Sunday

27th Nov 2022

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.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

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.

Debt-ridden Cyprus takes on EU presidency

Debt-ridden Cyprus took over the day-to-day running of the EU Sunday becoming the first euro state to take on the presidency since the end of 2010.

Cyprus could 'combine' Russian and EU loans

Cypriot President Demetris Christofias is waiting to see whether the EU or Russia offers the best deal for his troubled banks - and has not ruled out taking loans from both.

ECB says more rate hikes to come

European Central Bank president Christine Lagarde said more rate hikes will come, but also admitted a recession will not lower inflation — leaving some economist question the logic of the policy.

News in Brief

  1. 'Pro-Kremlin group' in EU Parliament cyberattack
  2. Ukraine will decide on any peace talks, Borrell says
  3. Germany blocks sale of chip factory to Chinese subsidiary
  4. Strikes and protests over cost-of-living grip Greece, Belgium
  5. Liberal MEPs want Musk quizzed in parliament
  6. Bulgarian policeman shot dead at Turkish border
  7. 89 people allowed to disembark in Italy, aid group says
  8. UN chief tells world: Cooperate on climate or perish

Stakeholders' Highlights

  1. Nordic Council of MinistersCOP27: Food systems transformation for climate action
  2. Nordic Council of MinistersThe Nordic Region and the African Union urge the COP27 to talk about gender equality
  3. International Sustainable Finance CentreJoin CEE Sustainable Finance Summit, 15 – 19 May 2023, high-level event for finance & business
  4. Friedrich Naumann Foundation European DialogueGender x Geopolitics: Shaping an Inclusive Foreign Security Policy for Europe
  5. Obama FoundationThe Obama Foundation Opens Applications for its Leaders Program in Europe
  6. EFBWW – EFBH – FETBBA lot more needs to be done to better protect construction workers from asbestos

Latest News

  1. Sweden says 'no' to EU asylum relocation pledges
  2. The 'proof' problem with EU sanctions — and how to fix it
  3. The EU gas cap: will the bottle ever be 'uncorked'?
  4. Enough talk, only rights can eliminate patriarchal violence
  5. Swedish EU presidency: 'Ukraine, Ukraine, Ukraine'
  6. EU Commission to keep Hungary's EU funds in limbo
  7. 'No substance' price ceiling for gas leaves everyone disgruntled
  8. Paying consumers who save most energy could tame gas prices

Stakeholders' Highlights

  1. European Committee of the RegionsRe-Watch EURegions Week 2022
  2. UNESDA - Soft Drinks EuropeCall for EU action – SMEs in the beverage industry call for fairer access to recycled material
  3. Nordic Council of MinistersNordic prime ministers: “We will deepen co-operation on defence”
  4. EFBWW – EFBH – FETBBConstruction workers can check wages and working conditions in 36 countries
  5. Nordic Council of MinistersNordic and Canadian ministers join forces to combat harmful content online
  6. European Centre for Press and Media FreedomEuropean Anti-SLAPP Conference 2022

Join EUobserver

Support quality EU news

Join us