In April 2004, Greek and Turkish Cypriots took part in separate simultaneous referenda on whether Cyprus would join the EU on 1 May 2004 as a reunited island based on a power-sharing agreement brokered by UN Secretary-General Ko. Annan. While 64.91 per cent of Turkish Cypriots accepted the Annan Plan, an overwhelming majority of 75.83 per cent of Greek Cypriots rejected the UN blueprint. The extent of the Greek Cypriot no vote seemingly brought an end to a large-scale effort to find a solution to one of the oldest items on the peacemaking agenda. In the aftermath of the referenda, the Commission decided to unleash an economic development package for the North. In addition to supporting improvements in infrastructure, the economic aid was destined to help the farming community of the North and to facilitate export of goods to the South and outside the island. The dispensing of funds has yet to begin as the Greek Cypriot government has stalled this effort. The process was expected to get back on track after the European Council in December 2004 gave Turkey the date of 3 October 2005 to begin talks on accession on the condition that a number of signposts were reached. One of these was the signing of the 1962 European Customs Union with the new member states, including Cyprus. Turkey signed the document in 2005 while stating that this would not constitute recognition of the Republic of Cyprus.

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