Cyprus News Agency 96-06-29.

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From: Giorgos Zacharia <lysi@MIT.EDU>

CONTENTS

[01] Security Council favours Cyprus entry into EU

[02] Cooperation, coordination needed, says UN envoy

[03] Cyprus economy continued upward path in 1995

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[01] Security Council favours Cyprus entry into EU

This was stressed in resolution 1062 [1996] unanimously adopted last night by the UN Security Council, which extends the mandate of the UN Peace-Keeping Force in Cyprus (UNFICYP) for a further six-month period, ending 31 December 1996.

The resolution notes that the Cyprus government has agreed that in view of the prevailing conditions in the island that it is necessary to keep the UN force in Cyprus beyond 30 June 1996.

The international body reiterates that the status quo in Cyprus is unacceptable and calls upon the parties to demonstrate concretely their commitment to an overall political settlement.

The resolution stresses its support for the Secretary-General's mission of good offices and urges the leaders of the two communities ''to respond positively and urgently to the Secretary-General's call upon them to work with him and with the many countries who support his mission of good offices to break the present impasse and establish common ground on which direct negotiations can be resumed.''

The Security Council has adopted Cyprus President Glafcos Clerides' position that common ground should be found on key aspects of the Cyprus problem before any direct negotiations with Turkish Cypriot leader Rauf Denktash.

The Cypriot President has repeatedly stressed that there should be common ground on fundamental aspects before high level talks otherwise such meetings will be doomed to failure. This scenario was repeated many times since the Turkish invasion and occupation of Cyprus' northern third in 1974.

In its resolution, the Security Council reiterates its concern that there has been no progress towards a final political solution and agrees with the UN Chief's assessment that the negotiations have been at an impasse for too long.

The Council welcomes the appointment of Han Sung-Joo as the new Special Representative of the Secretary-General for Cyprus and calls upon the parties to cooperate fully with him.

The former Foreign Minister of South Korea was holding talks here this week with both sides of the divide in a bid to break the present stalemate in the Cyprus problem.

The Security Council deplores the tragic incident involving the fatal shooting of a Greek Cypriot National Guardsman inside the UN buffer zone on 3 June 1996, as well as the hindering by Turkish Cypriot soldiers of UNFICYP personnel attempting to assist the National Guardsman and investigate the incident, as documented in the report of the Secretary-General of 7 June 1996.

The body express ''serious concern about the continuing modernisation and upgrading of military forces in the Republic of Cyprus, the excessive levels of military forces and armaments and the lack of progress towards a significant reduction in the number of foreign troops in the Republic of Cyprus, urges once again all concerned to commit themselves to such a reduction and to a reduction in defence spending in the Republic of Cyprus to help restore confidence between the parties and as a first step towards the withdrawal of non-Cypriot forces as described in the set of ideas.

The Security Council stresses the importance of eventual demilitarisation of the Republic of Cyprus as an objective in the context of an overall comprehensive settlement, and calls upon the Secretary-General to continue to promote efforts in this direction.

At the same time, the Security Council expresses serious concern about recent military exercises in the region, including overflights in the airspace of Cyprus by military fixed-wing aircraft, which have increased tension.

It calls upon the military authorities on both sides to respect the integrity of the UN buffer zone, ensure that no further incidents occur along this zone and adopt reciprocal measures to prohibit along the cease-fire lines live ammunition or weapons other than those which are hand-held.

At the same time, it calls upon the two sides to enter immediately into intensive discussions with UNFICYP with a view to extending the 1989 unmanning agreement to cover all areas of the buffer zone where the two sides are in close proximity to each other.

The Security Council expresses concern about the restrictions placed upon the freedom of movement of UNFICYP in the Turkish-occupied part of the island.

It calls upon the Turkish Cypriot side to respect fully the basic freedoms of the Greek Cypriots and Maronites living in the occupied part and the Cyprus government to continue its efforts to eliminate any discrimination against Turkish Cypriots living in the government-controlled southern part of the island.

The Council regrets the obstacles which have been placed in the way of bicommunal contacts and strongly urges all concerned, and especially the Turkish Cypriot leadership, to lift and prevent all obstacles to such contacts.

CNA GP/1996

ENDS, CYPRUS NEWS AGENCY

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[02] Cooperation, coordination needed, says UN envoy

He said not only a solution is necessary, but it is necessary as soon as possible.

Han underlined the importance of the process to be followed and the timing of efforts, adding ''there in no magic formula''.

The UN envoy was speaking at a press conference for Greek and Turkish Cypriot journalists at the Ledra Palace hotel in the UN-controlled buffer zone, in Nicosia.

The UN envoy leaves Cyprus tomorrow for visits to Europe and the US, after six days of consultations with Cyprus President Glafcos Clerides and Turkish Cypriot leader Rauf Denktash, as well as party and trade union representatives from both sides.

Han said almost everybody he met expressed urgency ''to find a solution or resolution of the situation in Cyprus'' but admitted ''it is difficult to expect a quick magic formula.''

He noted ''a great deal of patience, work and cooperation among the parties both in and out of Cyprus are necessary.

''I hope to be able to cut out the way in which to find the road toward that goal, which is to achieve peace, security, prosperity for everybody in the communities of Cyprus'', he added.

Asked to clarify his position on confidence building measures between the two communities, the UN envoy said ''we can not put all our eggs in one basket'' and that ''all possible avenues should be pursued.''

