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Cyprus Talks Energy

Harsh realities behind race for a solution

The two leaders have gone further than any others in the process of reaching an agreement, but the toughest issues have yet to be agreed on and both men face serious domestic opposition. To add to the pressure, time is rapidly running out

The race is on to reach a solution by the end of this year against massive odds that include yawning differences, changing realities on the ground and strong opposition on both sides, all of which do not give analysts and observers much cause for optimism, they say.

The Greek Cypriot side is adamant there is no question of timeframes, arbitration or international pressure, but the indications say otherwise, and the feeling is that if the negotiations carry over far into 2017, the danger of a non-solution will increase exponentially.

Even though President Nicos Anastasiades and Turkish Cypriot leader Mustafa Akinci have gone beyond other Cypriot leaders in terms of convergences, the big issues, property, territory, guarantees and security are far from a done deal. In fact, there are still divergences on all chapters, let alone the thorny issues.

Add to that the departure of UN Secretary-General Ban Ki-moon, a new administration in the White House, hydrocarbons drilling deadlines that would stall negotiations, and the kick-off of presidential election campaigns on the Greek Cypriot side by mid-2017.

In the north Turkish private investment is mushrooming, creating new fait accompli, and there will likely be pressure from Turkey to have another 27,000 settlers in the north granted ‘citizenship’ by the end of this year if there is no Cyprus deal.

“This is not scaremongering. These are the realities,” Sunday Mail sources close to the negotiations said. “There are dangers and difficulties and the leaders are racing against the clock”.

Anastasiades and Akinci will meet the UN secretary-general in New York on September 25 and are to ask for his personal engagement in the process, according to their joint statement on Wednesday.

To Hubert Faustmann, associate professor for history and political science at the University of Nicosia, this means they are unable to bridge the remaining gaps on their own. It was revealed on Wednesday that there are 180 issues on the table related to the substance of the talks, and another 103 pending for the UN to deal with.

“The two leaders leave for New York with substantial differences and will probably find it difficult or impossible without outside involvement to resolve them,” Faustmann said. “Then the question of UN mediation will pop up. It’s the classical dilemma of 2004. People will resist outside mediation.”

Indeed, the government has been at pains to say the reference in the joint press statement about Ban`s role does not imply any arbitration or timetables, probably to keep the rejectionists from having something to pounce on, though the opposition has rightly said these were the only logical conclusions that could be drawn.

Faustmann said the impression from the talks at the moment appeared to be one more of public image than substance. “They have to start moving,” he said. “The window is closing. Early next year will be the final limit for a comprehensive solution. Otherwise they will be left with a piecemeal one. They should also think ahead to that,” he added, as a sort of Plan B in case a comprehensive solution is not possible.

James Ker-Lindsay Cyprus and Balkans expert at the London School of Economics believes that in a sense things have already gone on too long. The leaders have been negotiating since May 2015.

“Once you go beyond 12 months the rejectionists find their voices. If it goes on for much longer beyond this year there might be a sense of ‘what’s taking so long’,” he said.

Ker-Lindsay alluded to the big changes on the international scene but he also thinks the strategy on Cyprus should be less about the solution itself than why it is so important that there be a settlement – that the leaders should be selling the reasons why Cyprus needs a settlement, and not just a solution plan. And Turkey, he said, was becoming increasingly unstable. “Also the Turkish Cypriots have to do more to help and show some allegiance to the new Cyprus state rather than always looking to Turkey,” he added.

“Always bear in mind that negotiating for a solution in Cyprus is indistinguishable from negotiating to avoid blame. You can never tell what the background motives are.”

Ker-Lindsay said the leaders’ statement had been a huge let-down as it was more of the same, “pedestrian and cautious” though he conceded it was probably worded that way for a good reason, not least to avoid giving ammunition to the rejectionists. He also said the involvement of the UN secretary-general would have to be handled carefully for the sake of public impressions.

Adding to the pressure is the growing consensus that without a solution there will be no benefits from gas
Adding to the pressure is the growing consensus that without a solution there will be no benefits from gas

The energy factor

Impressions aside, there are, according to informed sources, real dangers to a non-solution and the top one, which is also the real driver of the push against the clock for a solution, is energy.

French oil major Total is expected to commence exploring for gas in their offshore Block 11 concession in early 2017, Energy Minister Giorgos Lakkotrypis said in July.

“Without a solution there will be no chance to touch the gas or exploit natural resources,” the sources said, despite the Republic’s ongoing licensing rounds. If there is no solution, and drilling starts, they added, Turkey would intervene and international companies would not stick around for long.

