NICOSIA, Cyprus (AP) — It would be a "major mistake" for the international community to take advantage of Cypriots' current financial crisis to pressure them into a deal reunifying the ethnically-split island, a United Nations envoy said Thursday.

Alexander Downer told the Associated Press in an interview that making Cypriots feel that they're being exploited because they're weak would only elicit an "extremely negative reaction."

Cyprus was divided in 1974 when Turkey invaded after a coup by supporters of union with Greece. The Greek Cypriot south is recognized internationally, except by Turkey. In 1983, Turkish Cypriots declared an independent state recognized only by Turkey, which maintains 35,000 troops there.

The island joined the European Union in 2004 and the euro monetary union four years later, but only residents in the south enjoy benefits.

The country's Greek Cypriot-run government agreed in March on a multibillion euro rescue deal with its eurozone partners and the International Monetary Fund. In exchange for a 10 billion euro ($13.24 billion) loan, depositors in the country's two largest banks were forced to take steep losses on their savings over 100,000 euros ($132,360). As confidence in the banking sector collapsed, Cypriot authorities slapped restrictions on money transfers and withdrawals for all banks to prevent a run.

"Cypriots will not be pushed around, and the weaker they feel, the less inclined they'll want to be pushed around," said Downer. "So, it will be a major mistake for the international community to conclude that now's the time to put pressure on them."

Numerous rounds of peace talks over the last four decades have ended in failure. The latest round that began in 2008 under Downer stalled in May last year amid mutual recriminations over who was responsible for the stalemate.

Negotiations have revolved around reunifying the country under a federal roof, but significant disagreements between the two sides remain on power-sharing, military intervention rights for Turkey and arrangements regarding private property lost during the invasion.

Downer said a lot of work is being done to prepare the resumption of talks, expected sometime in October, but refused to disclose details.

"The secret of success will lie in the preparation...What's encouraging is that both sides are giving a huge amount of thought themselves as to how they can make this work better."

A key difference with the new round of talks is the appointment of special representatives by both sides who will be charged with hammering out the nuts and bolts of a deal. The leaders on both sides will offer guidance and final assent, but will also meet in person frequently.

In the previous round of talks, negotiations were primarily carried out face-to-face by Greek Cypriot former President Dimitris Christofias and Turkish Cypriot leader Mehmet Ali Talat and his successor Dervis Eroglu.

Downer said the appointment of representatives doesn't diminish the process but enhances it.

The envoy, a former Australian foreign minister, said Cyprus stands to reap huge economic benefits from the peace accord. It would attract more tourism and substantial investment in the budding energy sector that the country is counting on to eventually pull it out of its deep recession.

U.S. firm Noble Energy is now developing a gas field off the island's southern coastline that is estimated to contain between 5 and 8 trillion cubic feet of gas. Oil and gas giants including Italy's Eni and France's Total have been granted licenses to search for more gas deposits.

Turkey has strongly objected to the search, arguing that it flouts the rights of Turkish Cypriots to the island's mineral wealth. Senior Turkish government officials have warned that the Greek Cypriot's unilateral exploitation of the gas would mean that formal partition would be raised as an option at the negotiating table.

Greek Cypriots say that Turkish Cypriots can share in the gas bounty once a reunification deal is reached. They have accused Turkey of sending warships to harass oil and gas research vessels.

Downer said a reunified Cyprus would provide a "much better environment" for developing the energy sector, including construction of a processing facility that would allow Cyprus to export gas on a global scale.

"The last thing Cyprus needs is tension over the exploration and exploitation of gas, so I think it just points to the fact that the whole development of the gas sector will be all the easier if Cyprus reunified as will economic management," said Downer.

 

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