contracts linked to the 
rehabilitation  of  the  old  waste  dumpsite  near  Kato  Dhikomo  has  been  suspended 
until all property issues are resolved. This will cause slippage in implementation of at 
least six months.  

The  extensive  site  investigations,  feasibility  study  and  conceptual  designs  for  the 
rehabilitation  of  the  former  mining  and  ore  processing  sites  in  the  Lefke/Lefka 
region  were  finalised  in  2009.  Remediation  solutions  for  that  area  minimising  the 
impact  on  the  environment  and  human  health were  identified.  Further  works  there 
depend on decisions with regard to the future development of the area as well as the 
availability of financing.  

In the energy sector, savings allowed for additional electricity meters to be procured 
in  2009. A  Supervisory  Control  and  Data  Acquisition  (SCADA)  system  was 
contracted that will allow real-time monitoring and control of the electricity network, 
with  specifications  that  ensure  compatibility  and  interoperability  with  the  SCADA 
system  currently  in  place  in  the  government-controlled  areas.  A  contract  was 
concluded for  a  pilot  solar  power  plant  to  provide  in  excess  of  1  MW  of  power 

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output capacity. Additionally, a customer care system, consisting of the software to 
be integrated into and/or linked to the existing customer data system of the electrical 
utility  company  and  the  related hardware  as  well  as  a  pollution  control  and 
weather/wind monitoring system, to monitor the emissions of the power plants in the 
northern  part  of  Cyprus  and  to  establish  their  impact  on  the  environment,  was 
contracted in 2009. 

The  main  telecommunications  investment  contract  will  upgrade  and  replace  the 
current  network  by  a  modern  internet-based  backbone  infrastructure  and  greatly 
simplify  the  integration  of  telecommunications  systems  across  the  whole  island. 
Technical assistance was contracted in 2008 to help the Turkish Cypriot community 
manage  the  sector  according  to  EU  standards  and international best  practice and to 
conduct  a  comprehensive  training  programme  in  view  of  the  upgrading  of  the 
system.  This  contract  has  been  extended  to  ensure the  continuity  of  support  for  the 
sector despite delays in the reform process. 

The  traffic  safety  programme  management  contract  supported  contracting  of  the 
programme’s components. The technical assistance for creating an effective accident 
information  database  and  data  collection  system  to  strengthen  the  knowledge  of 
traffic  incidents  started  in  early  2009,  with  the  supply  component  being  contracted 
towards  the  end  of  the  year.  The  consultant  for  the  development  of  a  traffic 
operations plan for local communities also  started his activity in 2009. Most of the 
contracts were signed towards the end of 2009 and activities will start in 2010. This 
was  the  case  for  the  technical  assistance  and  the  supply  component  for  the 
improvement  of  the  vehicle  inspections  programme,  the  assistance  for  the 
improvement of the drivers licensing procedure as well as the traffic safety education 
campaign to promote traffic safety awareness and the development of a highway plan 
to  addresses  the  current  and  future  mobility  needs.  The  project  aiming  at  the 
elimination  of  traffic  accident  “black  spots”  was  transferred  to  the  UNDP  for 
contracting and implementation. 

4.2.2.  Objective 2: Promoting social and economic development 

The four  technical  assistance  teams (Rural  Development  Support  Team,  Animal 
Husbandry,  Crop  Husbandry,  Programme  Management  Unit),  funded  under  the 
Rural Development Sector Programme have assisted the Commission in launching 
and evaluating several grant schemes. They delivered targeted training and technical 
assistance to farmers, veterinarians, and rural development experts, central and local 
stakeholders.  Within  the  rural  development  grant  scheme  “Improving  agricultural 
production” 142 contracts for a total value of almost €5 million were signed. Under 
the grant scheme “Supporting rural enterprise” 47 grants were awarded for a value of 
€3.3  million.  Within  the  two  grant  schemes  "Community  development  through 
Village  Initiatives"  37  contracts  for  a  total  value  of  almost  €8  million  were 
contracted.  In  addition  10  supply  contracts  for  veterinary  laboratories  and  crop 
husbandry were signed for over €2 million.  

