Department of Political Studies - University of Catania

Jean Monnet Chair of European Comparative Politics

Jean Monnet Working Papers in Comparative and International Politics

Kostas APOSTOLIDES

Ministry of Foreign Affairs, Cyprus (1)

Cyprus and the Enlargement of the European Union

October 1998 - JMWP 15.98

The Mediterranean and the New International Order

Some of the main characteristics of the new international order may be described as follows:

• The United States is the only superpower.
• The '"iron curtain" was removed , communism was eliminated in Europe.
• A number of countries of Eastern and Central Europe became independent.
• The view prevailed that the EU 'was an economic giant and a political pigmy".
• The role of Russia as a regional and world power was undefined.
• Many of the newly independent countries were politically unstable.
• There was a rise in internal conflicts based on conflicts of race, nationalism and/or religion.
• Islamic fundamentalist political movements emerged as a factor both in internal politics and in international relations.

Unfortunately the "new international order" has resulted in a greater threat of, or actual occurrence of, disorder, particularly in and around the Mediterranean., Over and above the long running conflicts that have bedeviled life and politics in the Mediterranean since World War II, the collapse of communism has seen the re-emergence of conflicts forgotten, and the rise of tensions both within and between countries on issues of race, nationalism and religion.

With respect to the old conflicts, the peace agreements in Israel look fragile, the conflict in Southern Lebanon continues, and in Cyprus the intransigence on the Turkish side has led to the breakdown of the UN sponsored talks. To these have been added the tense situation in the Aegean, recurrent anarchy and instability of Albania, conflict and a precarious agreement in Bosnia, conflict in Kosovo (the current focus of attention), guerilla warfare in South Eastern Turkey , Turkish military incursions into Northern Iraq, an alarming situation in Algeria where the army is pitted against Islamic fundamentalists, while other countries such as Egypt face fundamentalist terrorism. A little further afield the conflict in Georgia has flared up again and there has been little progress between Armenia and Azerbaijan on Nagorno -Karabakh.

In addition to the risk of war that all these conflicts threaten, the economic disparities between the two shores of the Mediterranean and the conflicts themselves, have caused migratory movements of population towards western Europe, with which the countries of the EU have been unable to cope for both economic (i.e. unemployment) and political (cultural resistance) reasons.

The need to improve political and economic conditions in the Mediterranean basin in general has been recognized by the EU and was one of the underlying reasons for the Barcelona process. Many analysts believe, however, that the Barcelona process is incomplete (not all the Mediterranean states are included), and the way forward to political improvement is unclear. Furthermore it is feared that the European pre-occupation with issues such as the introduction of the European Monetary Union, EU reform and the enlargement involving the 10 central and eastern European countries and Cyprus. may result in insufficient attention being given to Mediterranean issues.

Within this overall context it was originally perceived that the accession to the EU of Cyprus and Malta would somewhat redress the imbalance by forcing the EU to consider Mediterranean issues and increasing the number of member states in the region. Owing to political developments within Malta, however, Cyprus is now the only Mediterranean country within the ten plus one countries that were accepted into the EU access process at the Luxembourg summit in December 1997, with the exception of Slovenia which nevertheless considers itself more central European.

The EU as a Mechanism for Peace

The rise of the EEC/EU as an economic superpower has often tended to mask the enormous contribution that the EU has made to peace in Europe, and by extension peace in the world. In fact it can reasonably be argued that the EEC/EU's contribution to peace has been its greatest achievement, particularly since the world wars that ravaged this Century had their roots in the rivalry between Germany on the one side and France and Britain on the other. Nevertheless, it is often forgotten that in the aftermath of World War II, the primary aim of the then European Communities was to foster peace by encouraging mutual cooperation in business and commerce and thereby creating a common interest in the preservation of peace.

