Cyprus: Are old friends offering new hope for unity?

"There is a chance that the leaders will be able to negotiate an agreement," says Ahmet Sözen, director of the Cyprus Policy Center at the Eastern Mediterranean University, in the north Cypriot city of Famagusta.

"But the outcome of a referendum on such an agreement is uncertain. Also, if both communities should vote in favor, it is not given that the unification solution would hold; perhaps the glue is not strong enough," Mr. Sözen says.

Land dispute remains key problem

Supporters of reunification were left shaken by a vote on April 19, when the nationalist National Unity Party defeated Talat's Republican Turkish Party in TRNC parliamentary elections.

Given that the president is in charge of the negotiations, and that many voters in the north are likely to support an agreement that promises EU membership, the election result may not be too serious of a setback to the negotiations, analysts say.

Both sides are now aiming for an agreement in the fall, followed by a referendum early next year.

The two leaders meet weekly and are negotiating a long list of complicated issues. The toughest issue involves disputes centered on the return or compensation of properties in the north owned by Greek Cypriots displaced to the south.

The Turkish Cypriots in the north, who constitute only a fifth of the island's population, live on 37 percent of its territory. They fear that returning these properties would make them a minority on their portion of the island. Many do not have the financial means to compensate the Greek Cypriot owners.

Talat confirmed that the property issue is the most difficult one. "It's the most painful and most difficult issue because it affects everybody, without exception."

Agreeing on a system of government for a reunified Cyprus is also a sticking point. The leaders agree in principle that the state should be a federation with two zones, but the Turkish Cypriots want to see stronger rights for minorities while the Greek Cypriots are seeking a stronger federal role with more emphasis on individual rights.

The presence of the Turkish military is a critical security issue. Although both sides agree that Cyprus must be demilitarized for reunification to happen, the conditions are a matter of dispute. That is also the case with the question of citizenship rights for tens of thousands of settlers from Turkey.

Ripe economic conditions for unity?

After decades of solid growth, most indicators now point toward a sharp downturn for the tourism-driven Greek Cypriot economy. The Turkish Cypriot economy, meanwhile, is expected to have a recession for the second year in a row.

The bad economy could be good news for the reunification efforts, says Praxoula Antoniadou Kyriacou, an economist and associate of the Cyprus Center of the International Peace Research Institute, of Oslo, Norway.

"In 2004, people who were against the Annan Plan argued that reunification would be too expensive, and that the use of money would overheat the economy," Ms. Kyriacou says. "But today, this is the answer to the recession. Investment, first and foremost in infrastructure, is what we need now."

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