Hydrocarbon Diplomacy: Turkey’s Gambit Might Yet Pay a Peace Dividend

January 30, 2020
Turkey LNG

What’s the best approach for countries in the Eastern Mediterranean to reconcile their competing offshore energy interests? Right now, the strategy appears to be “survival of the fittest” — and it’s not working. Since the discovery of sizeable gas reserves in the Eastern Mediterranean a decade ago, coastal states have been embroiled in diplomatic, legal, and commercial disputes over maritime borders.

At stake are sovereign rights to lucrative energy supply routes from the Eastern Mediterranean to European markets. The attempt by Greece, Cyprus, and Israel on one side, and Turkey, the Turkish Republic of Northern Cyprus (TRNC) and now Libya on the other, to build rival alliances is proving ineffective. It risks deadlock and foreshadows a zero-sum contest for advantage in which no one wins. Turkey’s latest move — an agreement with Libya’s U.N.-recognized Government of National Accord that sets out a sea boundary between the signatories — seeks to block the envisioned route of the EastMed pipeline. In response, Israel, Greece, and Cyprus are renewing their rhetorical commitment to the existing EastMed pipeline project. One thing is clear — the parties have displayed a disappointing lack of imagination during this dispute, which might become the defining opportunity to bring about a more favorable balance of interests for regional stakeholders.

 

 

Improving ties between Israel and Turkey would go a long way toward overcoming this impasse. Israel seeks energy independence to upgrade its regional status and commercial reach. Pragmatists there concede that increasing Israeli-produced gas efficiently (in terms of both schedule and cost) is unlikely without somehow coordinating with Turkey. At the same time, Turkish diplomatic channels recognize Israel as an ally it knows how to work with thanks to institutional and bureaucratic muscle memory. Restarting what was for many decades a strategic alliance in the Middle East between Turkey and Israel would benefit both countries and the region. 

Geopolitics of Offshore Energy in the Eastern Med 

The discovery of significant deposits of natural gas in the Eastern Mediterranean beginning in 2009 was a game-changer that upended regional geopolitics. It prompted new and unexpected alliances between Israel, Greece, Cyprus, and Egypt to maximize their chances of energy self-sufficiency. The bulk of the gas lies in Egypt’s Zohr field, the Leviathan and Tamar fields in Israeli waters, and the Aphrodite near the island of Cyprus. With recoverable natural gas reserves in the region estimated at upward of 120 trillion cubic feet, the strategic implications could not be bigger. This is about the same amount as the proven gas in the whole of Iraq, the 12th largest reserve globally.

The rift between Turkey and its Eastern Mediterranean neighbors primarily concerns Cyprus. While the Republic of Cyprus is internationally recognized as a sovereign state, the Turkish Republic of Northern Cyprus is recognized only by Ankara since its creation in 1974 after Turkish troops were deployed following a Greece-backed military coup on the island. Efforts at normalization and peace talks have repeatedly failed. Nonetheless, the Republic of Cyprus has managed to gain political credibility as it continues to strengthen its place in the European Union, and has even established exclusive economic zone-delineation treaties with Egypt in 2003, Lebanon in 2007 and Israel in 2010.  The conflict, an ongoing thorn in Europe’s side, has gained renewed prominence thanks to the new chapter of energy geopolitics. The dispute is fueled by claims lodged by the Turkish Republic of Northern Cyprus over the vast resources in the offshore waters north of the island — an assertion that is denied by the Greek-Cypriot government.

Turkey has voiced longstanding objections to the unilateral exploration grants offered by Cyprus to international energy companies including ENI (Italy) and Total (France). These grants for the most part focus on Blocks 4, 5, 6, and 7 lying to the south and extending to the southwest of the disputed island, which are included in the exclusive economic zone claimed by Cyprus but which Ankara claims violate its continental shelf as well as the territorial waters belonging to the TRNC. Offshore blocks are delineated spaces in the sea where hydrocarbon reserves have been found and are used in bids for energy exploration and production licenses. Ankara, which has yet to strike a sizeable gas discovery of its own, argues that offshore licensing and energy development should be halted until a political settlement is reached for the island.

International law presents few remedies at the moment to resolve competing maritime claims. The 1982 U.N. Convention on the Law of the Sea establishes that coastal nations are entitled to an exclusive economic zone as far out as 200 nautical miles from their coast where they can assert fishing, mining and drilling rights. But the shorter distances in the Eastern Mediterranean require states to settle on an agreed dividing line between their economic zones. Turkey’s position adds further complexity to an already dizzying legal conundrum. Turkey is not a signatory to the U.N. convention and defends a different interpretation of the maritime rights of island states, arguing that the waters adjacent to the Greek Cypriot administration remain an integral part of Turkey’s own continental shelf. Indeed, Ankara rejects the assumption that Greek islands, including Crete, have rights to an exclusive economic zone that extends beyond their territorial waters (an area adjacent to the shore that includes the seabed, subsoil and airspace above it) of up to 12 nautical miles.