Given the current emphasis on economic integration, it is refreshing to refer to the formative years of the European Community in which the goal of peace was clearly the primary objective of the common market agreements. For example, the preamble of the European Coal and Steel Community agreement signed in 1951 mentions peace as the first objective and clearly presents the various economic aspects of the agreement as simply a practical way of maintaining peace. The Preamble is presented below to demonstrate the importance attached to peace:

"Considering that world peace can be safeguarded only by creative efforts commensurate with the dangers that threaten it,

Convinced that the contribution which an organized and vital Europe can make to civilization is indispensable to the maintenance of peaceful relations,

Recognizing that Europe can be built only through practical achievements which will first create real solidarity, through the establishment of common bases for economic development,

Anxious to help, by expanding their basic production, to raise the standard of living and further works of peace,

Resolved to substitute for age old rivalries the merging of their essential interests, to create by establishing an economic community, the basis for a broader and deeper community among peoples long divided by bloody conflicts, and to lay the foundations for institutions which give direction to a destiny henceforward shared,

Have decided to create a European Coal and Steel Community."

The principle of encouraging peace by the development of a solidarity of interests among member states underlies all the efforts that have been taken from the original Coal and Steel community of 1951 to the European Union of today. This commitment to promoting peace was succinctly stated again in the Single European Act of 1993 which despite being a clearly economic agreement , emphasizes in the Preamble the following:

"Aware of the responsibility incombent upon the Europe to aim at speaking ever increasingly with one voice and to act with consistency and solidarity in order more effectively to protect its common interests and independence, in particular to display the principles of democracy and compliance with the law and with human rights to which they are attached, so that together they may make their own contribution to the preservation of international peace and security in accordance with the undertaking entered into by them within the framework of the United nations Charter."

Given that the primary aim of the EEC/EU has always been the preservation of peace, it is amazing that so little attention has been given to issues of peace and security within the EU enlargement process and association agreements . Economic issues have tended to dominate, and it has often been forgotten that the economic arrangements were originally envisaged as practical steps that would develop a solidarity of interests that would form the foundation upon which peace could be preserved.

Within the development of the concept of harmonization of foreign policy of EU countries through the treaties of Maastricht and Amsterdam, it is envisaged that the balance will gradually be redressed, and fundamental issues of democracy, human rights,and peaceful co-existence and security will again come to the forefront of EU policy. The EU enlargement and association processes would then become even more important instruments for the preservation of peace and security ,in addition to their more obvious economic aspects. In fact it is fair to state that the political motives for the membership of some central European countries (notably Poland, Hunagary and the Czech Republic) are more important to the EU than the economic motives, given the considerable economic disparities of some applicant states with those of the EU members.

Cyprus and the European Union

As mentioned earlier Cyprus is one of the candidate countries accepted by the EU within the accession process that began in 1998. In fact Cyprus is in a uniquely favorable position in relation to the other 10 candidate countries which have been accepted into the EU enlargement process, because it meets the Copenhagen criteria, it has a well-established democratic system of Government, it is the most developed of the applicant states, it will not place any great financial burden on EU finances, and it has the closest and longest relationship with the EEC/EU. In addition, the accession of Cyprus would correct the EU`s geographic imbalance by adding another Mediterranean member, and by extending its boundaries to the very important area of the Eastern Mediterranean. The accession of Cyprus would, therefore, provide benefits both to the EU and as well as all of the people of the island Republic.

The above factors are analyzed in more detail below. But first, the accession process decided upon by the European Council vis-?-vis Cyprus, followed by a short history of Cyprus` relationship with the EEC/EU, and a brief introduction to the Cyprus problem is presented. The relative advantages of Cyprus as a candidate state then follows, and the advantages of EU membership for its people considered. Finally, emphasis is given to the advantages accruing to the EU itself from Cyprus` membership, which would add a new dimension to the geographical, economic, political, and security interests and capabilities of the EU.

European Council Decisions on Accession

Initiation of the Enlargement Process

The Luxembourg meeting of the European Council held in December 1997 decided to launch accession procedures with Cyprus and 10 Central/Eastern European (2) applicant states on 30 March 1998. Furthermore, the Council resolved that a "fast track" procedure involving bilateral negotiations should begin for Cyprus, the Czech Republic, Hungary, Estonia, Slovenia, and Poland. With respect to Turkey, the Council confirmed its eligibility for accession on the basis of the same criteria as the other applicant states, but arrived at the conclusion that "the political and economic conditions allowing negotiations to be envisaged are not satisfied."

