It is a great honour and a privilege for me to have been invited to be here with you today and I would like to thank the Director of the Cicero Foundation Mr. Van Herpen for his kind invitation. In the time that has been allocated to me I will try to present to you a number of arguments in order to lay the ground for an informed debate on Cyprus accession process within the context of the forthcoming enlargement, answer any questions you might have and of course, listen to your comments and your suggestions.

The reopening of the enlargement process demonstrates undoubtedly the determination to translate into reality the noble vision of an inclusive, integrated Europe, without the divisions, which have plagued our old continent for so long. We should be, nonetheless, fully aware that this fifth enlargement represents a great challenge for the "15" and for Europe as a whole. This is so since, this time enlargement does not relate, as the previous ones to a small group of countries, but to 12 candidate countries currently carrying out accession negotiations while the door is also open for a thirteenth candidate, namely Turkey. These countries are of a heterogeneous composition and have important disparities and differences in terms of economic development, infrastructure, institutions and administration. At the same time we have to bear in mind that this enlargement is largely recognised as the enlargement of the "left aside". It will be the corrective move towards those who, against their own will, followed a separate course of history. In this sense the cause of Cyprus is the same as that of central and eastern European Countries. Furthermore, enlargement will increase security and stability throughout Europe as well as prosperity not only by boosting the economies of the candidates but also by increasing the economic opportunities and the capabilities of the Union itself.

Cyprus is a small country with a long history and civilisation and as the Commission Opinion on our application for membership put it " the deep lying bonds which, for two thousand years, have located the island at the very fount of European Culture and civilisation confer on Cyprus, beyond all doubt, its European identity and character and confirm its vocation to belong to the Community".

But on the other hand, Cyprus has limited resources and is stifled in the middle of powers and antagonisms that go beyond it and lives in a context where it can barely and with titanic efforts make its voice heard. In addition, our recent history has been encumbered with the impossible burden of being submitted to foreign aggression and continuing occupation of part of our territory with the cataclysmic consequences that such a situation entails.

Under these circumstances nothing has ever been easy for Cyprus and the Cypriots, whether this concerns the fundamentals of our mere survival in our area or the achievement of reasonable prospects for the future of our people, irrespective of their ethnic origin.

You can, therefore, appreciate the importance and significance for us of the prospect of our accession to the European Union. Of course, we have no illusions, we know that we are a peripheral state in the context of European Union affairs and, despite our sound economic and political situation, we are also aware of our size and of our political problem which constitutes our weak point. The course towards accession poses one of the greatest challenges faced by my country since the establishment of the independent Cypriot state. Our accession strategy is, thus, permeated and determined by the peculiarity of our case. We have adopted a most vigorous approach and all we are asking is to be treated in fairness.

One reservation put forward in certain circles is that the accession of Cyprus, without a prior solution of its problem, would amount to the "importation" of yet one more difficult problem within the Union. I believe that such a position is unfounded, given that the Cyprus problem is already a European problem that affects directly important interests of the Union irrespective of whether Cyprus is an EU member or not. Two member states Greece and the UK and one major partner, Turkey have important vested interest. On the other hand, in its inception, the European Union was a response to problems and a way of overcoming the divisions of the past and bringing the people of Europe closer together.

Hence, my first point is that instead of eluding the problem and the difficulty, Europe should rather face it and tackle it. More than anybody else, it has both the reasons and the power to do it. The creation of the EU has been a unique experiment in history. A continent striven for centuries by rivalries, conflicts and wars, has through the free will of its peoples achieved stability, peace and prosperity by integrating and working within the framework of supranational institutions. The accession of Cyprus to the European Union will definitely unveil the absurdity of the present dividing line and the pressures upon the divide will grow so strong, that the line would not survive full membership.

My second point is that Cyprus's accession to the Union will positively contribute towards the achievement of the objectives of the Union. Our accession will contribute to the balanced enlargement of the European Union since Cyprus along with Malta represents its Mediterranean dimension. It will also contribute to the Union's integration process, promoting with the other member states issues, like the Common Foreign and Security Policy, the European Security and Defence Policy and Home and Justice Affairs.

The Government of Cyprus has set a direct and constructive contribution to European and Mediterranean Affairs, as one of the major targets of its foreign policy. As a prospective member of the European Union, we have the potential to become an economic, political and cultural gate between the European Union and the area of the Middle East. This is why we attribute paramount importance to the Euro-Mediterranean partnership and we are actively engaged in it and try to do our utmost for its success.

My third point is that accession is the natural course for Cyprus underpinned by its historic, cultural, social, economic and political orientation and the natural outcome of a longstanding relationship. Cyprus has institutionalised links with the European Union since the early seventies. These relations, both political and economic, have become inextricably and irreversibly close. We have signed an Association Agreement with the Community as early as 1972. Since then we participated in an evolving course of relations with the EU, the landmarks of which are the signing of a Customs Union protocol in 1987, our application for accession to the Union in July 1990, and the opening of our accession negotiations on 31 March 1998.

