REPORT FROM THE COMMISSION TO THE COUNCIL AND THE EUROPEAN PARLIAMENT Sixth Annual Report 2011 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: 2012-06-01
Institutions: European Commission
Subjects: Cyprus, EU aid, EU programme, Türkiye, economic development, social development

EUROPEAN COMMISSION 

Brussels, 1.6.2012  
COM(2012) 243 final 

REPORT FROM THE COMMISSION TO THE COUNCIL AND THE EUROPEAN 
PARLIAMENT 

Sixth Annual Report 2011 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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REPORT FROM THE COMMISSION TO THE COUNCIL AND THE EUROPEAN 
PARLIAMENT 

Sixth Annual Report 2011 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 

Council  Regulation  (EC)  No  389/2006  establishing  an  instrument  of  financial 
support  for  encouraging  the  economic  development  of  the  Turkish  Cypriot 
community  (TCc)1  (hereafter 
the 
implementation  of  the  assistance  to  the  TCc  and  requires  annual  reporting  to  the 
Council and the European Parliament. This sixth report covers the year 2011. 

the  "Aid  Regulation") 

the  basis  for 

is 

2. 

PROGRAMMING OF THE ASSISTANCE 

Between  2006  and  2010,  €264  million  was  programmed  under  the  Aid  Regulation 
and  many  of  the  projects  arising  from  this  earlier  funding  were  still  underway  in 
2011.  Development  of 
input  from  stakeholder 
the  2011  programme  used 
consultations and from 2009 and 2010 evaluations. It followed the objectives of the 
Aid  Regulation:  reunification  of  Cyprus  through  the  promotion  of  social  and 
economic  development;  reconciliation,  confidence  building  and  support  to  civil 
society;  bringing  the  TCc  closer  to  the  EU  and  preparation  of  acquis-aligned  legal 
texts for the purpose of these being immediately applicable upon the entry into force 
of a comprehensive settlement of the Cyprus problem. Finance for infrastructure or 
large  equipment  was  not  included  in  the  2011  allocation,  since  substantial 
infrastructure  projects  were  already  underway.  The  2011  allocation  of  €28  million 
was made available under two Commission Decisions2. 

3. 

IMPLEMENTATION MECHANISMS  

The programme is implemented in an EU Member State in an area that is not under 
the effective control of the Member State authorities and where the application of the 
EU acquis is suspended. The assistance is implemented primarily through centralised 
management by the European Commission. Some projects are jointly managed with 
the United Nations Development Programme (UNDP).  

The Commission operates in a unique political, legal and diplomatic context. Ad hoc 
arrangements  are  needed  to  implement  the  programme  while  respecting  the 
principles of sound financial management. In EU-funded aid programmes, in normal 

1 
2 

OJ L65, 7.3.2006, p.5. 
Commission decisions C(2011)337 and C(2011)4443.  

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circumstances, a Financing Agreement with the beneficiary Government establishes 
the legal framework of the assistance. No such agreement exists for the assistance to 
the  TCc.  The  Commission  has  to  rely  on  what  it  understands  to  be  the  rules  and 
conditions applicable locally and this introduces a certain level of risk. Management 
and mitigation of these risks is part of the Commission's responsibility and adopted 
measures include intensive monitoring and support to beneficiaries, revised payment 
conditions,  linking  advance  payments  with  proof  of  signed  procurement  contracts 
and a more widespread use of bank guarantees. 

The Commission relies on the support of the TCc to make this programme a success 
and in particular to ensure its long-term sustainability. TC stakeholders are consulted 
about  their  needs  for  future  funding  and  TC  experts  take  part  in  tender  evaluation 
committees and play a key role in project steering committees. Cooperation between 
the  Turkish  Cypriot  and  Greek  Cypriot  communities  remains  necessary  for  full 
effectiveness of the programme and for achieving the ultimate goal of reunification.  

