BACKGROUND: The year 2010 was a turning point in Turkey-Northern Cyprus relations when the Turkish Cypriots were shaken by a grave economic crisis. As the sole available donor for the embargoed territory, the Turkish government provided substantial financial resources but also dictated strict austerity measures which provoked unprecedented demonstrations against the Turkish government.  The recent “Northern Cyprus policy” of the government of the Justice and Development Party (AKP) was shaped during this period. It was grounded on economic reform measures, aiming to launch a structural transformation through privatizations and reducing public spending.  These reforms shook the Turkish Cypriots even harder. A considerable part of the population saw them as an instrument to convert their “national” resources into benefits available for the Turkish AKP government and its supporters. According to a recent survey by TEPAV, the Economic Policy Research Foundation of Turkey, discontent has become the dominant psychology among Turkish Cypriots: 62 percent are unsatisfied with their socio-economic status and 30 percent believe that reforms have no chance of success at all.

The rising reaction to the AKP’s Northern Cyprus policy  undermined the Turkish Cypriot government. Former Prime Minister Irsen Küçük and his center-right Party of National Unity (UBP) was accused of doing the bidding of the AKP; the government  collapsed in May 2013 when a motion of censure was introduced by a group  of UBP deputies who broke ranks and joined the opposition, the center-left Republican Turkish Party (CTP) and United Forces (BG). On July 28, the opposition parties won the anticipated elections. However, the distribution of votes does not allow a strong dominant government that can bring back stability. The most likely scenario is a coalition between the center-left (CTP) and the center-right (UBP), which is unlikely to prove stable.  At the moment, Turkish Cypriot political life is focused on minute political debates, notably the post-election circumstances, next years’ municipal elections, the presidential elections of 2015 and the possible transition from a semi-presidential to a presidential system. The introverted nature of Turkish Cypriot political life with its Byzantine power games means that no political group is likely to produce any constructive project pertaining to the Cyprus conflict. At this stage, the Turkish Cypriots are effectively marginalized from political processes concerning the future of their own island.    

The idea of “reunified Cyprus” has also lost its priority in the troubled southern Greek part, the internationally recognized Republic of Cyprus, an EU member, which has not taken part in any reunification talks since earlier this year. The newly elected President, Nikos Anastasiades, has stated that he cannot concentrate on reunification until the economy has been rehabilitated, which is likely to take long time. According to the European Commission, there will be no sign of economic recovery until 2016 if the current economic and political trends continue. During a meeting with the Cypriot Minister of Foreign Affairs in May 2013, U.S. Secretary of State John Kerry also underlined the economic problems and suggested that reunification is the most credible way to change the state of affairs and establish a sustainable economic structure. However, Anastasiades resists the international pressure and has declared that even after the talks resume, they will restart from the beginning, as his government wants to introduce a new national standpoint which is to be decided by the National Council, the top advisory body to the President on the handling of the Cyprus question.

From the perspective of the Greek Cypriots, any precipitated movement toward reunification would be risky.  Above all, the Greek side prefers  to scrutinize all the potential opportunities arising with the exploration of rich energy resources in the Eastern Mediterranean, before it reengages in a process of reunification with the Turkish north Cyprus.

IMPLICATIONS: The first symptom of a new symmetry in Turkish-Greek Cypriot relations appeared in 2011, when the Greek Cypriot government of President Dimitris Christofias suggested  cooperating with Turkey for carrying Cyprus’s gas towards European markets. However, the second symptom was pointing to a more confrontational relation as another regional actor was added to the equation. During February 2013, the Cypriot government made its new position clearer by signing a gas drilling agreement with Israel; Turkish Prime Minister Recep Tayyip Erdoğan called the Cypriot-Israeli deal an act of “madness” and an act of “sabotage to negotiation process over the Cyprus issue”. Cyprus and Israel also consider bypassing Turkey in the commercialization of the gas and turn towards Far Eastern markets through the Suez Canal, even though these plans are yet to be  concretized.

