The Cyprus bailout and gas discoveries present both opportunities and challenges for the divided island.
By Menekse Tokyay for Southeast European Times in Istanbul -- 17/04/13
A reunified Cyprus may help bring newly discovered gas in the Eastern Mediterranean to European markets. [AFP]
The economic crisis in Cyprus coupled with the dispute over natural gas in the Eastern Mediterranean has observers and politicians raising questions over whether the current crisis could be a catalyst to restart stalled negotiations between Turkey and Cyprus or further split the two communities.
The perceived opportunity comes after Cyprus was forced to restructure its banking sector to avoid default and an exit from the eurozone in exchange for a 10 billion euro IMF and European bailout. Without a strong banking system to prop up the economy, cash-strapped Cyprus now needs to extract newly found natural gas deposits more than ever.
Positive signals have been coming from some political circles. Turkey President Abdullah Gul said that reunification would be in the economic interests of both communities on the island, while his recently elected counterpart in Cyprus, Nicos Anastasiades, is known for his support of reunification.
While rhetorically in favour of negotiations, the Cypriots appear intent on going ahead with unilateral natural gas exploration and extraction, two seemingly incompatible policies when it comes to reunification talks.
Turkey and the Turkish Cypriots hold considerable leverage, compounded by the fact that politics aside, the most economical and practical way to bring Cypriot gas to world markets is through a pipeline to Turkey.
A unilateral Greek Cypriot move to extract natural gas would run up against Turkey, which demands the consent of Turkish Cypriots as "co-owners of the island." In an act of gunboat diplomacy, Turkey has already sent its navy to the region to protect Turkish Cypriot interests and ratcheted up pressure recently by saying for the first time it would push for a two-state solution on the island if no deal on joint exploration could be reached with the Greek half of the island.
Reunification talks now revolve around high-stakes bailout and energy politics. Yet despite the chatter that the economic crisis and gas deposits can be turned into an opportunity, many analysts aren't so optimistic long intractable issues on the island can be resolved.
Bulent Aliriza, a former Turkish Cypriot diplomat and current director of the Turkey project at the Centre for Strategic and International Studies, told SETimes that although energy co-operation is desirable, for the moment it is just wishful thinking.
"There is currently no plan or even a detailed road map incorporating the advantages for both communities and at a broader level Greece and Turkey of including the energy issue as an agenda item in bilateral negotiations," Aliriza said, adding that the parties have turned inward and have failed to focus on the need to come up with solutions to their differences.
Aliriza said to turn the economic crisis into an opportunity, there is need for a comprehensive framework including a rational and viable plan for the joint use of offshore natural gas reserves.
"I am pessimistic about such an outcome because the Greek Cypriot side disregards the Turkish Cypriots as it seeks to unilaterally exploit the newly discovered energy reserves while arguing that this is a legitimate commercial transaction according to international law. Until and unless they abandon this approach, the crisis will not act as a catalyst for the solution of the Cyprus problem," Aliriza said.
Other analysts like Ahmet Sozen, the head the Department of Political Science and International Relations in Eastern Mediterranean University in Northern Cyprus, contend the mood of the Greek Cypriots is not amenable to re-starting the peace negotiations through concessions.
"Currently the Greek Cypriot society is in deep psychological shock due to the economic turmoil. They are in some sort of a 'victim' psychology. Due to the bailout episode there is a rise in xenophobia and more precisely a rise in anti-European sentiments," he said.
"Greek Cypriots need some time to be prepared to normalise. So, this autumn seems to be a realistic time for the restart of the peace negotiations," Sozen added.
According to Sozen, the Cyprus negotiations should be redesigned in such a way that it would include not just the two communities, but in an enlarged fashion, to include representatives from Turkey and Greece.
"In such a way it would be possible that the hydrocarbons issue as well as the Cyprus problem itself will be picked up by the relevant actors in line with the broader security and co-operation in the eastern Mediterranean," Sozen said.
Stavros Karkaletsis, president of Hellenic Center for European & International Analyses (HELCEIA) based in Athens and Nicosia, said only after a final political solution is reached will Cypriots be willing to split the economic benefits of the gas according to the demography of the island.
"It's not understandable for us to negotiate for energy sources, having at the same time 42,000 Turkish soldiers and more than 250,000 illegal settlers in occupied northern Cyprus," Karkaletsis told SETimes.
"The Greek Cypriots' priority is now the gas drilling and to save their economy from a full catastrophe," he said, adding, "Greek Cypriots will try hard to use gas benefits not only for their economy, but also to press Ankara for more positive actions to solve Cyprus issue."
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