After 28 years of failing to bridge their differences, Cypriot President Glafcos Clerides and Rauf Denktash, the leader of the republic's breakaway Turkish north, have only two months for an amicable solution to the west's longest-running diplomatic dispute. On December 14, the island, which meets all the EU's stringent economic criteria, is expected to be invited to join the union as part of its enlargement.

Failure to reach a settlement before then is likely to put Greece and Turkey, both Nato members, on a collision course if Ankara acts on its frequently made threat to annex the breakaway northern rump state.

Leaving Cyprus for New York, where today's talks have been convened by Kofi Annan, the UN secretary general, Mr Clerides described the coming months as "the most important diplomatic battle of the past 28 years - a battle that will determine the future of this country".

The internationally recognised Greek Cypriot government is nominally negotiating EU entry on behalf of the whole island. However, Mr Denktash has snubbed the invitation to participate in the negotiations with Brussels, and Turkey has repeatedly warned that it will seize the outlawed northern territory if the island is allowed to join the before a settlement is reached.

This week Ankara announced the creation of a joint parliamentary committee to examine ways of further "integrating" the north.

"On the issue of Cyprus, we have to resist until the end," the Turkish prime minister, Bulent Ecevit, said on Tuesday.

Annexation, say analysts, would damage Ankara's relations with Brussels and wreck any chance of EU membership for Nato's only member in the Muslim world.

"If that were to happen, Muslims around the world will see it as evidence that the west will never grant an Islamic country a place at the table of economic prosperity," said John Sitilides of the Western Policy Centre, a Washington thinktank.

In a televised address to the nation before leaving for New York, Mr Clerides said the internationally recognised south was "silently" strengthening its defences "to meet any eventuality".

Ankara has recently augmented its military presence in the north. Some 35,000 Turkish soldiers have been stationed there since invading the island in response to a Greek-led coup in 1974.

Concern about Cyprus has been reinforced by the lack of any evident progress since the two leaders re-engaged in face-to-face, UN-sponsored peace talks 10 months ago.

The negotiations have stumbled on the unwavering demand for international recognition by Mr Denktash, who derives support from Turkey's military top brass.

The Cypriot foreign minister, Ioannis Cassoulides, dispelled the fear that a settlement was virtually impossible before the EU's Copenhagen summit this December. Much depended on whether European-oriented reformists won Turkey's general election on November 3, he said.

"Nobody can exclude that a settlement can take place," he told the Guardian. "In view of her own [EU] expectations, Turkey may well change position. When the Turks change, they often do so abruptly. We will continue the talks right up until the very last day."

Cyprus would gain EU admission - with or without a solution - "because no one wants to make a mess of enlargement", Mr Cassoulides added.

Mirroring Ankara's threats, Athens has repeatedly warned that it "will have no other option" but to veto the accession of the nine other mostly ex-communist countries competing for EU entry, if Cyprus's application is turned down. "Whoever dares to stop Cyprus, stops EU enlargement," said George Papandreou, the Greek foreign minister, when he met Mr Annan last month.

Member states such as the Netherlands have voiced strong reservations about admitting the island before a political settlement that would allow Greek and Turkish Cypriots to join the EU at the same time, arguing that they do not want the EU's borders to end at a barbed-wire fence.

Diplomats say that while time is now of the essence, much of the problem has in fact been resolved, thanks to two decades of relentless UN-brokered peace talks and behind-the-scenes negotiations.

Tucked away in the country's scraggy central plain, the village was the one place where the middle-aged mason knew he would be welcomed.

"In this village", said Ibrahim Azziz - a writer who has "two mother tongues", Greek and Turkish - "there has never been war with hate. Since Ottoman times, both communities have lived quite happily, side by side."

In Potamia, most have spent centuries scratching a living from the land under the watchful eye of the landowners.

"Perhaps that's what kept us together - because we take immense pride in being Potamians first and Cypriots second," said Mr Azziz. "Please let it be known that we are a living example of the sort of place Cyprus could be."

In 1974, as one of the village's 39 resident Turkish Cypriots, it was Mr Azziz who insisted that his ethnic brethren remain in Potamia when others were beating a hasty retreat across the divide after hearing of the arrival of Turkish paratroopers.

Today, there is little to distinguish the two communities. When the sun goes down, Turkish Cypriots congregate in Potamia's cafes to joke and play backgammon with their Greek compatriots. Intermarriage is not uncommon.

"We looked at [the village of] Ayios Sozomenos down the road and knew that's what we didn't want to be," said Mr Azziz. The remains of houses scarred by bullets are all that is left of the village. There, Greeks and Turks fought to the last as the island was carved into ghettoes in the 1960s and then partitioned in the bloody aftermath of independence from Britain.

Before the Turks invaded, in the name of protecting the island's embattled Turkish community, the entire plain was dotted with ethnically mixed villages.

"Recently we set up a regional committee to advance policies of reconciliation between the two communities," said Potamia's genial Greek Cypriot mayor, Panicos Yiatrou. "When Turkish Cypriots get the chance they attend bi-communal events. It's been very successful."

But not all is well. At the village hall a row is brewing over the new emblem the people of Potamia want to adopt. Mr Yiatrou's Turkish Cypriot counterpart, Hussein Hami, refuses even to look at the Greek flag flying outside the offices, and Turkish Cypriots clearly don't like Mr Yiatrou's plans to have a Hellenistic head grace the new village flag.

"Sometimes they can be very insensitive to our needs," said Mr Azziz. "We wish the Greek Cypriots would seek out our opinion a little more often."

But even so, Mr Azziz admitted, the grievances that divide the two communities are "pretty small".

What really riles the village is that no government has ever promoted Potamia. "Hussein and I never stop making the point in all our official correspondence, that Greeks and Turks coexist peacefully here and that it is possible," Mr Yiatrou said.

Mr Ermin, the Turkish Cypriot mason, would not disagree. His son recently escaped to Potamia, but his wife and two daughters still live "on the other side". It is his great hope that one day, soon, they will join him.

The protesters converged on the RAF communications base at Akrotiri, one of the most important listening posts in the world, and vital for US-led intelligence gathering on Iraq and Iran.

Dimitris Christofias, the island's parliamentary president and powerful communist party chief, said Cypriots did not want the bases on their soil and feared reprisals if they are used to launch attacks on Iraq.

The bases - kept as overseas territories by Britain when it granted independence to Cyprus in 1960 - were used for the deployment of British troops during the Gulf war.

"What worries us most is Britain's assertion that the bases have been targeted by Iraqi missiles," said Green party MP George Perdikis, citing Downing Street's dossier on weapons of mass destruction allegedly held by Iraq.

Mr Perdikis said there were fears that giant antennae being erected at the base could be prone to terrorist attacks.