CYPRUS

	FY 1998 Actual	FY 1999 Estimate	FY 2000 Request
Economic Support Fund	$15,000,000	$15,000,000	$15,000,000

Introduction.

Cyprus continues to feel the strain of inter-ethnic conflict, distrust and misunderstanding. The divided island of Greek and Turkish Cypriots could be a flash point for regional problems. Approximately 200,000 Cypriots, almost one-third of the total Cypriot population, were displaced during the July 1974 coup and Turkish military intervention. The U.S. Government has continued to provide funds which, over the years, have shifted in emphasis from relief to long-term reconstruction and development activities. The US national interest in a settlement of the political division of Cyprus, is consistent with the International Affairs Strategic plan. The approach seeks to promote a greater appreciation, by both sides, on how the principles of federalism can contribute to a political settlement based on a bizonal, bicommunal federal framework, as called for in UN Security Council resolutions. This interest is consistent with the USAID Agency goal of strengthening democracy and good governance.

The Development Challenge.

Both the Greek and Turkish communities on Cyprus confront varying economic problems: the GDP per capita on the Greek Cypriot side has risen to over $13,000; while on the Turkish Cypriot side it has stagnated at around $3,000. While USAID assistance helps to address some economic constraints, the main democracy/governance-related challenge is to promote bicommunal participation in programs that benefit both island communities. This assistance is directed at underpinning our efforts to reduce inter-communal tension on the island. The United Nations Development Program (UNDP) and the Fulbright Commission act as the implementing agencies for the U.S. program through a series of program grants. UNDP and the Fulbright Commission have the ability to work with both Greek and Turkish Cypriots and are well positioned to promote bicommunal cooperation. The Nicosia Master Plan and the Nicosia Sanitary Sewerage System projects are two examples of programs that have been planned and implemented by both communities, and from which each community derives benefit. In December 1997, the leadership of the Turkish Cypriot community officially suspended Turkish-Cypriot participation in bicommunal meetings. Thus, while thirty-eight bicommunal meetings were held in FY 1997 to implement these projects, very few in-country meetings were conducted in FY 1998, following the suspension of formal bicommunal contacts. Informally, however, progress on some priority bicommunal initiatives, such as the expansion of the Nicosia sewerage plant, continues.

Other Donors.

After 1974, emergency humanitarian assistance was provided to both Greek and Turkish Cypriots by the International Committee of the Red Cross and by the United Nations High Commissioner for Refugees (UNHCR) with contributions from the United States and other countries. In 1974, the top five Official Development Assistance (ODA) donors to Cyprus provided $41 million in assistance with the United States share equal to 53%. Subsequently, donors other than the U.S. have discontinued assistance. In 1997, the UNHCR ceased to act as an implementing agent for the US. The US is the only major donor still active in Cyprus and, since early 1998, provides financing to the UNDP program.

The FY 2000 Program.

Working through UNDP and the U.S. Information Service (USIS), USAID funding promotes activities which encourage participation and cooperation among representatives of both communities. A business leaders economic cooperation conference held in Istanbul, Turkey, in December 1998, is an example of such initiatives. This bicommunal approach is designed to demonstrate the positive, substantive results of cooperation. Further, the linkages established between individuals and groups from a variety of sectors will contribute to: (1) increasing the pressure on each side's leadership to compromise on an equitable solution; or (2) providing opportunities for contacts and increasing the number of stakeholders in a solution.

The Bicommunal Development Project, implemented through the UNDP and the Cyprus Red Cross includes bicommunal activities in the fields of public health (municipal sewerage system upgrading) environment, forestry, water resource management, education, historic preservation, and urban renewal especially in areas near the dividing line.

The Scholarship Project, implemented through USIS and the Cyprus Fulbright Commission, offers U.S. scholarships for undergraduate and graduate degrees, and short-term professional training and bicommunal training through conferences, workshops and seminars, on conflict resolution and business management.

CYPRUS

FY 2000 PROGRAM SUMMARY
(in Thousands of Dollars)

Director, Office of European Country Affairs: Paula Feeney

Strategic Objectives	Economic Restructuring	Democratic Transition	Social Stabilization	Cross-cutting / Special Initiatives	Total
--	--	--	--	--	--
Cross-cutting / Special Initiatives	--	--	--	15,000a/	15,000
TOTAL	--	--	--	15,000a/	15,000
a) Economic Support Fund

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