Cypriot President Nicos Anastasiades speaks with Turkish Prime Minister Ahmet Davutoglu | Emmanuel Dunand/AFP/Getty Cyprus settlement deal ‘within reach’ Hopes high of an agreement after 42 years of division.

A deal on the future of divided Cyprus could be struck as soon as March, with a referendum to follow in the summer, according to a former leader of Turkish-controlled Northern Cyprus.

After almost 42 years of division and several false starts, many observers are more cautious. Talks are ongoing but the two sides "have not resolved the most sensitive issues,” such as the presence of almost 30,000 Turkish troops on the island, said an EU diplomat.

Jean-Claude Juncker, the president of the European Commission, said Friday he was "very confident" that a deal will be struck within the next six months. "I hope 2016 will be the year that we can finally resolve the Cyprus issue," he said.

U.N. chief Ban Ki-moon said earlier this month that a Cyprus settlement "is within reach."

Mehmet Ali Talat, a former leader of the Turkish Republic of Northern Cyprus, which is recognized only by Turkey, was more optimistic: “My estimate is that we can finalize a solution in March and then have a referendum in summer,” he told POLITICO after a meeting in Brussels with European Parliament President Martin Schulz.

Reunification talks resumed in May 2015, with 20 rounds of U.N.-brokered talks since then.

The presence of Turkish troops will not be an obstacle to reunification, Talat said. The troops "came to Cyprus because of the conflict on governance and power sharing; once this and other problems will be resolved they will go.”

Cyprus has been split since 1974, when Turkish troops invaded the northern third of the island in response to an Athens-backed coup seeking to unite Cyprus and Greece.

Reunification talks resumed in May 2015, with 20 rounds of U.N.-brokered talks since then. Negotiations were given a strong push late last year when the EU and Turkey began discussing ways to tackle Europe's migration crisis. At an EU-Turkey summit in November, the EU offered €3 billion to Ankara to stem the flow of refugees in exchange for re-energized membership talks.

Those membership talks had long been stalled, mainly over the Cyprus issue. Diplomats say many EU countries have been using the Cypriot problem as an excuse to oppose the entry to the EU of a large, predominantly Muslim country.

At the EU-Turkey summit, a meeting between Turkish Prime Minister Ahmet Davutoğlu and Cypriot President Nicos Anastasiades was described as “friendly” by an official who was in the room.

Sticking points

But Anastasiades has been treading with caution about a deal. “There is still distance to cover and what is said about March is way too optimistic,” he said in December in an interview with the Hellenic Broadcasting Corporation.

A major sticking point is properties belonging to Greek Cypriots who left the north of the island after the Turkish troops arrived. Talat said the long-term Turkish Cypriot position still stands: that residents forced to hand back property to Greek Cypriots should be compensated. “In Germany [after reunification], restitution of property didn't take place, they were compensated and compensation will generally be the main remedy” in the case of Cyprus, he said.

Division of land and property is one of many issues to be resolved. Also to be resolved are Turkey's refusal to recognize the Republic of Cyprus (the official name of the Greek Cypriot part of the island, which is recognized by the international community and a member of the EU), and the creation of a Cypriot army.

The U.N.'s special adviser on Cyprus, the Norwegian Espen Barth Eide, said last week, “We've made significant progress on some of the most difficult issues," but warned: "There are still significant outstanding issues that have to be tackled."

Not everyone is convinced.

“On several occasions in the past there were hopes for a solution, but I remain skeptical given the existing differences between the two sides,” said Andreas Theophanous, president of the Cyprus Center for European and International Affairs at the University of Nicosia.

In an article in Europe's World, Theophanous, a former advisor to the president of the Republic of Cyprus, said: “The Greek Cypriot position is that the bi-zonal, bi-communal federation and the new partnership should be the outcome of an evolution of the Republic of Cyprus.” The Turkish Cypriot position “is that the new partnership will involve a new state entity, to be created by two equal and sovereign constituent states,” he wrote.

In its regular report on Turkey's accession talks, published in October, the European Commission expressed concerns that Turkey “from October to April issued statements and engaged into actions challenging the Republic of Cyprus’s right to exploit hydrocarbon resources in Cyprus’s Exclusive Zone” — a maritime area over which there is a dispute between the two countries.

Cyprus is hoping natural gas will fuel an economic turnaround after the discovery of the Aphrodite gas field off its coast.