The Programme Team, set up in 2006 within the Commission's Directorate-General 
for Enlargement,  uses the  EU Programme  Support  Office  (EUPSO)  in  the  northern 
part of Nicosia, with office logistics provided through a service contract. This office 
provides  a  local  base  for  project  implementation  and  for  interaction  with  TC 
stakeholders. The Representation of the Commission in Cyprus also hosts meetings 
and seminars and communicates to the Cypriot public on the programme as part of 
its standard role. 

In  the  absence  of  a  Financing  Agreement  to  establish  the  legal  framework  under 
which the assistance is implemented, sector development programmes cannot easily 
be conceived. The assistance programme, therefore, includes a significant amount of 
grant support, particularly to non-public actors including NGOs, SMEs, farmers and 
students.  Management  of  this  grant  assistance  (over  1000  grants  since  2009)  is 
demanding  in  terms  of  EUPSO  human  resources,  and  the  staffing  situation  was 
particularly  challenging  in  2011,  with  reduced  numbers  and  a  high  turnover, 
requiring strict priority setting. 

One challenge of the EU assistance to the TCc is the difficulty of medium and long-
term  planning.  The  programme  is  currently  financed  from  the  margins  of  the  EU 
budget  as  it  is  not  included  in  the  multi-annual  financial  framework  for  2007-2013 
and annual allocations are not guaranteed. There are, however, a number of sectors, 
including those important for future acquis compliance, where multi-annual support 
is required for intervention to succeed fully.  

4. 

IMPLEMENTATION DURING THE REPORTING PERIOD 

4.1. 

General overview  

The year 2011 saw the major supply and large construction contracts from the 2006 
programme  moving  towards  completion  in  water,  solid  waste,  nature  protection, 
energy and telecommunications. Many grant contracts under the various schemes for 
civil  society  NGOs,  SMEs,  rural  development,  schools,  scholarships,  and  training 
organisations were completed. Considerable technical assistance (TA) has also been 
delivered  in  support  of  these  programmes.  Operations  through  joint  management 

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with UNDP were conducted in support of the Committee on Missing Persons, waste 
water  treatment  and  upgrading  of  local  and  urban  infrastructure.  The  Commission 
mandate under the Aid Regulation also includes preparation for the full application 
and implementation of the acquis communautaire following a solution to the Cyprus 
problem and the dissemination of information on the European Union's political and 
legal  order  to  the  TCc.  The  two  years  since  2009  have,  therefore,  been  a  period  of 
intensive  project 
the  Commission  has  developed 
in  which 
considerable experience in dealing with local constraints. Despite the fact that some 
major  infrastructure  is  close  to  the  point  of  hand-over  to  the  beneficiary,  there 
continue  to  be  problems  of  project  sustainability.  Works  contracts  for  the  seawater 
desalination  plant  near  Sirianokhori/Kumköy  and  the  construction  of  nature 
protection  facilities  in  four  Special  Environmental  Protection  Areas,  defined  as 
potential Natura 2000 sites, had to be cancelled by the Commission.  

implementation 

One further problem that arose in 2011 was the status of bank guarantees issued in 
the northern part of Cyprus. One local contractor filed a suit with the local "court" to 
prevent  the  Commission  from  calling  advance  and  performance  guarantees  after  a 
contract  termination.  This  matter  is  of  relevance  to  the  programme  in  general  and, 
until the matter is resolved, concerns about the effectiveness of local bank guarantees 
will remain. 

4.2. 

Progress by objectives  

The  overall  objective  of  the  Aid  Programme  is  to  facilitate  the  reunification  of 
Cyprus by encouraging the development of the TCc, 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 EU law 
in  case  of  a  comprehensive  settlement  of  the  Cyprus  problem.  A  considerable 
contribution  has  been  made  towards  improvements  in  some  areas,  notably  water, 
waste  water  and  environment,  and  there  is  some  evidence  that  the  GDP/capita  gap 
between  the  government  controlled  areas  and  the  northern  part  of  Cyprus  has  been 
reduced, although the picture is not entirely clear due to incomplete data. 

