Cyprus energy – averting a US-Turkey crisis

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Cyprus continues to proceed with offshore oil and gas projects despite Turkey's opposition. [Maersk Drilling / Flickr]

ExxonMobil’s plans for natural gas in Cypriot water is strongly opposed by Turkey, which could send warships to block drilling, as it has done in the past. A solution to the crisis would be to start talks on energy issues among the parties of the Cyprus conflict, writes Matthew Bryza.

Matthew Bryza is a non-resident senior fellow at the Atlantic Council’s Eurasia Centre and Global Energy Centre and a retired US Ambassador. He also served as the de-facto US mediator of the Cyprus Question.

The Eastern Mediterranean has become perhaps the most geopolitically tense region on earth. While Syria is most sharply in focus, another crisis may be quietly brewing in the waters surrounding Cyprus, the launching point for the British warplanes that struck Syria on April 14.

These latest tensions, however, have nothing to do with Syria; instead, they emanate from ExxonMobil’s plan to drill for natural gas in Cypriot waters this October and Turkey’s determination to oppose it.  Conceivably, Turkey could even send warships to block ExxonMobil’s exploration vessel, as it did this past February in the case of Italian oil company ENI.

A standoff between Turkey and the world’s largest private oil company, backed by Washington, could strain already fraught relations between NATO’s two largest military powers to the breaking point.  To avert such a maritime crisis, talks should begin now on energy issues among the parties to the Cyprus conflict.

Turkish President Recep Tayyip Erdogan called for precisely this sort of dialogue on March 20, when he proposed, “Turkish and Greek Cyprus should form a joint committee for drilling activities and both sides should get their fair share of the island’s natural resources based on their populations.”

In that same speech, however, President Erdogan also warned that Turkey would defend what it sees as its own and Turkish Cypriot rights regarding oil and gas projects in Cypriot waters. These include not only the right for Turkish Cypriots to receive a share in hydrocarbon revenues proportionate to the relative size of their population, but also to participate in all decision-making related to offshore energy projects.

These claims derive from Turkish and Turkish Cypriot legal arguments that Greek Cypriots lost their legitimacy to govern the Republic of Cyprus in 1963, when, in the midst of brutal inter-communal clashes, they banished Turkish Cypriots from the Cypriot government/parliament and seized control. These actions, the Turkish parties argue, eliminated the political equality between the two communities that was a cornerstone of the 1960 treaties and Constitution, which had established a new Cypriot state, independent from the United Kingdom, as a bi-zonal and bi-communal federation.

Tensions between the Turkish and Greek Cypriot communities subsequently intensified, until in 1974, a group of radical Greek Cypriot nationalists and military officers from Greece staged a coup aiming to unify Cyprus with Greece, in violation of the 1960 Treaty of Guarantee.  Ankara invoked its obligation under that treaty to protect the security of Turkish Cypriots and sent tens of thousands of troops to the island in what it terms an intervention — and the Greek parties call an invasion.

Turkish Cypriots subsequently developed their own administrative organs and in 1983 declared the Turkish Republic of Northern Cyprus (TRNC).

Whereas Turkey is the only country to recognize the TRNC, it is also the sole state that does not recognize the Republic of Cyprus.

Ankara thus argues the Greek Cypriot government lacks any legal authority over affairs pertaining to the entire island, including the right to claim a continental shelf and an exclusive economic zone (EEZ). Consequently, according to Ankara, all agreements reached by Greek Cypriot authorities with international oil companies for offshore oil and gas exploration are legally invalid.

Moreover, Turkey claims that its own EEZ extends to hydrocarbon blocks southwest of Cyprus licensed by Greek Cypriots, while the TRNC’s claimed EEZ encompasses most of the remaining Greek Cypriot offshore exploration areas.

It was in defense of such claims in mid-February that Turkish warships prevented ENI’s drill ship, the Saipem 12000, from reaching an exploration block southwest of Cyprus in an area Turkey claims as part of its EEZ.

Approximately one month before President Erdogan made his March 20 statements, several Turkish warships suddenly developed engine failure astride the Saipem 12000’s course in international waters.  Each time the Italian vessel changed course, a new Turkish Naval vessel appeared again to block its forward progress. Eventually, the commanding Turkish naval officer radioed the Italian ship that the area beyond the warships had been closed for military exercises. At that point, the Saipam 12000 abandoned its quest to reach Cyprus and set sail for a new drilling job in Morocco.

Greek Cypriot authorities, with full support from the European Commission, denounced this Turkish naval action as an illegal use of force, notwithstanding the Turkish Government’s insistence its warships never explicitly threatened to use force.

