As prepared for delivery...

Cyprus Partnership for Growth
Press Conference

Remarks by Ambassador Michael Klosson

Good morning and thank you for coming.

The United States has been hard at work over the past five months supporting opportunity and growth in the Turkish Cypriot economy. I want to use the visit this week of a senior official from the U.S. Agency for International Development in Washington to discuss with you what we have done during this first phase -- this first chapter -- of our $30.5 million dollar assistance program for Turkish Cypriots and our plans for the future. As Secretary of State Rice indicated over the weekend, the United States is proceeding with measures, such as this assistance package, to ease the isolation of Turkish Cypriots and to contribute to efforts to reunite the island.

Let me welcome my USAID colleague, Thomas Mefford. As the Deputy Assistant Administrator for a region encompassing Europe and Eurasia. Woody is no stranger to Cyprus. His presence today underlines the importance we place on working toward a peaceful and durable settlement of a problem that has gone on for much too long.

Our effort to help promote growth in the Turkish Cypriot economy and to ease the isolation of the Turkish Cypriots is part and parcel of our commitment to provide opportunities for a brighter tomorrowon both sides of the island.

Objectives

As I’ve said many times before, U.S. policy is to support a comprehensive settlement under UN auspices providing for the reunification of this island accepted by majorities on both sides. One of the ways we seek to do this, in parallel with our colleagues in the European Union, is to encourage growth in the Turkish Cypriot economy. Our $30.5 million assistance program -- the Cyprus Partnership for Economic Growth (CyPEG) -- is straight forward. By encouraging growth in the Turkish Cypriot economy, our program will:

• contribute to beneficial Turkish Cypriot interaction with Greek Cypriot, American and other businesses;

• better enable the Turkish Cypriot economy to shoulder its share of the future economic costs of a settlement;

• advance the adoption and implementation of European Union and international standards and practices across the island.

In sum, we aim to devise practical solutions to problems that hamper economic growth and that will improve the bottom line of Turkish Cypriot businesses.

Work Already Underway

In October, we fielded a strong team of experts from Bearing Point, a U.S. consulting firm, to meet with Turkish Cypriots and to complete the homework essential to designing effective programs. Through meetings with over 75 individuals and organizations, Bearing Point identified several areas where U.S. technical assistance would be useful and complementary to the European Union’s plans.

Next came study tours in the United States in December for approximately 30 Turkish Cypriot professionals. These study tours focused on three sectors key for future growth: banking and finance; sustainable development; and the role of business education in stimulating economic progress and innovation.

Simultaneously, we began working with Turkish Cypriot firms to overcome the practical barriers they face everyday. Through the International Executive Services Corps, we engaged the services of expert American business executives with strong professional experience in banking/finance, marketing and tourism, enterprise development and business facilitation. American experts began arriving in December, and established ties with key business organizations like the Chamber of Commerce, the Chamber of Industry and the Banks Association. They are hard at work today out of their offices within the Chamber of Commerce and Chamber of Industry.

Our marketing and business experts are here to help Turkish Cypriots find new markets for their goods and services -- whether that market is on the island or abroad – and to help local businessmen overcome obstacles they may face. They will also be offering a number of training seminars in such areas as:

• quality standards awareness, including in the food industry where Hazard Analysis and Critical Control Points (HACCP) standards are increasingly important;

• image enhancement and marketing, particularly in terms of participation in international trade fairs;

• risk management techniques for banking professionals and loan application skills for businesses.

The Future

What’s next? As I said at the outset, we are just in the first phase of our effort that will unfold over the next several years to help create new opportunities for Turkish Cypriot businesses. This is a task that can not be accomplished in one step.

Private enterprise development promotes prosperity and stability. To grow and flourish over time businesses anywhere—much like flowers—need good soil in which to take root and a supportive climate. We hope to improve the soil in which businesses will grow, helping firms do both more business, and do better business.

Let me say a word to the business people who may be listening.

At the very basic level, at your place of business, where you work and where your family’s livelihood is created, we may be able to help you identify and take advantage of new business opportunities. Our goal is to help you better understand your markets and find new customers; build strategic partnerships within and between sectors; and network both on the island and abroad, especially I hope with U.S. firms and organizations. As I’ve said before, the U.S. remains open to trade with Turkish Cypriot businesses. 

At the industry level, our program will work with local associations to improve the services they provide their members and to help them identify new market opportunities for their members.

Our focus is practical. We aim to provide technical assistance in areas such as standards and quality assurance; skills development—including English language, for example; marketing and resource efficiency. An establishment that uses energy-efficient technologies, for example, is not only more profitable, but is also less of a drain on the scarce resources that are essential to long term growth. Products that meet international standards will command better prices in the marketplace; restaurant employees that speak English to visitors from down the road or across the sea will encourage the visitor to return and/or send his/her friends. You know better than I the potential of certain products that are uniquely Cypriot if they are produced to the appropriate standard and packaged for the modern consumer.

Perhaps most importantly, we see our program improving the climate in which Turkish Cypriot firms do business. Businesses can improve their business plans, but if banks cannot properly assess risk, potentially lucrative activities will wither for lack of financing. We also plan to focus significant attention on improving the banking, financial, regulatory and other realities businesses face. This includes access to credit and capital. We plan to work with the banks and business community to help ensure that credit is readily available to small and medium Turkish Cypriot businesses. This will have lasting benefits for individual businesses as well as for the economy as a whole.

Over and over again I have heard that what Turkish Cypriot businesses need is a level playing field. I agree. All businesses deserve a level playing field.

We seek to address the disequilibria that exist in the marketplace by providing Turkish Cypriot firms with additional information, additional market access, additional resources (in terms of human and other capital) and additional exposure to international norms and practice.

To be effective and sustainable, business opportunities must be reciprocal.  Wherever possible restrictions on trade – whether on or off the island -- should be removed.  Trade cannot just flow in one direction .

Conclusion

In closing, let me emphasize that economic growth is a worthwhile goal in and of itself. That said, our program is also a means to a larger goal -- a lasting settlement to the Cyprus problem. Closing the economic gap between the sides will help pave the way toward a sustainable settlement. We are confident that by investing in the Turkish Cypriot economy, we are making an investment in the whole of Cyprus that will pay off in opportunities for a brighter tomorrow for all.