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Mon, Jan 09, 2012 | By Stephen Blank

Turkey and Cyprus’ Gas: More Troubles Ahead in 2012

This article was first published in the Turkey Analyst, vol. 5 no. 1 (www.turkeyanalyst.org), a biweekly publication of the Central Asia-Caucasus Institute & Silk Road Studies Program Joint Center. © Central Asia-Caucasus Institute & Silk Road Studies Program Joint Center, 2012.

New tension is brewing between Turkey and Cyprus after Cyprus’ and Israel’s enormous gas finds in the Eastern Mediterranean in 2010-11 and Turkey’s extremely negative reaction to those finds. Turkey can be embroiled with a conflict, not only with Cyprus, its European backers and Israel, but with Russia as well. The Cyprus energy conflict demonstrates the urgency of making progress on the tangled issue of Cyprus’ future and the relationships among its two ethnoreligous groups and of fully integrating Turkey into Europe.

Background

2011 was a difficult year in Turkey’s relations with Cyprus and 2012 does not look much better. Cyprus will hold the rotating Presidency of the EU from July to December and given a weak government at home, recent events will do nothing to ease conditions for Turkey’s entry into the EU. That means it will not support nor make any concessions on the vexed issue of the Turkish Republic of Northern Cyprus, the enclave created following the Turkish invasion in 1974. Neither is Turkey prepared to make unilateral concessions unless it is guarantee entry into the EU, something that will not happen. So a standoff and another wasted year on these issues is already in prospect. But those were not the issues that caused more tensions in 2011 and are likely to do so in 2012.

The new tension between Turkey and Cyprus revolve around Cyprus and Israel’s enormous gas finds in the Eastern Mediterranean in 2010-11. The issues relating to Cyprus’ gas could embroil Turkey, not only with Cyprus, its European backers, and Israel, but also with Russia, its supposed friend and partner.

During 2009 and 2010, Cyprus and Israel discovered enormous natural gas deposits off their shores in the Mediterranean Sea. And in late 2011 Noble Energy, the firm contracted by Cyprus with exploring for gas in its waters, announced a discovery of gas estimated at 5-8 trillion cubic feet of natural gas there. This discovery could not come at a better time for Cyprus, which in 2011 endured a slippage in its fiscal ratings, was shut out of international capital markets, hit by a large munitions blast, and was finally forced to accept a Russian bailout. All told, the discoveries by both countries amount to 33 trillion cubic feet of gas (ca. 1 trillion cubic meters). And the U.S. Geological Survey estimates that the Levant Basin, where most of these discoveries have occurred, may hold 122 TCF (3.4 tcm).

But these discoveries als have some negative repercussions. They have heightened tensions on Cyprus between the two states there and with Turkey. The discoveries offer Cyprus the prospect of becoming a local economic powerhouse in contrast to the near dissasters of 2011 and of thus reducing Turkish leverage upon Cyprus’ policies regarding the Cypriot Turks and Cyprus’ overall policies in general. Indeed, the gas finds to date give Cyprus enough gas to meet its needs for an estimated 150 years, fully satisfy its electricity generating needs for 210 years, and provide it with billions of dollars of revenues that will allow it to become a major exporter to Europe once pipelines or tankers carrying liquefied natural gas (LNG) can be built. So it can also expect an influx of much more foreign European captial to build those facilities, strenghthen and diversify its sources of foreign investment. It is likely that a pipeline will have to be built to connect with those that presently or soon will cross Turkey, or that a liquefication plant will need to be built to process Cypriot and Israeli gas finds. Not surprisingly, the TRNC government reacted cooly to the gas discovery and Turkey, which does not recognize the government of Cyprus, even sent an exploration ship accompanied by warships and fighter jets to the area after Noble started drillilng.

However, Turkey’s threats against Cyprus and Israel due to their exploration and drilling for gas in the Eastern Mediterranean caused concern in Russia. Moscow recently organized a large loan to Cyprus to sustain it against a crisis should Greece or Cyprus default because so many Russian accounts are held in Cyprus’ banks and then reinvested in Russia or used to launder the elite’s money by cycling it out of Russia into the global banking system. Clearly, Moscow cannot allow Cyprus to go under. Turkish threats therefore deeply disturb both Cyprus and Russia.

