REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Eighteenth Annual Report for 2023 on the implementation of the Union 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: 2024-07-04
Institutions: Directorate-General for Structural Reform Support, European Commission
Subjects: Cyprus, EU aid, activity report, aid programme, civil society, development aid, economic development, financial aid, national unification, social development

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 4.7.2024  COM(2024) 268 final  REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Eighteenth Annual Report for 2023 on the implementation of the Union 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  
 
 
REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND 
THE COUNCIL 

Eighteenth Annual Report for 2023 on the implementation of the Union 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 389/20061  (the  “Aid  Regulation”)  is  the  basis  for  the 
provision  of  assistance  to  the  Turkish  Cypriot  community  and  requires  annual 
reporting to the European Parliament and the Council. 

2. 

PROGRAMMING OF THE ASSISTANCE 

Between 2006 and the end of 2023, EUR 688 million was programmed for operations 
under the Aid Regulation. The amount committed in October 2023 for the 2023 annual 
action  programme  was  EUR 31.7  million2.  The  multiannual  financial  framework 
2021-2027 has provided a multiannual perspective to the programme with a provision 
for stable, annual funding. The assistance programme is, however, of an exceptional 
and  transitional  nature,  aiming  to  prepare  and  facilitate,  as  appropriate,  the  full 
application  of  the  acquis  in  the  areas  of  the  Republic  of  Cyprus  in  which  the 
Government of the Republic of Cyprus does not exercise effective control following a 
solution  to  the  Cyprus  problem.  Both  the  Aid  Regulation  and  Council  Regulation 
No 2020/20933 laying down the multiannual financial framework have provided for a 
revision in the case of reunification. 

3. 

IMPLEMENTATION MECHANISMS 

The programme is implemented in the areas of the Republic of Cyprus in which the 
Government of the Republic of Cyprus does not exercise effective control (the “non-
government cotrolled areas”) and where the application of the acquis is temporarily 
suspended  pursuant  to  Protocol  10  of  the  Treaty  of  Accession.  Assistance  is 
implemented in direct and indirect management. 

The  Commission  operates  in  a  unique  political,  legal  and  diplomatic  context.  The 
granting of such assistance does not imply recognition of any authority in the areas 
other than the Government of the Republic of Cyprus. Ad hoc arrangements are needed 
to  implement  the  programme  while  respecting  the  principles  of  sound  financial 
management.  In  EU-funded  aid  programmes,  in  normal  circumstances,  agreements 
with  a  beneficiary  government  would  establish  the  legal  framework  for  the 
development of the assistance. No such agreements can be made for the assistance to 
the Turkish Cypriot  community. Management and mitigation of the inherent  risk is 

1 
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  and  amending  Council 
Regulation (EC) No 2667/2000 on the European Agency for Reconstruction (OJ L65, 7.3.2006, p. 5). 
2 
Cypriot community for the year 2023 (C(2023) 5848). 
3 
financial framework for the years 2021 to 2027 (OJ L433I, 22.12.2020, p. 11). 

Council  Regulation  (EU,  Euratom)  2020/2093  of  17 December  2020  laying  down  the  multiannual 

Commission Implementing Decision of 12.09.2023 on adopting an Action Programme for the Turkish 

1 

 
 
 
 
part  of  the  Commission’s  responsibility.  Measures  adopted  include  intensive 
monitoring  of  contracts  and  provision  of  support  to  beneficiaries,  revised  payment 
conditions,  and  a  careful  approach  to  the  use  of  bank  guarantees.  The  assistance 
includes  a  significant  amount  of  grant  support,  requiring  resource-intensive 
management. 

To ensure impact, the Turkish Cypriot community must be fully engaged in preparing 
the implementation of the acquis in view of the withdrawal of the suspension of its 
application  in  accordance  with  Protocol  10,  upon  the  entry  into  force  of  a 
comprehensive settlement. 

