Omar H. Rahman

As Greek Cypriots and Turkish Cypriots have returned this month to try to settle their 42-year conflict once and for all, a powerful new economic incentive -- a significant natural gas discovery -- could provide the decisive chance for success to the peace talks on Cyprus. The background to the natural gas discovery and its impetus to peace is a long and winding road involving several countries' own natural gas findings in the region. The United Nations, which is leading the negotiations from Geneva, aims to forge a durable peace between the two sides in the drawn-out affair in Cyprus, aware that success could represent a huge leap of faith in the UN's ability to resolve conflicts. António Guterres, the new UN secretary-general, is pinning his hopes on the Cypriot talks putting the world body back toward center stage. "I believe a solution will be a symbol of hope in a world where so many conflicts are emerging, where so many problems do not seem to come to an end," Guterres said during his opening remarks at the new round of negotiations on Cyprus, in early January. The UN has been operating a peacekeeping mission in Cyprus for more than 50 years, maintaining a cease-fire and a buffer zone that divides the island in two. Talks to bridge the sides to reunification failed as recently as 2014. The natural gas impetus is based on an emerging energy hub that originated from 2009 to 2011 and has been playing out in the eastern Mediterranean Sea among Cyprus, Egypt and Israel. Such a strong incentive has eluded the two sides in the Cyprus standoff since Turkey invaded the island in 1974 in response to an Athens-inspired coup. "The discovery of gas has had a key impact on reunification talks because it is clear that both communities will gain exponentially from the exploitation of these resources," said Amanda Paul, a senior analyst with the European Policy Center, a think tank in Brussels and an expert on the Cypriot conflict. "Gas has softened their positions because both sides recognize it is in their interest to have a solution." In 2011, a large natural gas field, called Aphrodite, was discovered in Cyprus's territorial waters by an American firm, Noble Energy. The discovery followed two other major gas finds in neighboring Israel, sparking the promise of riches in the eastern Mediterranean. Drilling in the waters also sparked confrontation with Turkey, who disputed the right of the Greek Cypriots to explore resources without an agreement in place, causing both sides to walk away from reunification talks in 2014. After further drilling revealed Aphrodite to be smaller than investors had projected, enthusiasm for continued exploration around Cyprus faded and plans for building a natural gas exporting operation were shelved. Israel's own gas development plans also bogged down in a domestic dispute that was not resolved until mid-2016. For years, things were looking grim for Cyprus's opportunity to exploit natural gas. That was until two international oil companies, ENI and BP, made several discoveries to the south, in Egypt. With significant natural gas exporting infrastructure already available, Egypt set off a new wave of enthusiasm for an energy hub to be developed in the region. It also created more incentives for the two contentious parties, on each side of the so-called Green Line dividing Cyprus, to unify. The development of natural gas in the region has also brought more parties besides Cyprus, Egypt and Israel into the fold. These include large oil companies, investors and the users -- that is, the markets: Europe, Turkey and others. Natural gas production must ultimately find customers, either through pipelines or on ships, once it is converted to liquefied natural gas, or LNG. That entails infrastructure, which neither Cyprus nor Israel offers, in addition to billions of dollars of outside investment. Although Turkey has objected to oil and gas exploration and development in Cyprus, it also understands the value of a regional energy hub emerging in the eastern Mediterranean. While Cyprus and the European Union have explored building a pipeline from Israel to Greece through Cyprus, the project is not feasible. A much cheaper option is to run the pipeline from Israel through Cyprus into Turkey. This makes Ankara, the Turkish capital, an eager participant. Reconciliation through economic means has a close historical precedent for Turkey. Rapprochement efforts with Israel in July 2016 -- after the countries severed relations in 2010 resulting from Israel attacking a Gaza humanitarian-aid flotilla partly led by Turkey -- were cemented to some extent by a potential gas-supply deal. Yet the Turkish government does not recognize the Greek Cypriot government in Nicosia, the capital of Cyprus, and the rest of the world does not recognize the self-described Turkish Republic of Northern Cyprus. All of which makes cooperation on oil and gas projects, like a pipeline to Turkey, virtually impossible without a reunification agreement. "If there is no agreement it becomes very difficult for the country to transit their gas -- it's not economically feasible to get the gas to Greece," Paul said. Meanwhile, the government in southern Cyprus has signed a preliminary agreement for a pipeline to run directly to Egypt's LNG export center, circumventing the need to go to Europe or to Turkey. But this choice is risky. If Egypt begins exporting Cypriot gas -- a prospect years away -- it could strain relations between Egypt and Turkey. After the election of Mustafa Akinci in Northern Cyprus in April 2015 -- a longtime proponent of reunification -- the motivation for talks returned. Both sides have since avoided more outbreaks of hostility with each other over the gas issue despite more exploration activity by Cyprus. In December, Cyprus awarded exploration licenses in its territorial waters to various multinational oil giants, all of which now have a vested interest in the island's future. But before they tap gas in the eastern Mediterranean, the companies need to know they will have customers down the road, which is how a political resolution for Cyprus could make a difference. The European Union, a likely recipient of future gas production, is observing the current UN-led peace talks, moderated by Espen Barth Eide, a Norwegian. Both sides in Cyprus have taken the unprecedented step of meeting face to face with Turkey, Greece and Britain -- the guarantors -- also sitting at the table. After an initial round of talks earlier this month in Switzerland, the two sides are continuing the conversation in Cyprus, trying to resolve the outstanding details. Important sticking points must address Turkish troop withdrawals from the south as well as property rights in northern Cyprus. While natural gas prospects may not be the central reason that Greek and Turkish Cypriots have returned to the negotiating table, such an economic advantage is hard to miss. "It increases the number of interested stakeholders in a solution," said Alexandros Lagakos, chairman of the Greek Energy Forum, a London-based policy institution. "Therefore, it increases the pressure on both sides to sit down at the table and back down on some red lines and move closer to compromise."

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Omar H. Rahman

Gas Discovery Could Solidify UN-Led Cypriot Peace Talks

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