Indeed, once Turkey’s navy openly threatened Cyprus for signing an agreement with Noble Energy that is also a developing Israel’s maritime gas fields, Russia’s Ministry of Foreign Affairs publicly backed Cyprus’ right to develop its Mediterranean gas. Cyprus in turn labelled Moscow “a shield against any threats by Turkey.” Cyprus’ Prime Minister was also then able to charge Turkey with being a regional bully. Furthermore, Russia dispatched an aircraft carrier with fighter planes, and at least one submarine to Cyprus as a show of support for in an open example of it version of gunboat diplomacy. In other words, Moscow made clear that it would not tolerate Turkish threats against Cyprus, adding another issue to what is becoming an increasingly troubled agenda of Russo-Turkish relations. (See Turkey Analyst, 21 November 2011 issue)

Implications

This has apparently not deterred Turkey. On December 21 2011, Turkish naval vessels commenced shelling of the strip of water dividing the Cypriot and israeli gas exploration zones. On December 22, 2011, Israel retaliated by cancelling the sale to the Turkish Air Force of a $90 milion Long-Range Oblique Photography military surveillance system and the next day, Cyprus President Dimitris Christofias warned Turkey that Cyprus would retaliate agianst it if further threats and attacks took place. Meanwhile, U.S. Secretary of State Hillary Clinton has reportedly told Cyprus to keep drilling and ignore Turkish threats. Clearly, Ankara seems intent on pursuing a self-defeating course.

However, the consequences for Turkey do not end here. First, it is now clear that Turkey’s chances of joining the EU have receded even further. Second, Cyprus will probably no longer be economically vulnerable to Turkish pressure or to demands for concessions regarding the Turkish population on the island. This means a substantial diminution of any prospective leverage Turkey may have had in the past or hoped to have in the future.

Third, given Cyprus’ partnership with Israel, Turkish threats against Cyprus will aggravate the tense relationship with Israel that has already caused major headaches for Turkey in Washington and has left it with being in the bizarre position of simultaneously having deteriorating relations with Iran, Syria, and Israel. Fourth, the size of the Cypriot and Israeli discoveries and the plans to sell much of that gas to Europe directly cut against Turkish aspirations that are part of a deep elite consensus that Turkey’s geography makes it an energy hub for Europe. Now there could be alternative energy sources from the greater neighborhood that will go to Europe over which Turkey has little or no leverage.

Fifth, Russia has already demonstrated its will and ability to check Turkey in regard to Cyprus. That interest will only grow in the future because it is inconceivable that Moscow, which sees itself as being Europe’s main supplier of gas, will simply let Israel and Cyprus cut in with such massive impact into its sales and compete with it at no cost. This does not mean the use of military force but it does suggest that Moscow will bring substantial pressure to bear on Cyprus, if not Israel, to demand entrée into the gas business from their recent discoveries. Not only does this make it harder for Turkey to coerce Cyprus, it also has two negative implications for Turkey.

First, Russia’s presence in this sector of the gas market would enhance its leverage vis-à-vis Turkey in their bilateral energy dealings and limit Turkey’s ability to posture as an energy hub with the attendant benefits thereof. Second, from time immemorial geopolticians and geographers of all stripes have known that whoever controls Cyprus possesses the means to threaten with serious damage Turkey’s Mediterranean ports. Given Russia’s proclivities and that of its naval commanders who seek permanent anchorages and bases in the Mediterranean and may be in trouble in Syria due to its civil war, to seek such a facility at Cyprus may be tempting. This challenges Turkish security and NATO planning as well. But in conjunction with the Turkish threats to Cyprus and Moscow’s expected demand for a major place in Cyprus’ energy trade, it is a highly probable outcome based on existing trends.

Cyprus President Demetris Christofias arrives at Noble Energy’s Homer Ferrington oil rig in Republic’s Block 12 “Aphrodite” field, where exploratory drilling is underway to assess hydrocarbon reserves. (Nov 21, 2011 / cyprus-mail.com)

Conclusions

The Cyprus issue, considered in all its many dimensions, highlights the fact that Turkey’s zero problems with neighbors has run aground on the shoals of these neighbors’ competitive interests with those of Turkey and with great power politics in the overall Mediterranean basin. The Cyprus issue also shows the limits of Turkish power despite the ambitous and and even aggressive rhetoric emanating from Ankara. It suggests the need for Turkey to find a modus vivendi with Cyprus, if not Israel, as it did earlier with Russia. Some will say that it also shows the need for arriving at such an outcome as well or continuing to abide by the existing one with Moscow. But here, in fact, there was such an agrement, and despite the recent energy agreements signed on December 30, 2011 with Russia, Cyprus is merely one of many signs of what is arguably a worsening trend in Turkey’s relations with a Russia that is as ambitious as Turkey and even more aggressive insofar as its vital interests are involved.

The Cyprus energy conflict also serves another reminder that energy politics are inseparable from larger security considerations and produce new issues and combinations that undermine the status quo. It also shows the urgency of making progress on the tangled issue of Cyprus’ future and the relationships among its two ethnoreligous groups and of fully integrating Turkey into Europe. Turkey’s exclusion from the EU, as in part a direct result of the Cyprus question, limits the ability of both sides to live up to and maximize their potential for enhancing security, democracy, and prosperity. And as these events show, the failure to overcome those obstacles always leaves open the possibility of regression to heightened interstate conflict on Cyprus and international strife in the Mediterranean.

Stephen Blank is Professor at the Strategic Studies Institute, U.S. Army War College, Carlisle Barracks, PA. The views expressed here do not represent those of the U.S. Army, Defense Department, or the U.S. Government.