With  regard  to  the  project  Upgrading  of  Urban  and  Local  infrastructure 
implemented in joint management with UNDP, 2009 saw the completion of the EU-
funded restoration of the Bedestan building, in the northern part of the walled city of 
Nicosia.  The  study  and  design  for  this  restoration  received  a  2009  Europa  Nostra 
Award  in  the  research  category.  Following  the  decision  of  the  Leaders  of  the  two 

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communities in Cyprus, UNDP completed the feasibility study for the opening of a 
seventh  crossing  point  linking  the  villages  of  Kato  Pyrgos/Asagi  Pirgo  and 
Yeşilırmak/Limnitis. The EU funded the feasibility study and earmarked €2.5 million 
for the works. 

44  grants  for  a  total  value  of  almost  €  1.6  million  were  awarded  to  local  schools 
under the second and third call for proposals finalised in 2009. Projects included the 
provision  of  equipment  (IT  equipment,  language  labs,  etc.)  and  related  training  as 
well as in some cases study visits abroad. Technical assistance was provided for the 
ongoing  reform  of  the  primary  and  secondary  education  sector.  Supply  contracts 
have been signed for the provision of specialised equipment to vocational schools.  

To  support  life-long  learning,  social  inclusion  and  active  labour  market 
measures, 21  grants  were  awarded 
training 
organisations under the second and third call for a total value of almost €1 million. 
Technical assistance was provided for the development and promotion of vocational 
education and training systems, life-long learning and active labour market measures, 
including study visits to Germany and Malta. 

to  SMEs,  chambers  and  other 

The € 9 million project "Micro and small enterprise loan programme" could not go 
ahead due to difficulties in reaching agreement with Kreditanstalt für Wiederaufbau 
(KfW) in the special conditions prevailing in the northern part of Cyprus. Funds were 
reallocated in particular to projects supporting private sector development. 

Concerning the support for SMEs, two grant programmes were launched that led to 
33  contracts  worth  €4.5  million.  Additionally  a  technical  assistance  project  (€2.7 
million) aiming at Mainstream institutions and actions in the field of economic and 
ICT development, was contracted during the reporting period.  

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

civil society 

Reconciliation,  confidence  building  measures  and  support  to  civil  society 
focused primarily on strengthening civil society organizations.  

€4.8  million  was  awarded  to  44  projects  under  three  grant  schemes  called  Cypriot 
Civil Society in Action. The Civil Society Support Team (technical assistance team) 
provided  guidance  and  support  to  applicants  organising  training  for  civil  society 
organisations.  

€2  million  was  provided  to  the  Committee  of  Missing  Persons  (CMP).  Together 
with  an  earlier  grant  of  €1.5  million,  the  EU  is  the  largest  single  donor  to  this  bi-
communal project.  

Demining  entered  its  final  stage;  the  whole  buffer  zone  is  expected  to  be  declared 
mine-free  by  April  2011.  An  additional  EU  contribution  of  €  2.5  million  has  been 
signed to ensure co-financing until the end of the project together with an allocation 
of a similar amount from the Republic of Cyprus. 

The project Academy of Political Studies, implemented by the Council of Europe, 
focused  on  developing  a  common  understanding  among  young  Cypriot  leaders  on 

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key  issues  for  the  future  of  the  island  within  an  integrated  Europe.  The  selected 
group of young leaders from both sides of the island participated in 3 seminars.  

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

For  the  academic  year  2009/10,  the  third  year  of  the  Community  Scholarship 
Programme,  a  total  of  203  scholarships  (121  graduates,  27  undergraduates, 
55 teachers)  was  granted. Students  and  teachers  were  free  to  choose  study 
programmes,  although  preference  was  given  to  some  areas  (Economics,  Law, 
European studies, all Engineering fields, Public Administration, Public Finance, etc) 
where there is a lack of skilled professionals in the Turkish Cypriot community. Host 
countries  were  the  United  Kingdom,  the  Netherlands,  France,  Belgium,  Germany, 
Italy, Spain, Sweden, Lithuania, Estonia, Austria, Portugal and Greece. 

€0.8 million was awarded to 15 projects under the two grant schemes for Promotion 
of  Youth  Exchanges  and  other  People-to-People  Contacts.  The  objective  is  to 
help Turkish Cypriots improve their understanding of European values, experiences 
and  multi-cultural  traditions.  The  absorption  of  grants  under  this  project  was  lower 
than expected. 

The  InfoPoint  was  set  up  and  started  its  activities  in  June  2009  by  providing 
information  about  the  EU,  in  particular  the  aid  programme,  to  the  Turkish  Cypriot 
community  and  by  organising  visibility  events  in  cooperation  with  the  European 
Commission Representation in Cyprus.  

