Here’s a Win-Win Deal for Trump: Cyprus

The Trump administration has a golden opportunity to help resolve one of Europe’s longest-frozen conflicts: Cyprus. Significant progress has been made over the last two years toward reunifying this long-divided island, but the window of opportunity to conclude an agreement appears to be closing. Negotiations are reaching a critical point that would benefit from an investment of American time and resources. The United States has a strong interest in seeing the conflict resolved, particularly given the regional and economic benefits of a deal.

In Cyprus, inter-communal violence in the 1960s resulted in the deployment of a U.N. peacekeeping mission; 10 years later a coup (supported by Greece in an attempt to unite with Cyprus) led to Turkish military action and the de facto division of the island. The Republic of Cyprus controls the southern two-thirds of the island, while the Turkish Cypriots administer the other third in the north (with only Ankara recognizing an independent state). Greek Cypriot and Turkish Cypriot leaders have engaged in intense negotiations, supported by United Nations Special Envoy Espen Barth Eide, to reunify the island as a bi-zonal, bi-communal federation.

These talks have resulted in agreement on governance and economic arrangements for a federation composed of two constituent states, the right of all Cypriots to live and work where they choose, and mechanisms to address property lost during the violence. Yet several contentious issues remain, including the territory controlled by each constituent state and security arrangements. Prospects looked promising in recent months: leaders met twice in Switzerland last November, then in January discussed security issues with the guarantor powers (U.K., Greece, Turkey) for the first time ever. However, talks broke down in February after the Republic of Cyprus parliament voted to commemorate in schools the 1950 “enosis” referendum that proclaimed Cyprus part of Greece.

Time is quickly running out to close a deal. Aside from the fatigue of leaders and negotiators, external factors will limit the period of deliberation. Most notably, the Republic of Cyprus has presidential elections in February 2018. If leaders agree on a settlement, it will be put before both communities in a referendum; this should occur by fall at the latest to prevent it falling prey to party politics. The introduction of the enosis bill by the far-right party suggests campaigning may already be underway. Elections are also on the horizon for the Turkish Cypriot “parliament,” likely in spring 2018, but potentially as early as this October.

Another factor is Turkey, which will be required in the closing round of negotiations to reach agreement on security measures. Ankara appears reluctant to engage in advance of the April 16 referendum on constitutional reforms that would strengthen the president’s powers. The poll’s results could have an impact on how the Turkish government will approach Cyprus talks. Unfortunately, Cypriot leaders are failing to use the intervening month to resolve Cyprus-specific issues (such as the boundaries of the constituent states). If a settlement cannot be reached by this summer, it seems unlikely the process will withstand a six-month hiatus during the Republic of Cyprus’ election campaign.

An additional complication may be the resumption of energy exploration. The discovery of natural gas off the Cypriot coast was initially seen as an impetus for settlement. Furthermore, normalized relations with Turkey could make Cyprus a hub for energy companies and the most economically viable transit point for getting Mediterranean gas to the European market. Unfortunately, energy disputes have hindered negotiations. Following the start of Cypriot exploratory drilling in fall 2014, Turkey deployed a research vessel into the Republic of Cyprus’ exclusive economic zone and the ensuing dispute interrupted talks for several months. Since the resumption of negotiations in spring 2015, there has been a hiatus in drilling. However, energy seems likely to heat up again. Last Friday, Cypriot Energy Minister Georgios Lakkotrypis announced the completion of contracts with bidders for the third offshore licensing round. In addition, Total is expected to resume drilling this summer and ENI is reviewing its future plans. Not coincidentally, press reports indicate Turkey is looking to resume its own research activities in the Mediterranean this year.

The U.S. administration can play a critical role in enhancing the prospects of a deal:

Invest personal capital in supporting negotiations. It is clear that Cypriot leaders must remain at the forefront of solving this conflict. Yet this process has shown the utility of American encouragement in wobbly moments, as sustained engagement by U.S. officials in recent years has helped keep negotiations on track. As the talks near a make or break point, leaders are facing the toughest issues and need courage to make difficult compromises. A well-timed phone call from the secretary of state or vice president can steady the nerves and right the course. Now is such a moment. The Trump administration should encourage Cypriot leaders to utilize precious time by returning to the negotiating table before the Turkish referendum and resolving outstanding issues among themselves. If leaders can reach agreement, the United States will be better placed to press Turkey to address security — including relinquishing its guarantee and drawing down troops. The return on American political investment would be a safer, more affluent region that extends from Turkey to Israel to Egypt.

