Tuesday, 9 April 2013

After Cyprus bailout, Israeli apology, gas takes centre stage

by Alakbar Raufoglu and Andy Dabilis | Southeast European Times

The prospect of normalisation between Israel and Turkey following last month's apology has opened the questions about the relationship between Israel, Greece and Cyprus.

The fallout between Israel and Turkey over the past four years pushed Israel for strategic and economic reasons to cozy up to Greece and Cyprus, Turkey's historic rivals in the Eastern Mediterranean.

"The relations that were built in the last four years with Greece and Cyprus were to a great extent a result of the severe crisis with Turkey," Alon Liel, the former Israeli ambassador to Turkey, told SETimes.

Some analysts say this geopolitical and economic calculation could change following Israeli Prime Minister Benjamin Netanyahu's apology to Turkey for the 2010 raid on the Turkish aid ship, the Mavi Marmara, as it tried to breach an Israeli blockade of Gaza, resulting in the death of nine Turkish activists.

Mavi Marmara led to a severing of relations between once close regional powers. The apology opened the way to a still nascent rapprochement.

The prospect of Turkey and Israel rekindling their once close relationship has many observers looking to the large but disputed gas deposits in the Eastern Mediterranean that could transform the geopolitical future of the region.

Turkish Energy Minister Taner Yildiz said recently the Israeli apology could open the way for energy co-operation between the two countries.

He added Israel's energy plans in the Eastern Mediterranean "would only be reasonable if Turkey was involved."

Cyprus and Israel have been mulling building a liquefied natural gas (LNG) plant in Cyprus combining both Israeli and Cypriot gas finds in the Eastern Mediterranean. Amid the speculation over bringing Israeli gas to European markets -- whether through Turkey or Cyprus -- there is the question of how much Israel would decide to export. Hawks in Israel are pushing to keep the gas for domestic consumption to bolster energy security and independence for decades.

Without Israeli investment and gas supplies some energy analysts question whether such a 10 billion euro price tag LNG plant in Cyprus would be economically viable. The cheapest and shortest option to bring Israeli and Cypriot gas to European markets would be through Turkey via a pipeline.

George Leventis, director of the International Security Forum in Nicosia said he thinks Greece and Cyprus will lose leverage now.

"The observation that a revamped alliance between Israel and Turkey will squeeze out Cyprus and Greece is correct," he told SETimes. "If Israel manages to sell its gas -- which already is pumping out of the Tamar gas field -- via Turkey then Cyprus [and Greece] stand alone."

"Israel is considering all possible options in geopolitical-geostrategic terms. If Israel's choice is for an LNG plant it does make sense to place it in Cyprus rather than the Israeli coast. It will be safer on Cyprus. But this again presupposes that Tel Aviv will play the Cyprus card against Turkey and the current trend is to the opposite," he added.

Meanwhile, The Cyprus Mail quoted Israeli Deputy Ambassador Shani Cooper as saying that the "the normalisation of relations between Turkey and Israel was an important bilateral step but it will not affect any multilateral, trilateral or bilateral relations between Israel and other countries. Israel will maintain its close relations with Cyprus, and continue strengthening them as we have done the last few years."

Similarly, Spiros Lambridis, Athens's new envoy to Israel, said that "regardless of what Israel does with Turkey, we have a strategic relationship that is autonomous and has nothing to do with Turkey," the Jerusalem Post reported.

Lambridis said the new Israeli-Turkish rapprochement could help regional stability and lessen tensions in the area between Southeast Europe, Asia and the Middle East. "The more tranquility in the region, the better," he said.

Whatever Israel decides, some observers see the gas row as an opportunity to settle the long standing dispute between the Turkish and Greek Cypriots on the island. The Israel-Turkey rapprochement came only three days before 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 natural gas more than ever.

Cyprus seems determined to push ahead on its own if necessary. Foreign Minister Koannis Kasoulides said the island’s natural gas deposits are enough to warrant the construction of LNG plant to export excess supply, regardless of whether Israel decides to be a partner in the project. He added that Israel's apology to Turkey "doesn't mean Israel is obliged to follow what Turkey is dictating in this region."

An Israeli or Cypriot move would run up against Turkey, which demands the consent of Turkish Cypriots as "co-owners of the island" in the extraction of gas. Turkey has already sent its navy to the region to protect Turkish Cypriot interests and said recently energy companies doing business with Cyprus would be barred from current and future energy projects in Turkey.

Turkey would like a negotiated settlement on the island, but it 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.

Analysts like Ali Balci from the Sakarya University in Turkey argue all sides need to realise that the transfer of energy to the European market requires co-operation among Cyprus, Greece, Israel and Turkey.

"Because of the economic crisis, Cyprus is in need to use these energy fields as soon as possible. This is another incentive to construct peaceful relations among sides. Politics is not always zero-sum," he told SETimes.

Source:
http://www.setimes.com/cocoon/setimes/xhtml/en_GB/features/setimes/features/2013/04/09/feature-04

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