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

the acquis communautaire  

The  European  Commission's  Technical  Assistance  Information  Exchange  (TAIEX) 
instrument  has  been  used  as  the  main  tool  for  delivering  assistance  in  this  area.  In 
2009,  237  technical  assistance  activities  such  as  training  courses,  workshops  or 
seminars  were  organised  for  the  Turkish  Cypriots  through  the  TAIEX  programme, 
mobilising EU Member State experts on 449 occasions.  

Activities  mostly  focused  on  developing  the  Programme  for  the  Future 
Application  of  the  Acquis  (PFAA).  The  PFAA  provides  a  clear  framework  for 
planning  and  delivering  technical  assistance  and  training  in  order  to  help  Turkish 
Cypriots  prepare  for  the  lifting  of  the  suspension  of  the  acquis  after  reunification. 
Assistance was provided in 13 sectors of the PFAA such as agriculture, anti-money 
laundering,  environment,  statistics  and  health  and  consumer  protection3  Intensive 
efforts were made to adapt the TAIEX instrument to the specific context and needs 
of  the  Turkish  Cypriot  community.  The  aim  was  to  move  to  more  structured 
medium-term  and  project-based  assistance  as  a  more  stable  basis  for  achieving  the 
programme's  objectives.  By  the  end  of  the  year,  following  a  consultation  exercise 
with  all  EU  Member  States,  TAIEX  selected  some  70  EU  member  state  experts  to 
help Turkish Cypriots to implement medium-term projects.  

3 

Full  list  of  13  active  PFAA  sectors:  Free  Movement  of  Capital;  Public  Procurement;  Company  Law; 
Competition Policy; Financial Control; Financial Services; Agriculture and Rural Development; Food 
Safety,  Veterinary  and  Phytosanitary  Policy;  Transport;  Statistics;  Social  Policy  and  Employment; 
Environment; Consumer and Health Protection 

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TAIEX  also  provided  training  on  the  preparation  of  legal  texts  aligned  with  the 
acquis  for  the  purpose  of  these  being  immediately  applicable  upon  the  entry  into 
force of a comprehensive settlement of the Cyprus problem. Similarly, linked to the 
future  management  of  EU  funds,  training  has  been  given  in  the  area  of  public 
expenditure management. 

Support  was  provided  to  the  development  of  trade  across  the  Green  Line.  EU 
Member  State  experts  were  continuously  mobilised  through  TAIEX  to  carry  out 
veterinary and phytosanitary nature inspections of potatoes and fish. 

To  ensure  sufficient  finance  was  in  place  for  the  continuity  of  TAIEX  assistance 
throughout 2010, and the increased need for assistance in the event of a settlement, a 
further €5.5 million was reallocated to the TAIEX instrument. This brought the total 
budget  for  such  technical  assistance  since  2007  to  €14.5  million  of  which  €  8.3 
million had been committed to specific activities by the end of 2009.  

4.2.6.  Unallocated Technical Assistance and Programme Reserve Facility 

The Programme Reserve Facility was used for the further support to the CMP (€ 2 
million) and demining (€ 1.5 million)4. The unallocated Technical Assistance reserve 
(€1.2 million) was used to cover TAIEX activities.  

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

regulation 

A total of €18.65 million (i.e. 7.2% of the overall financial allocation) was earmarked 
for  the  programme  implementation  to  cover  costs  of  staff  involved  (up  to  €9.65 
million)  as  well  as  wider  technical  assistance  activities  (€9  million).  A  €1  million 
Trust  Fund  was  agreed  with  the  World  Bank  to  carry  out  studies  within  an 
"Economic analysis programme for growth and sustainable development". 

From 2010 staff costs will be financed from the general administrative budget line of 
DG Enlargement.  

4.3. 

Financial execution (contracts and payments) 

4.3.1.  Contracting  

During the reporting period, €181 million was contracted under the operational part 
of the programme.  

By the contracting deadline of December 2009, €247.6 i.e. 99.38%  (out of a total of 
€249.15 million of the operational part of the Aid Programme) was contracted. The 
bulk of these funds was contracted in the last quarter of the year. 

As  regards  the  staff  and  mission  component  of  the  programme  (i.e.  €9.85  million), 
€2.8  million  remained  unused  due  to  the  decision  to  use  administrative  credits  for 
staff expenditure rather than operational credits as initially foreseen.  

4 

Approved by the Commission Decision n° 2928 (2009) of 22 April 2009.  

