The Republic of Cyprus and the Turkish Republic of Northern Cyprus have accepted that their peace talks – which have taken place in Lausanne, Switzerland over the past two years - have been unsuccessful. This has wider implications than mere diplomatic failure, particularly threatening plans related to the construction of gas pipelines designed to feed the European market, and reduce Europe’s dependence on Russia.

Russia arguably anticipated the failure of these peace talks, and continued to engage in power plays over the major gas fields of the Eastern Mediterranean. This not only reinforces Russia’s role in regard to the European energy market, but also vis-à-vis Turkey, who has sought to diminish Russian influence in their own energy interests.

The lack of an agreed political outcome on the Cyprus crisis will ostensibly act as a reason for political actors with a vested interest to maintain their unpredictable policies, which ultimately impacts the viability of infrastructure investments related to the development of energy in the Eastern Mediterranean.

Impact

  • The failure of the Cyprus peace talks leaves an environment that is not conducive to the development of gas resources in the East Mediterranean, at least plans that include Cyprus.
  • Sustained weak legal frameworks defining maritime boundaries will also inevitably trigger unpredictability from political actors involved in Cyprus energy disputes. Given the arbitrariness of the law, energy deals can be manipulated by external parties to exert their influence.
  • The discovery of new gas basins in the East Mediterranean Sea has attracted a host of international and regional actors to declare their interest to invest in the development of associated energy resources.
  • Given political manoeuvrings, Egypt will remain one of the safest gas corridors for East Mediterranean gas basins; however, Russia, through Rosneft and Gazprom, will continue to expand its economic interests in the East Mediterranean by acquiring shares in entities exploiting opportunities in the basin.