Greek- and Turk-Cypriot leaders meeting in Nicosia have made limited progress on two key issues in ongoing efforts to try to reunify the island. Nathan Morley reports from Cyprus' capital they decided to hold one more meeting before launching fully-fledged peace talks.

Cypriot President Dimitris Christofias, (r), UN special representative to Cyprus Taye-Brook Zerihoun, center, and Turkish Cypriot leader Mehmet Ali Talat, after their meeting in Nicosia, 01 July 2008

No final decisions came out of the discussions between Cyprus President Dimitris Christofias and Turkish-Cypriot leader Mehmet Ali Talat.  They met for four-and-one-half hours in the U.N. patrolled buffer zone that divides this island.

A jointly prepared statement, read after the discussions by U.N. representative Taye-Brook Zerihoun, confirmed the two men will meet again later this month.

"They discussed the issues of single sovereignty and citizenship which they agreed in principal," he said. "They agreed to discuss the details of the implementation during fully fledged negotiations. They agreed to meet on 21st July, when they will undertake a final review of the working groups and technical committees."

But there have been no concrete agreements, and no date set for a launch of actual negotiations between the two sides. 

Many people want to be sure that questions relating to security, property, refugees, settlers, the economy and the constitution can be answered.

The Turkish Cypriots have been eager to launch full-fledged negotiations immediately, but the Greek Cypriots want to hold on until more preparation work has been completed.

In Cyprus, there appears to be a general feeling of fading optimism and uncertain times ahead that are seen as the major obstacles in the talks, which have been described as the last chance by many observers. Even once enthusiastic re-unification supporters say they are losing hope as the 34th year of division slowly moves to the 35th year.

"I do not think there is high-hopes in the northern part of Cyprus, because they lost their hopes during the last two-three years," said Ali Eral, the president of the Turkish Cypriot EU Association.

But there is a new player who could add some momentum to the process. Former Australian Foreign Minister Alexander Downer has said he will quit domestic politics this week and accept a post as the U.N. special envoy in Cyprus.

With his background in complex negotiations he could hold the key to future success in Cyprus.

Cyprus split in 1974 when Turkey invaded after an Athens-backed coup. The breakaway Turkish Cypriot north is only recognized by Turkey. Reunification talks have been deadlocked since 2004, when Greek Cypriots rejected a U.N. reunification plan in a referendum. Turkish Cypriots accepted it.