Wednesday

31st Aug 2016

Analysis

Cyprus - buoyed by gas hopes

  • Gas - how will the south-east Mediterranean deal with it? (Photo: Naftogaz of Ukraine)

Seen through a Brussels-based prism, it is easy to forget just how far to the east Cyprus is.

Lebanon, Syria and Israel are all within a couple of hundred kilometres. To its north is Turkey, to its south Egypt. To fit on euro coins, Cyprus had to be moved several degrees further west.

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

There is a price to pay for being such a strategically well-placed island.

Down through the years the island has had many masters. In ancient times it knew Assyrian, Egyptian, Persian, Greek and Roman domination. It was part of the Byzantine empire before coming to the attention of the Crusaders, the Knights Templar, the Franks and the Venetians. From being under the Ottoman Empire it was then passed to the British in 1878. Turkey invaded in 1974.

Since then the island has been partitioned. The intractable division between the internationally-recognised south and the Turkish-Cypriot north has poisoned the EU's relations with Nato and frozen Ankara's membership talks. EU officials regret letting the island into the Union in 2004 as a divided entity.

"As long as Cyprus is divided, Europe is divided," EU Council president Herman Van Rompuy remarked recently.

For long associated in the EU public's mind with the little understood 'Cyprus question.' It now has found bailout notoriety too. The country became the fifth eurozone state to request aid, largely due to heavy exposure of its banks to Greece.

But despite this unwanted attention, Cyprus has a spring in its step. And the reason is gas. There are large reserves of it off its shores. It started exploratory drilling last year.

The crude-oil dependent island hopes it will supply its own needs by 2017.

It expects to start making money in 2019. Energy minister Neoklis Sylikiotis speaks of Cyprus "becoming a regional energy hub" and of creating a "third energy corridor."

Multinational oil companies from the Netherlands, France, Italy the US and Korea are circling.

But technical negotiations with firms staffed with wily experts will be one thing. Managing the potential geopolitical fall-out will be quite another.

Israel has even bigger gas reserves off its shore. It has shown interest in a joint venture to pipe gas to Cyprus and then further on to Europe.

This has irritated Turkey which has resorted to sabre rattling – both by exploring gas off Cyprus' Turkish Cypriot coast, and by threatening not to do business with companies that work with Cyprus.

"The pressure on the Republic of Cyprus will be continuous and huge," says Costas Melakopides, a former professor of political science at the university of Cyprus.

He suggests a new triangle of influence - Cyprus, Israel and Greece - could come about if the gas is commercially exploited.

It is hard to see how Russia - a close ally of Cyprus - will not be involved.

Cyprus has already received one loan from Moscow and is currently seeking another, leaving it open to Russian pressure.

For Europe as a whole, a Cypriot energy route would be a "plus," says Stephen Tindale from the Centre for European Reform. Particularly as it is "questionable" whether Europe's other planned pipeline, Nabucco, will get off the ground.

"But given the inevitable involvement of Turkey and Israel, this will be even more complicated," says the analyst.

Nevertheless, Cypriots are thinking big.

Neoklis Sylikiotis believes the gas will serve as a "catalyst" for reunification between the two sides of the island. It wants to set up a hydrocarbon fund - on Norway's model - for all of the island's people.

Meanwhile, the rest of Europe is waiting to see if the gas will prove to be a boon for the region or throw it into further instability.

Stakeholders' Highlights

  1. EuridThe 2016 .eu Web Awards is a Chance to Make Dreams Come True so Vote Today !
  2. Nordic CouncilNordic-Baltic Co-operation Vital in Turbulent Times
  3. GoogleBrussels: Home of Beer, Fries, Chocolate and Google’s Policy Team - follow @GoogleBrussels
  4. HuaweiSeeds for the Future Programme to Bring Students to China for ICT Training
  5. EFASpain is Not a Democratic State. EFA Expresses Solidarity to A. Otegi and EH Bildu
  6. UNICEFBoko Haram Violence in Lake Chad Region Leaves Children Displaced and Trapped
  7. HuaweiMaking Cities Smarter and Safer
  8. GoogleHow Google Makes Connections More Secure For Users
  9. EGBAThe EU Court of Justice Applies Proportionality in Assessing Gambling Laws
  10. World VisionThe EU and Member States Must Not Use Overseas Aid for Promoting EU Interests
  11. Dialogue PlatformInterview: "There is a witch hunt against the Gulen Movement in Turkey"
  12. ACCAACCA Calls for ‘Future Looking’ Integrated Reporting Culture With IIRC and IAAER

Latest News

  1. Verheugen did not think VW cheating was morally possible
  2. Greece and EU to tackle labour market reform
  3. EU's €13bn tax decision angers Ireland, US, and Apple
  4. EU and US continue trade talks despite French criticism
  5. UK cannot have and eat EU cake
  6. Apple ordered to repay a record €13 billion to Ireland
  7. End in sight for EU-Poland dispute, says deputy PM
  8. Turkey pledges loyalty to EU and Nato