The Nov. 27, 2019 agreement signed between Turkish President Recep Tayyip Erdogan and Libya’s Prime Minister Fayez al-Sarraj set out a clarified sea boundary between the two signatories that notably teased close to Greek waters and its island of Crete. The agreement was the latest, and perhaps most consequential, signal by a nation increasingly confident in asserting its claim to the future bounty and gaining leverage over gas production deals.  The text demarcates an 18.6-nautical mile (35-kilometer) line that will form a maritime boundary from Turkey’s southwestern coast to northern Libya, and cuts across zones claimed by Greece and Cyprus.

At the core of the objections to the Turkey-Libya agreement is that it overrides Greece’s interpretation of its disputed maritime borders and tilts the balance of power in the Eastern Mediterranean in favor of Turkey. It also disrupts the envisioned route of the 1,900-kilometer EastMed pipeline that would run Israeli gas through Cyprus and Greece to southern Europe. Not wanting this project to be derailed, Greece has called for the U.N. Security Council and NATO to condemn Turkey’s maritime deal and expelled the Libyan ambassador to Greece over it. Greece is now seeking assurances from Gen. Khalifa Haftar, the rogue military commander of the Libyan National Army who is fighting to take control of war-torn Libya, that he will void the agreement if he is successful. Haftar was hosted in Athens on Jan. 17 and met with Prime Minister Kyriakos Mitsotakis. While the E.U. has expressed solidarity with member-state Greece over the Turkey-Libya maritime deal, the priority now appears to be on agreeing a ceasefire in Libya to avoid escalating the conflict.

Ostensibly as a countermeasure to Turkey’s tactics, Israel, Cyprus, and Greece convened on Jan. 2 to press ahead with the EastMed pipeline. Investors have shied away from the capital-intensive, deep-water pipeline, which is costly at $7 billion, technically complex and would require Turkey’s permission to pass through its continental shelf. Unresolved feasibility, financial and political complications mean that renewing the pledge will amount to little more than an optimistic gesture. Italy’s government has previously objected to the final leg of the Greece-to-Italy pipeline. And of course, there remains the simmering dispute with Turkey.

Turkey clearly perceives the maritime agreement with Libya as a major coup in energy geopolitics as it seeks to assert its sovereign rights against the gatekeepers of the regional status quo. Its latest gambit in the Eastern Mediterranean dramatically reverses decades of passive Turkish diplomacy that reduced the child of empire to an inferior and demoralizing status in the international order. John Bowlus, editor-in-chief of Energy Reporters in Istanbul, told me via email that the deal represents a “creative and clever diplomatic move to raise pressure and signal that Turkey will not allow the region’s resources to be developed without its consent. The west underestimates the legacy of the Mosul Question, namely that Turkey will never again allow other powers to prey upon oil reserves that it feels it has a claim to.” (the “Mosul Question” is the name of the territorial dispute that ultimately granted an oil-rich former Ottoman territory to Iraq in 1926). Indeed, referring to the latest shifts in the Eastern Mediterranean, Turkey’s Minister for Energy and Natural Resources Fatih Donmez recently said, “We are not behind the pace of progress elsewhere in the world. At a time when energy issues take center stage, we are defending our own roadmap.”

The Road to Détente Runs Between Ankara and Jerusalem

Restarting diplomatic talks between Turkish and Israeli counterparts could defuse bilateral disagreements and reconsider terms for energy cooperation. This option, though ripe with challenges, could generate a new channel for dialogue, and unlock the possibility of moving gas reserves to European markets. Turkey and Israel share nearly seven decades of relations, but ties collapsed to an all-time low following the Mavi Marmara incident in 2010, with dialogue only recommencing in 2016 at a time when commercial gas interests were a key driver of the détente. Israel is on its way to becoming a turbocharged exporter of natural gas following the discovery of the Tamar (2009) and Leviathan fields (2010). Leviathan is estimated to hold 22 trillion cubic feet of recoverable natural gas, and a potential half a million barrels of oil.  Turkey is the only country capable of receiving large volumes of Leviathan gas with increasing capabilities in storage, transportation, and consumption. Talks between Turkey and Israel collapsed in 2015­­­­­­­­­­­­­­­–2017 for a number of reasons. Publicly, disagreement over Israel’s price point and desired energy routes were blamed, but the greater culprit was mutual distrust at a time when both sides believed they had better trading options.

