When the group was set up
Prior to the accession of the Republic of Cyprus on 1 May 2004, the EU repeatedly reiterated its commitment to a comprehensive settlement of the Cyprus problem, thereby demonstrating its strong preference for accession by a reunited Cyprus. Accordingly, on 24 April 2004 the Cypriots were consulted, in two simultaneous referendums, on the comprehensive agreement on the settlement of the Cyprus question, the so-called Annan Plan. The Turkish Cypriot electors approved that agreement, whilst the Greek Cypriots rejected it.
As a result, although Cyprus as a whole became an EU Member State, application of the acquis communautaire was suspended in those areas of the Republic of Cyprus in which its Government does not exercise effective control.
Immediately after the rejection of the Annan Plan by the Greek Cypriots, the Council reiterated its determination to ensure that the people of Cyprus would soon achieve their shared destiny as citizens of a united Cyprus in the European Union, to put an end to the isolation of the Turkish Cypriot community and to facilitate the reunification of the Island by encouraging the economic development of that community. It therefore invited the Commission to bring forward comprehensive proposals to that end, with particular emphasis on the economic integration of the island and on improving contacts between the two communities and with the EU. This was consistent with Protocol No 10, which states that 'nothing in this Protocol shall preclude measures with a view to promoting the economic development' of the northern part of the island.
On 7 July 2004, therefore, the European Commission proposed a package of development aid and trade measures, the most significant being a draft regulation establishing a legal instrument to encourage the economic development of the Turkish Cypriot community (aid regulation) and a draft regulation on special conditions for trade with those areas of the Republic of Cyprus in which the Government of the Republic of Cyprus does not exercise effective control (direct trade draft regulation). The aid draft regulation, with a financial allocation amounting € 259 Mio has been adopted by the Council on 27 February 2006, while the direct trade draft regulation is still under consideration.
In addition, the Council adopted on 29 April 2004 a regulation on a regime under article 2 of Protocol 10 to the Act of Accession (known as the "Green line regulation"), lastly amended on 16 June 2008, by Council Regulation (EC)587/2008.
2 Presidency conclusions of the European Council of 25 and 26 March 2004, and first recital of Council Regulation No 389/2006 of 27 February 2006 on the instrument of financial support.
3 Protocol No 10. of the Accession Treaty.
4 General Affairs Council of 26 April 2004.
5 COM(2004) 465 final.
6 COM(2004) 466.
7 Council Regulation (EC) No 866/2004, amended by Council Regulation (EC) No 293/2005 and Council Regulation (EC)587/2008.