The Cost of Frozen Conflict for Cyprus, Greece and Turkey
The Cost of Frozen Conflict for Cyprus, Greece and Turkey
Fresh Thinking Needed on Cyprus
Fresh Thinking Needed on Cyprus

The Cost of Frozen Conflict for Cyprus, Greece and Turkey

Last month, iron anti-riot shutters boarded up the street-side windows of the Grande Bretagne hotel ballroom in Athens as fine-suited patriarchs of Greek and Cypriot industry gathered for the annual Athens Energy Forum, hoping that recent discoveries deep beneath the Mediterranean might power them out of austerity budgets and Eurozone bailouts.

But the idea of hydrocarbon salvation in the eastern Mediterranean is wishful thinking. The potential riches remain buried under decades of sterile politics: a lose-lose-lose failure to compromise between Greece, Cyprus and Turkey that will likely keep gas in the ground for much longer than is ever admitted in silver-tongued speeches at the Grande Bretagne.

The underlying reason is this: neither Turkey, nor Greece, nor Cyprus can securely say what belongs to whom. They have snookered themselves with maximalist claims to Exclusive Economic Zones in the Aegean and Mediterranean that cannot be resolved without major compromises. (According to the U.N. Law of the Sea, EEZs can extend up to 200 nautical miles from a country’s coast line; countries usually agree a median line if there is an overlap; islands may or may not allow EEZs to extend much further than a country’s mainland). If they try to drill without these compromises, they will have less reputable partners and higher costs; they will make un-economic development decisions; and they will risk igniting new conflicts.

This impasse is a legacy of old conflicts left unresolved because political elites have long chosen quick political gain over courageous steps towards compromise. The price of nationalist rhetoric over islands and maritime boundaries always seemed insignificant. But these individual actions have accumulated, and the resulting political blockage now gravely threatens core areas of these countries’ independence. Which, paradoxically, is the very reason the elites said they couldn’t compromise in the first place.

In Cyprus, an understandable but too absolute obsession with righting the wrongs of the Turkish invasion of 1974 led to its rejection of the UN’s Annan Plan to reunite the island in 2004. It also fostered a national blindness to the Cypriot elite’s survival tactics – loose bank regulation and risky international dalliances. Development and investment decisions were put off year after year because of unresolved angst about whether a conflict that left 30,000 Turkish troops dividing their capital and occupying the northern third of the island was really a frozen one.

In Cyprus, the real natural gas volumes in the new Aphrodite Field remain unknown. But even if it is 200 billion cubic meters, as claimed, profits could be 20-30 per cent less because of the frozen conflict – which, according to some bank reports, would mean no profits at all. That’s because of limited export options. An LNG plant will cost some $10 billion and face considerable market risks. A pipeline to Greece may cost $15-$20 billion. By contrast, studies have shown (see our report Aphrodite’s Gift: Can Cypriot Gas Power a New Dialogue? and the Peace Research In Oslo report The Cyprus Hydrocarbons Issue: Context, Positions and Future Scenarios) that the most profitable export route is by pipeline to Turkey – a growing market with easy onward access to Greece now and, most probably, Europe soon. But that pipeline cannot be built without a Cyprus settlement.

Failure to resolve Cyprus has forced Turkey, too, to pay a heavy long-term price in damage to its diplomatic image. It has lost EU aid in the past and now the freezing of half its negotiating chapters with the EU. Ankara did give brave support to the Annan Plan in 2004. But this was a late and brief exception to Ankara’s unwillingness to put behind it Turkish Cypriot suffering in the 1960s, and its failure to use its position of overwhelming power to really reach out to Greek Cypriots.

Turkey has other problems too. It is doing exploratory drilling in uncontested territorial Mediterranean waters (within 12 nautical miles of its coast), but beyond that Greek and Cypriot EEZ claims leave it with a very reduced uncontested area, despite the fact that Turkey’s big size gives it one of the longest coastlines in the eastern Mediterranean.

In Greece, politicians’ failure to solve the Aegean Sea nexus of maritime zone disputes has long forced Athens to spend a disproportionate five per cent of its budget on defence – the highest ratio in Europe. Prime Minister Antonis Samaras told executives at the Athens Energy Forum that he is determined to drill. But his options are limited. Drilling due south of Crete would not conflict with Turkish claims (it might clash with Libyan ones, however). But anywhere east of Crete, and almost anywhere in the Aegean Sea, it will confront Turkish claim. And any clash of claims means extra, and possibly prohibitive, costs and risks.

In the Aegean, Turkish officials know perfectly well that Greece’s claim is much stronger than its own (with 2,000 Greek islands dotting that sea). And Greek officials must know that Turkey’s claim in the Mediterranean is much stronger than theirs (since the Greek position is based on a speck of an archipelago 125 miles east of the nearest Greek territory). If the two sides went to the International Court of Justice, the normal arbitration venue, the court would probably balance Greek rights in the Aegean with Turkish rights in the Mediterranean. But Turkish officials say they will never go to court with Greece over this because it would leave unresolved the overlapping Cypriot claim in the Mediterranean. And this claim cannot be dealt with until – you’ve guessed it – the Cyprus problem is settled.

It doesn’t have to be like this. Greece and Turkey started a process of political and commercial normalisation in 1999 that brought out immense good will, new trade and positive energy. A normalisation on Cyprus that would somehow fit the Republic of Cyprus and the self-declared Turkish Republic of North Cyprus into the international system – whether it is reunification, a loose federation or a negotiated divorce – would probably do more good for the Greek Cypriot economy than either the gas or the bailout.