For instance, Egypt has long claimed that its two gas liquefaction plants present a cost-effective solution to re-export Israeli gas. Israel went on to sign an energy partnership with Egypt valued at  $19.5 billion to provide 85 billion cubic meters over 15 years to its neighbor. In January, Israel finally began exporting gas to Egypt. Israel’s Energy Minister Yuval Steinitz called the deal the most significant economic cooperation initiative between the neighboring countries since they signed a peace deal in 1979. That the deal between former foes was even thinkable shows how pragmatic optimism in shared economic growth can outrun historic animosity.

With this in mind, it is not too late for Turkey and Israel to agree to route surplus Israeli gas production to Europe via the Turkish coast. While this approach would not be straightforward, there are three reasons why it could work. First, Turkey’s geography presents it with the most commercially feasible path, along with the existence of add-on pipelines, to transport Israeli gas. Turkey has already developed an expansive infrastructure and networks, including the $40 billion Southern Gas Corridor, which will carry Azeri gas from the Shah Deniz-2 field to Europe through the Trans-Anatolian Natural Gas Pipeline (TANAP). The pipeline is projected to initially transport 16 billion cubic meters annually and reduce dependency on Russian gas. It connects to the Trans Adriatic Pipeline at the Turkey-Greece border. Bowlus argues that Turkey is the only viable path to an otherwise elusive win-win in the Eastern Mediterranean. The main snag is that the Leviathan field lies inside 860 square kilometers of an area unilaterally claimed by Israel (also a non-signatory to the U.N. Convention on the Law of the Sea) and is disputed by Lebanon. However, the 450-kilometer-long pipeline to Turkey’s Ceyhan port would be the most commercially competitive, straightforward option if the political impasse could be navigated.

Indeed, new developments indicate that a new phase of hydrocarbon diplomacy may now be back on the table. In mid-December reports circulated in the Turkish media, including the pro-government Daily Sabah, that Turkish and Israeli officials had embarked on fresh talks about a future energy deal. The news was based on a report filed by diplomatic correspondent Amichai Stein on Israeli state-run radio Kan station that said, “Ankara has expressed its willingness to enter into negotiations with Jerusalem on transferring Israeli gas supplies to the European continent through Turkish territory.” The report cited a high-ranking Turkish energy official who explained that Turkey was awaiting the formation of a stable government in Israel and the appointment of a new energy minister to discuss this issue. According to Stein, any pipeline agreement with Turkey would not replace Israel’s pipeline plans with Greece, Cyprus, and Italy.

Second, nimble diplomacy has historically meant that Turkey-Israel relations persevered even in the darkest hour. Today there are many challenges, including political mistrust between top decision-makers, disagreement over the future of the Palestinians and Hamas, and objections lodged by Egypt against Turkey. But there are also vital shared interests, including curbing Iranian influence in Syria, that supersede the current crisis. Gad Yishayahu, a researcher at the University of London, points out that the Marmara incident scarcely impacted trade between the two states, which according to Israel’s official figures actually increased. According to an Israeli source who spoke to me on the subject, “Turkey and Israel are not friends, but that is not a prejudice against doing business together. We have a long and embedded history of cooperation. For Israel, all options are on the table.” Such pragmatism has rightly driven Israeli’s foreign policy for decades and makes re-orienting ruptured relations and the narrative of crisis viable. There is more to this than simple trade talk. For example, Israel’s state policy has long been to avoid a firm stance on the future of the divided island of Cyprus or rally for reunification, a point that is not lost on Ankara. Avoiding an entrenched policy on the contentious Cyprus issue has kept a narrow diplomatic open door with Turkey.

There is a certain amount of flexibility in Israeli-Turkish ties. This can create problems, but also opportunity. Gabriel Mitchell, a fellow at Mitvim (The Israeli Institute for Regional Foreign Policies), told me in December, “Israel won’t be the first party to advocate bringing Turkey into the regional dialogue — the issue is too hot and there are few if any domestic political benefits during another election cycle. But if there is consensus to engage constructively with Turkey, Israel may not object.” In a recent op-ed, Mitchell added,  “Nicosia and Athens fear that the day will come when Ankara delivers an olive leaf to Israel.” But looking toward Turkey does not have to mean that Israel foregoes its new relationship with Greece — only that it chooses to pragmatically diversify its energy gas strategy.