There have been some encouraging signs of U.S. interest. Vice President-elect Mike Pence spoke to Cypriot President Nicos Anastasiades in December. Secretary of State Rex Tillerson called the Greek Cypriot and Turkish Cypriot leaders on February 28. Cyprus even got a shout-out in the State Department’s first press briefing on March 7. And U.N. Envoy Eide recently met Tillerson’s deputy and Pence’s national security advisor. However, it is unclear whether American leaders are personally committed to investing the weight of their offices in supporting talks or prepared to move beyond listening mode.

Tillerson’s Exxon background makes him well versed in regional energy issues, which he discussed in a business context with the Cypriot president in New York last fall. Yet he didn’t talk Cyprus with Greek Foreign Minister Nikos Kotzias in Washington on March 14 (who reportedly raised the topic with National Security Advisor H. R. McMaster) and his rumored trip to Turkey later this month is likely to focus primarily on Syria. Tillerson appears to be delegating the Cyprus file to his deputy, Tom Shannon, who saw the U.N. negotiator earlier this month and met Cypriot Foreign Minister Ioannis Kasoulides when he was in Washington on Monday. In addition, the lack of senior officials at the White House and State Department with overall responsibility for European policy precludes the added heft of hands-on shuttle diplomacy to prod leaders on all sides and brainstorm creative solutions.

Start planning for business investment and financial support. One of several reasons for the failure of past agreements (most notably the Annan Plan in 2004) was concern, particularly among Greek Cypriots, about the costs of settlement. Opponents of a deal, potentially influenced by Russia, could play upon such fears to undermine public support in a referendum. Thus, leaders will be looking to the United States and Europe for financial assistance to implement the agreement and for investments that provide tangible economic benefits.

Although expending foreign assistance funds and encouraging American investment abroad are not in keeping with Trump’s “America First” approach, the administration should recognize that stability and prosperity in the Eastern Mediterranean — including better relations between NATO allies Greece and Turkey and enhanced cooperation between NATO and the EU — is in America’s interest. The collapse of the process, which could increase tensions in the region, is not. The State Department may need congressional help to allocate money as a tangible demonstration of American backing for an agreement (for example, contributions to a fund for those who lost property during the intercommunal violence). A short-term cash injection would provide significant bang for the buck, as solidifying peace is more cost effective than preventing or addressing conflict.

Relatedly, a strong economy that benefits all Cypriots would help secure the unification dividend. An estimated consumer market of 500 million people surrounds Cyprus, which is as equidistant from Baghdad as from Athens. The return on American economic investment would be significant. For example, Cyprus has potential as an energy hub, including opportunities for equipment suppliers. Other firms may find potential in infrastructure, shipping, real estate, and resort markets. Business leaders (as well as the island’s diaspora) should be thinking creatively about opportunities that would bolster support across the island for a settlement.

This week Cypriot President Anastasiades and three ministers are in New York with a host of business executives for the Invest in Cyprus Forum organized by Capital Link. While a useful event, it would attract even greater attention after a settlement; studies already show the economic benefits of reunification. A deal would remove the political risk that currently dissuades some investors, open up new markets, provide investment opportunities (especially infrastructure projects with the rebuilding of Varosha, a beautiful resort town abandoned since the inter-communal violence), and create jobs and wealth for the entire population. American companies will find more openings — particularly amid likely European, Turkish, and Israeli interest — if Washington helps lead this effort. Thus, the Commerce Department should begin preparations for a trade delegation to visit the island during the sweet spot between a deal and a referendum.

Reunification would first and foremost benefit the people of Cyprus. However, a settlement is also good for the United States. It would enhance regional security cooperation, inspire neighbors struggling to resolve their own intractable conflicts, ease the transit of natural gas and facilitate energy diversification, and provide ample business opportunities. That’s a deal worthy of American investment.

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