The European Council stressed that "compliance with the Copenhagen political criteria is a prerequisite for the opening of accession negotiations." The Copenhagen European Council of 1993 stated that the criteria for membership of the European Union were as follows:

"1. Stability of institutions guaranteeing democracy, the rule of law, human rights and respect for the protection of minorities;

2. The existence of a functioning market economy, as well as the ability to cope with competitive pressures and market forces within the Union;

3. The ability to take on the obligations of membership, including adherence to the aims of political, economic and monetary union."

In addition, the European Council decided to set up a European Conference which will bring the member states of the EU together with the European states aspiring to accede to it, and which will show the world the EU`s values, as well as its internal and external objectives.

Its was stressed that the members of the Conference must share a common commitment to peace, security and good neighborliness, respect for other countries` sovereignty, the principles upon which the EU is founded, the integrity and inviolability of external borders, the principles of international law and a commitment to the settlement of territorial disputes by peaceful means, in particular through the jurisdiction of the International Court of Justice at the Hague. Countries which endorse these principles, which respect the right of any European country fulfilling the required criteria to accede to the EU, and which share the Union’s commitment to building a Europe free of the divisions and difficulties of the past will be invited to take part in the conference.

"Initially, the EU offer will be addressed to Cyprus, the applicant states of Central and Eastern Europe and Turkey." The first meeting of the conference was held in London, in March 1998, and it was attended by all the applicant countries except Turkey.

Accession Process for Cyprus

The Luxembourg European Council outlines a pre-accession strategy for all 11 candidate states considered for accession, for the purpose of enabling these states to eventually become members and, "to that end, to align themselves as far as possible, on the acquis prior to the accession." A strategy based on accession partnerships and increased pre-accession aid was formulated for the Central/Eastern European states. For Cyprus, a specific pre-accession strategy was decided, as follows:

" A special pre-accession strategy for Cyprus will be based on:

--participation in certain targeted projects, in particular to boost judicial and administrative capacity, and projects in the field of justice and home affairs;

..participation in certain Community programs and agencies (as in the approach followed for other applicant states);

..use of technical assistance provided by TAIEX (Technical Assistance Information Exchange Office)."

Furthermore, the European Council added the following paragraph:

"28. The accession of Cyprus should benefit all communities and help to bring about civil peace and reconciliation. The accession negotiations will contribute positively to the search for a political solution to the Cyprus problem through the talks under the aegis of the United Nations which must continue with a view to creating a bi-communal, bi-zonal federation. In this context, the European Council requests that the willingness of the Government of Cyprus to include representatives of the Turkish Cypriot community in the accession negotiating delegation be acted upon. In order for this request to be acted upon, the necessary contacts will be undertaken by the Presidency and the Commission."

Accession Process for Turkey

The Luxembourg European Council confirms Turkey’s eligibility for accession but states that Turkey does not satisfy the criteria which are met by the other applicant countries. Nevertheless, it was considered "important for a strategy to be drawn up to prepare Turkey for accession to the European Union in every field."

Cyprus is, however, brought up in relation to Turkey’s application, within the context of a paragraph stating the areas where Turkey must take action in order the meet the required criteria. The paragraph is as follows:

"35. The European Council recalls that strengthening Turkey’s links with the European Union also depends on that country’s pursuit of the political and economic reforms on which it has embarked, including the alignment of human rights standards and practices on those in force in the European Union; respect for and protection of minorities; the establishment of satisfactory and stable relations between Greece and Turkey; the settlement of disputes, in particular by the legal process, including the International Court of Justice; and support for negotiations under the aegis of the UN on a political settlement in Cyprus, on the basis of the relevant UN Security Council Resolutions."

