Tuesday, 22 September 2009

The economic aspects of a solution in Cyprus

Yesterday i attended a series of talks on the economic aspects of the Cyprus problem. The speakers were Mr. Basilliou, the chief G/C negotiator on European maters, Mr. Sarris, the chief G/C negotiator on Economic maters and A person form the European Commission (finance section) whom i unfortunately do not remember his name.
I left highly troubled due to three things – i do stress that below are my own conclusions of the speeches, and not the positions of the speakers themselves.
1) The EU has a Schizophrenic approach to the solution. One the one hand it does not want to get involved at all, despite the fact that a solution needs to fit (or even alter) the laws and regulations of the European Union. So it is left on the G/C side to argue that there can not be an prevention of people and capital crossing the borders of the constituent republics of a future federal Cyprus, despite the fact it is actually the EU than demands such a rule. Most worrying is the fact that the EU is thinking that Cyprus could finance rebuilding and a solution by just breaking the growth and stability pact for a maximum of 4 years. That is sheer lunacy – the construction of roads and a common electricity network, let alone making Famagusta fit for human habitation, will lead to prolonged and sustained budget deficits that could not and should not be restricted.
2) The Turkish Cypriot negotiation seems to suffer from the fact that the T/C have only the faintest idea on how the EU works. The lack of entry negotiations by the T/C mean that some demands are quite simply not realistic within an EU framework. Thus it is a fact that the EU will not accept constituent states to make any representation directly to the EU – it opens up an very ugly precedent. Thus the federal state needs to work correctly as the EU will only interloculate with federal instruments. Like wise arguing for two financial regulatory authorities, or for separate rules for Turkish institutions, goes contrary to the basic tenants of the EU and it is futile and destructive to argue for them since they will not be accepted by the EU.
3) In game theory terms, the negotiations are difficult because the actors have completely different aims: The EU, Turkey and G/C + T/C find it difficult to find common ground since their aims are parallel to each other – they simply do not connect.
I expect a long and frustrating negotiation process, that can only be aided with the EU actually becoming an actor and explaining to all what can and cannot be accepted.

4 comments:

ch said...

"there can not be an prevention of people and capital crossing the borders of the constituent republics of a future federal Cyprus, despite the fact it is actually the EU than demands such a rule" - not true, the EU requires those freedoms to operate between member states, not within them!

"it is a fact that the EU will not accept constituent states to make any representation directly to the EU" - only up to a point. In fact where you have constituent states with significant powers, like Flanders, Scotland, Bavaria, Catalunya, you find quite a lot of direct contact between their governments and the EU.

Alexander Apostolides said...

You are not really correct. Although there is quite a direct contact on the levels below than the commission, it is the commission who currently holds executive power in the European Union. And in that level there is no representation from regions. So when they request Cyprus will need to do something, they will expect the federal state to honour its pledge and browbeat the constituent states to compliance - something the T/C position are not keen in accepting.

ch said...

It simply isn't true to say that there is no contact between the Commission and the regions. There is an entire directorate general for regional policy - who do you think they talk to???

You picture of how the Commission interacts with members states, particularly federal member states, is very far from reality. I suggest you read a bit more about it before making such mistakes in public again.

Alexander Apostolides said...

Dear Ch - i was just quoting Johan Barras, who is a member for the executive in the commission and a specialist in matters of finance. The question was asked repeatedly and his answer was that in matters of finance only the federal state had jurisdiction. So i was trusting the expert - i am in no way an EU expert but an economist.

As for the you claim that freedoms within members states are not protected you are mistaken: since EU law is above state law and i can take a future republic of Cyprus to an EU court if it does not allow me to trade and move freely (if no exemptions are agreed).