Speech of Andros Kyprianou, General Secretary of the C.C. AKEL, at a Discussion with foreign Ambassadors
3rd November 2014, “Stoa Hall” Nicosia
On behalf of the Central Committee of AKEL I thank you all warmly for accepting our invitation and honouring us with your presence. Our meeting today is taking place at the time we had the extremely adverse development of the postponement of the negotiation procedure as a result of Turkey’s provocative actions in the Exclusive Economic Zone (EEZ) of the Republic of Cyprus.
Of course this isn’t the first time Turkey is taking provocative actions within our EEZ. However, recent provocations are the most serious ever. To substantiate this evaluation, I consider it necessary to recall very briefly certain fundamental provisions of the Law of the Sea.
According therefore to the conventional and customary Law of the Sea when the distsances between states with opposite or adjacent coasts do not allow an Exclusive Economic Zone of 200 nautical miles, delineation is imperative. So long as the delineation is pending, actions must not be taken in the disputed regions that would prejudice the final settlement. If an agreement is not reached within a reasonable period of time there must be a recourse to the International Court of Justice or to the International Tribunal for the Law of the Sea.
Turkey’s actions must be judged within this precise context. As it is known, Turkey is challenging a large section of the northwestern part of the Cyprus EEZ, considering – erroneously, of course – that it belongs to her. It has repeadetdly proceeded in this section to take concrete actions that violate the Law of the Sea. Let me clarify that when the Treaty refers to disputed regions it does so in a neutral way and does not imply nothing more than the recording of the fact that there are cases when specific regions are being claimed by two or more states.
The second serious step was Turkey’s similar actions in the part of the EEZ which it is not claiming on the one hand for its own purpose, but considers that it is an Exclusive Economic Zone of the pseudo-state. It overlooks of course that this is a case of an illegal entity that is not recognised by any state apart from Turkey itself. All the rest of the states all over the world recognise that the occupied areas, therefore the EEZ too, belong to the Republic of Cyprus.
The thrid step, which has been taken now for the first time, were the actions in part of the Exclusive Economic Zone of the Republic of Cyprus which Turkey never challenged not even for its own behalf, nor for the pseudo-state. I am reffering to the part of the EEZ that is opposite to the free, southern, coasts of the Republic of Cyprus.
The fourth step, which has also taken place now, was the binding of the largest part of the south coastline of the Republic of Cyprus by Turkey, and in fact very close to our territorial waters and in front of the drilling of the ENI-KOGAS consortium that is in currently fully underway.
It is precisely for all of these reasons that AKEL considers Turkey’s new action as the most provocative ever. As such, this action could not remain unanswered. The measures announced by the National Council (Note: advisory body to the Preesident on the Cyprus problem composed of all the parliamentary parties and former Presidents) are in the right direction, do not destroy bridges of understanding and do nut punish the Turkish Cypriots for Turkey’s international illegal acts. The most serious of these measures, in our opinion, was the suspension of the negotiation procedure. This is precisely why I would like to clarify our own position on the matter.
Turkey’s intolerable provocation objectively has an impact on the negotiation procedure; a provocation that is even more unacceptable given that it took place on the eve of the beginning of the substantive round of the talks, indeed when with the procedure and methodology to be pursued was agreed upon. Turkey knew, or at least should have known, that with its actions it was Tukrey itself that provoked the suspension of the negotiations. I would at this point like to stress that the suspension of the negotiations is one thing and the final termination of the talks is something completely different. Our long-standing position is that the inter-communal talks under the auspices and within the framework of the United Nations is the only way to solve the Cyprus problem. Given that for AKEL the solution of the problem is our foremost priority, we could not have consented to the termination of the negotiation procedure.
In our view, the suspension of the talks was imperative in order for everyone to realise that actions of such magnitude such as the last one made by Turkey not only do not help, but instead seriously damage the efforts to find a solution to the Cyprus problem. I am not only reffrering to the negotiation procedure as such. Among other effects, they provoke among the Greek Cypriots justifiable feelings of disappointment and mistrust with regards Turkey’s real objectives. Therefore, I address an appeal to all of you, who we do not doubt that when you say that you want a solution you mean it, to take action in the direction of Turkey. It was in fact Turkey and not President Anastasiades who led matters to the extremely undesirable point of the suspension of the negotiation procedure. Turkey provoked the crisis and it is the one that must to defuse it. The pressing overidding need is to find a way to revoke the provocative actions, so that the resumption of the negotiations is made possible.
What was Turkey’s goal when it carried out the specific action? First, it was to convey messages that the utilisation of the natural gas cannot be made without its participation. Secong, it was to force a solution of the Cyprus problem through blackmail. The position of AKEL is quite clear. We are ready for a solution any time; not however any kind of a solution. We are ready for a just, workable and viable solution, as set out by the relevant Resolutions of the United Nations, the High-Level Agreements, International and European Law. We do not abandon our sovereign right to utilise our natural resources. Turkey if it wants to become a prospective part of the proces to utlise them, should cooperate with us to achieve a solution as soon possible.
