Geopolitics of Energy: Gas Heats Up the Eastern Mediterranean

Written by | Sunday, April 26th, 2020
@Eubulletin

Over the past decade substantial natural gas reserves have been discovered in the eastern Mediterranean. In theory, this gas could benefit the countries in the region by satisfying their energy needs and generating export revenues, and help the EU to diversify its energy supplies. However, in reality, despite hopes that the discovery of gas might help bring Greek and Turkish Cypriots together, it has instead increased tensions between the EU and Turkey that has not yet found any gas of its own in the eastern Mediterranean.

Other countries in the region have ploughed on with projects that do not involve Turkey, further increasing Ankara’s fear of being shut out of a regional gas bonanza. In January 2019, Cyprus, Greece and Israel, together with Jordan, the Palestinian Authority and Italy, set up the Eastern Mediterranean Gas Forum, an organisation that aims to co-ordinate policies and establish a regional gas market. Turkey’s absence was notable. As more gas has been discovered near Cyprus, the country’s authorities have handed out more exploration licenses to companies. However, Turkey has sought to obstruct efforts to develop and commercialise Cypriot gas. It has deployed its navy to disrupt exploration efforts, and dispatched its own ships to search for gas in the disputed region. “Nothing at all can be done in the Mediterranean without Turkey,” the country’s foreign minister, Mevlüt Çavu?o?lu told a business conference in February.

Turkey does not recognise the Republic of Cyprus and argues that citizens of the Turkish Republic of Northern Cyprus, a state that only Turkey recognises, have the right to a share of the island’s gas resources, which should, however, not be commercialised until there is a political resolution to the country’s long-running dispute. Separately, Turkey also claims as its own areas that the EU recognises as part of Cyprus’ Exclusive Economic Zone (EEZ) – the waters that a coastal state has an exclusive right to exploit. Therefore, the shared desire to develop and exploit gas in the region, and to counter Turkey’s growing assertiveness, has led to the consolidation of an informal alliance between Cyprus, Egypt, Greece and Israel. Cyprus and Greece have had a tense relationship with Turkey for decades, while Israel and Turkey are once again at loggerheads: Israel is perturbed by Ankara’s actions in the eastern Mediterranean, and also accuses it of abetting Hamas. Also relations between Cairo and Ankara are very bad owing to Turkey’s support for the Muslim Brotherhood and Cairo’s aversion to it, and due to the fact that each is backing a different side in the Libyan conflict.

The burgeoning partnership between Cyprus, Greece and Israel has also led to closer political, economic and military ties, with the three countries regularly carrying out joint military exercises. The US, disillusioned with Turkey, has played a significant role in nurturing this emerging energy and security alliance as the linchpin of a new eastern Mediterranean strategy. Italy and France, concerned by Turkey’s actions in the eastern Mediterranean, have also increased their support to Cyprus. In December, they carried out joint naval exercises with Cyprus, and France is also helping Cyprus upgrade a naval base to host larger ships. It was against this backdrop that tensions in the region have risen sharply in recent months. In late November 2019, Libya’s UN-recognised Government of National Accord (GNA) in Tripoli signed a maritime agreement with Turkey, in exchange for the latter providing it with assistance in its struggle against military commander Khalifa Haftar. The Turkey-Libya agreement sets a maritime boundary between the two which does not take into account Crete, overlapping with Greece’s EEZ. The Turkey-Libya agreement provided a spur for Cyprus, Greece and Israel to strike a deal in January 2020 to build a 1,900 kilometre pipeline to bring gas from deposits in Israel and Cyprus to Greece and Italy, the ‘East Med pipeline’ – covering around 4% of EU’s annual gas consumption.

Cypriot gas has become one of the main sources of tension between the EU and Turkey. Brussels argues that Cyprus, an EU member state, is entitled to develop its own gas reserves, and that any disputes with Turkey should be resolved through negotiations. After repeatedly condemning Turkey’s gas exploration in the eastern Mediterranean, in November 2019 EU decided to sanction Ankara’s “continued and new illegal drilling activities” in areas that the EU recognises as Cyprus’ EEZ. Thus, tensions are likely to continue to rise: Turkey is intent on defending what it sees as its interests, even if this means alienating most countries in the region. Meanwhile, Cyprus, Egypt, Greece and Israel want to deepen their energy co-operation and counter Turkey’s actions. If Turkey continues to clash with Cyprus and Greece, the EU will probably impose additional sanctions on Turkey, though these are unlikely to change Turkish behaviour. While military conflict remains unlikely, Turkey’s deal with the GNA has entangled the gas dispute with the Libyan war, making peace harder to achieve and fuelling escalation.

At the same time, growing tensions in the eastern Mediterranean will also complicate the development of Cypriot gas. Turkey’s military presence will deter foreign companies from carrying out further exploration, and from constructing the East Med pipeline. Moreover, even prior to the coronavirus pandemic, the economic viability of the project was questionable, and the coming pandemic-driven recession will further depress demand and lower prices, making it even harder to raise capital. Despite its potential role in diversifying European energy supplies, as a carbon producing project, the pipeline is unlikely to benefit from significant EU funding in the new policy context of the Union’s embryonic Green Deal. Finally, some of the governments involved have doubts about the plan.

Commercial considerations could help take some sting out of the gas dispute by impeding further development efforts – some companies have already put exploration activities on hold. However, whether a dangerous gas-fuelled escalation can be avoided depends mainly on Turkey’s next moves. If Ankara continues on its current course, tensions are likely to rise. But Turkey might be tempted to de-escalate if its relations with Russia deteriorate as a result of renewed fighting in Syria, or if the Turkish economy suffers a heavy economic blow as a result of the COVID-19 pandemic. In the meantime, Europe needs to find a way of managing its relationship with Turkey, minimising conflict and maintaining as much co-operation as possible. While Turkey’s actions in the eastern Mediterranean are deeply concerning to the EU, in other areas the EU and Turkey have common interests, particularly striking a more solid migration co-operation agreement with Ankara. In Libya too, the EU will need to work with Turkey to achieve a ceasefire and a degree of stability.

Co-operation on one issue may generate goodwill in other areas, and ultimately make it easier for Europe and Turkey to address their differences in the eastern Mediterranean. And a substantial reduction in tensions could pave the way for restarting the Cyprus re-unification talks that collapsed in the summer of 2017. Progress towards a solution to that decades-long dispute would make it easier to begin talks on maritime boundaries in the eastern Mediterranean, and eventually exploit gas in a manner that benefits the region as a whole, and Europe too.

‘Gas Heats Up the Eastern Mediterranean’ – Article by Luigi Scazzieri – Centre for European Reform / CER.

The Article can be downloaded here

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