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    Cyprus Split Blocks Use of Gas Reserves



Energy is one of the toughest issues in the tortuous Cyprus peace process. It goes to the heart of the different concepts of sovereignty held by the two sides.

by: John Roberts

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Cyprus Split Blocks Use of Gas Reserves

Energy is one of the toughest issues in the tortuous Cyprus peace process. That’s because it goes to the heart of the different concepts of sovereignty held by the government of the internationally-recognised Republic of Cyprus in the Greek-populated north and by the government of the self-proclaimed and mostly unrecognised Turkish Republic of North Cyprus.

Energy is important because the question of how gas resources in and around Cypriot waters should be developed is becoming an increasingly divisive issue at a time when the leaders of both communities have put considerable effort into developing a personal relationship that they hope will enable them to conclude an agreement for the island’s reunification that can then be submitted to their respective communities in a referendum.

The issue was discussed at some length in the first ever conference on regional hydrocarbons development to be held in North Cyprus – an event in which Turkish Cypriot views predominated because Greek Cypriots, although invited, did not attend.

In essence, the core of the dispute is straightforward. Both Nicos Anastasiades, the Greek Cypriot president of the internationally recognized Republic of Cyprus and Mustafa Akinci, the Turkish Cypriot president of the self-proclaimed Turkish Republic of Northern Cyprus, agreed from the outset of their negotiations that development of the island’s offshore gas resources would come under the competence of the federal administration that they envisage being formed as and when the two communities both vote for unity.

And in public, they have have tried to mute their differences. Thus in March Akinci said, in the aftermath of another round of talks, that eastern Mediterranean hydrocarbons could provide "wealth to both sides” and that "we should not be turning this common wealth into an issue of tension."

But in the interim the authorities of the Republic of Cyprus – commonly dubbed Greek Cyprus or Southern Cyprus – argue that as the legitimate government of Cyprus they have the right to press on with development plans, notably by initiating a new licensing round.

In Northern Cyprus, however, the Turkish Cypriot argument is that there should be no such development until a new federal government is installed.

Berris Ekinci, the deputy director-general at Turkey’s foreign ministry, addressing the three day conference on Energy Security and Geopolitics in the Eastern Mediterranean, summed up the issue succinctly in comments made on 6 May: “Eastern Mediterranean hydrocarbons can either turn out to be a liability or an opportunity for the resolution of disputes in the region. The island’s resources belong to the two communities on the island. For that reason, they should be exploited and developed for the benefit of the two communities on the island.”

Such a statement is not particularly controversial. What does cause significant dispute, however, is whether current Greek Cypriot moves to develop offshore resources – and the only Cypriot resources that have so far been discovered lie in waters off the southern coast – should go ahead in the absence of either an overall reunification accord or some kind of interim agreement between the two communities.

A common Turkish perspective is that such development should simply not happen. “Letting the Greek Cypriots develop the resources is putting the cart before the horse,” the noted Turkish energy economist, Necdet Pamir, told the conference.

Discussions with those seeking to provide assistance on this critical issues to both sides make it clear that this is not the only viewpoint available. Because the predominantly Greek Cypriot Government in Nicosia does constitute the internationally recognised Government of Cyprus, it is quite free to secure the development of offshore resources in waters under its control.

But what it does with any gas that is brought to shore is quite another matter. If it is to serve both communities, then discussion between the leaders of both communities on how best the gas can be utilised are obviously crucial.

In particular, there is the vexed question of the gap between the worthy intentions of Anastasiadis and Akinci concerning long-term energy development and the notable lack of preparation as to how Turkish Cypriots would be involved in shaping such development, other than as consumers.

The two leaders have agreed that a post-settlement federal government would have responsibility for such key elements as production and exports from Cyprus’ offshore Aphrodite field, for future block leasing and drilling, for how hydrocarbons revenues should be used, and for such crucial geopolitical issues as delineation of the island’s exclusive economic zone (EEZ), the resolution of EEZ disputes with neighbouring states, and use of Cypriot territory or EEZ waters for the transit of gas exports from Israel.

However, it sometimes seems as if in practice the energy dimension of the settlement process is mainly characterised by a combination of lack of accurate information from political leaders to their own communities and by a lack of dialogue between Greek Cypriot and Turkish Cypriot institutions and experts.

On the Turkish Cypriot side there are doubts as to whether this gap can be bridged. Ergun Olgun, the principal Turkish Cypriot negotiator in the abortive “Annan Plan” talks in the early 2000s – a peace process that collapsed when Greek Cypriots rejected the plan in 2004 – is particularly pessimistic.

“I think that the window of opportunity is lost, or we are losing it,” he told the conference. “It is lost because of unilateral initiatives on both sides,” he added. In particular, he cited the Greek Cypriot announcement in March of a new licensing round “to select companies for operations in certain parts of the south.”

Olgun considered that this went against what he called “a gentleman’s agreement” between the Greek and Turkish negotiators under which they would not include any public reference to limits to further offshore development in their original heads of agreement concerning the reunification negotiations, but in practice the Greek Cypriot side would hold back.

Turkey’s former ambassador to Beijing and Ottawa, Rafet Akgunay, described this as “an apparent but unannounced modus vivendi reached between the two sides.” It followed, he said, in the wake of a controversial series of events in which the start of drilling of a second well at Aphrodite in September 2014 was followed by Turkey dispatching its survey vessel, the Barbaros Hayreddin Pasa, in protest, and then by the subsequent suspension of peace talks that were only resumed after drilling was halted and the Turkish ship had left the area.

“It seems that this modus vivendi is on the verge of collapse,” Akgunay said.

Ayla Gurel, a Turkish Northern Cypriot who works on energy issues at the Cyprus centre of the Norwegian-funded Peace Research Institute (PRIO), commented that “although it is often said that hydrocarbons development can be an incentive, there have been many developments which have been anything but compatible with this insight.” Current problems over energy, she argued, were “increasing the distrust between the two sides.”

She argued that the Greek Cypriots considered that the right to negotiate EEZs and thus develop resources was inalienable and non-negotiable and could not form part of a Cyprus solution. This she said, was at odds with Cyprus negotiations that are based on two equal partners.

As for revenues, Gurel said “they (the Greek Cypriots) say revenues will be shared with Turkish Cypriots, but at the moment this has nothing to do with Turkish Cypriots.”

The international community backed the Greek Cypriot stance, Gurel noted, but it appears to be oblivious to the implications, “although it makes an agreement less likely.”

For his part, Mitat Celikpala, professor of international relations at Istanbul’s Kadir Has University, said: “I don’t see any effort on the part of either community to use these resources as an incentive for the peace process.”

There are still those who hope that energy can be used to assist the peace process. One of them is a prominent former US negotiator on regional hydrocarbon development issues, Matt Bryza. Bryza, who is now working to develop a Turkish consortium to purchase eastern Mediterranean gas, told the conference: “I think we will see the possibility of such a pipeline only when a peace settlement has been reached – or when the basic principles of a Cyprus settlement have been agreed.”

Gas development, Bryza argued, “can become a confidence-building measure. But before that, it will remain a subject of suspicion.”


John Roberts, Chief Analyst