Why did Turkey consider that it could proceed to this provocative action without the international community reacting strongly? It did so because the conditions were ripe for it to attempt to gain rewards from its declared intention of undertaking, with a view to profit, a role in ther combatting of the “Islamic State”. Turkey evidently believes that the international community absolutely needs it and therefore will not be in a position to exert effective pressure to dissuade Turkey.
However, there are other reasons as well why Turkey decided at this particular time to take an illegal action of this magnitude. To make sense of these reasons, I consider it necessary to make a brief reference to the recent past.
Since the beginning of the previous decade specific and steady steps were taken that led to the first drilling, without Turkey being able to obstruct us. The Exclusive Economic Zone of the Republic of Cyprus was proclaimed and delineation agreements were signed with Egypt, Israel and Lebanon (the ratification of the latter by the Parliament of the neighbouring country is pending due to a dispute with Israel and not with Cyprus), all along the midline. Plots were licensed only in the demarcated regions, something which according to the Law of the Sea rendered Turkey solely responsible for the provocations in the non-demarcated northwestern regions of the EEZ. Companies were chosen carefully, with the question of national security having a prominent position in the selection criteria.
We have always stated that the only realistic way for our Turkish Cypriot compatriots to benefit too from the natural gas is through the solution of the Cyprus problem. As AKEL we are doing everything that depends on us towards this end. During the Demetris Christofias Presidency we proved that we could move ahead.
We sought and succedded in reaching an agreement with Talat with regards the issue of the maritime zones. All of them without exception, including the EEZ, will consitute a federal competency. The same will aply for the delineation and solution of disputes with neighbouring states. All these issues will be done in accordance with the UN Treaty for the Law of the Sea, that will be included in the list of international treaties of the united Republic of Cyprus. In combination with the convergence that the natural resources (which includes by definition natural gas) will also constitute a federal competency, as well as with the convergence regarding the distribution of federal revenues, it is obvious that with the solution of the Cyprus problem the issue of natural gas will basically be solved. Provided of course the convergences mentioned previously will be respected. This is the most convincing reply to Turkey’s position that the natural gas also belongs to the Turkish Cypriots.
It wasn’t just these issues however. Three chapters were almost agreed between Christofias and Talat (Governance and Power Sharing, the Economy, European Union issues). From there on, you all know very well that the reason why progress wasn’t registered on the remaining three chapters was that the Turkish Cypriot side’s insistance on not discussing comprehensively the territorial issue before an agreement is reached on all the other chapters. This inevitably also impeded progress on the property issue which is inextricably connected to this chapter, whilst the chapter on security was referred to a multilateral meeting.
When Mr. Eroglu assumed the leadership of the Turkish Cypriot community he shattered the convergences and, as is generally acknowledged, he was the one responsible for leading the talks to a deadlock, bearing the sole responsibility. In these conditions, Turkey found it difficult to proceed to provocations such as the last one.
What subsequently followed is known to all. When Mr. Anastasiades won the presidential elections, from the beginning AKEL urged him to seek the continuation of the talks from where they had left off. We had warned that negotiation from scratch would render the negotiation procedure unproductive and endless, and that this would harbour the danger of the Turkish Cypriot side bringing back partitionist positions, that were excluded with the convergences, to the table. In the final analysis we would either have been led to an impasse, or well-wishers would have found fertile ground to attempt the imposition of a solution to their own liking.
One and a half years have passed since then and developments themselves are confirming, regretfully, our fears mentioned previously. The proceduere that was followed resulted in the widening of the gap between the two sides. Eroglu, all of a sudden and playing it safe, transformed himself into a fervent preacher of the Christofias- Talat convergences, accusing the Greek Cypriot side that it was the one that destroyed them and at the same time he brought back partitionist positions that are in conflict with the convergences.
I reiterate , the position of AKEL was and indeed remains that the negotiation should have continued from where it had left off and that the pending core issues should be discussed. However, it was to be expected that since a common denominator could not be found with regards the convergences, at some stage the breaching of the deadlock would have been attempted by different means. Thus, it was agreed that the endless discussion regarding the convergences would be abandoned and the core pending issues shoud be discussed directly.
AKEL has repeatedly made it clear that it backs the negotition procedure, given that this is the only available way to find a solution of the Cyprus problem. Consequently, we could not have disagreed with the procedure agreed since such a move would have been tantamount not only with a substantive, but also with a procedural deadlock.