My fourth point is that Cyprus is ready to face successfully the challenge of accession. Our confidence emanates from the fact that during the eleven years which have elapsed since the submission of Cyprus's application for accession in 1990, our priority has been to prepare our economy, legal system, institutions and policies to successfully meet the obligations of membership.

Harmonisation is progressing well. The whole acquis will have been transposed into law by the end of 2002 and implementation of all laws and regulations passed thus far, is proceeding smoothly. The objective of the Government has always been to adopt and apply the acquis with the least derogations and transitional periods and in the shortest possible periods of time.

We have so far completed successfully the negotiations on 23 out of the 29 chapters of the acquis communautaire and we hope that during the Belgian Presidency we will be able to close the chapters of Justice and Home Affairs and of Taxation. Thus only four chapters will be left for negotiation: Competition, Regional Policy, Budget and Agriculture.

More specifically and as far as Taxation is concerned, Cyprus has undertaken to fully revise the existing system of taxation of companies as far as it is incompatible with community legislation. The system to be introduced provides that all companies will be taxed in an identical manner, whether they are Cypriot companies or companies with international activities. Still, the aim is that this single rate will be defined with a view to permitting the sector to remain dynamic and competitive within the new antagonistic environment. Value added tax as well as various excise taxes are in the process of being increased and will reach the minimum prescribed level by the EU, well on time.

The Justice and Home Affairs Chapter involves intense work on our behalf since we are very well aware of the responsibilities that come along with the fact that upon accession we will be a European Union external border. The harmonisation as well as the implementation of legislation in the fields of asylum, frontier control and the grant of visas proceed satisfactorily, while we would welcome a heightened degree of cooperation with member states on this extremely sensitive and serious issue.

Assuming therefore that the Union presents its positions on Agriculture, Regional Policy and Budget on time and in accordance with the road map, we hope to complete our negotiations by the middle of next year, because none of these chapters are expected to present any major difficulty for Cyprus.

Trade relations between Cyprus and the Union have been expanding year after year fairly steadily. The E.U. remains our main trading partner. In fact, during the year 2000, imports from the European Union represented 51% of Cyprus' total imports, while exports from Cyprus to the Union represented 57% of its domestic exports.

According to the latest data, the rate of economic growth reached the level of 5% in real terms in 2000 following an also satisfactory growth of the order of 4,5% in 1999. At the same time, the conditions of macroeconomic stability have improved markedly in most areas: notably those concerning fiscal accounts and the current account of the balance of payments, mainly a result of policy initiatives. The public debt of Cyprus has during the last two years increased, slightly exceeding the relevant Maastricht criterion of 60% of GNP. Yet, for the year 2001, the trend has been a decreasing one back to below the ceiling. The Fiscal Deficit was in 2000 at the level of 2.7%. The per capita income in 2000 was officially at EUR. 14200. The only exception to this improvement relates to a temporary increase, up to 4,1 %, in the rate of inflation in the year 2000, an increase we have managed to reverse during the current year. It has been contained to 1,75% in the first quarter of 2001 and we hope that it will not exceed 2% for the year 2001. Cyprus' GDP per head in PPS in 2000 was at 18500, higher than that of some EU member states, while the average of EU member states was 22500 and of the 13 candidate countries was 7900. Unemployment remains low with 3,4% in the year 2000.

This healthy state of the Cypriot economy allows compliance, without any insurmountable difficulty, with the Maastricht convergence criteria and fulfilment of the requirements of stability and growth thus rendering participation to the Economic and Monetary Union feasible immediately after accession.

However, if our vision, our wish and our ambition is to successfully conclude the accession process and become a full member of the European Union, our commitment and deep concern, always remains to heal our open wound, put an end to the division of our country, solve the Cyprus problem.

And here I come to my fifth point that the Government of Cyprus considers Cyprus's irreversible accession course and accession itself as being objectively at the service of the solution of the Cyprus problem because it could act as a catalyst for the solution of the problem.

Hence, turning now to the second aspect of our accession strategy, I would say that it includes those arrangements which would allow, on the one hand, the full operation of the catalyst role of the accession process for the solution of the Cyprus problem and, on the other, the unhindered integration and participation of Cyprus in the Union independently, and possibly in anticipation, of the final settlement of the Cyprus problem.