Cardiff European Council

The Cardiff European Council held on 15 and 16 June 1998 simply reports the progress achieved with the Accession Process for Cyprus and the 5 Central/Eastern European applicant states. Reference is also made of the preparation by the European Commission of proposals for a European strategy to prepare Turkey for membership.

The Cyprus Problem

The reason for the above reference to Cyprus with respect to Turkey’s application, was the fact that, in 1974, Turkey invaded Cyprus, occupied 37% of the northern part of the island, and displaced about 170,000 Greek, Armenian, Maronite and Roman Catholic Cypriots from their homes. Despite many UN Security Council and General Assembly Resolutions, Turkey has kept hold of this territory and has introduced thousands of Turkish settlers with the aim of changing the demographic balance of the country.

Negotiations have taken place over the last 24 years under UN auspices to try to find a solution to the Cyprus Problem, but despite some progress at the high-level agreements of 1977 and 1979 which established an agreed basis for a bi-communal, bi-zonal federation, the inflexible approach of the Turkish side has caused deadlock, and a lack of progress. This was most obvious during the UN-sponsored talks of July and August 1997, when the Turkish side refused to negotiate because the EU Commission's Agenda 2000 report recommended that the Cyprus application for full membership of the EU be considered favorably, and Cyprus be included in the accession process.

It is important here to note that the international community believes that the EU accession process will help break the deadlock, and contribute to a solution of the Cyprus Problem. UN Security Council Resolution 1062 (1996) states that the Council:

"Recognizes that the decision of the European Union concerning the opening of accession negotiations with Cyprus is an important new development that should facilitate an overall settlement."

This statement has been included in subsequent UN Security Council Resolutions.

There appear to be several mechanisms through which accession to the EU would help to facilitate the solution of the Cyprus Problem. First, it must be remembered that one of the main objectives of the 1950 European Steel and Coal Community was, as Robert Schuman--the French Foreign Minister of the time-- stated, "the elimination of the age-old opposition between France and Germany...to place Franco-German production of coal and steel as a whole under a higher authority, within the framework of an organization open to the participation of the other countries of Europe." This was later followed by the agreement on 25 March 1957, to establish the European Economic Community, which has grown into the European Union of 15 states.

Second, it is in the interests of both Cyprus and Turkey to resolve their differences.

Third, the EU allows reference to a "higher authority" to which the two sides may relate principles that are objective, and which facilitate a solution of the Cyprus Problem. For example, the EU`s commitment to human rights, the right of property and freedom of movement, trade and ownership, are all factors that should facilitate the solution of the Cyprus Problem.

Unfortunately, the Government of Turkey does not wish to solve the Cyprus Problem, and rejects both the EU criteria and the UN Resolutions for the solution of the Cyprus Problem. By contrast, the Government of Cyprus accepts the UN Resolutions on the Cyprus Problem and looks towards the EU criteria as a "higher authority" that should facilitate a solution.

Cyprus` Relations with the European Union

Association Agreement and Customs Protocol

The relations of Cyprus with the EEC/EU may be divided into 3 periods, as follows:

1973-1987: The Association Agreement

1988-1997: The Customs Union

1990-Present: The application for accession and the accession process.

Following the accession of the United Kingdom, the former colonial power and Cyprus`s main trading partner, to the EEC in 1973, Cyprus entered an Association Agreement with the EEC in that year, with a view to protecting and expanding its trade interests. The Association Agreement involved two stages--the first from 1973 to 1977 which provided for the reduction of tariff barriers, and the second from 1977 to 1982, which envisaged a Customs Union.

Unfortunately, the Turkish invasion of 1974 greatly disrupted the Cyprus economy, and consequently, Stage 1 of the Association Agreement was extended until economic recovery was achieved and more stable conditions established.

In 1987, agreement was reached on a Customs Union Protocol, which was also divided into two phases. Phase 1 involved the gradual elimination of customs tariffs over a 10 year period, and the adoption of the EEC’s Common Customs Tariff. This stage was completed in December 1997, but was to have been followed up by Phase 2, from 1997 to 2002/3, providing for the free and unrestricted movement of industrial and agricultural products--that is, essentially, the adoption of the Common Agricultural Policy by Cyprus. Given Cyprus` application for full membership, the Government of Cyprus has requested that the EU inform it as to whether or not they should proceed to Phase 2. It is important to stress that the Customs Union with the EU gives Cyprus the closest relationship with the EU of any applicant country.