He said ''the way in which the goal is pursued, the process and the timing of the effort are as important as the substance and nature of the goal.''

The UN envoy noted that ''mutual accommodation is needed'' to solve the Cyprus problem and said ''it is important that everyone takes into account the concerns and the minimum requirements of each other.''

Han said he is concentrating his efforts on finding the way to secure common ground between the two sides, adding for the time being the interested parties could not start negotiating.

Asked whether the US and other countries are helping him in his mission, he replied ''there is no competition between the UN and any other party here.''

Han stressed there is ''a need for cooperation and coordination'' and said he will ''see to it that such cooperation and coordination will be forthcoming.''

Replying to a question whether he attaches the same significance to the procedure to be followed and the substance of the problem and if he has in mind a different procedure to the one followed till today, Han said he could not say what the procedure will be.

''I would like to see that there is more purpose, deliberateness and coordination. In other words, as every party tries to make contribution to the resolution of the issue there is better purpose and coordination,'' he added.

The UN envoy said he was ''made to feel at home here'' and he ''received the fullest cooperation" which helped him gain ''understanding and familiarity with the situation'' and made his visit ''quite fruitful''.

''I did not find a solution but I'm not leaving with disappointment'', the UN representative said.

Han refrained from commenting on how the Cyprus peace talks would be affected by the new Turkish Prime Minister, Islamist leader Necmettin Erbakan. He said this development makes his visit to Ankara ''all the more important.''

Asked why the UN have failed to solve the Cyprus issue, Han said ''one cannot underestimate the contribution of the UN in maintaining peace and keeping the situation from deteriorating.

''The situation is very complex and very difficult,'' he said and expressed the opinion that the changing international environment and the fact that old and difficult problems have been dealt will help in solving the problem in Cyprus.

He dismissed a comment that the UN is shifting responsibility to the European Union, stressing that ''the problem remains the responsibility of the UN.'' Han said, however, the EU prospect should serve as a positive factor, but refrained from commenting on whether Cyprus could join the Union before a solution. CNA/MA/GP/1996

ENDS, CYPRUS NEWS AGENCY

1425:CYPPRESS:03

[03] Cyprus economy continued upward path in 1995

According to the 1995 annual report of the Central Bank of Cyprus, the expansion of private final consumption, as well as the recovery of gross fixed capital formation, were the major contributing factors to the expansion in aggregate demand.

Exports of goods and services, on the other hand, exerted a lesser influence, exhibiting a decelerated rate of growth as a result of the slowdown in tourism after the rebound of 1994.

During 1995 full employment conditions were maintained while inflation continued to decline and converged to average price level's in the European Union.

The rate of unemployment recorded a marginal decline to 2,6 per cent of the economically active population in 1995 from 2,7 per cent in 1994, remaining in line with the five-year-period average for 1991-95 which amounted to 2,6 per cent of the economically active population.

The rate of inflation declined from 4,9 per cent in 1993 to 4,7 per cent in 1994 and down to a low of 2,6 per cent in 1995 thus meeting comfortably the Maastrict criterion for inflation which stood, in 1995, at 3 per cent.

The current account surpluses recorded during 1993 and 1994 were overturned and 1995 ended with a current account deficit of the order of 102,8 million Cyprus pounds (one Cyprus pound = about two US dollars).

Capital flows were again positive in 1995 but lower than in 1994 and, combined with large negative errors and omissions, led to an overall balance of payments deficit of the order of 110,2 million pounds.

The large fiscal deficits observed in the early part of the 1990's gave way to a marked improvement in public finances in 1993-95 reflecting a conscious effort by the government to contain the deficit at or below 3 per cent of GDP which is the target specified by the Maastrict Treaty on EU.

The fiscal deficit, which in the period 1991-92 averaged 5,9 per cent of GDP declined to 1,4 per cent (51,8 m. pounds) of GDP in 1994 and at a low of 1 per cent (39,9 m. pounds) of GDP in 1995.

Referring to prospects for 1996, the Central Bank report says the economic activity is expected to remain strong, though a relative slowdown in GDP growth is anticipated.

Domestic demand in particular, is expected to record a substantial deceleration reflecting an expected cyclical downswing of private consumption expenditure.

Foreign demand is expected to show some improvement on account, mainly of the forecast modest recovery of tourism. Based on these expectations real GDP growth is envisaged at around 3,5 - 4 per cent in 1996.

A reversal of the downward trend displayed by the rate of inflation in the last few years is also forecast, as the exceptional factors which were conducive to last year's decline are not expected to repeat themselves in 1996.

Current estimates indicate an increase in the rate of inflation to 3 per cent from 2,6 per cent in 1995.

Full employment conditions will prevail in 1996 as well and no substantial differentiation in the rate of unemployment is expected.

The Central Bank notes that the year under review can be characterised as a ''landmark'' year as far as Cyprus application to join the EU is concerned.

The process of harmonisation of the Cypriot legislation and policies with the EU acquis communautaire is proceeding at a fast pace.

Substantial progress has also been made with respect to exchange control liberalisations which is another facet of financial reforms.

Further relaxations were put recently into effect with respect to blocked foreign exchange accounts and immigration allowances.

''The Central Bank is committed to continue the process of liberalisation with the ultimate objective of completely lifting exchange restrictions in the new few years,'' the report adds.

CNA GP/1996

ENDS, CYPRUS NEWS AGENCY

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