The future of bankrupt Cyprus and perhaps of the EU’s vast energy needs lies in the offshore gas field named after the ancient Greek goddess Aphrodite who, according to legend, was born on the tiny island nation.

The Aphrodite field, one of 12 blocks, alone could supply up to 40% of the EU’s current natural-gas consumption. The block, moreover, is close to Israel’s Leviathan gas field –the very name suggests how much energy it might contain–. According to the US Geological Survey, an estimated 122 trillion cubic feet of recoverable natural gas lie, along with 1.7 billion barrels of recoverable oil, beneath the seabed of the Levant Basin, about as much as the world consumes in a year.Gas from Israel’s smaller offshore Tamar field began flowing into the country on 31 March.

While the Greek Cypriot economy goes into meltdown (it could shrink by as much as 15% this year and the unemployment rate reach Spanish proportions), as a result of the collapse of its oversized banking sector (around seven times the annual GDP and much favoured by wealthy Russians wishing to salt away funds in the tax haven), the spotlight is now cast on the potential of the energy wealth in Cypriot waters. The vast reserves could ‘save’ not just the island in the long term (exports are not envisaged until 2019), but also make a huge contribution to the EU’s energy needs and reduce reliance on Russia. Half of EU countries’ energy supplies are imported.

The issue, however, is complex and not just simply one of extracting the gas and exporting it. Cyprus has been divided since Turkey invaded it in 1974 after attempts were made to unite the island with Greece. Since then Turkish troops have occupied the northern one-third of the country in the self-proclaimed Turkish Republic of Northern Cyprus (TRNC), which no other country recognises. Turkey disputes the right of the internationally-recognised Greek Cypriot government in the south of the island to exploit the energy wealth.

The whole of Cyprus joined the EU in 2004 (the acquis communautaire only applies to the Greek Cypriot part). Turkey has been negotiating its EU accession at a snail’s pace since for the past seven years. Roughly one-half of the 35 chapters of EU law that Turkey has to comply with have been suspended by the EU as whole because Ankara refuses to open its ports and airports to Greek Cypriot traffic and so recognise the Republic of Cyprus unless something is done to ease the isolation of the TRNC, or are blocked by France and Cyprus individually.

Noble Energy of Texas announced a major discovery at the end of 2011 in the exclusive economic zone of the Republic of Cyprus (with a 60% probability of geological success) after defying Turkish demands to stop drilling.

Ankara claims that sections of some of the blocks ‘overlap with Turkey’s continental shelf areas in the Eastern Mediterranean’. It resorted to gunboat diplomacy and sent ships and submarines to the area and threatened to provide naval escorts for survey vessels of the Turkish Petroleum Corporation exploring off the coast of northern Cyprus.

Nicosia says these claims are ‘legally unfounded and geomorphologically baseless’ and it put out to tender drilling in some of the blocks.

The Cypriot and Israeli governments have an agreement delimiting the maritime boundary between the two countries, as well as defence and cooperation agreements. These accords came after Turkey’s relations with Israel reached a low point in May 2010, following the Israeli raid on a Turkish-flagged aid flotilla seeking to break the Gaza blockade, in which nine Turks died. Recep Tayyip Erdogan, Turkey’s Prime Minister, is a vociferous supporter of the Palestinian cause. Ankara downgraded diplomatic relations with Israel to below the level of ambassador and restricted use of Turkey’s air space to Israeli cargo flights.

In a surprise move last month, Turkey and Israel began to patch up their relations after the Israeli Prime Minister, Benjamin Netanyahu, in a phone call stage-managed by the US President Barack Obama, bowed to Erdogan’s demand and apologised for the deaths. The rapprochement should be seen in the context of the deteriorating crisis in Syria and the need for both countries to work together to contain it (both Turkey and Israel have borders with Syria), but it could also be a game-changer for the region’s energy politics.

The detente between Israel and Turkey could facilitate the export of Israeli gas to and through Turkey, while piping Cypriot gas to Turkey, instead of building a costly liquefied natural gas plant in Cyprus, for which Nicosia on its own does not have the money, looks like the best solution. Turkey (at the nearest point around 100km from Cyprus) is the most easily accessible market for Cypriot gas.

Turkey (population 74 million), which does not have any gas or oil of its own, is becoming an energy hub for Europe. The 1,092-mile Baku-Tbilisi-Ceyhan pipeline traverses 669 miles of Turkish territory to ship Azeri Caspian oil to Turkey’s Mediterranean Ceyhan port. Construction of the 3,900km EU-backed Nabucco pipeline, repeatedly delayed because of cost overruns and problems in nailing down supply deals, which will link the gas-rich Caucasus and Central Asia to energy-hungry European nations, is envisaged to start this year.

Bringing the Cypriot gas to market will be politically and technically difficult, however. A pipeline to Turkey is unthinkable without a mutually satisfactory solution to the island’s division. Greek Cypriots massively rejected in a referendum in 2004 the reunification plan of Kofi Annan, the former UN Secretary General, while Turkish Cypriots overwhelmingly accepted it. Since then little progress has been made in one of the world’s most intractable problems.