The EU Accession Process

On 4 July 1990, the Government of the Republic of Cyprus officially applied for full membership of the EU. This was followed in 1992 by a decision to link the Cyprus Pound with the ECU (1 ECU=CYP 0.58). Cyprus was, therefore, the first of the 11 current applicants accepted in the accession process to have applied for full membership.

The EU Commission, in its opinion on Cyprus` application issued on 30 June 1993, concluded that:

"Cyprus` geographical position, the deep-lying bonds which, for two thousand years have located the island at the very fount of European culture and civilization, the intensity of the European influence apparent in the values shared by the people of Cyprus and in the conduct of the cultural, political, economic and social life of its citizens, the wealth of its contacts of every kind with the Community, all these confer on Cyprus, beyond all doubt, its European identity and character, and confirm its vocation to belong to the Community."

The Commission went on to state that it "is convinced that the result of Cyprus` accession to the Community would be increased security and prosperity, and that it would help to bring the two communities on the island closer together." With regard to the economic aspects of accession and the adoption of the acquis communitaire, the Commission noted that in view of the progress achieved with the Customs Union, there are no "insurmountable problems."

The Commission expresses the view that a "political settlement of the Cyprus question would serve only to reinforce this (European) vocation and strengthen the ties which link Cyprus to Europe." But in the event of failure of the intercommunal talks to produce a political settlement of the Cyprus question in the foreseeable future, the "situation should be reassessed in view of the positions adopted by each party in the talks, and that the question of Cyprus` accession to the Community should be reconsidered in January 1995."

The European Councils of Corfu (June 1994) and Essen (December 1994) confirmed that the next round of the Union’s enlargement would involve Cyprus and Malta. On 6 March 1995, and after examining the report of the European Observer for Cyprus, the Council concluded that negotiations would start on the basis of Commission proposals 6 months after the conclusion of the 1996 Intergovernmental Conference, taking into account the results of the Conference. In line with this decision, the EU/Cyprus Association Council on 12 June 1995 adopted a common Resolution on the establishment of a structural dialogue between the EU and Cyprus on certain elements of strategy to prepare it for accession.

The completion of the EU Intergovernmental Conference and the decisions taken in the Amsterdam EU summit regarding a new EU treaty, opened the way for the implementation of the decisions taken regarding enlargement. However, the results of the general election in Malta were such that Malta decided not to pursue its application further. As a result, the Cyprus application was considered with those of the Central/Eastern European countries, the so-called ten plus one.

On 16 July 1997, the Commission issued the Agenda 2000 report relating to the next enlargement, which confirmed that accession negotiations would begin as planned. Agenda 2000 reiterated the Union’s determination to play a positive role in bringing about a just and lasting settlement in accordance with the relevant UN Resolutions. The Commission felt that the prospect of accession, whose political and economic advantages were becoming clear to the Turkish Cypriots as well as the Greek Cypriots, could itself provide such an incentive for a solution. The timetable agreed for accession negotiations to start with Cyprus meant that they could start before a political settlement was reached. Furthermore, the EU shared the view expressed by the UN Secretary General that the decision to open negotiations should be seen as a positive development which would promote the search for a political settlement.

The breakdown of the UN-led direct negotiations at Montreaux in August 1997, were viewed with deep concern by the EU, and Commissioner Hans Van den Broek stated that the precondition for progress set by the Turkish side--implying the freezing of the Unions` commitment to start accession negotiations with Cyprus in 1998--was unacceptable, and reconfirmed that those negotiations would proceed as agreed, in March 1998. Agenda 2000 made it clear that if progress towards a solution of the Cyprus Problem was not reached before negotiations began, then the negotiations for accession should proceed with the Government of the Republic of Cyprus, as the only authority recognized by international law. The EU pledged to facilitate the process of finding a solution by funding bi-communal projects and activities designed to demonstrate and inform the Turkish Cypriots of the benefits of EU accession.