They further argue that the Republic of Cyprus is a member of the United Nations and European Union and that their is legally recognized by every country except Turkey.  Thus, Greek Cypriots insist they enjoy full authority to claim an EEZ and license exploration blocks.

They consequently refuse to discuss offshore energy projects with Turkish Cypriot authorities unless/until the two communities reach a comprehensive Cyprus settlement.  Many Greek Cypriots were therefore buoyed by the port call at Limassol, Cyprus, on March 19, (e.g., one day before the Erdogan statement), by the U.S.S. Iwo Jima aircraft carrier, hoping this ship visit might have been a warning from the US Navy to its Turkish counterpart not to harass ExxonMobil’s drill ship later in the year.

A cooler analysis, however, would conclude that a maritime standoff between the Turkish Navy and ExxonMobil would not be in the interest of Greek Cypriots.  Were US warships to accompany ExxonMobil’s vessel, the U.S. and Turkish Navies could find themselves on a collision course, causing political risk premiums for Cypriot natural gas projects to skyrocket.  Alternatively, absent a U.S. naval escort, ExxonMobil’s drill ship would likely have no choice but to turn around in response to Turkish naval vessels, as did ENI’s vessel. In either scenario, ExxonMobil would be forced to delay its exploration program in Cyprus, and its fellow international oil companies would probably follow suit.

The timing of such delays would be terrible for Cyprus and its commercial partners, given the large volumes of liquid natural gas (LNG) from the US, Australia, and Russia that are readying to enter the global market.

Greek Cypriots thus have a strong interest in averting this sort of maritime crisis which will require dialogue among leaders of both Cypriot communities as well as Turkey.

Discussing offshore energy projects with Turkish Cypriots, however, is still politically hazardous for Greek Cypriots. It may therefore be necessary to begin with a less controversial energy topic, such as electricity sharing. After all, Turkish and Greek Cypriots have been sharing electricity since January 2016, when three pre-existing power lines were reconnected and electricity was able to flow again throughout the entire island in a single and synchronized network.

This reconnection has allowed Greek Cypriots to increase use of their installed renewable energy capacity by 20 percent by ensuring access to more uninterruptable electricity to keep the Cypriot power grid balanced when the sun doesn’t shine and wind doesn’t blow.  Building on this success, Greek Cypriots could further increase their renewable energy usage through an 80-km subsea power connection from Turkey to the north of Cyprus, which would further increase the island’s “base load”.  Perhaps even more significantly, a Turkey-Cyprus electricity link could end Cyprus’s dubious status as the EU’s last “energy island:” by connecting with Turkey’s electricity grid, Greek Cypriots would gain a synchronized link with the European electricity grid (e.g., the European Network of Transmission System Operators-Electricity or ENTSO-E) via Turkey’s inter-connections with Bulgaria and Greece.

Greek Cypriot nationalists, however, will oppose a Turkey-Cyprus electricity connection a priori on political grounds, arguing they must never become dependent for electricity supplies on Turkey.  They could hedge this risk, however, by proceeding with their planned Euro-Asia Interconnector, an electricity cable from Israel to Cyprus to Greece.

In this scenario, the electricity from Turkey to northern Cyprus would become merely an option for Greek Cypriots, and one that would provide environmental and energy security benefits that are strongly supported by the EU.

Still, if hardliners are not yet ready to discuss further electricity sharing with Turkish Cypriots, perhaps they would be willing to explore a topic that knows no political boundaries, environmental protection of the sea. Indeed, an oil spill in the north of Cyprus can easily spread to the south, and vice versa.

Moreover, Turkish Cypriot authorities could probably benefit Greek Cypriot experience in adopting and implementing EU environmental protection regulations.  This discussion of maritime environmental issues could then broaden to include electricity sharing followed by offshore energy exploration.

The key point is to break the ice.

The alternative is to allow the current state of affairs to drift toward yet another security crisis in the Eastern Mediterranean, and one that could pit two NATO Allies against each other while denying both Cypriot communities tangible benefits otherwise within reach.  And, if these energy-related discussions could be compartmentalized so as to avoid setting any legal precedents, they could generate new patterns of bi-communal cooperation that might help rekindle UN-led talks on a comprehensive Cyprus settlement.

For all these reasons, it is important for the United States and European Union to act now to provide the encouragement and political cover for cautious Cypriot politicians to begin a discussion that carries political risks but could also promise economic, environmental, and even strategic breakthroughs.

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