Foreign Policy Blogs

Cyprus: How to kill two birds with one stone

Levant_Basin

The Levant Basin – via Wikimedia Foundation

Is a solution to the ongoing, four-decade long Cypriot crisis finally at hand? Judging by the insinuated words of Joe Biden during his recent visit to the divided island, so it may seem. It is no happenstance that the second time a U.S. vice president visits Cyprus after Lyndon Johnson’s visit of 1962 took place this May. With Russia falling prey to its imperialistic whims, in Europe the question of “energy security” (i.e., diversification away from Gazprom) has been put back on the table with a vengeance. And little Cyprus stands to become Europe’s next big energy hub, according to Joe Biden at least.

According to the U.S. Energy Information Agency, the country “has substantial offshore acreage in the Levant Basin, which contains recoverable resources of 1.7 billion barrels of oil and 122 trillion cubic feet (tcf) of natural gas.” To put these figures into context, Europe consumes annually 18 tcf, meaning that the Levant Basin could singlehandedly quench the continent’s thirst for gas for almost seven years. Noble Energy announced the discovery of 3.6 to 6 tcf in Block 12 located within Cyprus’ exclusive economic zone. But there is a catch: Turkey.

But there is a catch to this precious jackpot. Cyprus is the prime example of frozen, or otherwise protracted, conflicts sidestepping decades of appeasement efforts. In an effort to prevent the country from uniting with Greece, Turkey invaded in 1974, splitting the island in two, according to their ethnic lines. A 180-kilometer makeshift wall called the “Atilla line” and patrolled by U.N. blue berets separates the Turkish republic of North Cyprus from its Greek, sister. Turkey currently has stationed some 35,000 troops in the breakaway province.

Ankara does not recognize the Southern Cypriot government in Nicosia and has stressed that any attempts of drilling in the offshore Levant Basin could be met with military force. Why? Because the maritime border between the two countries has not been demarcated yet. In fact, Turkey has claimed that the offshore blocks (including Block 12) in southern Cyprus, all the way to Egyptian waters, rightfully belong to it.

Disputed EEZ border between Cyprus and Turkey - via Wikimedia

Disputed EEZ border between Cyprus and Turkey – via Wikimedia

Nevertheless, even if so far this gunboat diplomacy has yet to show its teeth, foreign companies have shied away from committing substantial resources to a project that may be stopped in its tracks by the threat of military violence. So far, only exploratory works have been conducted in Block 12, as drilling would be a red line for Turkey.

It is for these very reasons that Biden’s visit to Cyprus was of significance. Accompanied by officials of the Department of Energy, the Vice President held talks with the leaders of both regions. Washington has therefore decided to take a hands-on approach to restarting the long-delayed peace process between the two warring halves of the island, which have become of paramount importance after the discovery of the substantial offshore energy resources. The crisis in Ukraine has merely added significance to these findings.

The Levant Basin spans the territorial waters of Cyprus, Israel, Lebanon, Turkey and Egypt. Tapping into their riches would spur the development of these countries and would dramatically reduce Europe’s dependence on Russian gas. Biden made that quite clear, by stating that, “We must be resolute and united in the face of Russian intervention”

For Cyprus, drilling in the Mediterranean could become a boon of massive significance, as Nicosia is still recovering following a sharp banking crisis which pushed the European Union to bail out the country and impose a never-seen-before haircut on deposits, thereby plunging the country into recession. Two possibilities are proposed to reap in the profits: building a pipeline spanning the territories of Jordan, Turkey, Greece and Europe or building an onshore liquefaction terminal and shipping LNG by sea. The former option, despite being considerably cheaper, is not favored by Nicosia, which seeks to escape Turkey’s stranglehold and increase its leverage with Ankara in pushing for reunification.

This scenario almost sounds too good to be true: helped by Washington and the EU, peace and vast economic wealth could be essentially achieved in Cyprus in the span of a few years. And in some ways, it is. Cyprus’ Energy Minister has recently stated that the 5tcf discovered by Noble are simply not enough to render profitable a LNG plant, signaling that more exploratory work needs to be carried in adjacent blocks 2, 3 and 9. There are also a number of political risks that would threaten the projects future success and deal a blow to stakeholders. Solving the maritime disputes with Turkey would go a long way towards rendering the project feasible and subsequently achieving internal stability.

And then there’s the looming presence of Russia’s far-reaching interests in Cyprus through its investments in banking and real estate, not mention that the island is heavily dependent on Russian tourism. Moscow will probably try to throw a wrench in the works and stop the island from reunifying, fearful of the dent a future Cypriot energy hub will put in its hold over Europe’s gas sector.

Cyprus stands at the crossroads between Europe’s, Russia’s and the Middle East’s overlapping spheres of interest, in a geopolitical hotspot where competing interests ebb and flow. Since its interests are at stake as well, Europe should stop looking to its transatlantic partner to solve all of its problems and take initiatives in order to rid itself from the Russian stranglehold it currently finds itself in.

 
  • Yiannis Ioannou

    Turkey didn’t split the island “according to their ethnic lines”. The native population (Greek Cypriots) have been the inhabitants of the whole Cyprus for many 1000s of years. A small Turkish minority was created when the Ottomans forcefully captured Cyprus a few centuries ago, but that minority was spread all over the island and there was never any part of Cyprus with a Turkish majority.

    In 1974 Turkey invaded and ethnically cleansed the native majority from the north part of Cyprus and replaced them with Turkish Settlers brought from Turkey. Then Turkey declared a Turkish pseudo state in this occupied part of Cyprus, which is recognized by no other country.

    • ursanegro

      you might be right, historically, but when there were island-wide elections about a rapproachement, which was the side that said no? the greek side or the turkish side?

  • Kapouti Hellenic

    i like to share this with you #kapouti

    https://pbs.twimg.com/media/BqVsij-CQAEFDT1.png

  • Marina A. Theodotou

    Solid Points. As an avid FPA member I appreciate the article. As an economist and former COO of the Cyprus Investment Promotion Agency, I have commented on twitter during VP Biden’s visit that a Cyprus accession to NATO would provide both 1) military protection to the large investments required to extract, liquify, transport and distribute the gas and could hence facilitate the necessary FDI to complete the LNG facility and 2) a seat at the table in the same club with Turkey to finally negotiate and pick up the pieces – whatever is salvageable at this time after 40-50 years for the sake of the next generations. Too many grave political mistakes and hundreds of diplomatic fumbles and gambles of the past are still plaguing Cyprus, both in the south and the north costing 4 generations their cultural roots and identity. Refocusing the negotiations on both the hard numbers issues like robust economic growth metrics, gas, geopolitics and and ROI as well as soft issues such as education, human rights incl. gender and minority rights, health, environment, entrepreneurship, national security and safety and why not ” life, liberty and the pursuit of happiness’ for all Cypriots can be achieved only by new blood and women at the negotiating table.