In accordance with Public Law 95 - 384, I am submitting herewith a bimonthly report on progress toward a negotiated settlement of the Cyprus question.

Since my last report to you there have been several developments in the Cyprus question worthy of note. On April 17 the self-declared Turkish Cypriot ``state'' announced the formal exchange of ambassadors with the Government of Turkey. We strongly opposed this development and declared publicly our concern that it could set back the U.N. Secretary General's efforts in the search for progress. We also repeated our opposition to any diplomatic recognition of the self-declared entity.

On May 8 I informed the Congress that the Administration intended to request authorization for a ``Cyprus Peace and Reconstruction Fund'' of up to $250 million to be utilized on Cyprus at such time as a fair and equitable solution acceptable to both Cypriot communities is reached, or when substantial progress is made toward that goal. I intend this commitment to be a symbol of the shared concern of the Administration and the Congress for promoting genuine progress on Cyprus. I was pleased that a committee of the House of Representatives has included this fund in an authorization bill it is considering.

On May 11 the United Nations Security Council passed Resolution 550 which condemned the Turkish Cypriot community for several actions it had taken. We found it necessary to abstain on the resolution, believing its language unlikely to contribute to the goal of a negotiated settlement. We reiterated to the Council our continuing opposition to the Turkish Cypriot community's declaration of statehood and our determination to see progress made under the aegis of the Secretary General. Following passage of that resolution Secretary Shultz's Special Cyprus Coordinator, Richard Haass, and other Administration officials undertook intensive consultations with both Cypriot parties, with U.N. officials and others on the potential for progress on the question.

On June 15 the Security Council met again on Cyprus, this time to renew, unanimously, its mandate for U.N. peacekeeping forces in Cyprus (UNFICYP). The resolution approved on that date is identical in text to the previous renewal in December, 1983. Following the vote the Turkish Cypriot representative told the Council his community could not accept the resolution but would continue its cooperation with the U.N. forces on the same basis as that announced by the Turkish Cypriots in December, 1983. We view this continuation of the vital U.N. peacekeeping mandate as a positive sign that the parties to the Cyprus question do intend to continue the search for a solution. I am enclosing a copy of the Secretary General's report to the Council on UNFICYP activities.

At the time of the June Security Council vote the Turkish Cypriot side pledged to maintain the unoccupied status of the city of Varosha and presented to the Secretary General its latest ideas on possible next steps toward a solution. We welcomed the Varosha announcement and hope the ideas presented, as well as the comprehensive framework presented previously by the Government of Cyprus, can assist the Secretary General as he resumes efforts under his good offices mandate.

Sincerely,

Ronald Reagan

Note: This is the text of identical letters addressed to Thomas P. O'Neill, Jr., Speaker of the House of Representatives, and Charles H. Percy, chairman of the Senate Foreign Relations Committee.