The prospect of membership of the Union constitutes a unique opportunity for Cyprus, for a better future, for solving the problem, for increased security and prosperity and for all Cypriots to benefit from membership. We believe that all the conditions for a constructive solution are on the table. UN Resolutions provide for a federation, bi-communal and bi-zonal with two equal constitutive parts, each benefiting of a large degree of autonomy. Our Turkish Cypriot community will also find that the European unification process has proved to offer unlimited prospects for prospering and for having its specific identity secured and promoted.

We believe that the Turkish Cypriot community at the end of the day suffers as much as the Greek Cypriot community from the present situation. More and more Turkish Cypriots wake up to the reality that, they too, have their individual and collective aspirations and expectations from life thwarted by the imperatives of Turkey's geo-strategic interests. We have now reached a point where the Turkish Cypriots have become a minority in the space where they live and they desperately warn that Turkey's policy is eradicating them.

The President of Cyprus Mr. Clerides, has, extended an invitation, welcomed by all as courageous, genuine and generous, to the Turkish Cypriot community to nominate their representatives to join as full members of our negotiating team. We regret that the Turkish Cypriot leadership rejected this offer. But the invitation is still open. There are many indications that already the silent majority of Turkish Cypriots realise the enormous prospects opening up. Recent opinion polls confirm that the overwhelming majority of the people in the occupied part of Cyprus are, positively disposed to the idea of accession.

We hope that Turkey will at the end realise the absurdities and dead-end of the policies it has pursued until now, and will try to involve in a dialogue in an effort to solve problems as provided by international legal principles, instead of refusing to discuss and trying to hold Cyprus hostage to its obsolete, anachronistic and conflictual policies

The prevailing spirit in our region is one of uniting forces, discarding old geopolitical views that maintain segregations. And yet Turkey insists on holding views of security and national interest towards Greece and Cyprus that cannot stand the test of rationality.

The European Union, have made clear their view that Turkey may have a European future and a vocation to become a member of the EU, but there are political and economic problems which must be solved beforehand. Cyprus couldn't agree more. We appreciate the political, military and economic importance and significance of Turkey for Europe, for the US, for NATO etc, and the considerations behind the policy of embrace. We have no reason in principle to be against Turkey coming closer to Europe. Objectively speaking, Cyprus, maybe more than anybody else has interest in having its powerful neighbour behaving in accordance with European values and standards.

This is why we were particularly happy with the conclusions of the Helsinki European Council, which officially freed Cyprus accession from the vicious circle surrounding the Cyprus issue due to the Turkish intransigence; as you all recall at the Helsinki Summit unanimously the 15 member states have agreed that the solution of the Cyprus problem is not a precondition for accession.

"The European Council underlines that a political settlement will facilitate the accession of Cyprus to the European Union. If no settlement has been reached by the completion of accession negotiations, the Council's decision on accession will be made without the above being a precondition. In this, the Council will take account if all relevant factors."

The Helsinki Conclusions made it clear that on the one hand, our application will be judged on its own merits and that no third country will have a veto over its progress, nor will Cyprus be penalised in order to satisfy the interests of third countries and on the other hand that we should spare no effort to achieve the reunification of the island. However, it is not enough for the Greek Cypriots to want and work for a solution. The co-operation of Mr Denktash and Ankara is indispensable and, unfortunately, for the time being is not forthcoming although the Helsinki conclusions, in essence, constituted a balanced deal, as it opened the way to Turkey for eventual accession. With this deal Ankara committed itself to meet the Copenhagen political and economic criteria and undertook certain obligations in relation to the Cyprus problem, the Aegean and human rights.

Some quarters both within the European Union and in other candidate countries voice from time to time concerns about the eventuality that the political problem of Cyprus, could delay or block enlargement. Some people are worried that if one or more member states refuse to ratify the accession treaty for Cyprus, in fear of Turkish reactions, there will be a major crisis and the whole enlargement process will be endangered.

Personally though I cannot exclude such a scenario I do not consider it as very likely. I believe that despite difficulties, things will at the end evolve smoothly. It seems now widely accepted that if Turkish intransigence persists, there is no better option other than that of Cyprus joining anyway and before a solution of the Cyprus problem is achieved.

I think, however, that it is appropriate to make a few remarks on this question, which is in the minds of many Europeans.

Let me state first that we do not feel like competitors with the other candidate countries. We firmly believe that each candidacy has to be judged on its own merits, in accordance with the criteria set out by the Union. We would be most happy if negotiations for all candidates proceeded smoothly and we all become partners and make our contribution to the United Europe of this new millennium.

But as a matter of fact, and this is my sixth point, the question one should consider about the political problems of Cyprus is for how long is Europe going to allow these problems, the solution of which is, to a large extent, not in the hands of the Government of Cyprus, to prevent the accession of a country that otherwise fulfils the criteria of membership, for how long is Cyprus going to be penalised, because it is a victim of foreign occupation.

