Prospects for reunification improved as new coalition government formed in Turkish Cyprus. Pro- reunification Republican party leader and new prime minister Mehmet Ali Talat joined by Democrat Party’s Serdar Denktash, son of President Rauf Denktash. 1 May set by new government as date to find solution based on previously rejected UN plan. EU leaders pushed Turkey to encourage resolution of Cyprus issue in light of its bid for EU membership. Turkish PM Erdogan met UN Secretary General Kofi Annan 24 January and asked for renewed efforts by UN to find solution. Annan conditioned talks on both sides agreeing to UN blueprint as basis for negotiations and referendum on results. Sec. State Powell indicated willingness of U.S. to help sides reach Agreement.

15 December parliamentary elections in Turkish Cyprus, widely viewed as referendum on UN reunification plan, resulted in stalemate. President Rauf Denktash’s nationalist coalition, who oppose UN plan endorsed by Greece, Turkey and Greek Cypriot government, won same number of seats as opposition parties favouring reunification and EU accession; fresh elections to be held in 2 months if parties unable to form coalition government. Denktash appointed leader of pro-European party, Mehmet Ali Talat, as PM of Turkish Cyprus 29 December. U.S. and EU keen to broker reunification before Greek Cypriot part of island joins EU in May 2004.

U.S. and EU keen to broker reunification before Greek Cypriot part of island joins European Union May 2004. Progress unlikely, however, until after 14 December elections in Turkish Cyprus – last round of talks broke down in March with Turkish Cypriot leadership insisting on two state solution. Greek Cypriot leader Tassos Papadopoulos requested UN sponsorship of new peace talks 26 November. UN SG Kofi Annan called for six-month extension of UN peacekeeping force on the island.

Decision by Turkish, Greek and Cypriot governments 15 October to cancel respective annual military exercises; jointly expressed support for plan to de-mine Cyprus. Progress unlikely in UN-led efforts to reunify Cyprus, however, until after December elections in Turkish Cyprus. Diplomatic push for UN-backed peace plan by U.S. ambassador elicited hostile reaction from Turkish Cypriot leader, Rauf Denktash, who described it as "diplomatically unethical, unacceptable, uninvited interference".

Unlikely to be any progress in UN-led efforts to reunify Cyprus until December elections in Turkish Cyprus. Greek Cypriot president says he believes decisions about Cyprus are made by Turkey, not Turkish Cypriot leader.