Greek and Turkish Cypriot leaders are currently holding talks for the reunification of the island. Other countries in the region are closely following the negotiations because a political settlement could open the door for energy cooperation in the Eastern Mediterranean involving Greece, Turkey and Israel. But significant domestic issues, including the restitution of property to Greek Cypriots and a decision on the reunited island's political system, are complicating the negotiations. International issues, such as the status of foreign military powers on the island, also factor into the talks. The final say on reunification will come from the Cypriot citizens themselves, who must ratify any agreement in a referendum.
Stratfor: Cyprus Takes Another Shot at Reunification
Summary
Analysis
Cyprus has been divided since 1974, when Turkey invaded the north of the island in response to a military coup backed by Greece. The island was de facto partitioned, with Turkish Cypriots inhabiting most of the northern third and Greek Cypriots mostly in the southern two-thirds. The U.N. patrols a buffer zone, commonly known as the "Green Line," between the two sides.
The sides disagree on the number of people who were displaced after the partition, but the U.N. estimates that some 165,000 Greek Cypriots fled or were expelled from the north and 45,000 Turkish Cypriots from the south. In the early 1980s, northern Cyprus proclaimed independence, but only Turkey recognizes the claim.
Same Old Problems
Between 1974 and 2004, there were several proposals for reunification. Most of them revolved around the idea of creating a federation or a confederation. In the early 2000s, then-U.N. Secretary-General Kofi Annan presented a plan to create the United Cyprus Republic, a loose federation composed of two constituent states, each with its own regional parliament but sharing one federal parliament. The plan also envisaged a combination of property restitution for some Greek Cypriots and economic compensation for others. Turkey and the United Kingdom openly supported the plan while Greece stayed neutral. Hopes for the plan were ultimately dashed, however, when more than 75 percent of Greek Cypriots opposed it in a 2004 referendum. (Two-thirds of Turkish Cypriots were in favor of the plan.) This virtually froze the negotiation process for a decade.
Every attempt at reunification has encountered most of the same challenges. Internally, property restitution is a sensitive issue. Many Greek Cypriots, who owned most of the land and property in the north, were forced to abandon their homes when the island was partitioned; some Turkish Cypriots also left their homes in the south but not to the same extent. Since then, the Greek Cypriot side has demanded the return of property in any settlement. Turkish Cypriots argue, however, that the complete return of all Greek Cypriot property to the original owners after four decades would be impossible. Instead, the Turkish Cypriots insist on some form of compensation.
Cyprus' Strategic Importance (Dispatch)
The status of foreign military troops in Cyprus is also controversial. Both Turkey and Greece keep troops on their respective sides of the island. In addition, the United Kingdom has naval bases on the island, and a 1960 agreement gave the United Kingdom, Greece and Turkey the right to intervene militarily in the island's affairs. Because of Cyprus' strategic location in the Eastern Mediterranean, Athens, Ankara and London are unwilling to give up their military presence on the island.
Talks resumed in February 2014. In a joint release, Greek Cypriot President Nicos Anastasiades and his Turkish Cypriot counterpart, Dervis Eroglu, declared their intent to create a "bi-communal, bi-zonal federation with political equality." There would be a united Cyprus citizenship and a single set of federal laws. In order to move forward, the agreement needs to be approved in separate simultaneous referendums held in Greek and Turkish Cyprus. While the European Union, Greece and Turkey praised the announcement, it created political tensions in southern Cyprus, where some political parties -- most notably the centrist Democratic Party, a member of the government coalition -- rejected it.
What's New This Time
The same obstacles are still around in the new cycle of negotiations, but there are also new elements influencing the discussions. First, the United States is more involved. In late May, U.S. Vice President Joe Biden became the first U.S. leader to visit the island in more than five decades. Although Washington does not recognize the independence of northern Cyprus, Biden met with Eroglu, its president, to discuss reunification.
Second, the severe economic crisis in Cyprus gives Nicosia additional reasons for a settlement. A peaceful resolution could bring much-needed foreign investment to the island.
Third, and perhaps most important, recent discoveries of hydrocarbons in the Eastern Mediterranean could serve as an incentive to create an energy partnership that would include Turkey and Israel. Israeli energy companies are interested in working with Cypriot firms on the exploration and extraction of oil and natural gas off the Israeli coast. This has opened new frictions between both countries and Turkey, however, because Ankara believes that Nicosia does not have the authority to sign international deals. Greek Cyprus is also interested in building a liquefied natural gas terminal, but there has been little progress so far.
Israeli and Turkish companies have recently discussed building a pipeline from Israel's Leviathan natural gas field to the Turkish coast. This would certainly help Turkey's push for natural gas diversification. The problem is that the pipeline would have to go through Cyprus' exclusive economic zone -- something Nicosia would reject unless there is a broader agreement between Turkey and Cyprus on reunification. Israel's priority is using its energy reserves to reinforce its strategic relationships in the region. Turkey, meanwhile, is moving back toward normalizing relations with Israel, not wanting to be left out of the development of the Eastern Mediterranean.
As a result of these efforts, Turkey will gradually become more integrated in energy discussions in the Eastern Mediterranean. A Turkish-Cypriot rapprochement, including a settlement on the Turkish-Cypriot maritime boundary, is critical to Turkey's ability to realize the plans for a pipeline from the Leviathan field to Turkey. Israel is more likely to follow a regional strategy and feed energy to its neighbors through pipelines to Turkey, Egypt and Jordan as opposed to investing in a liquefied natural gas export facility. Israel is going to be far more interested in reinforcing its regional alliances than it is in securing a higher premium from LNG exports to other markets such as the Asia-Pacific region. Finally, the White House is interested in having U.S. companies explore for hydrocarbons in the Eastern Mediterranean, as well as in a rapprochement between Turkey, Greece and Israel. We can expect the United States to remain involved in the reunification talks as well as in negotiations with the relevant players in the region.
Russia is also important to watch. At a time when the primary customers for its natural gas exports in continental Europe are looking to diversify, Russia will probably oppose Cyprus' reunification since regional cooperation to explore for hydrocarbons could follow. And Russia has leverage in the matter: It has a presence in the Cypriot banking and real estate sectors, and the island is heavily dependent on Russian tourism.
The Fine Print
Anastasiades and Eroglu agree on the broad aspects of the type of government the island should have, but specific details still need to be resolved. There is, for example, the issue of equality between the two communities. Greek and Turkish Cypriots have discussed the possibility of introducing some kind of rotating presidency, but there is no consensus on how the system would work. Former Cypriot President Demetris Christofias also said he would fight for the demilitarization of the island and a reduction in the number of Turkish settlers. Ankara is likely to reject both ideas.
Even if all these problems are solved, reunification still cannot occur without popular support. Recent opinion polls show the same divisions as in 2004, with Turkish Cypriots generally being more supportive of reunification than their Greek Cypriot neighbors. Many Greek Cypriots are still concerned about sharing power and equal political rights with the minority in the north. Anastasiades and Eroglu agreed to meet every two weeks to discuss the bilateral agenda. But once the meetings are over, the decision of a few hundred thousand voters will be more important than any agreement between leaders or regional players.
Natural Gas Europe is pleased to provide this article in cooperation with Stratfor, a Natural Gas Europe Knowledge Partner.
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