The programme team operates through the EU Programme Support Office in the non-
government controlled areas in Nicosia. The Commission Representation in Cyprus 
also  hosts  meetings,  seminars  and  press  conferences  and  communicates  with  the 
Cypriot public throughout the island, including on the Aid Programme. In addition, 
the  EU  Infopoint,  funded  under  the  Aid  Programme,  carries  out  a  range  of 
communication  and  visibility  actions,  providing  information  about  EU  policies, 
priorities  and  actions  in  support  of  the  Turkish  Cypriot  community,  and  promoting 
European culture. 

4. 

IMPLEMENTATION DURING THE REPORTING PERIOD 

4.1. 

General overview 

The Commission continues to implement the Aid Regulation with the overall aim of 
supporting  reunification.  In  the  event  of  a  comprehensive  settlement  of  the  Cyprus 
problem, the Council will, on the basis of a proposal from the Commission, decide 
unanimously on the necessary adaptations to this Regulation. 

Operations in 2023 included the continuation of a number of established and successful 
projects, such as EU scholarships and confidence-building measures in support of both 
the Technical Committee on Cultural Heritage and the Committee on Missing Persons. 
A  dedicated  facility  continued  to  fund  initiatives  under  the  bi-communal  Technical 
Committees. 

Grant support remains an essential feature of the programme. Greater assistance was 
provided to key economic sectors preparing for a settlement through projects geared 
towards  the  private  sector  and  rural  development.  Efforts  continued  to  tangibly 
improve the state of play in animal diseases eradication and food safety. 

The  Commission  continued  its  efforts  to  assist  the  Turkish  Cypriot  community  to 
comply  with  the  standards  set  by  the  package  of  two  measures  adopted  by  the 
Commission  in  2021,  registering  ‘Χαλλούμι’  (Halloumi)/’Hellim’  as  a  protected 
designation  of  origin  (PDO)  and  laying  down  the  conditions  for  movement  of  this 
product over the Green Line. To this end, dedicated financial assistance and technical 
experts  supported  farmers,  food  business  operators  and  local  bodies  in  charge  of 
controls  throughout  the  food  production  chain.  The  Commission  also  continued  to 
convene  the  informal  Working  Group  on  Halloumi/Hellim  bringing  together 
stakeholders from both Cypriot communities. 

There are still considerable gaps in beneficiaries’ capacity to  effectively  implement 
the  acquis  upon  the  entry  into  force  of  a  comprehensive  settlement.  However,  the 
Turkish Cypriot community continued to make good progress in a number of areas, 

2 

 
 
such as environment, health and food safety, and acquired a firmer understanding of 
the challenges. 

At the end of the year, 138 contracts were running under the Aid Programme. 

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 for the acquis. 

The activities undertaken in 2023 are described below, for each objective of the Aid 
Regulation. 

4.2.1.  Objective 1: Developing and restructuring of infrastructure 

The  United  Nations  Development  Programme  (UNDP)  continued  to  implement  the 
Local Infrastructure Facility through ongoing contribution agreements signed with the 
Commission  for  a  total  of  EUR 33.2  million.  The  facility  provides  support  for 
preparing and implementing relevant local infrastructure investments. In 2023, three 
infrastructure  projects  were  completed,  namely  the  construction  of  the  Kormakitis 
Centre for Cooperation, the extension of the Morphou wastewater treatment plant, and 
the  rehabilitation  of  the  Kouklia  wetlands.  An  additional  15  projects  were  active, 
including the development of a pre-feasibility study for setting up a bi-communal solar 
power plant.  

Remedial  works  and  construction  activities  on  the  Famagusta  sewerage  network, 
which began in July 2021, ended in 2023. A total of 45 km of the sewage network was 
replaced, many defects encountered in the initial project were resolved, and the quality 
and functionality of the system was improved.  

