Judy Asks: Is Now the Time to Solve the Cyprus Dispute?

Greek Cypriots are hopeful that this time around, a breakthrough might just happen. There have been so many cycles of talks over the years, and each one has failed. Ten years ago, Greek Cypriots voted “no” in a referendum on a UN proposal to reunite the island—maybe because (Greek) Cyprus was about to join the EU regardless of the result, so there was nothing to gain from voting “yes.” But in fact, nothing positive came out of voting “no” either.

Now, a number of external factors have created the right climate for talks. Contrary to what many observers say, the financial crisis is not the most significant influence. It seems that Turkey really wants a breakthrough, and so does the United States. The Americans want the region to be peaceful.

But the big game changer is oil and gas. If the Cyprus dispute were settled, it would facilitate the exploration of energy resources in the Eastern Mediterranean. It remains to be seen how the energy issue will play out with the Cypriot public. But somehow, the atmosphere is different this time around.

The short answer is “yes.” The Cyprus problem has evolved from a dangerous security issue to an unresolved political dispute. That is a positive development, to be sure. But a settlement has remained elusive, and the lack of negotiating success imposes opportunity costs for both sides of the island, Greece, Turkey, and transatlantic relations.

Shifts in regional geopolitics provide strong incentives for compromise, and resolving the dispute would be a transformative development. First, Turkey could use a foreign policy success, particularly one that would reinvigorate Ankara’s relations with the EU and Euro-Atlantic partners. Second, new energy finds in the Eastern Mediterranean are unlikely to be effectively exploited by any party without a greater degree of regional integration—and a Cyprus settlement is the key here.

Last but not least, reunification of the island would remove the central obstacle to EU-NATO cooperation. With looming changes in the leaderships of both organizations, there is now an opportunity to strengthen European security arrangements. Amid mounting instability in the Eastern Mediterranean and the Levant, a resolution of the Cyprus dispute has never been more attractive or important.

The atmosphere is certainly conducive to resolving the Cyprus dispute. But caution is in order until a real agreement emerges.

The joint statement on February 11 by Greek and Turkish Cypriot leaders is an extremely positive development, as it provides a sound basis for detailed talks on a future federal structure. Such an architecture could mean many different things, depending on how much weight is given to the central entity, on the one hand, and to the Greek and Turkish Cypriot components, on the other.

Yet there are strong incentives for all stakeholders to make a decisive move. One potential game changer is the availability of gas resources in the Eastern Mediterranean. For example, the most economical way for Israel to export gas from its Leviathan wells would be via Cypriot territorial waters and onward to Turkey. That would be advantageous for both Cypriot entities as well as Ankara. Similarly, any income from gas found in Cypriot waters would benefit the reunified country, as agreed in previous talks.

Greece and Turkey also have the chance to end a forty-year standoff over a divided Cyprus and the presence of some 35,000 Turkish troops in the north of the island. And Turkey’s recognition of a reunified Cyprus would lift the biggest obstacle to Ankara’s EU accession negotiations.

After many false starts and disappointed hopes, this may be the year that Cyprus comes to its senses and begins to resolve its painful division.

Time has been running out as the generation that remembers a unified island before the Turkish invasion of 1974 fades from the scene, but there are a number of reasons to hold out hope for a breakthrough this year. Most importantly, there seems to be a cross-party Greek-Cypriot coalition willing to back an agreement on a federal structure. At the same time, the recent financial crisis and the prospect of an energy boom off the Cypriot coast provide solid economic reasons for a rapprochement. A Cyprus that remains divided will face the prospect of being a satellite for Russian money, and will be less independent than a reunified nation.

Finally, the United States seems willing to play the role that neither the UN nor the EU has, and could provide the necessary combination of pressure and incentives to push through an agreement. If a settlement is reached, the benefits for the region and for the West will be substantial. Many major issues remain to be tackled, but the momentum is in the right direction.

After almost two years of standstill, Greek and Turkish Cypriots finally agreed in early February to a joint statement that paves the way for a resumption of the peace process. But after decades of botched efforts, why should negotiations succeed now?

In short, because gas has emerged as a new variable in the complex Cypriot equation. So far, the gas finds in the Eastern Mediterranean have only exacerbated tensions, revealing the underlying sovereignty dispute at the heart of the Cyprus conflict. But gas could act—and, arguably, has already acted—as a catalyst for a restart of the peace process, and possibly for its successful conclusion.

If the gas reserves are sufficient to justify multiple transport routes, one option could be a liquefied natural gas facility in Vasilikos, Cyprus, together with a pipeline linking Israel to Turkey. Under this scenario, Cyprus and Israel would liquefy part of their natural gas for export to more profitable global markets, and a portion of that gas would be channeled to Turkey and the Southern Gas Corridor, which links the Caspian Sea to Europe. Cyprus should consent to such a proposal.

The current opportunity to resolve the Cyprus dispute must be seized, since it may be the last chance to finally end the division of the island.

As intractable as it may seem, the problem of the division of Cyprus deserves a renewed effort by its main stakeholders. The last major attempt to reunite the island failed in 2004, when the Greek side rejected in a referendum a deal negotiated under the auspices of the UN. After that, despite efforts to bring the two sides together at the negotiating table, the right incentives could not be found.

Now, it seems that both positive external shocks—the discovery of offshore gas resources in the Eastern Mediterranean—and negative ones—the effects of the eurozone crisis on Cyprus—have created a new set of incentives for a lasting settlement. This changing context seems to have convinced the Greek Cypriot leadership that they may have more to gain from a resolution of the dispute than from a preservation of the status quo.

In other words, the “positive-sum game” mentality may finally have shifted the positions of the two sides toward a pro-settlement outcome. It’s now or never for Cyprus.