Hopes for a deal to reunify Cyprus this year were dashed in the early hours of Tuesday, when negotiations prepared for months failed over entrenched disagreements.

Talks between the leaders of divided Cyprus and United Nations officials in Switzerland couldn't overcome conflicting governance and property claims, which have scuttled previous attempts to overcome the 42-year-long division of the island between its Greek and Turkish communities.

The prospect of resolving the conflict has once again receded, say people involved in the talks. Officials from both sides said it is unclear when there might be another attempt.

"This is not a good night for our country,"Cyprus's government spokesman Nicos Christodoulides said after talks broke up. "We are not at all happy with the outcome."

The island?a member of the European Union that lies in the eastern Mediterranean, close to Turkey and Syria?has been split between the Greek south and the Turkish north since 1974. Numerous rounds of talks over the years have ended in failure.

Cyprus's President Nicos Anastasiades and Turkish Cypriot leader Mustafa Akinci, both strong supporters of the island's reunification, have sought to generate international momentum for a deal over the last 18 months. Both have raised hopes that 2016 could be the best chance to finally solve the dispute and turn the island into an anchor of stability in a troubled region.

But the two leaders failed to bridge their differences on how much territory would go to separate administrative units for Greek and Turkish Cypriots under a new federation, as well as how to compensate people from both communities who lost their land and property when the island was divided.

"Despite their best efforts, they have not been able to achieve the necessary further convergences on criteria for territorial adjustment that would have paved the way for the last phase of talks," the U.N. said. "The two sides have decided to return to Cyprus and reflect on the way forward."

A deal on territorial issues would have paved the way for a final summit of Greece, Turkey and Britain?the country's guarantor power since 1974?to seek an agreement on security arrangements on the island.

Turkey wants to keep its troops on the island, where they have protected the Turkish minority since the split. Greece and Greek Cypriots want the Turkish army to leave.

Cypriot leaders had hoped that a deal could deliver large economic benefits, in part by allowing new natural-gas pipelines connecting Europe and the Middle East via the island.

Cyprus also has gas reserves in its waters, the harnessing of which a peace deal could allow. Turkey has repeatedly threatened to mobilize its naval forces should Cyprus proceed unilaterally with plans to begin drilling.

Write to Nektaria Stamouli at nektaria.stamouli@wsj.com

(END) Dow Jones Newswires

November 22, 2016 07:25 ET (12:25 GMT)

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