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 previous report, United Nations Secretary General Perez de Cuellar has continued his efforts, begun last fall, to obtain the two Cypriot communities' acceptance of an agreement containing the elements of a comprehensive Cyprus settlement. He endeavored to overcome the difficulties that had arisen during the January 1985 summit meeting by incorporating components of the documentation into a consolidated draft agreement. His expressed intention was to bring greater clarity to its various elements and to devise procedural arrangements for follow-up action, while preserving the substance of the documentation. The Secretary General reported to the Security Council in June, a copy of which is attached, that the Greek Cypriot side had replied affirmatively to his revised documentation and that he was awaiting the Turkish Cypriot response to his efforts. The Secretary General added that, ``provided both sides manifest the necessary goodwill and co-operation, an agreement can be reached without further delay.''

The Turkish Cypriots postponed replying to the Secretary General while they proceeded with a constitutional referendum on May 5, a presidential election on June 9, and parliamentary elections on June 23. The Turkish Cypriots stated that the referendum and elections would not preclude their participation in a federal Cypriot state. We have repeatedly registered with both communities our conviction that actions which might impede the Secretary General's efforts to negotiate an agreement should be avoided and have reiterated our policy of not recognizing a separate Turkish Cypriot ``state.''

Since my last report to you, American officials in Cyprus have met regularly with leaders of both Cypriot communities. Department of State Special Cyprus Coordinator Richard Haass visited Cyprus, Greece, and Turkey in July. He discussed the Cyprus issue with the two Cypriot parties and the Governments of Greece and Turkey and expressed our support for the Secretary General's initiative. We continue to urge flexibility by all parties and are encouraged that they continue to support a negotiated settlement under the Secretary General's good offices mandate.

Sincerely,

/s/Ronald Reagan

Note: Identical letters were sent to Thomas P. O'Neill, Jr., Speaker of the House of Representatives, and Richard G. Lugar, chairman of the Senate Foreign Relations Committee. The original was not available for verification of the content.