Structural  problems  with  the  operation  of  the  landfill  in  the  Turkish  Cypriot 
community continued in 2023. Since it was handed over in 2022, the beneficiary has 
not  improved  the  operation  and  management  of  the  facility,  and  has  continued  to 
implement  poor  waste  disposal  practices.  This  has  inevitably  led  to  a  significant 
deterioration  of  the  situation  and  depreciation  of  the  investment.  Without  the 
involvement of the Commission, the beneficiary launched two tenders to contract out 
landfill operations. However, they were both cancelled, making the future governance 
of the waste sector in the community unclear. The Commission remains committed to 
supporting the beneficiary to rectify the situation, provided that appropriate strategic 
decisions on its management are made. 

In line with the EU-funded integrated solid waste management plan, grants  helping 
eight  local  communities  to  improve  their  waste  management  infrastructure  were 
completed in 2023. 

Local  technical  capacity  to  monitor  the  quality  of  the  environment  continued  to  be 
strengthened through dedicated capacity-building activities, such as the development 
of a local emissions inventory of air pollutants. The information provided by the EU-
funded air quality monitoring network is now being used to assess pollution levels and 
develop specific actions to reduce them. 

In the telecommunications sector, new broadcasting infrastructure was completed in 
2023  thanks  to  an  EU-funded  project.  Under  the  project,  the  Turkish  Cypriot 
community removed all analogue television broadcasts from the 700 MHz frequency 

3 

 
 
bandwidth. This in turn enabled the unhindered allocation of the 700 MHz frequency 
band to 5G mobile services, contributing to an increased digitalisation in the Turkish 
Cypriot community. 

4.2.2.  Objective 2: Promoting social and economic development 

Through  the  Aid  Programme,  the  Commission  continued  to  steer  and  promote 
economic integration and development by providing assistance packages to small and 
medium-sized  businesses  in  the  Turkish  Cypriot  community,  with  the  aim  of 
increasing  competitiveness  and  innovation.  As  of  the  end  of  2023,  nearly  100 
businesses had completed the implementation of multiannual grants worth EUR 4.6 
million, resulting in the creation of more than 200 new jobs, the introduction of EU 
quality  standards,  and  support  to  digital  transformation.  The  EU  ‘Into  Business’ 
programme reached more than 1 150 entrepreneurs, culminating in the creation of 36 
new businesses. The EU Incubator Hive was launched, enabling start-ups to receive 
tailored support.  

through  a  simplification  of  procedures  continued.  The 

In  the  area  of  economic  convergence,  cooperation  with  the  World  Bank  on 
macroeconomic monitoring, statistics, facilitation of trade and improving the business 
environment 
first 
comprehensive Household Budget Survey, which focused on monitoring poverty, was 
completed  in  2023  and  the  findings  were  widely  discussed.  Work  on  adressing 
regulatory  requirements  and  overcoming  obstacles  related  to  the  opening  of  bank 
accounts  for  Turkish  Cypriots  in  banks  in  the  government-controlled  areas  and 
enabling payments for Green Line trade progressed. 

Progress was made also in the area of product safety. A technical assistance project on 
market  surveillance,  launched  in  March  2022,  continued  in  2023  with  the  aim  to 
introduce  new,  and  to  improve  existing,  practices  in  metrology,  standardisation, 
accreditation, and conformity assessment. Working closely with the private sector, the 
project  contributes  to  improving  the  business  environment  in  the  Turkish  Cypriot 
community and to ensuring that locally produced goods comply with EU standards. 

The  Commission  continued  its  long-standing  support  to  the  Turkish  Cypriot 
community to help it meet EU standards in food safety and animal health and in the 
prevention, detection and elimination of animal diseases. Farm advisory services were 
provided to farmers and farmer organisations, which resulted in the creation of a pool 
of over 100 local  technical  advisers  and a vibrant  network of stakeholders eager to 
broaden  their  knowledge  and  enhance  practices.  Over  2022-2023,  109  farmers 
completed  one  or  more  agricultural  vocational  education  and  training  courses, 
resulting in the issuing of a total of 247 training certificates. In addition, grants worth 
EUR  3.5  million  were  dispersed  to  a  total  of  53  farmers,  cooperatives  and  food 
business operators in 2023, increasing their efficiency and productivity.   

