The Cyprus factor in Turkish-Israeli normalization

Israel Minister of National Infrastructure, Energy, and Water Yuval Steinitz meets with Turkish Energy and National Resources Minister Berat Albaryrak

In this article from the December 2016 issue of Turkeyscope, Alan Makovsky examines the prospect that the Cyprus problem could impede Israel’s and Turkey’s energy plans.

Over the course of the nearly six months since Turkish Prime Minister Binali Yıldırım and Israeli Prime Minister Benjamin Netanyahu announced their agreement on normalization of bilateral relations, it has become increasingly likely that the factor that clinched the deal was prospective cooperation on energy. That being said, should Israel proceed with a pipeline to bring its gas to Turkey, it faces the possibility of deterioration in its increasingly important relations with Greece and Cyprus, as well as Greek-Americans.[1]

Energy key to normalization
Energy is not explicitly mentioned in the agreement, but prior to signing, an informal understanding apparently emerged that energy would be a significant component of the bilateral agenda. That factor helps explain why Israeli Prime Minister Benjamin Netanyahu ultimately blessed an agreement reportedly similar to one he had rejected two years earlier.

According to a U.S. official intimately involved with the final stages of negotiations, Israel decided to embrace the normalization agreement only when it became convinced that Turkey would be the most strategic and lucrative route for exporting its gas to world markets. The U.S. played a significant role in bringing Israel to that conclusion, according to the official.[2]

The object of Turkey’s apparent desire and Israel’s apparent economic hopes is Israel’s Leviathan gas field on the Mediterranean coast. The gas field has an estimated 600 bcm of proven gas reserves – and according to Israeli Energy Minister Yuval Steinitz, there may be as much as 2,200 bcm more gas reserves located in Leviathan and nearby.[3] Israel is optimistically targeting 2019 as the year when gas will begin flowing from Leviathan.

The two nations’ energy ministers met October 13 in Ankara to discuss prospects for an underwater gas pipeline; thus far, it is the only ministerial-level meeting since the normalization process began. It’s worth noting that Turkish Energy Minister Berat Albayrak has unusual sway for one in his position; he is President Recep Tayyip Erdoğan’s son-in-law and widely considered the second-most powerful figure in Turkey.

A month after meeting Albayrak, Steinitz explicitly announced that “(we) decided to move ahead on the plan for a gas export pipeline from Israel to Turkey.”[4] Of course, implementation is a long way off. Feasibility studies are necessary, and most importantly, investors must be found for a roughly 300-mile-long pipeline estimated to cost $7 billion. Nevertheless, the Steinitz statement signals an affirmative decision to move forward.

Import of Israeli natural gas would mitigate Turkish dependence on Russia and Iran, Turkey’s top two suppliers. Turkey imports more than half of its natural gas from Russia and nearly one-fifth from Iran. Reportedly, the pipeline now under discussion with Israel could also supply somewhere in the range of 9-12 bcm, more than one-fifth of Turkey’s current usage. Some of the gas could be designated for Europe, also now heavily dependent on Russian gas.[5]

Turkey’s reliability
While some Israelis may be concerned that Turkey’s economic doldrums and Erdoğan’s personal volatility and anti-Israel reflexes (pointedly re-affirmed in a November 21 interview with Israeli journalist Ilana Dayan) could undermine the project, the Israeli government does not appear to share that assessment. Last month, Steinitz described the Turkish economy, somewhat counter-intuitively, as “very stable and very strong.”[6]

Moreover, Israeli supporters of the pipeline concept point to the fact that Israel has been importing Azerbaijani oil through Turkey for years (via the Baku-Tblisi-Ceyhan pipeline), and Turkey never interfered with those shipments, even during the worst periods of Israeli-Turkish tension. Bilateral trade between Israel and Turkey actually grew dramatically during the post-Mavi Marmara years. Seemingly, Turkey had walled off the commercial relationship for special protection, thus creating confidence that despite political tensions, were a natural-gas pipeline to be built, Turkey would fulfill its end of the contract.

The Cyprus conundrum
So, with both governments seemingly committed, is it smooth sailing ahead for the Turkish-Israeli pipeline? Hardly. Assuming that everything else goes right – a bold assumption in the world of energy – one major diplomatic obstacle looms, confronting Israel with a difficult policy choice.

That obstacle – a longstanding diplomatic problem that rarely attracts international media attention – is the “Cyprus problem.”

By all accounts, the only feasible route for a Turkish-Israeli pipeline is one that would traverse Cyprus’ Exclusive Economic Zone, or EEZ.[7] That may give tiny Cyprus some leverage over the Israeli-Turkish mega-project’s progress. And Cyprus has made it clear that it opposes the project, unless the Turkish occupation of the northern one-third of the island ends, and the Turkish-Cypriot-populated North is reunited with the Greek-Cypriot South.

