Think of Cyprus and what might first come to mind is the country's enduring feud with Turkey, which has occupied the northern part of the island since 1974.
The country, which joined the European Union in 2004, hopes it can project a different image from July 1, when it takes over the six-monthly rotating EU presidency from Denmark for the first time.
But whether this will be for the better or worse remains open to speculation. Given Cyprus’ precarious economic state, Europe watchers are wondering what the country might achieve at the head of a Europe in a similarly parlous position.
‘A dog guarding the sausages’
Kurt Lauk, president of the economic council of Angela Merkel's Christian Democrats didn’t mince his words: “This is the paradox of the European Union, that the dog should be put in charge of the supply of sausages!” He called for all countries that have received bailouts to be barred from holding the presidency.
Heavily exposed to the banking crisis of its big brother Greece, Cyprus is running a debt of 14 billion euros, and its deficit of 6.3 percent is one of the highest in the eurozone.
On Monday it requested a bailout from the EU, which has since been approved. The European Commission, the European Central Bank and the International Monetary Fund (IMF) will begin assessing next week how much bailout money will be needed to prop up the country’s banks.
At the same time, the country’s communist president Demetris Christofias has irked Europe by seeking bilateral aid from Russia and China, albeit at an interest rate 2% higher than from the EU. Cyprus has close ties with Russia, whose economic and political presence in the island has no equivalent elsewhere in Europe.
French daily Le Monde explained the reasoning: “Cyprus is worried about the possibility of a visit from troika experts that could accompany EU aid. [...] Even more daunting than the possibility of pressure to raise the island’s 10% corporate tax rate, which is the lowest in Europe, Cyprus is alarmed by the prospect of austerity.”
On the ground however, local press report an upbeat mood, with the presidency expected to boost morale about the ailing economy.
“I think the presidency is something that can lift the mood, and maybe distract people’s attention,” said Jacqueline Agathocleous, a journalist for the English daily Cyprus Mail, adding that the arrival of delegates would be good for business.
Turkey in a tizz
The ongoing dispute with Turkey adds another dimension to Cyprus’ impending presidency. Turkey occupied the island’s north in 1974, which subsequently declared itself the Turkish Republic of Northern Cyprus. This sovereign entity lacks international recognition and remains isolated from the rest of Europe.
Turkey has previously stated it will boycott the Cyprus presidency and warned it may freeze relations with the EU, and even formally annex the north.
Earlier this week, hundreds of Turkish Cypriots staged a protest on the streets of Brussels against the upcoming presidency, saying the rights of the island’s Turkish minority were being ignored.
A better Europe
Yet Cyprus’ political class remains undeterred by the difficulties. In May, Deputy Minister to the President for European Affairs Andreas Mavroyiannis said: “The Cyprus issue and the Cyprus presidency of the EU are two parallel and independent processes, and we will not accept to have a second-class presidency due to our national problem and to the stance of Turkey towards the Council of the EU.”
The country’s main objective for the presidency is “to work towards a Better Europe, a Union more relevant to its citizens and the world.” This agenda will be pursued against two themes of ‘solidarity and social cohesion’ and ‘effectiveness and growth’.
Mavroyiannis conceded the subjects that Cyprus will be able to address have been “more or less predetermined” since these are inherited from the previous presidencies and from the EU’s 2012 work programme.
However, there is still room to champion a few signature issues. Chief among these for Cyprus include negotiations of the new Multi-annual Financial Framework for 2014-20, which is a mechanism for keeping EU spending predictable and subject to strict budget discipline.
And for all Turkey’s grandstanding, Mavroyiannis also had an olive branch to extend: “The reinforcement of Turkey’s accession prospect is of critical importance, and the presidency will focus on advancing this prospect,” he said.