The Luxembourg and Cardiff EU Council meetings of December 1997 and June 1998, confirmed that accession negotiations with Cyprus would begin in March 1998 and continue with the applications of the 5 Central/Eastern European countries that the EU considers as meeting the criteria for accession (refer to Section 5 above).

Position of the Government of the Republic of Cyprus

The Government of the Republic of Cyprus has clearly stated that the peaceful, negotiated solution of the Cyprus problem on the basis of a workable, bi-communal, bi-zonal federated state which gives displaced persons the right to return to their homes, has the highest priority. It is, in fact, the only issue that has a higher priority than that of EU accession for Cyprus. However, Cyprus should not be held hostage to Turkish intransigence on the Cyprus question, and no non-member state should have the right to veto the accession applications of other countries. Consequently, every effort should be made for the solution of the Cyprus Problem as soon as possible, but this should not be placed as a condition of EU accession

The Government of Cyprus also believes that the Turkish Cypriot Community has a great deal to gain both from the solution of the Cyprus problem and EU accession, and agrees with the UN and the EU that the accession process and Cyprus` actual accession will facilitate a solution to the Cyprus problem.

These views are in line with EU Council decisions.

In accordance with the Luxembourg EU Council's wishes in 1997 the Government of Cyprus submitted proposals to the European Union for the participation of the Turkish Cypriot Community in the Cyprus delegation for the EU accession negotiations, but unfortunately the Turkish side rejected the proposals. Officials of the EU subsequently stated that they considered the proposals of the Government of Cyprus both fair and generous.

The strengths of the Cyprus Application

The strengths of the Cyprus application mentioned in section 4 above are analyzed in more detail below:

• Cyprus meets the Copenhagen criteria, both the Commission opinion of 1993 and Agenda 2000 in 1997 confirmed that democracy and human rights standards are maintained and that there should be no insurmountable problems with respect to harmonization with the EU.
• Cyprus is the most developed of the applicant states and is generally considered to have a standard of living higher than Portugal and Greece, and by some estimates other EU member states. Enclosure 1 shows the Human Development Index rankings of UNDP which show Cyprus above Portugal and rather surprisingly Luxembourg. Enclosure 2 shows adjusted per capita GDP in terms of purchasing power parity (PPP$) as calculated by the World Bank which ranks Cyprus eighth in Europe above the U.K., Italy, Sweden, Ireland , Spain, Portugal and Greece. The situation should be clarified next year when the European Commission will be in a position to make its own estimates, but irrespective it is certain that Cyprus will have a better ranking than the other candidate countries as well as some member states.
• In addition to having a high standard of living Cyprus also has a long tradition of rapid economic growth with good economic management. Over the last 20 years the rate of real growth of GDP has been over 5%, and in 1995 and 1996 Cyprus was able to meet the stringent Maastricht criteria for entry to the European Monetary Union. It is the intention of the Government of Cyprus to enter the EMU system immediately upon full membership.
• As a small highly developed country both the Government of Cyprus and the European Commission do not consider that Cyprus will be a significant financial burden on the Community. The main concern for Cyprus would be to fairly share the benefits and burdens of membership, and that competing member states should not obtain an unfair competitive advantage.
• Cyprus has the closest and longest relationship with the EU primarily because of the 1973 Association Agreement and the 1987 Customs Union, which in December 1997 led to zero tariffs for almost all EU products ,and adoption of the Common External Tariff.
• In general Cyprus with its long tradition of a market economy, its links with the EU, and its relatively high level of development is not expected to face major problems in adjusting to the EU acquis communautaire.