That opposition mainly reflects resentment of Turkey’s unwillingness to recognize the Greek-Cypriot-dominated government[8] and of Turkey’s claim to a large part of Cyprus’ EEZ. Cyprus also may want to use whatever leverage it has over the project to persuade Turkey, and Turkish Cypriots, to be more flexible on Cyprus problem-related issues. A Cyprus solution would eliminate all these problems: Turkey would recognize the new Cypriot government that includes Turkish Cypriots, and Turkey and Cyprus would then presumably demarcate their respective EEZs.

Could the Cypriot government be bought off? Perhaps, but those who assume so probably aren’t familiar with the tenacity of the Cypriot parties, particularly when dealing with issues that touch on recognition.

If Turkey and Israel proceed, it is unclear how much leverage Cyprus has to block the pipeline. With a limited military, Cyprus’ only recourse would be legal.   The United Nations Convention on the Law of the Sea (UNCLOS) explicitly permits “submarine pipelines” across the EEZ of another state (Article 58). However, somewhat confusingly, it also permits the coastal state – in this case, Cyprus – to object to “the course” of the pipeline (Article 79), and bring its objection to one of various venues prescribed in UNCLOS, including a special arbitration board and the International Court of Justice. Some say the process could take years, which would leave the pipeline in limbo. Indeed, Cyprus’ very objections may alienate potential investors, who may be reluctant to embrace a project in disputed waters.

Of course, if the Cyprus problem were resolved, Cyprus’ objection to the pipeline would likewise be removed.  In fact, Cyprus has its own small natural gas field (an estimated 125 bcm of proven reserves), and it might want to link up to the Israeli-Turkish line, exporting its gas through Turkey as well, pending a settlement to the Cyprus problem. Negotiations over gas amounts and price could even emerge as the final piece of a putative Cyprus solution.

However, achieving a solution to the Cyprus problem is a long shot at best. Reunification talks have been taking place off and on since 1975. There is currently more optimism than usual about prospects for success, but many gaps remain in the two communities’ positions, some seemingly intractable.

Israeli-Hellenic relations
Were Israel and Turkey to proceed with the pipeline in the face of Cyprus’ objections, Israel would risk its increasingly close relations with Cyprus and its sister Hellenic republic, Greece. These ties began to evolve significantly after the Mavi Marmara incident left relations with Turkey in tatters.

In recent years, Israel has reportedly conducted air exercises in both Greece and Cyprus, and carried out numerous joint air and naval exercises with Greece.  Leaders of the three states meet regularly, including earlier this month in Israel. Moreover, Greece and Cyprus have been helpful to Israel’s case in European Union decision-making centers.

Developing from this relationship, Greek-American and mostly Jewish-American pro-Israel ethnic lobbies have begun cooperating to a new and unprecedented degree; as a sign of solidarity, some Greek-Americans joined lobbyists from pro-Israel organizations in lobbying against last year’s Iran nuclear agreement. Much of that cooperation could end if Turkey and Israel pursue their pipeline absent a Cyprus settlement.

For the United States, the prospect of an Israeli-Turkish pipeline in the absence of a Cyprus settlement would also create problems. On the one hand, the U.S. would welcome the reinforcement of Turkish-Israeli stability that the pipeline would bring. Moreover, it has long wanted Turkey – and, for that matter, Europe – to ease its dependence on Russian energy. On the other hand, the issue could also play out awkwardly in Washington, where Administrations are usually sensitive to Greek-American concerns, and where some Congressmen would be torn between traditional support for both Israel and the Hellenic states. This issue could also place the U.S. – long-time champion of a Cyprus solution – in the uncomfortable position of supporting a project that angers Greek Cypriots, and thereby makes prospects for a solution more distant.

None of this is to suggest that if the Cyprus problem is solved, an agreement on the pipeline would be easy.  Energy deals are notoriously difficult to put together. They can be derailed by market forces or by lack of mutual trust. First and foremost, the engineering challenge of building a 300-mile, deep-water pipeline could prove insuperable. Additionally, third party countries can also create problems. In this case, both Russia and Egypt might have concerns about a Turkish-Israeli pipeline.

Nor is any of the above intended to suggest that normalization of Turkish-Israeli relations would lose all value if the pipeline fails to materialize; now that normalization has been achieved, both sides presumably would want to preserve it, whatever the circumstances. Normalization enhances regional stability; opens channels for bilateral contacts at all levels of society; supports already-thriving bilateral commercial trade; and creates an opening for Israel and Turkey to cooperate against common threats, such as ISIS and perhaps Iran.

Nevertheless, the matchmaker in this Turkish-Israeli marriage of convenience seems to be energy. When Greek Cypriot and Turkish Cypriot negotiators next meet on January 9-12 in Geneva, energy sector mavens in Israel, Turkey, and elsewhere, will be paying unusually close attention.

Alan Makovsky is a Senior Fellow at The Center for American Progress (CAP), a Washington-based think tank. He has followed events in Turkey for decades, as an analyst at think tanks, as advisor to the Chairman of the House Foreign Affairs Committee (U.S. Congress), and as an official at the U.S. State Department, from which position he served a stint as political officer at the U.S. Embassy in Ankara and as Political Advisor to a U.S. military operation at İncirlik Air Force Base in southern Turkey. amakovsky [at]americanprogress.org