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4.3.2.  Payments 

During the reporting period, the European Commission disbursed €42 million. This 
was  considerably  lower  than  had  been  foreseen  in  the  initial  planning  for  the  2009 
budget leading to the need to transfer €42 million of payments credits to other budget 
lines. The underperformance in payments was primarily due to the later than planned 
signature  of  many  contracts  which  led  to  activities  being  delayed  from  2009  into 
2010.  

Of the €259 million, €75.8 million (30%) in total was disbursed by end-2009. 

4.4.  Monitoring  

The Interim Review Mechanism (IRM) serves as a forum to discuss in detail with the 
beneficiaries  the  implementation  of  the  programme.  One  meeting  of  the  IRM  took 
place during the reporting period (June 2009).  

4.5. 

Audit and controls 

An  internal  audit  was  carried  out  in  2008  by  DG  Enlargement  Internal  Audit 
Capability  Unit.  The  main  recommendations  focussing  on  assuring  sound  financial 
management  in  the  specific  legal  circumstances  prevailing  in  the  northern  part  of 
Cyprus  were  implemented  (with  the  exception  of  one  recommendation,  to  recruit 
additional officials due to the lack of sufficient posts).  

4.6. 

Evaluation. 

In June 2009 an ad hoc evaluation was carried out by a team of external experts. The 
evaluation  report  recommended  the  continuation  of  the  assistance  to  the  Turkish 
Cypriot community and drew conclusions to be taken into account in programming 
future  assistance  such  as  a  continuation  of  SME  grant  schemes  and  reconciliation 
measures.  

4.7. 

Information, Publicity and Visibility  

During the reporting period, 33 press releases were published on programme-related 
issues. 85 public events were organized. The Programme Team and the Commission 
Representation  co-operated  to  increase  the  programme’s  visibility.  Information 
campaigns  were  carried  out  using  mass  media,  mostly  for  grant  schemes. 
Cooperation with the Commission Representation in Cyprus for the dissemination of 
press  releases,  media  interviews  and  other  actions  also  contributed  to  increase 
visibility.  

The  InfoPoint  project  supported  the  visibility  of  the  aid  programme  among  the 
Turkish Cypriot community.  

The two main visibility events were the 1) opening of the Bedestan in Nicosia widely 
attended by both communities of Cyprus and 2) the ceremony to mark the further €2 
million  EU  funding  for  the  CMP  with  the  attendance  of  the  Leaders  of  the  two 
communities in Cyprus. 

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4.8. 

Consultations with the Government of the Republic of Cyprus 

Meetings  were  held  with  representatives  of  the  Government  of  the  Republic  of 
Cyprus,  in particular when senior Commission officials  visited the  island.  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. 

As regards the verification of property ownership, the Commission relied in 2010 on 
the  continued  co-operation  with  the  relevant  services  of  the  Government  of  the 
Republic of Cyprus. 

5. 

CONCLUSIONS 

During the reporting period, activities focused on:  

(1) 

(2) 

contracting:  more  than  60%  of  the  operational  part  of  the  programme  was 
contracted in the reporting period. 

implementation:  monitoring  the  use  of  EU  funds  by  contractors  and  grant 
recipients. 

Some  challenges  mentioned  in  previous  reports  are  still  present.  In  the  reporting 
period issues affecting the Aid Programme implementation included: 

(1) 

(2) 

(3) 

(4) 

(5) 

Cooperation between Turkish Cypriot and Greek Cypriot communities: this is 
the key to the programme's success.  

Low absorption capacity by the beneficiary community: the Turkish Cypriot 
community is small and receiving such large resources for projects contracted 
in  such  a  concentrated  timescale  is  a  major  challenge.  However,  improved 
capacity was noted in the course of 2009.  

Delivery issue: The time needed to prepare, contract and implement projects 
has  to  a  certain  extent  affected  the  credibility  of  the  delivery  of  financial 
support from the EU This problem will be substantially addressed by the high 
level  of  implementation  expected  in  2010  following  the  high  level  of 
contracting in 2009. 

Property  issue:  Rights  of  private  owners  were  rigorously  respected.  This 
particularly  affected  implementation  of  the  waste  management  sector  where 
three  construction  contracts  were  signed  with  a  suspensive  clause  to  allow 
sufficient time to regularise all property issues.  

Sustainability  issue:  in  key  sectors  (telecom,  energy),  there  is  a  need  to 
convince  the  Turkish  Cypriot  community  of  the  importance  of  reform.  This 
delays implementation and puts at risk sustainability of the investment. 

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