Location: The East Mediterranean, the Island of Cyprus.
Parties involved: The Government of the Republic of Cyprus, The Government of the United States, The Government of Turkey, Total Energies, Eni, Shell, and Chevron.
Cyprus remains divided since Turkey invaded and occupied the northern third of the island in 1974.
The two states never signed a peace agreement, although a UN peacekeeping force has maintained a demilitarised zone between the Greek and Turkish sides of their respective claimed territory. As a result, this war is considered a “frozen” conflict.
Since the first discovery of natural gas in 2011, natural resources have led to a re-politicization of this frozen conflict. This is due to Western energy suppliers such as Chevron [US], Total [France], Shell [Britain/Netherlands], and Eni [Italy] actively discovering, drilling, and owning the majority stake of all natural gas fields off of the southern coast of the island.
Naturally, the Cypriot offshore exploration programme has faced strong objection from Turkey due to overlapping claims of jurisdiction over territorial waters.
The most recent of these discoveries was made in August 2022. Total and Eni reported 2.5 trillion cubic feet of gas reserves at Cronos-1 well. Drilling will begin in May of the following calendar year. For context, the Aphrodite gas field [one of the 13 listed] contains 4.5 trillion cubic feet of gas reserves worth $9 billion. Scheduled for commissioning by 2026, it will grant Cyprus energy independence and produce ample economic benefits.
On 16/09/2022, US Secretary of State Blinken lifted Defence Trade Restrictions on the Republic of Cyprus for the fiscal year 2023. The original arms embargo was enacted in 1987 in order to push for a diplomatic solution to the Cyprus conflict.
Turkish President Erdogan reacted strongly to the renewed US-Cyprus cooperation. He claims that US weapons transfers to the Republic of Cyprus endanger stability on the divided island. In retaliation, Turkey sent 40,000 additional troops and equipment on 29/09/2022 to the Turkish-occupied territory of Northern Cyprus.
Analysis and implications:
Cyprus risks becoming a strategic battleground as a result of its energy reserves. Following Russia’s invasion of Ukraine in February 2022, the European Union has been seeking to cut its energy dependence on Russian gas. For the EU, Cypriot gas reserves offer a viable energy alternative. Whereas for Russia, reinforcing Turkey’s resolve would serve as an additional tool for it to apply pressure on European countries that are supplying arms to Ukraine.
This internationalisation of the conflict is likely to lead to a rapid increase of arms and troops on the island in both Turkish and Greek areas of control. As this occurs, the risks of preemptive strikes, accidental engagements, and reputational damage to energy companies already invested in the island are heightening.
If a conflict ensues, the extraction of natural resources would grind to a halt, which would damage the production and economic output of the major European Energy companies. This would further worsen rising energy prices and inflation rates, in addition to opening an additional war in Europe.
Due to the NATO status of both Greece and Turkey, any aggression by either side will result in a collapse in the security framework of NATO. While a worst-case scenario, NATO would rapidly fracture along political lines, which would weaken the border security of Western Europe to outside aggression. In addition, the UN peacekeeping force deployed to the Island is unlikely to offer enough of a buffer for its HQ in New York to make any meaningful contribution to the event. Nor is the British contingent at RAF Akrotiri going to be able to keep Turkey at bay.
This geopolitical conundrum further complicates Europe’s security due to the delicate balance Turkey plays with its relations with Russia. If the West does not heed to Turkish grievances, it could intentionally push Turkey into Russia’s arms. This will be of particular concern to the war in Ukraine, as Turkey is running a thin line between supporting Ukraine’s efforts with equipment [such as the infamous Bayraktar drone]. If this support stops, the Ukrainian military risks losing an important supplier of arms, which could tip the war in Russia’s favour.
The externalities of this frozen conflict could prove devastating for the security of Europe if left unaddressed. The economic benefits for energy companies in the short term are unlikely to outweigh the long-term consequences of Turkey escalating the political conflict into a military operation or withdrawing its support for the Ukrainian Government. For businesses and residents on the island of Cyprus, the consequences will be dire. For the rest of the world, this island could prove to be a powder keg that could set off the largest-scale war that Europe has witnessed since the Yugoslav wars in 2001.