Nicos Anastasiades, the embattled President of Cyprus, was the only prominent politician to vote in favour of the plan when he was head of the conservative Democratic Rally party. Greek Cypriots, however, are seething with anger at the demise of the banking sector, the mainstay of the economy along with tourism, and are in no mood to strike a deal with Turkish Cypriots.

Ankara, meanwhile, has wasted no time in exploiting Cyprus’s crisis, as it sees the Greek Cypriots boxed into a corner. No sooner was a deal reached between Nicosia and the troika than Ankara announced it would freeze out energy companies that cooperated with the Greek Cypriot government over offshore gas. Taner Yildiz, Turkey’s Energy Minister, said Eni, the Italian energy giant, would be barred from current and future projects in Turkey if it went ahead with a licence it won in January to explore gas off the Cyprus coast. French, South Korean and US companies have also been awarded exploration licences.

The Turkish Foreign Minister Ahmet Davutoglu has proposed three alternatives to end the stalemate in Cyprus, all involving the exploitation of natural gas around the island. He said the two communities could form a united Cyprus state and jointly exploit the natural resources around the island, or, in parallel to ongoing peace negotiations, Greek Cypriots and Turkish Cypriots could form a joint committee to exploit and market natural gas. The third option is a two-state solution.

Whether Cyprus’s crisis produces a more pragmatic approach to reunification remains to be seen. Unless Ankara decides to be magnanimous, which is unlikely in the present circumstances, a conciliatory gesture would have to come from Nicosia. Perhaps it will be inspired by Aphrodite, the goddess of love.
http://www.realinstitutoelcano.org/wps/portal/rielcano_eng/Content?WCM_GLOBAL_CONTEXT=/elcano/Elcano_in/Zonas_in/Commentary-Chilslett-Cyprus-crisis

Abdullah Ocalan, imprisoned since 1999, called for a truce to a conflict of almost 30 years in which more than 35,000 people have died in a struggle for the establishment of an ethnic Kurdish homeland in the south-east of Turkey. If all goes well this will end one of Europe’s most intractable problems of political violence by a group classified as a terrorism organisation by the EU, the US and Turkey.

Ocalan chose the beginning of the Kurdish New Year for a message of his to be read out to tens of thousands of jubilant Kurds in Diyarbakir. This followed several months of talks between Ocalan, jailed on an island off Istanbul, and the government of Recep Tayyip Erdogan. Ocalan said the door to democracy was opening in Turkey and PKK fighters should lay down their arms. ‘Let guns be silenced and politics dominate’, read the statement. ‘It’s not the end; it’s the start of a new era’.

It certainly looks that way. Under the deal, whose details are sketchy, there are likely to be greater constitutional, political and linguistic rights for Kurds and the release of some activists and others jailed for speaking or writing about the Kurdish cause. The government is not expected to declare a blanket amnesty, as this would be a step too far for the armed forces, though they have lost a lot of their power and influence in the 10 years since Erdogan took office as prime minister.

The constitution, drafted by generals following a coup in 1980, is to be reformed and an article describing all Turkish citizens as ‘Turks’ is to be scrapped, as will the one banning education in the Kurdish language.

The anti-terrorism law, which blurs the line between incitement to violence and the expression of non-violent ideas, will also be reformed. Turkey has become the world’s leading jailer of journalists, many of them Kurds. Turkey was placed 154th in the 2013 Reporters Without Borders World Press Freedom Index, compared with around 100th in the mid-2000s.

This law, among others, was criticised by the EU in its last progress report on Turkey’s accession negotiations which began in 2007 and are moving at a snail’s pace. One third of all the world’s terrorism arrests made between 2001 and 2011 were in Turkey, including several thousand non-violent Kurdish activists placed in preventive detention.

Several ceasefires in the past failed. This one looks more likely to stick. Ocalan told Kurdish politicians who visited him earlier this week that his declaration would be ‘historic’. The PKK military leadership over the border in the mountains of northern Iraq endorsed the truce. Ocalan still commands respect, despite spending the last 14 years in prison.

The PKK has also dropped its previous demands for an independent state, something that could go some way towards calming ultra nationalist sentiment, particularly in the security forces which fought a ‘dirty war’ in the Kurdish south-east of the country during the 1980s and 1990s where most of Turkey’s estimated 15 million Kurds live. Many thousands of deaths remain unexplained. A particularly feared unit was Jetem, part of the Turkish gendarmerie charged with intelligence gathering and counter terrorism, which caused people suspected of ties with the PKK to disappear.

Ocalan’s views have mellowed since he was captured in Kenya in 1999. His death sentence for treason was commuted to life imprisonment in 2002 after Turkey abolished the death penalty as part of the drive to enhance the country’s credentials for EU membership. Ocalan told a delegation from the pro-Kurdish Peace and Democracy Party (BDP), which visited him in February, that if the Kurdish movement continued to push for ‘democratic autonomy’ it would be ‘sabotaging’ the talks with the government. There was speculation that Ocalan could be ‘rewarded’ for his stance by being moved from the island prison to house arrest, which would enable him to play an active role in the post-ceasefire period.

