Cyprus at the EU’s helm
Anna Sonny, 13 July 2012
By Anna Sonny
On July 1, Cyprus officially took over the rotating presidency of the Council of the European Union, a position that makes Cyprus the driving force of the EU’s legislative and political decision-making process for the next six months. Joining the EU in 2004, this will be the first time that the island has ever held the rotating Council presidency. It is also the first time that a country due to receive EU-IMF bailout funds will be at the helm of EU policy-making, a troubling indicator of the difficult times the EU is facing.
A few days before assuming the presidency, Cyprus became the fifth country to request a bailout from the EU and the IMF. Cyprus’ economy only represents a tiny 0.2% of EU’s GDP, but with the tally of bailouts in Europe rising to 5 out of the 17 Eurozone states, anxiety about the EU’s ability to withstand the financial storm is increasing. Up until the onset of the global financial crisis in 2008, the Cypriot economy had been steadily growing. However, the island’s heavy exposure to the Greek economy saw huge losses for its banking sector, equivalent to 25% of its GDP. On top of this, an explosion at Cyprus’ Vasilikos power station last year, which killed 13 people and wiped out half of the south’s electricity production, caused severe economic damage and forced Cyprus to ask for more help, despite the 2.5 billion euro loan it received from Russia last year.
The Eurozone crisis isn’t the only issue likely to impact on this presidency; Cyprus’ political and ethnic division will face close scrutiny. The island has been split since 1974, with the dividing line running right through its capital city Nicosia. Turkish-Cypriots inhabit the self-declared Turkish Republic of Northern Cyprus, recognised as independent solely by Turkey, and Greek-Cypriots inhabit the internationally recognized south. While some have suggested that Cyprus should not have been allowed to assume the rotating EU presidency before reaching a reunification agreement, others have suggested that healing this division should be the core focus of the presidency. Talks have been starting and stalling for a decade, with attempts to reunite so far proving fruitless. The issue has blocked the discussions between the EU and NATO, of which Turkey is a member, but Cyprus is not, and there is concern that the EU’s relations with Turkey could suffer as a result of Cyprus’ presidency; however, it is true that Turkey’s own EU aspirations are linked to the Cyprus’ future, and a settlement is therefore in Turkey’s interests.
As President of the Council of the EU, Cyprus already has to carefully negotiate the dividing line that currently runs through the heart of European economic policy: austerity versus growth. The island has opted for a combination of both, naming economic growth as a priority for its Presidential Programme, along with social cohesion, job creation and enhancing the role of the EU on the international scene. At the official launch of Cyprus’ presidency in the Curium amphitheatre, Helle Thorning-Schmidt, the Prime Minister of the outgoing presidency, Denmark, affirmed that she was confident Europe would be steered in the right direction with Cypriot President Demetris Christofias behind the wheel. European Commission President José Manuel Barroso also said that over the coming six months Cyprus would be ‘helping to guide the EU through rough waters’. For a small Mediterranean island, surrounded by sea, these nautical metaphors are perhaps very apt. In keeping with this maritime theme is the title of the Cyprus presidency: ‘Towards a Better Europe’.