Athens/Nicosia - Swedish Foreign Minister Carl Bildt on Friday said there is now a unique window of opportunity for settling the Cyprus issue given that Turkey's membership evaluation by the European Union will take place at the end of the year.

"The failure by Turkey to meet the criteria could not be seen in separation from all the other issues, including the Cyprus problem," said Bildt during a visit to Cyprus.

The eastern Mediterranean island has been divided into a Greek Cypriot south and Turkish Cypriot controlled north since a Turkish invasion in 1974, with peace talks only resuming in September last year after being broken off in 2004.

Despite renewed efforts to solve the problem, EU diplomats say that the ongoing conflict over Cyprus has become the bloc's single biggest problem in two key areas: It is troubling Turkey's bid to join the EU and it is complicating the bloc's relationship with Europe's premier military power, NATO.

Speaking to journalists after talks with Cypriot Foreign Minister Marcos Kyprianou, Bildt said that a solution to the Cyprus problem would result in positive economic dynamics for both sides as well as positive dynamics between the EU and NATO.

Bildt was paying a visit to the island before Sweden takes over the presidency of the European Union in the second half of 2009.

The 35-year conflict continues to pose a headache for diplomats, most recently in 2004, when Greek Cypriots rejected a United Nations settlement blueprint a week before the island joined the EU as a divided state.

Both ethnic communities agree, on paper, to rejoining the island as a bizonal and bicommunal federation, but disagree on how it will work.

EU officials have said that progress in the Cyprus reunification talks will be essential to move Turkey's slow-moving EU accession process forward.

Turkey refuses to recognise the Republic of Cyprus, even though it is itself a candidate to join the club of which the republic is now a member. It has also refused to open its ports and airports to Greek Cypriot ships and planes.

Turkey has opened talks on 10 out of the 25 policy areas it needs for EU entry but has provisionally completed negotiations on just one. The EU has frozen eight chapters following Ankara's refusal to open its ports and airports to Greek Cypriots.

Turkey's membership bid has also been held up by opposition from France and Austria which demand Ankara do more on certain domestic and external issues, including human rights and reforms.

The feud has even deadlocked EU relations with NATO - ironically, since the two alliances share four-fifths of their members and are headquartered just five kilometers apart in Brussels.

Cyprus is not a NATO member, but Turkey is, making both sides reluctant to approve any kind of formal cooperation between the two organisations - even though their soldiers and diplomats are dealing with exactly the same missions in places like Afghanistan and Kosovo.

For their part, Greek-Cypriots have also blocked any EU-proposed infrastructure projects, including direct trade and waterworks, that implies recognition of the authorities in the Turkish-Cypriot north.(dpa)