However, our support of the negotiation procedure does not mean that we consider the concrete methodology that was agreed as the most suitable. While it is our own position too that the pending basic issues must be discussed, that is to say what was actually agreed should be done, but there is one substantial difference: the pending issues should been discussed given that the convergences should be reconfirmed beforehand. This was not done and therefore the agreed procedure, if and when the talks resume, will encounter dificulties, even concerning what precise issues are considered as pending. It is self-evident that to determine the pending issues, the agreed issues must previously be defined. The procedure of the parallel negotiation of one chapter chosen by one side with a chapter chosen by the other side, addresses the issue of the chapters that will be discussed in a procedural way, but not of the basic pending issues as well, given that such issues exist in all the chapters.
We shall even encounter difficulties on the issues that the two sides will agree are pending, such as for example most issues that are included on the chapters of the territorial and security and guarantees issues. Given the long-standing stance of the Turkish Cypriot side not to open the territorial issue before the final phase and to refer the chapter of security to a multilateral meeting, we retain strong doubts as to whether it will be discussed in a substantive way at this phase.
Finally, reasonable questions are raised by the fact that after the discussion of the pending basic issues a “give-and-take” process will follow. This would have a meaning only if we were close towards a comprehensive settlement, in other words if the convergences on the rest of the issues were to aplly. If the convergences do not apply but rather the positions submitted, how will there be a “give-and-take” taking into account such a gap?
I refer to the previous issue as a cause for reflection given, that the principal duty today to address Turkey’s provocations, reverse the faits accomplis and enable the resumption of the negotiation procedure. The recent developmenst prove once more the pressing need for a solution of the Cyprus problem that will provide for the withdrawal of the occupational troops and settlers, for a bicommunal bizonal federal solution with political equality as set out by the relevant resolutions of the UN Security Council, a solution that will safeguard a single sovereignty, a single international personality and a single citizenship, as well as the respect of the human rights and fundamental freedoms of all the citizens of the united Republic of Cyprus.
The just solution of the Cyprus problem can create dynamic preconditions also for the country’s economic growth and development. This is something Cyprus needs badly today. The signing of the Memorandum between the Republic of Cyprus and the international loaners in March 2013 signalled the beginning of a new period for the Cyprus economy. The big deficits in the banking sector and the long-standing weaknesses of the Cyprus economy forced Cyprus to search for international assistance. However, the conditions and terms that were imposed for the granting of the funding by the European Union and the International Monetary Fund were unequal and unbalanced. The agreement between the Government and the rest of the leaders of the Eurozone for the haircut on bank deposits was particulalry severe and unfair for Cyprus. One and a half years afterwards, the assessment of its consequences on the Cyprus economy and society are negative.
Firstly, the overall destabilisation of the banking sector was enormous. The decision cultivated the loss of trust in the banking system, leading to the gradual shrinking of loaning and deposits due to the new realities in the banking sector. In addition, let me point out that one and a half year afterwards, the restrictions towards abroad remain in force without the possibility of them being lifted on the horizon, one example of the difficulties the banking sector is still facing.
I am certain that we can all agree on a basic conclusion. Based on the principle of proportionality the measure was unbalanced, not only because it make worse the very negative environment in the economy, but because the rescue of the economy could have been achieved through less painful and evidently more efficient measures. We should not forget that the financial assistance given to Cyprus represents just a tiny part of the GDP of the European Union, a very tiny amount in relation to the sacrifices and measures the Cypriot people were called upon to assume. Furthermore permit me to recall that one year afterwards a corresponding amount of assistance was approved for Ukraine, a state that is not a member of the European Union, through rapid procedures when the treatment of member states, indeed of the core of the Eurozone, such as Cyprus, was, dare I say, deplorable.
It is now clear that our country was treated as a guinea pig. It is not sure that the solutions that were implemented will tackle the problems that led to the current crisis, for various reasons.
First, the depth of the recession, although less than expected, then austerity policies but also the haircut on deposits have resulted in a significant reduction in the disposable income in the economy. This led to the decline in the creditworthiness and slovency both of households and Small and Medium Enterprises. Households to survive the reduced income used part of their deposists to support consumtion and to be able to pay off their private debt. This was a practice that restricted to a degree the recession, with a short-term nonetheless character. With reduced capabilities, the substantial tackling of the private debt to the banks in the future is doubtful.
Second, the decline in the disposable income, but also the impact of the austerity measures in the aspirations of economic units has led to a significant reduction both in public as well as private investment. In 2013 alone, the level of capital expenditure fell by 21.6%, whilst in 2014 the decline continues to be correspondingly significant. The prospects for growth in the future are less and it is not accidental that the forcasts for the growth rate in 2015 are not positive. In addition, we evaluate that even if the economy records positive signs, today it does not have the capabilities and possibilities to return to pre-Memorandum growth rates.