In her timely new book, Israel’s Mediterranean Gas: Domestic Governance, Economic Impact, and Strategic Implications, Sujata Ashwarya teases out the complexities inherent in Israel’s approach to Turkey in the “gas game.” She told me via email that “with Israel taking up the leadership in the gas development of the region, Israeli policymakers have little enthusiasm for Turkey’s inclusion into the network of economic and political ties they are trying to build.” But the story may not end there. Ashwarya believes that “Israeli foreign policymakers rue the ‘loss’ of Turkey and might be looking to mend fences. A critical aspect of Israeli foreign policy has always been to build stable relations in the larger Middle Eastern region, and Israel has always considered Turkey to be an important country to have on its side.”

A Turkey-Israel détente is an outcome that Greece and the Greek Cypriot administration are dreading since it would disrupt their plans to capitalize on Israel’s natural gas reserves while lending credibility to Turkey as a serious stakeholder in the future of energy resources in the Eastern Mediterranean. However, hydrocarbon diplomacy between Ankara and Jerusalem will show that moving past the current impasse matters more than winning either the legal argument or the game of one-upmanship. Presuming that Turkey and Israel’s respective interests and strategies will always be in opposition would be a shortsighted mistake.

It is difficult to know why Israel and Turkey may have revived talks but Bowlus thinks they may be motivated by broader U.S.-Russian dealmaking in the Middle East: “Both U.S. President Donald Trump and Russian President Vladimir Putin want to extend the era of hydrocarbon dominance of the global energy system, which is best assured by bringing as many supplies as possible on to the market, and to strengthen regional powers, Israel and Turkey, in the process.” This brings us to the third reason for normalizing Turkey-Israel ties. External actors with a vested interest in stability in the Eastern Mediterranean would welcome a bilateral agreement that would bring the region’s gas to market, reduce the risk of naval confrontation and bridge the deadlock between today’s rival blocs.

To be sure, this would be a tough sell in Turkey, where the government’s assertive posturing in the Eastern Mediterranean resonates with ideologically diverse constituencies at home, including pro-Justice and Development Party (AKP) conservative Islamists backing the government, secular Ataturkists in the mainstream political opposition, firebrand anti-Americanists on the left, and far-right Turkic Eurasianists. Politics in Turkey has been framed in existential terms in recent years, as shown by the popular AKP refrain, “We will either make it on this path or die.” Rousing support for the Turkish-Libya agreement is cut from the same cloth as a series of reactions in recent years that framed U.S. sanctions against Turkey as an economic invasion; called for the 1923 Treaty of Lausanne, which defined Turkey’s borders with its neighbors after World War I, to be renegotiated on more favorable terms; or that cancelled American-style Westerns on the state television channel TRT’s Sunday lineup.

But rhetoric seldom matches reality. Turkey’s sputtering economy would no doubt welcome the dividend that an agreement with Israel would deliver. Diplomatic channels and business interests were never completely severed, so resetting ties is not necessarily a fringe proposition. The Turkish electorate, impatient for the economic growth it was promised, is likely to approve of a lucrative energy contract, rather than seeing it as a defeat.

Conclusion

International maritime law hasn’t helped resolve disputes in the Eastern Mediterranean. Nor has the building of competing alliance blocs. A more pragmatic approach is one that considers the strategic benefits of rebuilding Turkey-Israel ties. Turkey’s geostrategic significance and military capacity still make it a desirable partner from the perspective of Israel. Neighboring states could also benefit from what this partnership could bring over time. While reviving Turkey-Israel ties is not a panacea for regional deadlock, it would be a clear step in the right direction that shows to reluctant neighbours that they may actually benefit from cooperating with Ankara in the Eastern Mediterranean. No one is going to win the energy war alone. At stake is more than pipeline politics. The current juncture offers a unique opportunity to reshape the regional order by imagining long-term policy solutions that contribute to joint security, energy, and prosperity. Israel and Turkey can both play decisive roles to harness this potential.

For now, there seems to be little appetite for an alternative to the status quo. Ongoing developments in Libya will undoubtedly influence the balance of power in the Eastern Mediterranean. But with few real options to deter Turkey’s unilateralism, the other parties may have to concede that excluding Ankara from the Eastern Mediterranean bounty is simply not sustainable. Turkey, in turn, will need a face-saving option to de-escalate gunboat diplomacy tactics and avoid international isolation while still pursuing its claims through diplomatic channels and proactive foreign policy. Ultimately, consensus-seeking dialogue that includes all of the key players is the only way to achieve regional stability.

 

 

Burcu Ozcelik is a Leverhulme Early Career Research Fellow in the Department of Politics and International Studies at the University of Cambridge, where she received her PhD and was subsequently a teaching fellow in Conflict, Peacebuilding and the Politics of the Middle East (2015–2017). She has lived in Washington, D.C., Ankara, Brussels and Baghdad. Burcu previously worked at the United National Develop Programme country office in Turkey.

Image: Wikicommons (Photo by CeeGee)