The ceasefire has restored the momentum of reform to the government. It has notched up economic successes –per capita income quadrupled over the last decade and last year Fitch gave Turkish Treasury issues investment-grade status– but progress on the political front has stalled. The Economic Intelligence Unit’s Democracy Index 2011 placed Turkey 88th as a ‘hybrid regime’, a category below ‘flawed democracy’, the same place it was in 2007.

If the ceasefire holds and there is a permanent solution to the Kurdish problem, Erdogan’s name could be etched into history in much the same way that the abolition of slavery enshrined President Lincoln’s memory for Americans more than a century ago, according to Murat Yetkin, editor-in-chief of the Hurriyet Daily News.

Spain knows about these things as it has a longer history of terrorism by the Basque terrorist group ETA, whose ceasefire announced in October 2011 is still in force, though the group has yet to lay down its arms.

Erdogan was probably motivated not just by a desire to get his name in the history books, which is guaranteed anyway because he is Turkey’s longest-serving prime minister and looks set to become the next president when direct elections for the post are held in 2014 for the first time.

Other considerations include enhancing the chances of benefiting from the oil and gas-rich lands of Kurdish northern Iraq, much nearer than those in Russia which supply Turkey with energy. Furthermore, the fast-growing economy, though less so than in 2010 and 2011, is increasing Ankara’s energy needs. State-owned Turkish companies have been negotiating taking stakes in oil and gas fields.

The peace deal with the PKK could also remove the threat in neighbouring Syria where a PKK affiliate, the Democratic Union Party, controls a string of Kurdish towns left to them by President Bashar Assad.

The truce comes at a time when France and Germany have expressed a greater readiness to kick-start Turkey’s paralysed EU negotiations. France is allowing EU documents to refer once again to an eventual EU ‘accession’ for Turkey, and is prepared to open one of the five chapters it has blocked in the negotiation process, the first in two and a half years.

Erdogan’s ambition to become president, and with powers equivalent to those of the French presidency, could be realised with the help of the BDP as Erdogan’s Justice and Development Party and the BDP command sufficient seats to ram through constitutional changes. An unholy alliance between Erdogan and Ocalan is putting it too far, but the two men could end up needing one another.
http://www.realinstitutoelcano.org/wps/portal/rielcano_eng/Content?WCM_GLOBAL_CONTEXT=/elcano/Elcano_in/Zonas_in/Commentary-Chilslett-Turkey-PKK-ceasefire

Like Spain, the Turkish economy became overheated and growth is still high by EU standards. Spanish exports have risen by more than 30% over the last five years, making Turkey the second-largest non-EU market after the US, and in 2011 Turkey was the main destination of Spain’s direct investment abroad. Per capita income tripled in dollar terms in the last decade, enhancing the attractiveness of a huge market whose infrastructure needs are high.
http://www.realinstitutoelcano.org/wps/portal/rielcano_eng/Content?WCM_GLOBAL_CONTEXT=/elcano/Elcano_in/Zonas_in/ARI2-2013_Chislett_Turkey_Spain_trade_investment

There is hardly a glimmer of light in Spain’s long tunnel of recession, very high unemployment and rising bad debts in the banking sector. This Working Paper looks at the current situation, the progress that has been made and the challenges ahead.
http://www.realinstitutoelcano.org/wps/portal/rielcano_eng/Content?WCM_GLOBAL_CONTEXT=/elcano/Elcano_in/Zonas_in/WP17-2012_Chislett_Spain_Crisis_2012

Spain’s international presence bears no comparison to what it was 20 years ago.
This document forms part of ‘Spain’s Global Presence and Company Brands Atlas’ which will be published by the Leading Brands of Spain Forum in the autumn.
http://www.realinstitutoelcano.org/wps/portal/rielcano_eng/Content?WCM_GLOBAL_CONTEXT=/elcano/elcano_in/zonas_in/chislett_rise_spain_international_presence_oct2012

The European Commission’s report on Turkey’s progress toward full EU membership, stalled for the past two years, underscores the long way it still has to go.
http://www.realinstitutoelcano.org/wps/wcm/connect/7e38ba804d0ae6e791bddbf2157e2fd8/ARI63-2012_Chislett_Turkey_EU_report_progress_2012.pdf?MOD=AJPERES&CACHEID=7e38ba804d0ae6e791bddbf2157e2fd8

Every crisis has a silver lining. Spain’s four-year recession, apart from anaemic growth in 2011, has produced an unprecedented surge in exports, helping to lower the trade deficit and contributing to a turnaround in the current account. But for how long can this be sustained?
http://www.realinstitutoelcano.org/wps/portal/rielcano_eng/Content?WCM_GLOBAL_CONTEXT=/elcano/Elcano_in/Zonas_in/ARI60-2012