Key food safety and crisis preparedness activities, which have implications for Green 
Line trade and the Halloumi/Hellim PDO scheme, continued to be implemented. As a 
result,  in  March  2023,  the  first  Halloumi/Hellim  produced  in  the  Turkish  Cypriot 
community  was  certified  as  PDO  compliant.  By  the  end  of  2023,  three 
Halloumi/Hellim cheese producers and 15 farms in the Turkish Cypriot community 
had been certified and attested respectively under the PDO scheme. The Commission’s 
informal  Working  Group  on  Halloumi/Hellim  held  four  meetings  on 
the 
implementation of the PDO scheme in 2023. 

4 

 
 
A  large-scale  testing  and  sampling  of  animals  for  priority  diseases,  including 
brucellosis,  tuberculosis,  and  foot  and  mouth  disease  continued  in  2023.  For  this 
exercise,  the  Commission  provided  laboratory  tests,  veterinary  consumables  and 
services. As a result of the Aid Programme’s comprehensive range of measures, the 
prevalence  of  brucellosis  continued  to  decline,  falling  to  0.3%  by  the  end  of  2023. 
Tuberculosis and foot and mouth disease have already been eradicated. 

EU-funded  assistance  also  contributed  to  further  progress  in  engaging  private 
veterinarians to implement food safety and veterinary controls. 

The Commission continued its support in the area of education, focusing on vocational 
education and training, lifelong learning and professional development of teachers. By 
2023, curriculum packages for 20 occupations had been developed and 330 teachers 
trained  on  the  new  curricula.  In  total,  103  trainings  were  organised  and  nearly  200 
modules  developed to  enhance the skills  and knowledge of all teaching  staff in  the 
Turkish Cypriot community.  

The  technical  assistance  project  with  Statistics  Denmark  continued  to  improve 
business delivery and the management of data sources. The project was complemented 
by  targeted  support  provided  through  the  Commission’s  technical  assistance  and 
information exchange (TAIEX) instrument and the World Bank. All these actions form 
a  comprehensive  EU  strategy  aimed  at  improving  the  provision  of  statistics  in  the 
Turkish Cypriot community, with a view to facilitate reunification. 

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

civil society 

The  Committee  on  Missing  Persons,  supported  by  the  Aid  Programme  through  a 
contribution agreement with the UNDP, continued its field and laboratory work. By 
the end of 2023, of the total of 2 002 missing persons, it had exhumed 1 186 sets of 
remains. Of these, 1 044 were identified genetically and returned to their families. 

In 2023, a new EUR 2.6 million contribution agreement was signed to provide funding 
for the Committee’s operations in 2024. Overall, in 2006-2023, the EU has contributed 
EUR 38.5  million  to  support  the  activities  of  the  Committee  on  Missing  Persons, 
accounting for 80% of its total funding for this period. 

Protecting  cultural  heritage  remained  a  key  component  of  the  reconciliation  and 
confidence-building  measures  supported  under  the  Aid  Programme,  in  close 
cooperation  with  the  bi-communal  Technical  Committee  on  Cultural  Heritage. 
Overall, in 2006-2023, the cultural heritage programme has received EU funding of 
approximately EUR 27.5 million. This has enabled 142 cultural heritage sites across 
the island to be conserved, structurally supported, physically protected or restored. 

In  2023,  a  new  EU  contribution  of  EUR 2  million  was  granted  for  the  support 
facility for the bi-communal Technical Committees. This support is implemented by 
the  UNDP.  Since  2019,  the  support  facility  has  funded  around  20  projects  of  the 
Technical  Committees,  from  feasibility  and  research  studies  to  workshops  and 
exhibitions. 

The successful implementation of a pilot bi-communal scholarship scheme by United 
World  Colleges,  enabled  46  students  from  both  communities  to  participate  in  the 
International Baccalaureate Diploma programme in different countries between 2020 
and 2023. Other actions  by  United World Colleges  include cross-community youth 

5 

 
 
engagement activities and short courses aimed at empowering young people to bring 
about positive change in their societies. 

