In its latest report on how the European Commission has managed the instrument of financial support for encouraging the economic development of the Turkish Cypriot community in the Northern part of the island, the EU Court of Auditors (ECA) found that while important results have been achieved, “more generally, the sustainability of projects is often in doubt”.

The ECA examined a sample of 34 contracts financed by the EU executive between February 2006 and the third quarter of 2011 under the provisions of Council Regulation 389/2006. The main example for the Commission’s failure to execute its programme is the planned construction of a seawater desalination plant – the programme’s largest project worth €27.5 million (10% of total contracted funding) – which could not be implemented. “The failure to implement this project represents a significant setback for the overall assistance programme,” says the ECA. Greek Cypriot workers of one of the consortium’s contractors had been denied access to the site by the Turkish armed forces. However, the auditors note that the Commission could have predicted this problem as it “was aware of the risk” entailed in a company with Greek Cypriot workers wining the tender. In addition, the ECA states that “by contracting the works at the latest possible moment [...] the Commission also missed an opportunity to offer the contract to another tenderer”.

DIFFICULT CIRCUMSTANCES

However, the report recognises the “difficult political and legal circumstances” and the “tight timetable” under which the Commission had to operate. Despite these, “the Commission managed to establish a programme which reflected the regulation’s [EC No 389/2006] objective.”

While the whole of the island is part of the EU, the government of Cyprus – a member of the Union – does not exercise effective control over the Northern part of the country and EU legislation is suspended in the area in line with Protocol 10 of the 2003 Accession Treaty. In February 2006, the EU approved an aid regulation to the benefit of the Turkish Cypriot community, allocating €259 million aimed at putting an end to the isolation of this community and helping prepare for the reunification of the island.

To face these difficulties and address the ECA’s doubts, the auditors give recommendations to the Commission with three possible scenarios in mind. First, if there is no solution to the island’s division in the short term and the Commission continues to provide significant funding, it should put in place a mechanism with a multiannual perspective and identify ways to ensure appropriate flexibility in the length of employment of staff working for its task force. In a second scenario, where it is decided not to provide EU assistance, the ECA recommends that an action plan be prepared to scale down the task force’s operations. And in a third scenario, in which a political settlement is found, the auditors believe the Commission should “develop a proposal for a programme to enable the whole country to benefit from EU funding”.