4.2.1.  Objective 1: Developing and restructuring of infrastructure 

In the water sector, the replacement of old, concrete asbestos water distribution pipes 
in  the  northern  part  of  Nicosia,  Kyrenia,  Kioneli/Gonyeli  and  Lefka  /Lefke  was 
completed  during  2011.  In  Nicosia,  the  beneficiary  has  reported  a  substantial 
reduction  in  leakages,  resulting  in  overall  water  supply  to  the  northern  part  of 
Nicosia falling from 0.67 to 0.40 m3/day/consumer meter.  

In the Morphou/Güzelyurt area, the commissioning of the wastewater treatment plant 
was started during the second half of 2011. In addition, 53 km of sewerage network 
and  43  km  of  water  main  were  installed.  After  all  house  connections  have  been 
made, this will provide, for the first time, wastewater collection and treatment in this 
region for about 10,700 people thereby reducing pollution of groundwater sources. In 
the  Famagusta  area,  the  new  wastewater  treatment  infrastructure  for  about  30,000 
people is nearing completion and will be commissioned during the first half of 2012. 
The  project  includes  50  km  sewerage  network  and  45  km  water  network.  Both 
projects in Famagusta and Morphou have suffered from construction delays, putting 
a strain on the limited supervision resources. The construction of the new Nicosia bi-

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communal  wastewater  treatment  plant  at  Mia  Milia/Haspolat,  co-funded  by  the  EU 
and the Sewerage Board of Nicosia and implemented through the UNDP, continued 
in 2011 and commissioning is expected in the second half of 2012. 

The  largest  project  in  the  water  sector  was  the  €27  million  seawater  desalination 
plant  at  Sirianokhori/Kumköy,  to  supply  water  to  100,000  people  and  reduce  the 
overexploitation of the Morphou aquifer, which is the current main water source in 
the  area.  The  programme  experienced  problems  including  site  access  restrictions 
imposed  by  the  Turkish  army,  which  emerged  at  the  end  of  2010.  Once  those 
restrictions were lifted in March 2011, the contractor was unwilling to continue. The 
Commission terminated the contract in December 2011. 

On  nature  protection,  draft  management  plans  were  prepared  for  all  Special 
Environmental Protection Areas (SEPAs) and consultation meetings were held with 
local  stakeholders. A  walking  trail  network  of  over  600  km  was  completed. 
Construction of information and management centres located in four SEPAs suffered 
from  poor  contractor  performance  and  the  Commission  terminated  the  contract  in 
November 2011. The place of arbitration of the contract is Belgium, but the local TC 
contractor filed a suit with the local “court” to prevent the Commission from calling 
the  advance  and  performance  guarantees  from  the  local  bank.  Until  the  matter  is 
resolved, concerns about the effectiveness of local bank guarantees will remain. The 
completion  of  the  buildings  remains  a  challenge  to  be  addressed  in  2012.  In  the 
meantime, the delivery and use of supplies intended for the nature protection teams 
has been delayed.  

With regard to solid waste, the rehabilitation and closure of the Kato Dhikomo/Aşağı 
Dikmen dump progressed well and will be completed in the first half of 2012. The 
transfer  station  in  Famagusta  and  the  new  landfill  in  Koutsoventis/Güngör  were 
completed  in  2011.  The  handover  and  opening  of  the  new  facilities  was,  however, 
delayed  because  the  beneficiary  has  not  been  able  to  put  in  place  the  necessary 
operating  entity.  Delays  have  also  arisen  from  a  local  "court"  case  pursued  by  a 
nearby  university  on  environmental  grounds.  The  case  has  been  dismissed  by  the 
"court", but this has led, in the meantime, to temporary dumping on a new area close 
to  the  Kato  Dhikomo/Aşağı  Dikmen  site.  The  medical  waste  facility  for  the  main 
hospital in the northern part of Nicosia was handed over at the end of 2011.  

