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November 21, 2014

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ANALYSIS - Did Cyprus΄ dream to become a major gas provider go up in smoke?

The regional conflict involving Cyprus, Turkey and Greece over energy reserves discovered in Cyprus΄ proximity in 2011 has escalated. After a number of recent failures in the international arena, the Turkish government may feel that it needs a victory in the Eastern Mediterranean at all costs. The following dilemma has given way to a great analysis on the situation by the PressProject. HellasFrappe decided to republish the article so that our readers can obtain a better understanding of what stakes are at play. We just want to point out that the views and opinions that are posted in this article do not necessarily agree and/or disagree with our own.

The story is fairly well-trodden now. Back in October 20, a research vessel, accompanied by two navy ships, was sent out from Turkey to do seismic testing within Cyprus's Exclusive Economic Zone (EEZ), an abuse of the UN Convention of the Law of the Sea, and an intimidation that led to Cyprus immediately calling off the ongoing peace talks between Cyprus and the self-declared TRNC (Turkish Republic of Northern Cyprus) in northern Cyprus.

With a Turkish navy ship also observing the deep-sea drilling of gas deposits from eight kilometers away, we are seeing an escalation of a conflict that began when large gas deposits were discovered in Cyprus' proximity in 2011.
     "The least I can say is that negotiations, in order to produce results, cannot be conducted under such conditions of provocation," said Ioannis Kasoulides, the Cypriot foreign minister.
From Cyprus's perspective, a peace process cannot be undertaken in the context of such provocation. Turkey is acting illegally against a former foe to strongarm its way to natural gas deposits in the Eastern Mediterranean that lie under Cypriot sea. But is there more to this dispute than meets the eye?

Undersea gas deposits should - and still could - transform Cyprus's economy, which has suffered greatly since 2011. An estimated 5 trillion cubic feet (tcf) of gas was thought to be discovered in one offshore field within Cyprus's EEZ three years ago; the Cypriot government subsequently licensed U.S. energy firm Noble, Italy’s ENI and France’s Total to turn the discovery into an economic reality.

Added to that the likelihood of Cyprus becoming a gas hub, with new-found Israeli gas also running through it to reach European markets, while being surrounded by energy consumers eager to wean themselves off Russian gas dependency, it is easy to see how Cypriots saw undersea gas as a panacea to their economic strife.

It seems that neighbours Turkey and the TRNC had other ideas. In the eyes of Turkey, Cyprus is an illegitimate country, as the TRNC is to the rest of the world. Pro-government newspapers this week have been discussing the fact that Cyprus's EEZ was always disputed by Turkey, and the last maritime agreement that both countries agreed to was in 1960, in which much of the gas fields are within Turkey's range. Ergo, Turkey has a claim on the gas - and is willing to settle for some sort of share of the proceeds being given to the northern part of the island.

The problem facing Ankara here is that regardless of what it believes, the rest of the world failed to sufficiently sympathise with the Turkish invasion and does not recognise TRNC. Furthermore, Turkey has failed to receive any hint of EU or American backing, and is running out of friends - as its recent failure to join the UN Security Council as a temporary member illustrates. "The United States respects the Republic of Cyprus' sovereignty and right to develop resources in its exclusive economic zone, in keeping with customary international law,” chided Joe Biden via an official statement earlier this month.

While Cyprus is focusing on trying to extract natural resources, the Turkish president Recep Tayyip Erdogan's current foreign policy seems to involve making as many enemies in the region as possible, alienating Kurds, Shias, and Israel; and governments opposing the Muslim Brotherhood; meanwhile traditional foes such as Greece and Armenia persist in the background. Lukewarm efforts against the Islamic State have angered many governments worldwide. So with Turkey's reputation at rock-bottom, is it more than just coincidence that Cyprus chose this moment to provoke the old adversary?

From Cyprus's perspective the timing is understandable. A country in economic dire straits has a now-or-never moment to plunder its lucrative natural resources, while its neighbour is too busy fighting other battles and trying to restore its flagging reputation.

To raise the stakes, Cyprus has threatened to veto any further Turkish EU-joining procedures. Meanwhile Israel and Egypt eagerly joined the dispute. Egypt, which has got on well with Cyprus ever since the days of Nasser, is irritated by Erdogan's pro-Muslim Brotherhood rhetoric, and are in need of a local gas imports as well as EU-member allies. Meanwhile Israel and Turkey have been carping at each other for the past four years; Israel badly needs this disagreement settled so it can start drilling for gas and sending it across to Cyprus. Cyprus, Israel, Egypt and Greece have held  several meetings this month. But how far will these countries allow the crisis to escalate?

Many countries would fold under the such international pressure. To place Turkey in this category however would be to underestimate the belligerence of Erdogan when under pressure. When criticised, his instinct is usually to double-down, particularly with an election drawing close. His parliamentary majority is very safe and most of the media are afraid to criticize his policies. His strong position, domestically, gives him flexibility in how he deals with this crisis; the Turkish navy has been strengthened a great deal this year; Erdogan's supporters seem to appreciate his tough rhetoric that now incorporates Israel and Egypt as well as Cyprus.

After a number of failures in the international arena lately the Turkish government may feel that it needs a victory in the Eastern Mediterranean at all costs. So how far could this go? It is worth considering what might constitute a 'victory'. Earlier this month the TRNC's foreign minister, Özdil Nami, was invited to Israel for a major energy conference, suggesting that at least Israel can envisage a positive outcome involving both sides of the island.

Would some compensation for the TRNC be a fair outcome? Whatever one may feel about the rights and wrongs of the northern occupation, one might suggest that treating one group more favorably than the other holds moral implications. Furthermore, Cyprus would benefit from a settlement in the sense that under the current economic climate, any capital inflows are welcome. With this in mind, the current bout of sabre-rattling between the two states could well be an elaborate bluff, designed to make the financial settlement for either side be as favorable as possible.

The outcome may depend upon whether Erdogan sees the vested interests in the Eastern Mediterranean as part of a zero-sum game or not. Turkey may not enjoy watching its neighbours get stronger for geopolitical reasons, but on the other hand, it, too, can benefit from having more diverse resources. A potentially alternative source of natural gas to Russia should always be welcome - as Erdogan clearly seems to think, judging by his trip to Turkmenistan last week, where gas contracts have been signed.

Turkey should be able to benefit economically from having more prosperous neighbours, as it has with its trade with northern Iraq. It has already started selling electricity to TRNC, and soon will sell water. For the past two weeks Sabah, a government mouthpiece newspaper, has kept silent on the Cyprus issue, perhaps suggesting the government would like to quietly built bridges. It is up to both sides now to see if that is attainable.

PressProject


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