"Blackmail will not make Turkey change its position," Abdullah Gul told a ceremony in the Turkish sector of the island's divided capital Nicosia to mark the 23rd anniversary of the foundation of the self-proclaimed TRNC.
"Neither Turkey nor the Turkish Cypriots have bowed to blackmail in the past and will not bow to it in the future either," he said.
Gul said European Union promises made two years ago to lift the isolation of the Turkish Cypriots were yet to materialise.
"It is unacceptable that the Turkish Cypriots be made to pay for the intransigence of the Greek Cypriots. Before all else, we want the unjustified sanctions to be lifted," he said.
The Cyprus government rejected Gul's "blackmail" accusation.
"As an equal partner of the European Union, we respond to Gul by saying the European Union does not resort to blackmail," said government spokesman Christodoulos Pashardes.
"The European Union simply demands that Turkey fulfils its obligations towards the bloc, obligations which Turkey itself undertook. This requirement cannot be construed as blackmail," he added.
The Greek Cypriot spokesman also condemned Gul's visit to the divided island as "illegal" and a "provocation".
EU promises of financial aid and a trade package for the TRNC date to April 2004, when Turkish Cypriots voted in favour of a UN plan to end Cyprus' 32-year division.
The plan was massively rejected by the Greek Cypriots, who joined the European Union a month later.
The island's division has now become one of the most formidable obstacles to Turkey's bid for the European Union and the accession talks that began only last year.
Under a customs union agreement with the 25-nation bloc, Turkey must open its ports and airports to Cyprus, but it does not recognise the island's internationally acknowledged Greek Cypriot administration.
Signing the trade agreement was a prerequisite for Turkey launching EU accession negotiations.
Ankara says its ports will remain off-limits to Cyprus unless the European Union delivers on its promises to the TRNC, which only Turkey recognises.
In a key progress report last week, the European Commission gave Turkey until the December 14-15 EU summit to open its ports to Cyprus to ensure that membership talks remain on track.

Copyright AFP (Agence France-Presse), 2006