14 Assistance for northern Cyprus
| (26058)
13883/04
COM(04) 696
| Amended draft Council Regulation on establishing an instrument of financial support for encouraging the economic development of the Turkish Cypriot community and amending Regulation (EC) No. 2667/2000 on the European Agency for Reconstruction
|
| Legal base | Article 308 EC; unanimity
|
| Documents originated | 21 October 2004
|
| Deposited in Parliament | 27 October 2004
|
| Department | Foreign and Commonwealth Office
|
| Basis of consideration | EM of 4 November 2004
|
| Previous Committee Report | None
|
| To be discussed in Council | 22 November 2004 GAERC
|
| Committee's assessment | Politically important
|
| Committee's decision | Cleared
|
Background
14.1 In response to the wishes of the 26 April General Affairs
and External Relations Council (GAERC) following the disappointing
outcome of the Cyprus referendum, the Commission announced on
7 July 2004 a package of measures aimed at the economic integration
of the island and at improving contact between the two communities
and with the EU, together with specific rules for goods crossing
the "green line" that separates the two communities.
The package included two draft Council regulations:
- to establish financial support for economic development in
northern Cyprus and for improving inter-community contact (€259
million for 2004-2005, originally earmarked for a reunited Cyprus);
and
- to facilitate direct trade from the north, including
a preferential regime for products originating there on entering
the Customs territory of the EU.
14.2 The Committee cleared the "green line"
Regulation on 18 May[42]
and the other two draft Regulations on 21 July.[43]
The former was adopted on 23 August. But the other two have
been the subject of so far inconclusive discussion in the Council.
However, differences having now been resolved, the Government
is keen to get the aid disbursed as quickly and effectively as
possible.
The Government's view
14.3 In his 4 November 2004 Explanatory Memorandum,
the Minister for Europe (Mr Denis MacShane) says that the Commission
proposes using an existing structure — the European Agency
for Reconstruction (EAR) based in Thessaloniki — rather
than establishing a new one. As he explains:
"The EAR was set up in the aftermath of
the Kosovo crisis to manage the EU's assistance to UN administered
Kosovo. Its mandate covers the full project cycle, from identification
(including preparatory studies) to final payments, monitoring
and evaluation of projects under its responsibility. Since its
establishment, the mandate of the EAR has been extended twice
(to include Serbia and Montenegro and the former Yugoslav Republic
of Macedonia). On 28 June 2004 the Commission proposed to extend
the Agency's mandate for another two years until 31 December 2006."
He supports this in the following terms:
"It is important to ensure that a mechanism
is in place to disburse the funds quickly and effectively for
north Cyprus. This is in line with the UK and EU objective of
ending the isolation of the Turkish Cypriots. We consider the
EAR an appropriate mechanism for the disbursal of aid to the north.
It is well established and has a long and recognised experience
of implementing major infrastructure projects, which will represent
the bulk of the aid to the northern part of Cyprus. It is also
a pragmatic choice that avoids the need to set up a new body with
all the political and administrative delays this could involve.
"We are confident that this proposal will
not have an adverse impact on the EAR's important work in the
Western Balkans. The European Commission have confirmed that the
EAR will not divert any staff away from work in the Western Balkans,
but we will monitor this carefully. Approximately 30 new staff
will be employed to work on Cyprus. Nor will financial resources
be diverted away from the Balkans. Under the CARDS (Community
Assistance for Reconstruction Development and Stabilisation) 2004
Country Programmes, €329 million was approved for Kosovo,
Macedonia, and Serbia and Montenegro. Funds for Cyprus will all
come from the €259 million earmarked under the Aid Regulation."
14.4 In relation to the legal basis the Minister
says:
"The Government agrees that the use of Article
308 is justified as northern Cyprus is in a unique situation not
covered by other Treaty articles. Use of Article 181a would not
be appropriate as northern Cyprus is not a third country."
14.5 In his accompanying letter he explains why the
proposal has not yet been finalised:
"The Commission and Council Legal Service
(CLS) are still in discussion regarding the most appropriate way
of appointing the EAR to take on responsibility for aid to northern
Cyprus. It is proposed to either amend the Aid Regulation or to
amend a separate regulation extending the EAR's mandate.[44]
We do not have a preference. Our main concern is that an appropriate
mechanism is put in place to enable the aid to be disbursed without
delay. However, despite the substance remaining the same it may
result in the final proposal looking slightly different to the
current text. I thought it best to give your Committee the chance
to scrutinise the original proposal. If a final decision on a
funding mechanism is not made until closer to the 22 November
GAERC this may result in your Committee not being able to scrutinise
the final proposal. The Government is keen to follow through on
the commitment made at the 26 April GAERC and we would not want
to delay the dispersal of aid. If a decision is made shortly we
will of course outline the differences in a supplementary EM."
Conclusion
14.6 The underlying objective — to facilitate
reunification in Cyprus — is laudable, and we share the
Minister's regret that it has taken so long to give effect to
the Council's intentions.
14.7 We again accept, despite our frequent reservations
about the use of Article 308, that there is no other suitable
treaty provision available for this case and that reunification
would attain one of the Community's objectives in the course of
the operation of the common market.
14.8 We are grateful to the Minister for submitting
the draft proposal to us now to enable scrutiny to be carried
out, rather than waiting until a final decision on the financing
mechanism is made. We are content to accept his assurance that
he will notify us of any changes, and would in any event wish
to be notified of the final decision (and to receive the final
text).
14.9 We now clear the document. Given the continuing
interest in Cyprus, we considered a short Report to the House
appropriate.
42 HC 42-xx (2003-04), para 21 (18 May 2004). Back
43
HC 42-xxix (2003-04), para 12 (21 July 2004). Back
44
Cleared by the Committee without a substantive Report to the House:
see 25794: HC 42-xxx (2003-04), para 17 (9 September 2004). Back
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