In Cyprus, tangle of interests thwarts progress toward reunion

Savvas Damaskinos is a rotund Greek Cypriot with opinions on everything. He runs a scruffy little restaurant in the old town of Nicosia, where he serves mostly grilled meat, pickled vegetables, and salad to locals. The signs on the walls are in Greek, Turkish, and Arabic.

''Never bothered to change them,'' he says. ''Sure we could live with the Turks. We did before and we can again. But I do not think we will ever be given the chance.''

July 1984 will mark the 10th anniversary of the Greek Army-led coup and Turkish invasion that divided Cyprus. Intercommunal talks, United Nations mediation, and international resolutions have failed to bring the two sides closer to reunion.

The consensus in Cyprus is that any agreement to reunify the island must:

* Bridge the gap in views between the two sides. The Turkish Cypriots say the new state must ensure equal rights and equal power for the two communities. The Greek Cypriots say that political and human rights must be equal but power must be shared proportionally.

* Guarantee the security of both the minority Turkish and majority Greek populations after all foreign troops - Turkish and UN - are removed.

* Provide for steps that will build trust between the two communities and eventually lead to free human and economic contacts and movement of people across the dividing ''green line.''

* Satisfy the strategic concerns of Turkey, Greece, and, by association, the NATO alliance.

A reading of UN reports and of records of intercommunal negotiations in the last 20 years does indicate that the Greek position has shifted from a demand for a unitary state to acceptance of a bizonal federation with autonomy in each region.

But, says Cypriot President Spyros Kyprianou, ''I don't think that anything we do would make any difference.''

On the other side, Turkish-Cypriot leader Rauf Denktash says the view that the Greek-Cypriot position has changed is the result of ''disinformation.''

''We have never been heard anywhere, and the Greek Cypriots have the master plan of making Cyprus Greek as a first step for making it a part of the mainland ,'' Denktash says. The Turkish Cypriots, who declared independence last November , demand equal say and equal power in any new Cyprus.

On Jan. 2 they proposed measures to get the peace process back on track. These included handing Varosha - an abandoned Greek-Cypriot town - over to the UN, pending a negotiated plan to resettle Greeks there; reopening Nicosia airport under UN auspices for the benefit of both communities; and reconvening the commission on missing persons to attempt to establish the fates of missing Greek and Turkish Cypriots.

The Greeks rejected the proposal. Denktash charges they did not even look at it. Behind the rejection were other provisions, such as demands for the lifting of the embargo against Turkish Cyprus and opening of the green line for free economic and tourist movement. To the Greek Cypriots, these were unreasonable demands because they would remove incentive for the north to negotiate a final solution and represent de facto recognition of the Turkish-Cypriot state.

The intensity of feeling about Cyprus is at least as high, if not higher, in Greece. After nearly a half century of defeats at the hands of Turkey in areas that were once heavily populated by Greeks, no Greek government that was perceived to have lost Cyprus could survive, say Greek officials. Although they deny the linkage on the record, Greek officials in Athens acknowledge that they view Cyprus as a test case for other islands off Turkey, which they say Turkey covets.

Turkish leaders often talk of their ''obligation'' to their people on Cyprus.

''They (the Turks) have strategic reasons for making sure this does not become an island dominated by Greece,'' says Turkish-Cypriot spokesman Oktay Oksuzoglu. Turkey does not want its Mediterranean coasts completely surrounded by Greek islands, he adds.

The US is caught in a squeeze between two NATO allies, Greece and Turkey. If the situation gets out of hand in Cyprus, it could lead to collapse of NATO's eastern wing, United States diplomats say.

But if Washington has taken what it regards as the correct stance by backing the Greek-Cypriot view in the UN and elsewhere, it finds that it is unable to do more.

''We just cannot sacrifice either Greece or Turkey,'' says one US envoy. ''They want us to choose, but we have no choice.''