This was made clear from statements ten days ago by US Special Envoy for International Energy Affairs Bureau of Energy Resources, Amos Hochstein. He warned that if countries in the Eastern Mediterranean did not resolve their political differences and learn how to share infrastructure, most of the natural gas in the region would stay in the ground.

He also said he hoped Turkey understood the critical element of energy discussions when it came to the Cyprus issue because wider plans could not proceed without a political solution. The market was still looking for validation that historic political differences would not get in the way of investment and development Hochstein warned.

“Energy is a ticking time bomb,” Faustmann said. “If Greek Cypriots start drilling, Turkey will respond.”

Political analyst Christoforos Christoforou too said the situation is not the same as it was in 2004 during the Annan plan era when Greek Cypriots were still looking forward to EU accession and felt safe in rejecting the solution plan. “The realities are different now,” he said. “Without a solution there will be no gas and no benefits from gas. This is a point of pressure for the leaders. This is also a bright point for a solution,” he added, given the boost it would bring to the economy.

The big issues

According to insiders, from the big issues – guarantees, security, property and territory – the two former are actually the easiest to resolve with the correct handling and compromise.

“The guarantees is just a lot of talk,” said one. “If Turkey wants to invade somewhere it doesn’t need a guarantee to do it.” The Greek Cypriots say guarantees are not needed but the Turkish side says they are, though some say Akinci knows they’re really not but still needs to put Turkish Cypriots at ease.

Property, the Sunday Mail understands, remains the single biggest tangle and the most unworkable as it stands. Leaks to Turkish media in the past few weeks talk about complicated formulae in determining ownership including ’emotional bonds’ for which an age limit of ten years old has been set to develop this bond. Attached to this is also the estimated cost of compensation, expected to run to billions.  Unpublished government opinion polls show that the main concern for Greek Cypriots is actually the financial aspect of a solution, having already gone through a major economic crisis.

One suggestion to finance the property compensation is for an EU financial institution to provide loans but not to make them part of the public debt as it would be unsustainable. The money could then be paid when the economy takes off, which it would as all studies have shown, though it might take one or two years before investors take the plunge once they saw the situation was stable, the IMF has apparently cautioned.

The Mail also understands that territory, though it is linked to property, is also resolvable but Faustmann said this cannot be done without first sorting out the property. Under the Annan Plan Greek Cypriots would have seen the return of Morphou but that is now off the table as far as the Turkish side is concerned. One possible solution being mooted as a compromise is placing Morphou and part of the Karpas peninsula on the island’s north east, under federal government jurisdiction rather than under either of the two constituent states. This move would also be strategic in terms of federal coastline security.

Government spokesman Nicos Christodoulides said during the week the position of the Turkish Cypriot side on territory was to have very few territorial readjustments. On this matter there was no agreement between the two sides, he said. “It is one of the issues that is under discussion together with security,” he added. Christodoulides said however it was the first time since 1960 that these matters were being discussed in a negotiating procedure.

“I think it [the outlook] is rather bleak,” said Faustmann. “There is a chance, but it’s not all over without mediation, and won’t be by the end of the year. There could be a five-party conference [on guarantees], but the Greek Cypriots will resist it. I’m more pessimistic than optimistic,” he added.

Christoforou too was sceptical. “It was being said earlier in the year the [parliamentary] elections might have to be postponed and to expect a solution.  It didn’t materialise,” he said.

“The differences are not minor which makes me sceptical about what will happen. We need a solution by the end of the year but if there is international pressure to bridge the gaps there will be a problem in approving the solution in a vote. Anything that appears forced will face popular rejection. The only other option is that both leaders make huge compromises to reach a solution,” he added. “Even if they agreed tomorrow in principle they would have to set down and outline the details. It can’t be done in three months so the question is, how far into 2017 can it go?”

Ker-Lindsay did not want to go as far as to say he was pessimistic. “I want to be optimistic…,” he said.

The National Council meeting on Wednesday with party leaders. Six out of the eight parties are rejectionists
The National Council meeting on Wednesday with party leaders. Six out of the eight parties are rejectionists

The biggest block to a quick settlement

The leaders may have a lot on their plate in terms of negotiating the issues but the real stumbling block to progress and compromise are their respective opposition. They must not only find a solution but walk a fine line in selling it, especially Anastasiades.