Support for civil society continued in 2023. The Civic Space project, which provides 
technical assistance for civil society organisations, continued to help them build their 
capacities, promote an enabling environment for the development of civil society, and 
stimulate networking and joint actions with Greek Cypriot and other EU civil society 
organisations.  

The  Cypriot  Civil  Society  in  Action  VIII  call  for  proposals  of  2022  resulted  in  17 
grants for a total financial allocation of EUR 2.5 million. Focusing on bi-communal 
research  actions,  bi-communal  confidence-building  actions,  and  strengthening  civil 
society  in  the  Turkish  Cypriot  community,  the  projects  entered  their  full 
implementation  phase  in  2023,  enabling  civil  society  to  organise  key  advocacy 
activities and stimulate civic activity. 

The Human Rights Platform association continued to successfully implement its EU-
funded direct grant receiving additional funding in 2023. The main activities focused 
on  anti-trafficking,  refugees’  rights,  LGBTIQ+  rights,  relevant  stakeholder 
participation, proper detention conditions and freedom from torture. The platform was 
involved in bringing the first human trafficking case before the ‘courts’ of the Turkish 
Cypriot community, which ended in a conviction. It also provided support to victims 
of human rights violations and bolstered the capacities of civil society on rights-based 
issues in general. 

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

Since 2022, the Commission has been partnering with the Goethe-Institut to implement 
the EU Scholarship Programme.  In  the  academic year 2023/2024, 129 scholarships 
were offered to Turkish Cypriot students to attend universities in EU countries, and as 
of the end of 2023, two Turkish Cypriots benefiting from an EU scholarship have been 
admitted to the College of Europe. 

Since 2007,  more than 2 150 scholarships  have been awarded to  students, covering 
more than 100 universities and 23 EU countries. These scholarships support students 
during their first year of undergraduate studies, graduate students in their master’s or 
doctoral  programmes,  and  researchers  and  professionals  in  further  developing  their 
language and professional skills across EU countries. The Commission, together with 
the  Goethe-Institut,  also  launched  Alumni  Connect  Digital,  an  online  platform  to 
connect scholarship alumni. 

The EU Infopoint is managed by the EU Programme Support Office together with the 
Commission Representation in Cyprus. In 2023, through its activities both online and 
offline, it achieved a high level of visibility for the EU. The EU Infopoint carried out 
more than 500 communication and visibility activities in 2023, covering EU-related 
themes  such  as  disability  rights,  freedom  of  expression,  Green  Line  trade  and  the 
European  Green  Deal.  A  total  of  30  events  were  organised  with  over  20  000 
participants,  reflecting  a  policy  shift  towards  a  greater  focus  on  visibility  and 
communication events for a higher number of beneficiaries.  During this period, the 
Commission produced 20 publications, 75 infographics and 15 audio-visual products. 

4.2.5.   Objectives 5-6: Preparing the Turkish Cypriot community to introduce and implement 

the acquis 

6 

 
 
The TAIEX instrument is used to implement objectives 5 and 6 of the Aid Regulation. 
It helps prepare the Turkish Cypriot community for implementing the acquis in view 
of the withdrawal of the suspension of its application upon the entry into force of a 
comprehensive settlement. 

The  TAIEX  facility  remains  an  important  tool  for  achieving  the  Aid  Programme’s 
objectives.  In 2023, the instrument provided continuous support  across 12 thematic 
areas of the acquis through a combination of online and on-site events. Approximately 
150  TAIEX  events  were  organised,  in  line  with  the  previous  year’s  numbers.  In 
addition, a database of all legal texts drafted with TAIEX support was developed, and 
efforts to improve the quality of translation and interpretation in the Turkish Cypriot 
community continued. 