In  the  energy  sector,  the  remaining  supply  and  TA  contracts  have  been  completed. 
The challenging construction of the 1.27 MW Solar Power Plant was finished and the 
installation has been running at full power since November 2011. The allocation of 
dedicated  staff  by  the  beneficiary  is  necessary,  however,  for  the  effective  and 
sustainable use of the generating installation and the control system. The TA for the 
restructuring of the electricity utility and the sector policy reform was not delivered 
effectively due to a lack of cooperation from the counterparts. 

In  the  telecommunications  sector,  all  equipment  for  network  upgrading  has  been 
delivered to the sites and most of it has been installed, but there have been delays in 
site  preparation  and  technical  input  by  the  beneficiary.  The  project  should  be 
completed  by  mid-2012.  The  TA  component  has  been  extended  accordingly.  The 
“law”  detailing  the  modalities  of  liberalisation  of  the  electronic  communications 
sector  was  adopted  in  December  2011.  The  conditions  necessary  to  separate  the 

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provision of services from the network operation are still to be met in order to ensure 
a smooth transfer and a sustainable use of the EU-financed assets.  

Under  the  traffic  safety  project,  all  TA  and  supply  projects  are  finished.  Traffic 
management  plans  have  been  prepared,  the  accident  information  database  and  the 
data  collection  system  are  effective  and  the  vehicle  inspection  equipment  has  been 
installed and is in use. The education campaign to promote traffic safety took place at 
the beginning of 2011 and has demonstrated some immediate, positive results with a 
significant reduction in the number of severe accidents. Finally, after several delays, 
the project to eliminate traffic accident “black spots” should be completed within the 
first half of 2012. 

4.2.2.  Objective 2: Promoting social and economic development 

Four TA teams continued to deliver training and assistance to farmers, veterinarians 
and rural development counterparts including support for grant implementation. The 
two  grant  schemes  Improving  Agricultural  Production  and  Supporting  Rural 
Enterprise  were  completed  in  2011,  but  many  of  the  37  projects  under  Community 
Development  through  Village  Initiatives  suffered  delays,  arising  in  particular  from 
procurement  of  infrastructure  works.  Two  additional  Calls  for  Proposals,  to  be 
funded under 2011 budget, were prepared.  

Under the project Upgrading of Urban and Local Infrastructure implemented under 
joint  management  with  UNDP,  rehabilitation  works  in  several  villages  in  the 
northern  part  of  Cyprus  (Louroukina/Akıncilar,  Tremetousia/Erdemli,  Galinoporni/ 
Kaleburnu and Kormakitis/Kormacit) were finalised. Renovation of the market in the 
northern  part  of  the  walled  city  of  Nicosia  has  continued  and  will  be  completed  in 
2012.  

The  TA  activities  for  the  Ongoing  Reform  of  Primary  and  Secondary  Education 
continued  to  focus  on  building  the  capacity  of  the  main  stakeholders  including 
intensive training of a core team of inspectors, study visits, training and support for 
child-centred  education,  development  of  quality  standards  and  input  for  the 
development of the European Information Management System. The project ended in 
December  2011.  The main output was a draft vision and mission document for the 
education sector in the northern part of Cyprus. Most of the 72 grant contracts signed 
with local schools finished in 2011. Only seven will continue into 2012.  

TA  was  provided  for  the  development  of  Vocational  Education  and  Training 
Systems,  Life-Long  Learning  and  Active  Labour  Market  Measures,  including  the 
opening of a job centre in Nicosia, study visits and conferences abroad. Efforts were 
concentrated  on  training  the  stakeholders  in  areas  such  as  entrepreneurship  and 
career counseling and collaboration with local counterparts has been very productive. 
The  project  ended  in  February  2012.  Under  the  project  for  Life-Long  Learning, 
Social Inclusion and Active Labour Market Measures, 31 grants have been awarded 
to SMEs, Chambers of Commerce and other training organizations since 2008. Most 
were completed in 2011 and only two will continue into 2012. 