Observers say Akinci does not have as much of a problem even though his ‘government’ has set the ball rolling on trying to scupper a deal. As long as he has Ankara’s backing, the opposition can be kept in check, though the Sunday Mail understands that the Greek Cypriot side has concerns about it. It is also understood that the recent visit to the north by Turkish Foreign Minister Mevlut Cavusoglu was to instruct them to toe the line.

Anastasiades has a whole other ball game to deal with, with six out rejectionist parliamentary parties out of eight to fend off.  Some insiders see his constant efforts to achieve a consensus as a waste of negotiating time as none of the hardliners ever come up with alternatives “only criticisms”, and that whatever solution is reached will never be good enough.

“The people who are against it [a solution] are against it,” said one insider, adding that it is impossible to please everyone and the president should not even bother trying.

“Unfortunately those who don’t want a solution, other than Akel and Disy, will try to find a way to scupper it,” said political observer Louis Igoumenides.

From their statements during the week it is clear that Diko, Edek, the Greens, Citizens Alliance, Solidarity Movement and far-right Elam, are still playing the zero-sum game. If Akinci is happy about a development in the talks, it automatically means Anastasiades has given away yet another concession.

Greens MP Giorgos Perdikis described any sign of Akinci's happiness as 'truly disturbing'
Greens MP Giorgos Perdikis described any sign of Akinci’s happiness as ‘truly disturbing’

In the words of the Greens Giorgos Perdikis, Akinci’s happiness is “truly disturbing”. To be fair, the so-called hardline parties other than Diko and the Greens – and Elam who don’t really count other than as leaders of the ‘never’ minority – have toned down their rhetoric somewhat after the National Council meeting on Wednesday, but nowhere near enough to be counted as even mildly supportive. This is despite the fact that Akel leader Andros Kyprianou made it clear afterwards that Anastasiades had not crossed any ‘red lines’.

“The hardliners are itching for a fight,” said Ker-Lindsay. “If something looks optimistic it’s like firing the starting gun to undermine it.” He feels perhaps that is why the joint statement was restrained in that there was a sense of not wanting to give them something to latch on to. “But some won’t be happy no matter what,” he added.

A senior official from one of the six parties, who wished to speak anonymously told the Sunday Mail he was pessimistic about the negotiations. “I can’t imagine a viable and functional solution coming out of the current negotiations,” he said.

The party official said it was accepted that Anastasiades had the power to make certain concessions on sovereignty, power sharing, EU affairs. etc. “We recognise that certain moves have to be made in these areas,” he conceded. But on the big issues such as property, he said, it was clear that according to what was on the table, not very many Greek Cypriots would be able to enjoy their properties.

He said the joint statement on Wednesday was indicative of progress. “But as we have said on many occasions in recent years, progress is synonymous with Greek Cypriot concessions,” he added. He also said that from the documents seen by the parties, all progress until now had been based on these concessions “so we can’t see how this will lead to a solution”.

The official said it was crucial to the opposition that the Turkish side make certain moves on security, guarantees and territory. When it was put to him that these issues had not yet been discussed in depth at the table so there was perhaps time for concessions to come from the Turkish side, he said indications from Akinci already showed that the Turkish Cypriot leader felt that as long as the ‘four freedoms’ were enshrined, no territorial adjustments would be necessary. Also the fact that UN Special Adviser Espen Barth Eide said the leaders had merely “brainstormed” on the tough issues, meant there was no progress on guarantees and security.

“From access to the documents in recent weeks we have formed the distinctive impression that no solution can be found,” the official said.

He insisted it was not matter of looking for the ideal solution “but the withdrawal of the Turkish army is a must”. “I don’t think that is a very hardline position. It is not an easy situation to solve. The solution must be improved on in the current situation. If we consider the uncooperative position of the Turkish government, we are not sure that a solution can be reached on these terms,” he added.

If the Turkish side did show it was willing to give concessions on guarantees and security “we would be pleased”. ‘I can’t say right now whether it meant we would say yes or no but a plan with no troops and no guarantees would allow the two communities to have a peaceful future with no interference from Turkey,” he said. “There are certain moves that can be taken by the Turkish side to improve the situation and create the grounds for a solution. Not all the concessions must come from the Greek Cypriot side is what we say… as long as Turkey remains a major player in the area and in Cyprus we are pessimistic.”

Igoumenides believes that despite the constant negative stance of the parties, public opinion has changed since the financial crisis “and I expect a different outcome in spite of the rejectionists”, he said but the government has to explain everything to the people and what the meaning of the solution will be. They should also be prepared for what to do if the referendum is negative, he said because “partition will be next”.

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