Saturday, February 11, 2017

Is Russia really meddling with Cyprus? - IN CYPRUS / CYPRUS WEEKLY

Limassol, Feb. 28, 2014: Cypriot President Nicos Anastasiades (C)
gets a tour of the aircraft carrier Admiral Kuznetsov 
February 11, 2017
Fiona Mullen

In the past few weeks there have been three articles in well-respected media outlets suggesting that Russia is trying to prevent a solution to the Cyprus problem. The first was published by Politico on January 12, the second by Bloomberg on January 16 and the third by the New York Times on February 5.

The general argument is that Russia is actively undermining efforts to resolve the Cyprus problem, which they tie to its energy and security interests, and that Cypriots are worried about this. Setting aside the uncanny timing of the articles, these assumptions are rather tenuous for a number of reasons.

The energy angle

First, let’s take the idea that Russia fears competition from Eastern Mediterranean gas. Russia has 1,140 trillion cubic feet (tcf) of proven natural gas reserves—the second largest in the world after Iran—according to the latest BP Statistical Review of World Energy. Eastern Mediterranean gas finds in the past few years in Israel, Egypt and Cyprus (not all of which are proven) amount to around 70 tcf.
With only 6% of Russia’s proven reserves, the EastMed can only ever hope to put a tiny dent in the gas dominance of Russia and/or Iran, even if its gas finds treble.

Moreover, if Russia is trying to prevent EastMed gas, it begs the question why Russia’s state-owned Rosneft agreed with ENI in December to buy a 30% stake in the 30 tcf Zohr field. The Zohr gas is expected initially to feed the Egyptian domestic market but there are also plans for exports.

Gas markets are predominantly regional, therefore this gas will most likely go to Europe. Buying into Zohr does not look like the move of a country hell bent on preventing EastMed gas exports.

Perhaps Russia does not want pipelines crossing Turkey that might compete with its own. The quickest and cheapest export market for Cypriot and Israeli gas is indeed through a pipeline to Turkey. However, ‘to’ Turkey is not the same as ‘through’ Turkey. Feeding long pipelines would considerably raise the prices of gas that is already expensive to extract from deep waters.

Moreover, Turkey has an urgent need to diversify, having just suffered a major gas-supply crisis owing to lack of flexibility in its contracts. As energy analyst Gina Cohen pointed out in a recent article in enerjiIQ: “Natural gas supplies are based on complex, often long-term contracts.”

This lack of flexibility caught Turkey short in December 2016, when cold weather led to a shortage of gas and a near total blackout.

“Thus seasonable flexibility or swing becomes very important for Turkey,” said Cohen.

The recent Turk Stream deal is not enough to make a difference. To diversify, Turkey can use nuclear power, renewables or diversify with gas from the Eastern Mediterranean. Whichever one it chooses, I doubt Russia can stop it.

The UN resolution

All three articles mention Russia’s veto of the UN Security Council Resolution in 2004 which was intended to be adopted before Greek and Turkish Cypriots voted on the Annan Plan.

However, the Security Council veto was carried out at the behest of the then president, Tasos Papadopoulos, who was using all means at his disposal to secure the “strong no” which he had called for. Indeed, I was recently told by someone closely involved at the time that Russia initially refused to veto.

Moreover, as Soteris Flourentzios pointed out on Twitter, nine other countries, including France and Spain, also had serious reservations about passing the resolution before the referendum. Although they eventually went along with it, it is clear from the statements in the resolution that France was peeved.

While we are on the subject of the UN, I was a staff member in the UN Good Offices mission at the time of the leaks saga. Without busting contractual obligations on confidentiality, I can tell you for a fact that this assertion from the New York Times, “The United Nations concluded that only a foreign intelligence service could have orchestrated such an operation”, is completely false.

That is not the only error in the articles. There is not space to go into why cited figures on the Russian population and foreign direct investment in Cyprus are also wrong.

‘Cypriots are worried’

My third issue is with the idea that Greek Cypriots are worried about Russia’s role. This is a misunderstanding of the Greek Cypriot psyche.

Greek Cypriots have long been far more sceptical of the UK and the US than citizens of NATO countries, thanks to British colonial rule and plenty of archive material about what the US and UK did and did not do to stop Turkey invading in 1974, or to sanction it thereafter.

Russia, by contrast has been an ally of Cyprus for centuries, probably since the disagreements with that other ‘evil Western power’, namely the Church in Rome. This continued when Cyprus became a member of the Non-Aligned Movement during the Cold War.

This is why every time Russia backs Greek Cypriot positions on the Cyprus problem, the media delight in it for days. The same is true when any other big power does so (such as the EU Council statement on hydrocarbons in December 2011).

Perhaps the only thing the government is worried about is that the Russian ambassador turned up at an event where the president was criticised. Official statements since then have more than made up for this episode.

The NATO angle

The articles argue that a solution of the Cyrus problem would somehow strengthen NATO by removing a bone of contention between Greece and Turkey. Anyone following the Cyprus talks closely will know that no one wants the Aegean issue brought into the Cyprus negotiations. Turkey and Greece will argue about this long after any Cyprus solution.

They also talk as if Cyprus might join NATO. To solve the Cyprus problem, you need the support of the second-largest party in Cyprus, namely the pro-Russian, communist AKEL.

NATO membership is therefore out of the question. There might end up being a role for troops of NATO countries. But the best way to ensure that Russia does not act as a spoiler is to ensure that a settlement of the Cyprus problem is not a NATO-only affair.

Plenty of countries have security and energy interests in this region. Give them all a role so that they have a common interest in ending the problem.

The writer is Director of 
Sapienta Economics and author of the monthly Sapienta Country Anaylsis Cyprus covering poltiics, economics and hydrocarbons