The Israelis have not finally decided whether or not to export the gas due to economic concerns, mainly their export surplus and the inconvenience of a strong Israeli shekel for the competitiveness of the country’s economy. Also, the building of pipelines is a costly investment requiring time and significant financial resources. The Cypriots being in debt and Israelis too reticent, the only concrete attempt so far  has been the project of constructing a distribution terminal by 2020. Besides, this option seems to have no other logic than bypassing Turkey: the project will cost US$ 10 billion and pay off in 10 years, while a pipeline via Turkey would cost US$2.5 billion and pay off in less than 5 years.

The project would also have a diplomatic cost. The gas explored in Cyprus’s Exclusive Economic Zone is estimated at 230 billion cubic meters and worth 100 billion Euros. This amount could help the EU decrease its energy dependency on Russian gas and also recover its loans to the Cypriot government. Turning towards Eastern markets may bring the isolation of the Greek side within the EU and translate in loss of an important international support.  At this point, the Turkish government has three different options to which it may resort according to the course of events.

The current strategy of the Turkish government is basically to wait and see, as it does not seek to impose any vision on the future of Cyprus and says it will support any settlement reached through compromise between the two peoples of the island. The strategy reflects the AKP’s patience until the Greek side defines its new standpoint.  However, if the Cypriot government takes further tangible steps in energy cooperation with Israel, the Turkish government can be expected to  give priority to  Northern Cyprus , insisting that the Turkish Cypriots should also have a say on the distribution of island’s natural resources. In theory, the strategy could also be backed up by encouraging regional blocs in order to counter the Cypriot-Israeli energy alliance.  However, recent developments, notably the fall of the Muslim Brotherhood government in Egypt, has deprived the Turkish AKP government of the ally which would have been crucial for the realization of such a scheme. 

Turkey could also choose to ignore the Cyprus conflict. As pronounced by the Turkish Minister of Energy Taner Yıldız, Turkey may not need to wait until a solution in Cyprus for cooperating with Greek Cypriots in the commercialization of energy resources. This strategy would be in line with Turkey’s aspiration to become a regional energy player and would also fit into the AKP’s generally pragmatic approach to nationalist causes, as its handling of the Kurdish issue has demonstrated. If Ankara were to pragmatically join forces with Cyprus, it would undoubtedly represent a decisive twist in the Cyprus conflict. 

CONCLUSIONS: For the AKP government, a resolution of the Cyprus conflict does not necessarily imply “reunification” or any other sort of change in the current status quo. In fact, Turkey finds itself in a suitable environment for exploring different paths, given that the conditions push the Greek Cypriots to pragmatism and as the Turkish Cypriots are immersed in internal conflicts that keep them at bay from debates concerning their international status. In this context, Ankara is essentially interested in cooperating with Greek Cypriots and wants to lure them away from the energy alliance with Israel.  As for the Greek Cypriots, they are undertaking political feasibility assessments, testing the Turkish government with statements and diplomatic actions.

In case the two parties manage to establish a dialogue and build confidence, they can achieve agreements on some important points with economic resonance – to begin with the opening of Turkish ports to Greek Cypriot shipping – which would also have a beneficial effect on Turkey’s stalled membership negotiations with the EU. Turkey does indeed seem to be inclined   to establishing a pragmatic relation with Cyprus, as the statement of the Turkish energy minister indicates.   The Greek Cypriot leadership however, has to cope with a psychology of division and occupation that is still dominant among the Greek Cypriot population. If Cypriot President Anastasiades were to adopt the same pragmatic approach as the AKP government, he would need to be supported by the National Council, and there is presently little to suggest that such support would be forthcoming.  Ultimately, in order to entice the Greek Cypriots to cooperate in a spirit of pragmatism, Turkey will have to demonstrate that it is prepared to address their grievances caused by the division of the island.

Ozan Serdaroğlu, Ph.D., is a Visiting Fellow at the Institute of Security and Development Policy’s Silk Road Studies Program in Stockholm, Sweden.