If Europe truly wants to help fellow EU members Greece and Cyprus in their hour of need – to put these damaged economies back on a healthier path, and to guide Turkey’s EU relationship onto a more normal track – its leaders should turn their attention once more to the mother of all obstacles to stability and prosperity on the southeastern edge of Europe: settling the division of Cyprus.

And to help that, since the EU, Turkey and Cyprus are always welded together like a triangle, European countries will have to reach out to Turkey: be proactive in making visa procedures more humane, push France to lift its block on four EU accession chapters, reciprocate the recent overtures by Turkish leaders, and publicly recognise the enormous advantages Europe has reaped as Turkey’s principal trade and investment partner.

Fresh Thinking Needed on Cyprus

A new round of talks has begun in Cyprus and the key parties seem eager to reach a settlement. However, the official goal — a bizonal, bicommunal federation — has stymied negotiators for decades. It is possible that the time has come to consider a mutually agreed separation, within the European Union, of the Greek and Turkish parts of the island.

The closest the two sides have come to an agreement on federal reunification was a decade ago under the Annan Plan, named after United Nations Secretary General Kofi Annan. It built on decades of work and won the support of the UN, EU, United States, Turkey, and even Greece. Indeed, any federal deal will have to look pretty much like the one hammered out in those years of intense negotiations.

Yet the reality of public sentiment bit back. 76 percent of Greek Cypriots said no to this plan at referendum. As Annan wrote to the Security Council afterwards, “what was rejected was the [federal] solution itself rather than a mere blueprint.”

Today the two sides — whose infrastructure and administrative systems are almost completely separate — are, if anything, further apart. The numbers of people crossing the border have fallen, while polls show weakening support for a federal outcome. In 2004, the Turkish Cypriot side supported the Annan Plan with 65 percent of the vote. But in 2010, they firmly voted back to power a leader whose whole career has been dedicated to a two-state settlement. 

Miracles may happen — and there are many on the island who remain desperate for a settlement — but my judgment is that any federal deal will have an even tougher time succeeding now.

Fresh thinking is needed.The two sides should broaden the agenda alongside the well-worn process of UN-hosted talks between Greek Cypriot and Turkish Cypriot negotiators.

One idea that should be fully explored is what the terms might be if Greek Cypriots — the majority of the island’s population — were to offer Turkish Cypriots citizens full independence and fully support them to become members of the European Union. 

Such a deal would have to be agreed to by Greek Cypriots, voluntarily and through a referendum. This will be hard. Greek Cypriot public opinion still, in theory, absolutely rejects any partition. But even senior Greek Cypriot officials agree in private — especially around the dinner tables of business leaders seeking a way out of Cyprus’s crushing banking crisis of 2013 — that there is an increasingly urgent need for a new way forward for the economy and for society.

There is also a growing drumbeat of expert opinion urging Greek Cypriots to consider outcomes beyond the traditional federal goal, which has become so discredited that few on Cyprus are paying much attention to the new talks. International Crisis Group has just published Divided Cyprus: Coming to Terms on an Imperfect Reality, while the U .S. Congressional Research Service concluded last year that “a ‘two-state’ solution seems to have become a more prominent part of the Turkish Cypriot/Turkey rhetoric and unless a dramatic breakthrough occurs early in the negotiations… that reality may gain more momentum.”

Polls show that key parts of what Greek Cypriots and Turkish Cypriots really want can look surprisingly similar. The Greek Cypriots have long wanted a solution securely embedded in European values and structures. That is what Turkish Cypriots say they want too: to become part of the European Union, not part of Turkey, even if they do wish that, in extremis, Turkey would protect their small community. The European part is crucial.

This can only happen with voluntary Greek Cypriot agreement, something that will have to be persuasively won by Turkey and the Turkish Cypriots. They will need to offer convincing terms: withdraw all or almost all of Turkey’s 30,000 troops on the island; end the demand to continue the 1960s “guarantorship” so hated by Greek Cypriots; guarantee compensation of Greek Cypriots for the two-thirds of private property in the north that is owned by them; return the ghost resort of Varosha to its original owners; and pull back to hold 29 percent or less of the island. 

After what will necessarily be a multi-year transition, this will also produce the European solution that Greek Cypriots so often say they want. The two sides will share the same basic legal norms and regulations, the same currency, and the same visa regime. Secure and confident in their new sovereign rights, the Turkish Cypriot side will likely waive the un-European demand for “derogations,” or limits on property purchases by Greek Cypriots in the new entity. 

Nobody is completely right on Cyprus: all parties share responsibility for the frozen conflict on the island. At the end of the day, an independent Turkish Cypriot state within the EU is not rewarding one side or another. Europe will doubtless flinch at accepting a small new Turkish, Muslim state in its midst. 

But Europe helped create this situation, since Brussels breaking its own rules contributed to the clumsy 2004 accession of the disunited island to the EU. 

Moreover, at least 100,000 of the 170,000 Turkish Cypriots are already EU citizens through their Republic of Cyprus passports.

Europe will also be among those who gain from resolving a dispute that has for four decades burdened so many local and regional processes, not least the long-hamstrung relationship between the EU and NATO, and the new question of how the countries of the East Mediterranean can most quickly, profitably and safely exploit new offshore natural gas reserves. This is not partition: it is reunifying Cyprus within the EU.

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