In an extraordinary meeting on 24 February 2006, the EU Committee of Permanent Representatives (COREPER) approved the direct aid regulation that was prepared for the TRNC by the EU Commission by decoupling it from the direct trade regulation.

This means that out of the 259 million Euros in aid that was initially earmarked for the TRNC, as a result of 120 million Euros not being approved in the 2005 budget by 31 December 2005, only the remaining 130 million Euros is available to be used by the TRNC.

The TRNC Presidency has stated that the approval of the Direct Aid Regulation by COREPER was far from meeting the expectations of the Turkish Cypriot side.

In a written statement issued by the TRNC Presidency's Press Office it was stated that the Turkish Cypriot side was disturbed by the fact that as a result of pressure exerted by the Greek Cypriot side the EU institutions had produced decisions that would weaken a comprehensive settlement.

The statement said the following:

"During the last two weeks, as a result of the intensive diplomatic activity started by the EU Term Presidency Austria, on Friday 24 February, the EU Committee of Permanent Representatives (COREPER), together with a pretext, has approved the Direct Aid Regulation for the Turkish Cypriot side. The Turkish Cypriot side was also involved in this intensive diplomacy traffic and had conveyed its views, proposals and concerns to the EU Term Presidency, the EU Commission and member countries. In the final stage, the Turkish Cypriot side did not approve the contents of the pretext and had criticised references made to the unofficial and unrecorded meetings that were carried out during Luxembourg's Term Presidency, and for an opportunity to be given to carry the UN agenda onto the EU platform.

Our side had stressed that the steps to be taken from now on by the EU and the evaluation and implementation of this decision should be in support of a comprehensive settlement in Cyprus on the UN ground and that any confusion regarding the decision given should be evaluated as being in this direction.

However, the decision in question, which was approved without our consent and with the concern of overcoming the Greek Cypriot veto, is far from meeting our expectations. The Turkish Cypriot side is disturbed by the fact that as a result of pressure exerted by the Greek Cypriot side the EU institutions has produced decisions that will weaken a comprehensive settlement."

The statement also called upon the EU Council to reassess COREPER's decision and stated that the EU Council should encourage the Greek Cypriot side, who is its member, to sit down at the negotiating table within the framework of the UN settlement plan, which is clearly supported by the EU.

Meanwhile, commenting on the issue, Turkish Prime Minister Recep Tayyip Erdogan said: "No matter decision the EU takes, we will continue to trade with the TRNC. No one can prevent this. Above all, the EU has not kept its promise and in the 24 April 2004 referendum it stated that if the TRNC had voted 'yes' (on the Annan Plan) this would facilitate our decision process. When we asked what would happen if South Cyprus voted 'no', we were told by the EU, 'Don't worry. We'll do whatever is necessary'. However, when South Cyprus voted 'no', one week later they were made an EU member. First of all you should keep your promise, otherwise don't expect anything from us. This is it. We'll continue to follow our path".

The Spokesman of the US State Department has stated that "trade with North Cyprus is legal".

Following the news that the "USA was preparing to trade directly with North Cyprus", the issue came up in the State Department's daily briefing.

Responding to a question, the US State Department's Spokesman Adam Ereli said; "According to all the definitions I know, it's not illegal to trade with the Northern part of Cyprus".