In  support  of  SME  Competitiveness,  23  grant  contracts  were  ongoing  during  2011. 
There have been delays due to lack of experience of EU grants by SME beneficiaries, 
but  all  the  contracts  will  end  in  2012.  The  private  sector  has  also  received  TA 

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support promoting good business practices. A significant result was the adoption of a 
Private  Sector  Development  Strategy  by  the  TCc.  Sector-specific  marketing 
initiatives were also undertaken to promote local products in Nicosia and Famagusta. 
Training in entrepreneurship and project cycle management started in 2011 and will 
continue  in  2012.  In  the  ICT  sector,  help  was  given  to  develop  an  e-governance 
strategy.  

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

civil society 

Support  to  the  Committee  on  Missing  Persons  for  exhumation,  identification  and 
return of remains, managed jointly with UNDP, is ongoing. Work now focuses more 
on individual exhumations rather than mass exhumations and this has influenced the 
speed  of  the  process.  A  new  Contribution  Agreement  with  UNDP,  continuing  the 
work, is likely to be signed in 2012.  

The  demining  of  the  buffer-zone  has  been  almost  completed.  There  is  lack  of 
agreement  on  access  to  remaining  minefields  in  the  buffer  zone  or  extension  of 
demining to areas outside the buffer zone hampering the continuation of EU funded 
demining  activities.  A  final  evaluation  of  the  project  was  positive,  highlighting  the 
appreciation of the project by all stakeholders. 

Out of the 44 projects under three grant schemes so far for Civil Society in Action, 27 
have been concluded or are near completion. Ten projects will end their activities in 
2012.  A  TA  team  provided  guidance  to  applicants  on  grant  management.  More 
training  will  be  necessary  to  accompany  the  next  grant  call  in  2012,  since  grant 
beneficiaries' capacity for producing good quality applications for EU grants and for 
grant administration and activity reporting is proving insufficient in many cases.  

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

For  the  fifth  year  of  the  Scholarships  Programme,  89  scholarships  (9  teachers,  1 
undergraduate,  79  graduates)  were  granted,  with  free  choice  of  study  or  training 
programme, although with priority given to technical and administrative topics where 
there is a skill shortage in the TCc. An evaluation of the scholarship scheme will be 
carried out in 2012.  

Visibility was mainly ensured by the Infopoint project and 2011 was a fruitful year 
with 37 events. The biggest EU-funded event was organised in collaboration with the 
TC  Children’s  Welfare  Association  and  attracted  around  1000  participants.  In 
addition, video clips and photo archives were prepared and there were two academic 
conferences  organised  with  the  participation  of  internationally  renowned  scholars 
and local Turkish Cypriot and Greek Cypriot academics. There were also eight issues 
of the Infopoint Newsbulletin published in Turkish and one in English covering the 
Aid Programme and current EU topics. 

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

the acquis communautaire  

The Commission's TA Information Exchange (TAIEX) instrument helps prepare the 
TCc  for  implementation  of  the  EU  acquis  following  the  settlement  of  the  Cyprus 

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problem. TAIEX supports the preparation of acquis-compliant legal drafts, which are 
then  subject  to  review  and  approval  through  the  local  processes.  Through  TAIEX, 
over  80  EU  experts  carried  out  528  actions  in  2011,  including  training  courses, 
workshops,  and  study  visits.  Activities  followed  the  Programme  for  the  Future 
Application of the Acquis (PFAA), which provides the medium-term framework for 
the intervention. In addition to the 13 sectors of the PFAA, assistance was provided 
in  2011  in  Free  Movement  of  Goods,  Intellectual  Property  Rights  and  Mutual 
Recognition of Professional Qualifications. Linked to the future management of EU 
funds after a settlement, training was also given on Public Expenditure Management. 
Finally,  trade  across  the  Green  Line  (Regulation  866/  2004)  was  also  supported  by 
TAIEX  EU  Member  State  experts  who  were  mobilised  to  carry  out  regular 
phytosanitary/veterinary  inspections  of  potatoes  and  fish.  Preparations  for  a  new 
cycle of TAIEX assistance were launched at the end of 2011 in cooperation with the 
beneficiaries.  

