A calmness of sorts in the East Med

With no exploration activities taking place, other than in Egypt, and Turkey refraining from provocations, the East Med is a sea of relative calmness. This has allowed diplomacy to take centre stage.

On January 25, Greece and Turkey had their first exploratory meeting, since their skirmishes last year, in Istanbul, resuming earlier discussions that stopped in 2016. The purpose of this is to agree on an agenda that would allow full-scale negotiations to take place. The fact that this first meeting lasted three and a half hours may be a good start, as is the fact that the two sides are keeping any developments to themselves.

This will now be followed by a new round of talks in Athens. At this stage the talks are informal, but hopefully, they will lead to an agreement to proceed to formal negotiations.

But there are still significant differences between the two countries’ approaches even at this early agenda-setting stage. Greece has made it clear that it is only prepared to discuss the maritime disputes between the two countries, leading to the delimitation of maritime zones based on international law. Turkey’s position is that everything – all disputes and differences – should be on the table.

However, such an approach would be risky. Putting too many issues on the table at the same time increases the danger of disagreements and the collapse of the negotiations. A well-defined, narrow, agenda has a better chance to succeed. And a successful start can open the way for further dialogue. What is encouraging though is that both sides are positive about the resumption of exploratory discussions. Hopefully, they will also converge to an agreed agenda. 

On January 20, Greece extended its territorial waters in the Ionian Sea to 12 nautical miles, in accordance with the UN Convention on the Law of the Sea (UNCLOS). However, it is refraining from doing so in the Aegean, as this would be seen by Turkey as a provocation, risking escalation and abandonment of the fresh attempt to enter into negotiations. 

Last year Greece entered into formal EEZ agreements with Italy and Egypt and agreed with Albania to refer their differences to the International Court of Justice at the Hague. These moves can be seen as a message to Turkey that adherence to international law is key to the resolution of the disputes between the two countries.

Turkey appears to have entered 2021 on a platform promising reform, both internally and externally. At least that is the message its president, Recep Tayyip Erdogan, has been keen to convey, also re-stating that Turkey’s place is in Europe. Turkey has also made conciliatory overtures to Israel, Egypt and the UAE. But Erdogan has yet to make clear how and what this change will involve. So far he appears to be dictating the terms.

A factor in this ‘about-turn’ may be the dismal economic situation  Turkey is in, exacerbated by the spread of the second phase of the COVID-19 pandemic. But another major factor is the possibility that, without change, there could be additional sanctions by the US and the EU at the Council summit in March. In effect, this has become a deadline by which to demonstrate progress.

Even more important may be the Biden factor. Undoubtedly, the coming of Biden to the US presidency must be of concern to Turkey. Without a change in direction, Turkey is likely to face a difficult time with Biden and his team, who have strong views on civil liberties and human rights, as well as aggression towards Turkey’s neighboring countries. This includes the ongoing Cyprus problem and Turkey’s role in it.

An important factor is that Antony Blinken, the new US Secretary of State, is well versed in Middle East issues, including the Cyprus problem and the Greek-Turkish conflict and may play a more active role. He said at a recent Senate hearing “Turkey is an ally, but in many ways, it is not acting as an ally should.”

Turkey has a window of opportunity over the next few weeks and hopefully, it will seized it. The EU sees this change of direction positively, but has also sent a clear message that this change in behavior and de-escalation must continue, avoiding a return to last year’s confrontations.

Even though so far led by the EU, the new US Administration will be very encouraging of the discussions between Greece and Turkey to resolve their maritime disputes and avoid future stand-offs.

Hydrocarbon exploration activities around Cyprus are at a standstill, partly due to the continuing impact of Covid-19, but also due to the dire state of the international oil companies (IOCs), reeling under the impact of low oil and gas prices and massive losses and asset write-offs during 2020. The path to full recovery will be slow and at the end of it, in 2-3 years, the IOCs will be different, placing more emphasis on clean energy and renewables.

This delay in resuming offshore exploration may be a blessing, taking the heat off hydrocarbons, while priorities shift to discussions to resolve the Cyprus problem. These are progressing, with the first meeting scheduled by the UN to take place in New York early March.

In the meanwhile, Egypt is forging ahead. It has signed a new exploration agreement with Shell for an offshore block in the Red Sea. In addition, EGPC and EGAS are planning to offer onshore and offshore exploration blocks for bidding in February.

Tareq El Molla, Egypt’s petroleum minister, signaled earlier this month Egypt’s intention to expand petrochemical projects to follow ongoing projects and take advantage of its expanding oil and gas resources. The country has updated its petrochemical national plan until 2023 to meet the changes in this industry.

Egypt has also benefited from the recent increase in LNG prices, resuming exports from its liquefaction plant at Idku, with most exports going to China, India and Turkey. The country is also ready to resume exports from its second liquefaction plant at Damietta – that has been lying idle since 2012 due to disputes that have now been resolved – starting in February. LNG exports will mainly utilize surplus gas from the Zohr gasfield and possibly imports from Israel, should prices allow it. 

Chevron – having acquired Noble Energy and its interests in the region – and its partners in Israel’s Leviathan and Tamar gas fields, signed an agreement to invest $235 million in a new pipeline, expanding existing facilities to enable them to increase gas exports to Egypt to as much as 7 billion cubic meters of gas annually (bcm/yr).

Lebanon and Israel were discussing their EEZ dispute until last November but gaps between the two sides are still large. Continuation may need to await elections in both countries. The US is ready to continue mediation.

Overall, calmness has returned to the East Med but there is a long way to go before long-standing problems are resolved. But at least for now, the threat of escalating conflicts has receded.