US, UK dangle Cyprus reconstruction aid

The United States pledged $400 million yesterday to help rebuild a reunited Cyprus if both communities on the divided east Mediterranean island vote next week to approve a UN peace plan.

The European Union told a preparatory donors' conference it would take about €2 billion over five years in international aid to stitch Cyprus back together after three decades of bitter ethnic partition.

But the exercise was overshadowed by deep concern that the majority Greek Cypriots seem set to reject reunification in an April 24 referendum, dashing the most promising peace bid for decades, even if the poorer Turkish Cypriots vote "yes".

Both communities will vote on UN Secretary-General Kofi Annan's blueprint for a loose federation to reunify the island after it joins the EU on May 1.

"There is a clear view that if there's no solution at the end of the month, there will be no solution for a very long time," EU Enlargement Commissioner Guenter Verheugen said.

"Nobody should have any delusions that delaying tactics could help," he said in a clear rejection of Greek Cypriot calls to postpone the referendum.

The head of the US Agency for International Development, Andrew Natsios, told the conference: "Given a positive outcome from April 24 referenda in both communities, the United States pledges a total of $400 million... to support peace in Cyprus."

British Deputy Prime Minister John Prescott pledged €31 million on behalf of the former colonial power, which has also offered to give up half the land on which it maintains military bases in Cyprus.

But the money may never be forthcoming because opinion polls suggest wealthier majority Greek Cypriots, safe in the knowledge that they will join the EU anyway, are set to vote "no".

Mr Verheugen said that if they did so, the EU would move to end the economic isolation of the Turkish Cypriots, subject to a trade embargo since Turkey invaded northern Cyprus in 1974 in response to a brief Greek-backed coup in Nicosia.

"I would find it rather unfair that the Greek Cypriot community would enjoy benefits of membership, Turkey would enjoy benefits of entering the pre-accession phase, and only the Turkish Cypriots would get nothing," he said.

Mr Natsios said $100 million in US aid would be available to meet immediate needs for housing and relocation assistance for Turkish Cypriots who would have to leave their homes to make way for returning Greek Cypriots, and to support property and compensation funds and a reconciliation commission.

Cyprus is the most prosperous of 10 countries joining the EU next month, and the Commission's estimate of the reunification costs was sharply lower than the figures sought by both parties to the conflict.

The Turkish Cypriots, represented by Prime Minister Mehmet Ali Talat, say they need $3.8 billion over five years - roughly half of what was pledged for three years at last month's donors conference on Afghanistan, which is many times the size of Cyprus and very much poorer.

The Greek Cypriot representative, government economist Panicos Pouros, said Nicosia's assessment of the needs was in the region of 6.5 billion Cyprus pounds.

The EU study said the amount required from international donors was estimated at between €962 million and €1.082 billion for housing and €759-839 million for other needs.

Some 16,000-18,000 households were expected to move under the planned "territorial adjustment", it said.