The equipment supplied in previous years under contracts for air quality monitoring 
is in use. The two TA contracts for this sector have ended. The equipment supports 
compliance 
the  new  draft  environment  "law".  Sustainability  requires  a 
commitment to staffing and to equipment servicing in the long run. 

to 

The  progress  of  draft  "legislation"  aimed  at  acquis-alignment  through  the  approval 
process was, however, slower than hoped. The telecommunications reform "law" was 
finally adopted at the end of 2011, but the environment "law" has been delayed. 

4.2.6.  Other projects  

A  €1  million  Trust  Fund  with  the  World  Bank  to  carry  an  Economic  Analysis 
Programme  for  Growth  and  Sustainable  Development  was  restarted  in  2011  and  a 
Stock-Taking Report was delivered in December. 

4.3. 

Financial execution (contracts and payments) 

4.3.1.  Contracting  

Commitments  in  2011  were  €7.45  million  (66%  of  the  January  forecast  of  €11.2 
million). Commitments for school grants and a Contribution Agreement with UNDP 
in the field of Cultural Heritage were delayed until 2012.  

4.3.2.  Payments 

Payments in 2011 totalled €49.98 million (67% of the January forecast). During the 
year, however, the target was reassessed and reduced by €24.5 million. This was due 
to the termination of two works projects, delays in large scale projects in the field of 
water and telecommunications and to late completion of grant projects, particularly 
those  dealing  with  village  upgrading.  From  the  revised  projection,  100%  was 
disbursed.  

In  total,  €179  million  (69%  of  the  overall  amount  contracted  since  the  start  of  the 
programme  in  2006)  was  disbursed  by  the  end  of  2011.  The  number  of  contracts 
open at the end of 2011 was 533. 

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4.4.  Monitoring  

The  bi-annual  Interim  Review  Mechanism  (IRM)  serves  as  a  forum  for  detailed 
discussion  of  the  programme  with  the  beneficiaries.  EC  staff  also  carries  out 
continuous  monitoring  through  field  visits,  site  meetings  and  Project  Steering 
Committee meetings. TAIEX activities are monitored through more than 20 Project 
Steering Groups, that each met twice in 2011, plus bi-annual Monitoring Mechanism 
meetings.  TAIEX  logistics  are  monitored  through  the  on-line  TAIEX  Management 
System.  In  most  of  the  intervention  areas,  a  lack  of  beneficiary  experience  or 
capacity  causes  implementation  difficulties  or  delays.  Grant  beneficiaries,  for 
example,  experienced  problems  with  EU  procedures,  particularly  for  procurements 
using  grant  funds.  This  has  been  addressed  through  Project  Management  Units, 
established  to  assist  grant  holders  with  grant  administration.  In  the  case  of 
infrastructure  or  supply  projects,  the  central  or  local  TC  administration,  which  will 
be  responsible  for  operation  and  maintenance,  is  struggling  to  provide  adequate 
resources  and  set  up  suitable  structures  in  a  number  of  cases.  Appropriate  TA  is 
provided to support the beneficiary through the hand-over period. 

4.5. 

Audit and controls 

The European Court of Auditors carried out a performance audit in 2011. The report 
will be published in 2012. 

