Boosted by the missile order, Clerides is re-elected president in February. But following Turkish threats of pre-emptive military action, Clerides decides in November not to take delivery of the missiles and re-directs them to Crete.

The European Court of Human Rights, reinforcing its decision in 1996, orders Turkey to pay compensation to a Greek Cypriot refugee, Titina Loizidou, for barring her access to her property in Kyrenia. Turkey fears the landmark ruling – which does not forfeit her rights to the property – will open the floodgates for countless refugees to file lawsuits. In December 2003, Turkey pays Loizidou more than $1m compensation.
Clerides appoints Vassiliou as chief negotiator for EU accession negotiations, which are initiated in April. Turkish Cypriots reject an offer by Clerides that they join the negotiating team.