Advantages of Membership for Cyprus

It is difficult to undertake a cost-benefit account of membership of the EU with any degree of confidence, in part because it is much easier to calculate the costs than the benefits. The main reasons for Cyprus's application for full membership are as follows:

• The desire to belong to the mainstream of European society and to participate as a full member in an area of high economic, social and cultural development.
• The improvement of the prospects for peace and security in line with the goals of the EEC/EU, and the improvement of the security of all the population.
• The development of trade with the EU which accounts for about 60% of domestic exports and 52% of imports. In 1996 Cyprus exports to the EU were 184 mln pounds as against imports of 902 mln pounds.
• The encouragement of EU investment in Cyprus, and the further development of the island as a centre for business for the Middle East and Russia and the Eastern European countries.
• The advantages for planning of dealing within a stable environment, and having to adopt standards and technology comparable with those of the advanced European states.
• The application of EU principles and criteria with respect to the solution of the Cyprus problem, and the provision of incentives of EU membership for the attainment of a workable solution.
• The provision of benefits to all the population of Cyprus , that is both the Greek Cypriot Community (which also includes Armenians, Maronites and Roman Catholics) and the Turkish Cypriot Community.
• All citizens of Cyprus will be able to fully share all the benefits of freedom of movement of EU citizens, and other programmes provided by the EU to EU citizens.

Benefits Accruing to the EU

Despite the fact that Cyprus is a small country, the EU will also gain greatly from Cyprus' membership. The main benefits that may be identified at this stage appear to be the following:

• The EU borders will be expanded hundreds of miles to the East, to a region that because of its economic resources (oil and the transport routes for Middle east and Central Asian oil) is of crucial importance to the interests of the EU member states.
• The EU will be able to improve the security of the region, and thereby improve the security of Europe.
• The existing function of Cyprus as a business centre for the Middle East, North Africa and Eastern Europe could be greatly developed for the benefit of European firms.
• Cyprus could be exploited as a communications hub for Europe in the region.
• EU firms would have improved access to the Cyprus market, which due to the high level of development is larger than that of countries with a much greater population, but also through Cyprus's access to Middle East and East European markets.
• The highly developed and professional service sectors of Cyprus, including professional services, could be used to reduce the costs of operation of EU firms operating in the regions with which Cyprus has economic relations.

In this way Cyprus could become a bridge between Europe and the Middle East and Eastern Europe, which would provide connections and services for commerce ,transport and service industries. These are precisely the areas where Cyprus already has a strong presence and a comparative advantage.

Conclusion

The accession of Cyprus to the EU will have a significance both for the Mediterranean countries and the EU far beyond the small size of the country. Europe 's boundaries will be extended a little offshore from the Middle East, and this will have important repercussions for the security of the region and for European trade and business activity. All the population of Cyprus would be able to benefit, and strong incentives for the solution of the Cyprus problem will have been put in motion, for the benefit of the whole of Europe, and not just the population of the island..

Irrespective of whether there is a solution of the Cyprus problem prior to EU accession, the membership of Cyprus would contribute to peace and stability by making conflict less likely (or even eliminating the possibility of conflict) and providing a standard based on international law and the acquis communautaire for the solution of the problem.

Within the context of the new world order, the extension of the EU to the Eastern Mediterranean would increase the influence of the EU in the region and would be a stabilizing factor, without extending the EU to the mainland of Asia.

Annex 1

HUMAN DEVELOPMENT INDEX

(1994 data)

Source: Human Development Report 1997 UNDP.

Annex 2

WORLD BANK RANKING OF ECONOMIES

(1996 Data)

Source: World Bank Atlas 1998.

Footnotes

(1)

Kostas Apostolides is Senior Planning officer with the Planning Bureau on secondment to the Ministry of Foreign Affairs of Cyprus, where he is Deputy Head of the Office for the Study of the Cyprus Problem. The views expressed in this document are the personal views of the author and do not necessarily reflect the views of the Government of Cyprus or the ministry of Foreign Affairs.

(2) Czech Republic, Hungary, Estonia, Slovenia, Poland, Romania, Bulgaria, Lithuania, Latvia, and Slovakia.

ã Copyright 1998. Jean Monnet Chair of European Comparative Politics.

Kostas APOSTOLIDES, Ministry of Foreign Affairs, Deputy Head of the Office for the Study of the Cyprus Problem.