US and Britain offer Cyprus £288m to accept UN plan

Britain and the United States pledged £288m in aid to Cyprus yesterday in an attempt to sweeten the United Nations peace plan to reunify the island.

The offer is strictly conditional on voters on both sides of the UN buffer zone voting to end three decades of division between ethnic Greeks and Turks at simultaneous referendums on 24 April.

Andrew Natsios, the US Agency for International Development (Usaid) administrator, told a conference of potential donors: "Given a positive outcome from April 24 [referendums] in both communities, the United States pledges $400m ... to support peace in Cyprus." John Prescott, the Deputy Prime Minister, committed the island's former colonial power to £27m, plus promised to hand over half of the land on which Britain maintains two military bases.

The cash boost came as Greece lent its backing to the blueprint. "Within the framework of the EU, the positive points outnumber the negatives," Costas Karamanlis, the Greek Prime Minister, said.

The endorsement by Athens, although lukewarm, was welcomed by diplomats after Tassos Papadopoulos, the Greek- Cypriot President, and Rauf Denktash, the Turkish-Cypriot leader, urged their supporters to vote "no". Polls signal majority support for the plan among Turkish-Cypriots but their Greek counterparts seem set to reject it.

The plan calls for a federation of two communities with a loose central government based on the Swiss model. Greek Cypriots are angry at restrictions on the right of return for those who lost their homes in the 1974 communal strife that led to division. They are also wary of a continued Turkish military presence.

Cyprus is the wealthiest of the 10 countries acceding to the European Union on 1 May, but many Greek-Cypriots are concerned at the prospect of picking up the post-reunification bill for modernising the backward northern enclave.

The EU's estimate of reconstruction costs, £1.3bn over five years, is lower than that of Mehmet Ali Talat, the Turkish-Cypriot Prime Minister, who said more than £2bn was needed. The Greek-Cypriot representative, Panicos Pouros, said Nicosia's assessment was £7bn.

The UN plan must be passed by both sides of the island if a united Cyprus is to join the EU. The Greek part will make its entry whatever the outcome. Turkey has warned that a Greek-Cypriot rejection would be the first step to a de facto partition.

"We will travel the whole world and do everything we can to get Turkish Republic of Northern Cyprus recognised," Abdullah Gul, the Turkish Foreign Minister, said, adding that it would be unfair to punish Turkish-Cypriots if Greek-Cypriots vote against the plan.

Turkey has been pushed to support UN peace efforts as Ankara seeks a date to enter its own accession talks with the EU. Guenther Verheugen, the enlargement commissioner, said a Greek-Cypriot "no" would force the EU to move to end the economic isolation of the Turkish side, subject to a trade embargo since Turkey invaded northern Cyprus in 1974 in response to a Greek-backed coup in Nicosia.