Our plea is for everybody to measure the stakes involved and to reflect about the existing, morally, ethically and politically acceptable, options. One should not turn a blind eye to the predicament of the Government and the people of Cyprus struggling for their survival. Expression of concern, efforts and pressure should be exerted in the right direction. Bearing in mind that the responsibility for the non-solution of the Cyprus problem lies entirely with Turkey, Cyprus, a small island state, and for inherent reasons quite vulnerable, should not be asked to pay the price of Turkey being important, by tolerating the continued occupation of our land, or by complicating our accession course in order to accommodate it.

While Turkey seems to bid time for consolidating the status quo and permanently dividing the island, we believe on our part that time is running out and a solution is urgently needed. New generations in both communities grow up without common experiences, the alteration of the demographic structure worsens day after day and soon we are not going to have representatives of the Turkish Cypriot Community to talk to.

Accession to the EU is of course not a substitute for the solution As long, however, as the Turkish intransigence and their insistence on the creation through confederation of two independent states continue, there can be no reunification. We do not give up and do not despair however. Though at this moment the omens are not very promising, we hope that shortly it will be possible to have a new round of talks under the auspices of United Nations. Last month the Secretary General of United Nations had issued his invitations for the resumption of the talks. President Clerides immediately accepted it but, unfortunately, Mr Denktash and Turkey have rejected it. We will not take no for an answer, however. We will continue our efforts hoping that the talks will resume and we will go there with all the goodwill in the world and be ready to reach an agreement within the frame of the UN and EU resolutions. We sincerely hope that Mr Denktash will cooperate and we will do everything possible to encourage any such move. It is our strong desire to succeed in the talks and see a reunified Cyprus join the Union.

But while Turkey's current policy continues, there can be no solution and under these circumstances we do not expect any of the fifteen member countries to feel that the right course of action could be to veto Cyprus' accession.

There still remains a major question to answer: what will happen after accession without solution?

As long as there is no solution, Cyprus as a whole will belong to the Union represented by its Government and institutions, all Cypriots in possession of official documents of the Republic of Cyprus will become European citizens, but the acquis will apply where it is possible to be applied. What is meant by that is that parts of it having a territorial element would not apply in the occupied part of Cyprus. This is what is already happening with the Customs Union. It entails working out modalities and practical arrangements that will allow the system to work until a solution makes possible its extension throughout the entire island. This could be not hundred percent satisfactory, but there is nothing dramatic nothing that cannot be accommodated and nothing unprecedented about it. It is a pragmatic option that will allow us to live and constructively move forward.

The real issue is, in fact, the pressures and threats by Turkey. Though we can but take them seriously we firmly believe that they should not deter neither Cyprus nor the European Union and make us deviate from what has been agreed in Helsinki. Any other behaviour would be less satisfactory.

On the political front there are in fact two opinions: The one to which some people refer is that accession will lead to a permanent partition of the island and a practical annexation of the occupied area by Turkey. We, in Cyprus we cannot see how the situation after accession can be worse from the one that prevails today.

The second opinion is that the accession will act as catalyst for a solution shortly afterwards. After Cyprus joins, the benefits and the pressures of Cyprus' being part of the Union will greatly play into the hands of those in favour of a solution. There will be a tremendous pressure on the part of the Turkish Cypriots to join desirous to take advantage of the economic and other benefits of the federation within the Union. In Turkey, also, there will be a growing number of people who will see no rationale in continuing to maintain at a high economic and political cost an untenable situation.

Therefore our expectations are that after accession, Turkey will abandon the illusion of a confederation and accept the UN position of a federation, which, it should be stressed, had initially been a Turkish demand that the Greek Cypriot side accepted. In the last two years, we have seen a deliberate effort on the part of Greece to promote good neighbourly relations with Turkey and Greece supports and favours Turkey's move towards Europe. All in all, Turkey's desire to improve relations with the Union, the pressure of the Turkish Cypriots and its own population, Greece's continuous friendly foreign policy and the significant economic benefits that will be waiting around the corner, will contribute towards a change of Turkish policy towards Cyprus.

European Union enlargement towards Cyprus therefore will have very positive implications on the island and should sooner or later lead to its reunification for the benefit of all Cypriots and the region.

Cyprus, which historically and culturally has always been a part of Europe, looks forward to full integration and participation in the great European family in the near future, is eager to play an active and constructive role in the European integration process and aspires to contribute positively to the discussion and reflection that currently takes place. Its historical experiences and geographic position constitute a good vantage?point for viewing the issues as a concerned and directly involved participant. Its ambition is not just to achieve and to maintain the required economic indicators to qualify both for membership of the Union and of the third stage of Economic and Monetary Union but also to have a healthy and thriving economy and sound conditions that will allow it to make its own contribution to the fulfilment of the objectives of the Union.

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