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5th Dec 2016

Cyprus gets set to referee EU budget talks

  • Roman-era mosaic in Kurion, Cyprus (Photo: ColinsCamera)

The incoming Cypriot presidency is getting ready to tackle the biggest and ugliest dossier in the EU - the money - amid problems in its own backyard.

"It's the big bang in the EU because everything gets put on the table - own resources, administrative spending, external aid, cohesion, agriculture," a Cypriot source told EUobserver in Brussels on Wednesday (25 April), referring to future talks on the Union's next €1-trillion-plus seven-year budget.

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"We are currently assessing the level of ambition we should have for each dossier. We're really ambitious to finalise [the budget talks] by the end of the year ... if it is not possible, we at least want to reach a stage where an agreement is within reach," the contact added.

Cypriot priorities also include new EU rules on asylum seekers - a sensitive topic in the current anti-immigration climate, especially for Cyprus' neighbour, Greece, which is struggling to cope with Asian and Arab Spring refugees.

Another major project for the island nation is an integrated EU maritime policy, covering areas from customs rules to pollution and coastal tourism.

The Cypriot source added that as a small and new member state, it needs to "prove itself" in EU circles that it is up to the job.

It is throwing €62 million of its own money at the six-month chairmanship, which starts in July. The figure is smaller than previous presidencies (Poland spent €110 million last year). But it is "huge" by Cyprus' standards, amounting to 0.3 percent of the country's gross national income.

Cyprus is, after Malta and Luxembourg, the third smallest EU country and the most easterly - there are no direct flights to the EU capital as things stand, making Brussels-Nicosia a six-hour trip.

Logistics is likely to be the least of its worries, however.

The country's private companies are exposed to Greece to the tune of some €25 billion, tying its economic fate to Athens, which risks going bust if radical anti-austerity parties have their way after elections next month.

The Cypriot source confirmed that Cyprus is currently being kept afloat by Russia, which gave it a €2.5 billion fixed rate loan last year to offset its €3 billion haircut on Greek bonds. "It became almost impossible for us to go to markets to satisfy our borrowing needs," the contact explained.

Meanwhile, its biggest neighbour, Turkey, is doing its best to spoil its moment in the EU limelight.

The two countries are locked in a 40-year-old territorial dispute over northern Cyprus and have no diplomatic relations, so that Nicosia only talks to Ankara via other EU countries' embassies.

The Cypriot source said there is little chance of a breakthrough on the conflict or of Cyprus lifting its related block on new chapters in Turkey's EU accession talks. With Turkey saying it will boycott any Cyprus-chaired EU meetings, the contact noted that offering to open a chapter would amount to "playing games" with Ankara.

The source said Cyprus will try to involve NGOs from Turkish-controlled north Cyprus in its presidency projects. The contact added that it will also invite Turkey to relevant EU meetings "as if there was no particular problem ... it's up to them to decide what they want to do."

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