TAIEX  support  for  trade  across  the  Green  Line  (Council  Regulation  (EC)  No 
866/2004) increased signficantly in 2023. Commission-mandated independent experts 
carried out regular inspections of fresh fruit and vegetables, potatoes, honey and fish. 
In  addition  to  the  six  types  of  processed  foods  of  non-animal  origin  which  were 
admitted for Green Line trade for the first time in 2022, packaging materials that come 
into contact with food and two new processed food products of non-animal origin were 
also admitted for trade, namely table olives and various fruit juices. TAIEX experts 
ensured  EU-level  standards  and  quality  through  relevant  compliance  checks  of  the 
facilities in the non-government contorolled areas.  

To further facilitate Green Line trade, the Commission launched in November 2023 
the  ‘EU  One  Stop  Shop’,  which  provides  knowledge,  support  and  networking 
opportunities to businesses and traders interested or engaged in Green Line trade. 

4.3. 

Financial execution (contracts and payments) 

4.3.1.  Contracting 

The Commission signed legal commitments amounting to EUR 36.9 million in 2023. 

4.3.2.  Payments 

Payments in 2023 totalled EUR 37.3 million (EUR 40.6 million in 2022). 

4.4.  Monitoring 

The  Commission  is  directly  responsible  for  implementing  most  projects  (direct 
management). The level of monitoring by Commission staff is very high, with constant 
contacts  with  contractors,  spot-check  visits,  site  meetings  and  steering  committee 
meetings. The technical assistance provided by the Grant Support Team continued to 
support the Commission in monitoring the implementation of grant contracts, while 
also  assisting  grant  beneficiaries  in  applying  EU  rules  on  implementing  grant 
contracts, including secondary procurement rules. 

The Commission also implements a number of contracts through indirect management. 
The implementing bodies, such as the UNDP, the World Bank, the Goethe-Institut, 
GiZ  and  NI-CO,  report  to  the  Commission  in  line  with  the  respective  framework 
agreements. The Commission is closely involved in the day-to-day monitoring of these 
actions. 

4.5. 

Audit and controls 

The  recommendations  of  the  last  audit  conducted  by  the  Internal  Audit  Service  in 
2017, related to internal control arrangements in the area of public procurement, have 
been fully implemented. 

7 

 
 
4.6. 

Evaluation 

An independent evaluation of the Aid Programme covering the period 2013-2018 was 
published  in  2022.  The  results  of  the  evaluation  were  satisfactory.  The  evaluation 
concluded that the programme remains relevant and that its impact has been generally 
positive. It confirmed the EU added value and credited the programme with keeping 
the  reunification  perspective  alive.  It  also  underlined  the  general  coherence  and 
efficiency of the programme. At the same time, the evaluation highlighted that the Aid 
Programme, on its own, cannot achieve the reunification of Cyprus, for which the two 
Cypriot communities remain responsible. 

4.7. 

Information, publicity and visibility 

Overall, 505 visibility and communication actions were organised in 2023 to showcase 
the  EU’s  work.  The  Commission  also  published  a  booklet  on  private  sector 
development. 

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. The Commission continues to rely on the Government’s cooperation for 
the verification of property rights and the facilitation of the work of the bi-communal 
Technical Committees. The Commission meets regularly with the Ministry of Foreign 
Affairs and Permanent Representation of the Republic of Cyprus to the EU. 

5. 

CONCLUSIONS 

Through the work it does in line with the Aid Regulation objectives, the Commission 
continues to deliver assistance under the Aid Regulation to facilitate the reunification 
of  Cyprus  by  encouraging  the  economic  development  of  the  Turkish  Cypriot 
community.  

During 2023, assistance continued to focus on areas that present particular problems 
for future  compliance with  the acquis, while also  ensuring that emerging  needs are 
addressed in an efficient manner.  

Emphasis on relevance, maturity, ownership and sustainability of projects has yielded 
positive  results  and  will  continue  to  guide  future  programming  discussions.  Also, 
efforts  will  continue  on  making  a  greater  and  long-term  impact  in  priority  areas 
through strategic actions. 

The Commission stands ready to deploy resources as needed, including under the Aid 
Programme, to support settlement negotiations under UN auspices.  

8