FACTBOX: Key issues in Cyprus conflict

(Reuters) - Rival leaders of divided Cyprus launch peace talks on Wednesday to end a conflict threatening Turkey's EU membership aspirations and relations between NATO allies Turkey and Greece.

Here are some top issues relating to the dispute:

WHAT TRIGGERED THE DISPUTE?

- Former British colony until 1960, Cyprus's Greek and Turkish Cypriots participated in power sharing until 1963, when a tax dispute triggered attempts by the Greek Cypriot side to curtail Turkish Cypriot say in government. Turkish Cypriots withdrew from the administration, leaving Greek Cypriots running the internationally-recognized Republic of Cyprus since.

- Violence erupted in December 1963, prompting dispatch of U.N. peacekeeping force on island six months later. Turkish Cypriots withdrew into enclaves, effectively partitioning the capital Nicosia.

- Turkey, citing its rights as guarantor power, invaded Cyprus in July 1974 after Greek-inspired nationalists staged brief coup which toppled legitimate government.

WHY SOLVE IT?

- Cyprus has been a member of the EU since 2004, but it is effectively represented by Greek Cypriots who have veto powers over Turkey joining the bloc in future. The vast Turkish market of 72 million people is a key ally of the United States perched on the edge of the volatile Middle East and Caucasus regions.

- With Cyprus being in the EU and Turkey being in NATO, defense relations between the two organizations have been fraught with problems. Turkey has blocked military cooperation between NATO and the EU, saying NATO intelligence cannot be shared with non-NATO EU countries including Cyprus.

- Although it has been years since any violence between the two sides, 30,000 Turkish troops remain in the north and both sides have security concerns stemming from past conflict.

WHAT ARE THE KEY STUMBLING BLOCKS?

- Sovereignty: Disputes focus on whether a peace deal should be an evolution of the present Republic of Cyprus, as advocated by Greek Cypriots, or a "virgin birth" and merging of two equal states advocated by Turkish Cypriots.

- Guarantor system: An emotional trigger for both sides. Greek Cypriots will not accept any system of third countries offering the island guarantees of its sovereignty, similar to that set up in 1960. Turkish Cypriots say they need Turkish guarantees because of past experience with Greek Cypriots.

- Governance: How much say will go to each community in the context of a federal system, and what deadlock-easing mechanisms can be adopted for the smooth functioning of the state.

- Settlement and Property Disputes: Legal quagmire where thousands of individuals stake a claim on property seized decades ago. There is disagreement on whether a bi-zonal federation would permit free movement or try to enforce the ethnic majorities in the north and the south.