Third, social inbalances and inequalities have sharpened. Unemployment has exceeded 15%, whilst more specifically among young people it has risen to over 40%. After many years net immigration is negative due to the non-existence of perspectives in the labour market, resulting in the majority of young people opting to look for a job abroad. Approximately 28% of the population are on the verge of the poverty line, while in the last two years the number of people who cannot secure even an elementary existence has risen by 40,000. In other words, our people has been trapped into a vicious circle of austerity-recession-poverty.
Fourth, the imposition of the view by the Government and other circles that the implementation of the Memorandum must also be accompanied by a reduction in labour costs aiming at boosting the competitiveness of the Cyprus economy has failed in practice. Labour costs, although drastically reduced resulting in household incomes being curbed, has not had a big impact on the economy’s productivity which has remained stagnant. The reduction in labour costs had a one-dimensional impact, merely increasing big businesses’ margin and room for profit. The economy’s productive possibilities remain stagnant.
Fifth, the absence of adequate developmental tools, but also the precarious productive basis illustrate that the prospects for the future are bleak. Cyprus relies almost exclusively on international services and tourism, given that the main vehicle for growth during the last decade, namely the construction sector, is today restricted without any real perspectives for the future.
This is the state of the Cyprus economy today.
What we consider as a great mistake as far as Cyprus is concerned, but also for Europe, is the insistance on the recipe of austerity and cuts. Deflation is not only burdening the Cyprus economy, but also the Eurozone as a whole. It is indeed indicative that the voices in Europe that are calling for a change in strategy are growing; voices that are increasingly being heard now also from Nobel Prize economists, the United Nations, the European Central Bank but also from a section of the leadership of the European Union.
The conclusions drawn by the European Parliament about the legitimacy of the Troika’s decisions and the lack of democratic control are not overlooked, nor the criticism exerted about the philosophy of the policy being pursued and the impact these decisions are having on society and more specifically, in relation to unemployment among young people. “Enough of austerity, we need development and growth”. This conclusion which is adopted by studies conducted by the economists of the International Monetary Fund ascertains that the historic realities demonstrate that to achieve the exit from the crisis a policy based on reducing expenditure and restricting disposable income is not enough. This is also the conclusion drawn by 17 Nobel Prize economists at a meeting they held in Lindau Germany. This conclusion was also registered by the United Nations in its Trade and Development Report for 2014. A conclusion drawn by everyone – except the leadership of the European Union.
This persistance makes the perspectives of the European economy even more bleak. European society can no longer stand seeing public debt increasing, thus putting more burdens on the future generations. No matter how many steps may have been taken, even this recent revision of the real GDP, are not enough to adequately address the problem. I will agree with Mr. Steen Jakobsen, Chied Economist of Saxo Bank, that the public debt is an elephant in the room which everyone is refusing to see and tackle.
I reiterate that Europe’s future cannot be trapped in stagnation. It is indicative that even today, six years after the outbrake of the crisis growth rates have not managed to return to pre-crisis levels. Even worse, countries such as Germany are making bleak assessments about their economic prospects deteriorating. We are in immediate danger of driving an entire generation of young scientists outside the labour market, downgrading the knowledge and vocational training of the labour force in the future. Consequently, we need real solutions immediately, both on a local and European level.
In Cyprus we shall continue to seek a just and viable solution of the Cyprus problem; a solution that will change our country’s economic perspectives. We want to use our natural wealth efefctively and timely; to give Cyprus a new dynamic and perspective; to create jobs and increase public investments from the rational management of incomes; to achieve in this way a change in the country’s productive possibilities, creating opportunities and prospects in a new productive sector, namely in the field of energy.
Without these tools the dynamic our country has today cannot change substantially, especially when it operates within a context of reduced public and private investments and meagre consumption. This is the reason why the Government must change philosophy immediately and implement an alternative strategy; a strategy which will aim at supporting the real economy and the development of a different model of economic activity, a model that will correspond to the new conditions that have evolved, a model that will provide for the creation of a comprehensive plan of social protection of the vulnerable groups of the population and charting a real strategy for the disengagement from the Memorandum.
Solutions must also be given on a European level through decisions boosting public expenditure in investment and infrastructure projects; through the elaboration and imlementation of a strategy for the substantial tackling of unemployment; through the creation of stable and dignified jobs; through strengthening the efforts to combat poverty and social exclusion; through the study and control of the inbalances between member-states, with respect to the peculiarities in each member-state’s economic structure, far from any single and uniform approaches which in most cases address the problem in a superficial and shallow way; through an overall plan and the implementation of even non-conventional measures, measures that will have as their priority the qualative enhancement and raising of the living standards of societies and not the quantative improvement of indexes.
For a vision generating a perspective for Cyprus and for the Europe of peace, prosperity and progress.
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