14 Sep 2016 Country Analysis update: solution prospects held at 40%

Sapienta Economics is holding the prospects of a solution of the Cyprus problem at 40%, following a somewhat cautious statement on Wednesday at the end of the intensive phase of meetings between the president of the Republic of Cyprus and leader of the Greek Cypriot community, Nicos Anastasiades, and the president of the unrecognized Turkish Republic of Northern Cyprus (TRNC) and leader of the Turkish Cypriot community, Mustafa Akinci.

In a joint statement read by the UN special adviser, Espen Barth Eide, the two leaders said “Significant progress has been achieved on many of the outstanding issues on the Chapters of Governance and Power-Sharing, Economy, the EU matters and Property. However, certain substantial divergences still remain.”

While they repeated their “aim of reaching a comprehensive settlement agreement within 2016”, the statement did not add anything substantive to what has already been announced in recent weeks.

The leaders also committed to meet the UN Secretary-General, Ban Ki-moon, in New York on 25 September. In our last issue we said that if the Secretary-General was called, we would raise the prospects of a solution to 45%, since this was likely to be a meeting in which territorial arrangements are discussed in detail.

However, Mr Anastasiades, who has been facing noisy opposition from the hardline parties in recent days, played down the significance of the New York meeting. Mr Anastasiades told reporters: “we will brief him [the Secretary-General] on the progress to date, on the outstanding differences, and on the more active involvement of all of us in an intensified effort so that as soon as possible we achieve such convergences that will lead us to a solution acceptable to all parties.”

He also dampened suggestions of a multi-party conference together with the three guarantor powers:  Turkey, the United Kingdom and Greece. A multi-party conference would be a major milestone, signifying that the end-game has been reached.

“If there is no substantial progress on the outstanding issues –  and there are quite a few – in order to justify the convening of a multilateral conference, this will not occur,” Mr Anastasiades said.

We are therefore holding the prospects of a settlement of the Cyprus problem at 40%. If there is a clear shift towards a multi-party conference, we would raise the prospects to 45% and then to 50% if a referendum is called.

Conversely, if there is no further progress in the coming weeks, the very narrow opportunity to solve the Cyprus problem under the current leadership will have passed, for reasons explained more fully in our monthly reports, and we would expect to downgrade the prospects again.