The ELARG Internal Audit Capability Audit Report of 2008 was supplemented by a 
2011  follow-up 
that  all  recommendations  have  now  been 
implemented,  although  some  residual  risk  has  been  identified  in  handing  over  of 
works and supplies. 

that  concluded 

An  ex-post  control  was  carried  out  at  the  end  of  2010  by  the  Operational  Audit  & 
Evaluation  Unit  of  DG  ELARG  to  verify  legality  and  regularity  of  a  set  of  23 
transactions.  The  final  report  in  May  2011  made  some  observations  on  procedures, 
which are being considered. 

An external audit was carried out on 12 selected grant contracts and the final report 
will be delivered in the first half of 2012.  

4.6. 

Evaluation 

A  review  of  the  water  sector  was  initiated  in  2011  and  will  contribute  to  future 
programming.  A  World  Bank  study  of  economic  aspects  of  the  TC  economy  was 
also underway in 2011. A major evaluation effort has been foreseen for 2012, when 
the main part of the 2006 programme will finish. 

4.7. 

Information, Publicity and Visibility  

Visibility was ensured through the Infopoint (see Objective 4). In addition, TA teams 
from the separate projects have been tasked with enhancing visibility. A number of 
project-completion  events  were  also  held  by  grant  beneficiaries.  Six  press  releases 
relating  to  the  Aid  Programme  for  the  TCc  were  disseminated  by  the  Commission 
Representation in Cyprus. 

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4.8. 

Consultations with the Government of the Republic of Cyprus 

Regular meetings were held with representatives of the Government of the Republic 
of  Cyprus,  in  particular  when  senior  Commission  officials  visited  the  island.  The 
Commission  also  meets  regularly  with  the  Permanent  Representation  in  Brussels. 
The  Commission  continues  to  rely  on  the  cooperation  of  the  Government  of  the 
Republic of Cyprus for verification of property ownership. 

5. 

CONCLUSIONS 

The programme continues to meet challenges in its implementation, in the absence of 
a  recognised  beneficiary  or  a  programme  for  direct  institutional  restructuring. 
Progress  towards  meeting  the  objective  of  the  Regulation  to  facilitate  the 
reunification  of  Cyprus  by  encouraging  the  economic  development  of  the  Turkish 
Cypriot community remains difficult to achieve, given the operating environment and 
the  sui  generis  political  and  economic  situation  prevailing  in  the  northern  part  of 
Cyprus. The process of preparing for the future adoption and implementation of the 
acquis is slow and the TCc is likely to require considerable support to meet acquis 
requirements in many areas following a settlement and reunification.  

During  the  reporting  period,  activities  focused  on  the  completion  of  the  2006 
programme.  A  number  of  substantial  infrastructure  and  equipment  supply  projects 
were  nearing  completion.  The  Morphou  waste  water  treatment  plant  started  to 
receive  wastewater  and  the  pilot  solar  power  plant,  completed  and  handed  over  in 
July, is operating at full capacity. Efforts have been made to prepare the beneficiary 
for  handover  and  future  operation,  but  lack  of  resources  and  experience  mean  that 
substantial further commitment and input is required from the TC administration to 
ensure  sustainability  of 
investments.  Inefficient  structures  and  unclear 
responsibilities are the underlying causes in many cases. This must be addressed in 
2012. 

the 

The  many  grant  schemes  launched  since  2009  have  been  well  received,  but  have 
been demanding in terms of human resources, partly because of lack of experience of 
the beneficiaries for project and financial management. 

As the major part of the 2006 programme is completed, an overall review evaluation 
of  the  Aid  Programme,  as  well  as  sector-specific  impact  studies  are  necessary  and 
will be carried out in 2012.  

Human resources for the Programme Team remain a challenge, partly because of the 
grant-intensive programme composition, but also because of the overall reduction in 
human resources foreseen in all services of the Commission. 

The programme would benefit from more medium and long term planning for which 
more  stable  arrangements  for  financing  the  operational  and  staffing  costs  are 
necessary. 

EN 

10 

   EN