Geopolitics of Cyprus: Economy, International Relations, and Current Challenges
Geopolitical Report ISSN 2785-2598 Volume 44 Issue 4
Author: Silvia Boltuc
Executive Background
Cyprus, a historically and culturally rich island nation situated at the nexus of the Eastern Mediterranean, embodies a unique blend of European and Asian influences. Although geographically close to the western coast of Asia, its cultural and political orientation strongly aligns with southeastern Europe, particularly Greece.
Cyprus boasts a high-income, service-based economy and is an integral member of the European Union. Tourism significantly fuels its economy, and the Cyprus Stock Exchange acts as a vital link for investments among EU member countries. Recent discoveries of gas fields have amplified Nicosia’s importance in the Mediterranean, though the ongoing division of Cyprus remains a profound geopolitical issue.
This report delves into the complexities of Cyprus’s geopolitical scenario, examining the multifaceted affects of its division, international relations, and resource discoveries.
Key Findings
- The division of Cyprus into the Greek-Cypriot south and Turkish-Cypriot north continues to significantly influence regional geopolitics, fostering instability and impeding economic potential.
- The discovery of new gas fields has bolstered Cyprus’s geopolitical relevance in the Mediterranean, creating new avenues for international cooperation and economic growth.
- Cyprus’s firm commitment to EU policies and international law has played a crucial role in successfully navigating its relationships with Russia, Ukraine, and the West, despite facing challenges.
- The migrant crisis, exacerbated by Middle Eastern destabilisation, remains a critical issue for Cyprus, with significant socio-political implications and pressures on domestic resources.
Geopolitical Scenario
Historical and Cultural Context
Cyprus’s identity embraces a rich historical and cultural heritage that connects European and Asian influences. Known for its strategic location at the crossroads of three continents—Europe, Asia, and Africa—Cyprus has been a coveted territory for various civilisations, including the Greeks, Romans, Byzantines, Venetians, Ottomans, and the British.
This historical amalgamation has deeply influenced the island’s cultural and political identity. At present, despite its geographical proximity to Asia, Cyprus’s alignment with southeastern Europe is underscored by its political and cultural ties to Greece and its membership in the European Union. The Greek influence is evident in the language, religion, and customs of the Greek Cypriot community, which constitutes the majority of the island’s population.
Economic Landscape
Cyprus’s economy is predominantly service-oriented, with a significant emphasis on tourism, financial services, and shipping. The island’s strategic location has historically made it a vital commercial and trade hub, linking Europe with the Middle East and North Africa.
The financial sector in Cyprus has seen substantial growth, facilitated by favourable tax regulations and a robust legal framework, making it an attractive destination for international businesses and investors. The Cyprus Stock Exchange serves as a crucial bridge for investment flows between EU member countries, enhancing the island’s economic integration within the European Union.
Tourism remains a cornerstone of the Cypriot economy, contributing significantly to GDP and employment. The island’s natural beauty, historical sites, and favourable climate attract millions of visitors annually. The division of the island has imposed restrictions on the full potential of tourism, as substantial portions of the coastline and tourist sites remain out of reach.
Despite these challenges, Cyprus has continually adapted, enhancing its tourism offerings and diversifying its markets to mitigate the impact of geopolitical instability.
Cyprus Problem: A Persistent Division
Cyprus’s division continues to be a central geopolitical issue affecting the island and the region. In 1974, Turkey conducted military operations in response to a coup led by Greek Cypriots who sought to unify with Greece. As a result, the Turkish Republic of Northern Cyprus (TRNC) was established, receiving recognition only from Turkey.
This division resulted in a significant displacement of populations, with around 200,000 Greek Cypriots fleeing south and Turkish Cypriots moving north. The northern part of the island remains heavily militarised, with approximately 40,000 Turkish troops stationed there, covering 37% of the territory.
The ongoing crisis has many adverse effects. Economically, according to the Nicosia government, the control of over half of the island’s coastline by Turkish forces limits the development of vital sectors like tourism and fisheries. The northern part has developed separately, often in isolation because of international non-recognition, affecting trade and economic opportunities. Socially, the displacement and continued separation have left deep emotional scars and unresolved property disputes, complicating efforts towards reconciliation.
The demographic changes in the north, influenced by the influx of settlers from Turkey, have further complicated the situation. This shift has altered the social fabric and created cultural and social divides between native Turkish Cypriots and the new settlers. Turkish Cypriots often feel distinct from the settlers, exacerbating tensions within the community and affecting the prospects for a unified Cyprus.
International Relations and Diplomatic Efforts
Its commitment to international law and its alignment with European Union policies heavily influenced Cyprus’s foreign policy. As a member of the EU, Cyprus adheres to the bloc’s stances on various international issues, including sanctions against Russia.
While Turkey’s enthusiasm for joining the EU has diminished, the Cyprus issue continues to affect its dealings with the EU, specifically in relation to trade and visa facilitation.
Cyprus has also navigated its historical ties with Russia with caution. While imposing EU sanctions on Russia following its actions in Ukraine has strained economic relations, particularly in the tourism sector, Cyprus has diversified its economic dependencies, reducing its reliance on Russian tourists and investments.
The island has also played a significant role in the EU’s broader foreign policy, hosting Ukrainian refugees and advocating for strong EU positions on issues of international law and territorial integrity.
Energy Exploration and Economic Potential
The discovery of significant gas fields within Cyprus’s exclusive economic zone (EEZ) has reshaped its geopolitical landscape, offering new economic opportunities and enhancing its strategic importance. The involvement of major international energy companies like Eni, ExxonMobil, and Chevron highlights the potential of these resources to transform the Cypriot economy and promote regional cooperation.
The progress made in the energy sector has fostered stronger connections with neighbouring nations, notably Egypt and Israel, with whom Cyprus has established EEZ agreements. These agreements have established the foundation for cooperative energy initiatives, such as the possibility of transporting gas to Egypt for the export of liquefied natural gas (LNG). The proximity of Cypriot gas fields to significant discoveries like Egypt’s Zohr field enhances the prospects for integrated energy infrastructure and market synergy.
The East Mediterranean Gas Forum (EMGF) exemplifies the regional cooperation fostered by these energy discoveries. As a member, Cyprus engages in dialogue and collaboration with other Eastern Mediterranean countries, promoting energy security and economic cooperation. The forum also provides a platform for addressing geopolitical tensions, with the potential to normalise relations and resolve conflicts through shared economic interests.
Despite these positive developments, Turkey’s stance remains a challenge. Turkey contests Cyprus’s EEZ agreements and has conducted illegal drilling activities in the region, leading to tensions and causing a robust legal and diplomatic response from Cyprus and its allies.
Migrant Crisis and Socio-Political Implications
The destabilisation in the Middle East, particularly in Syria and Lebanon, has significantly affected Cyprus, leading to substantial migrant inflows. The island’s strategic location makes it a primary entry point for migrants and asylum seekers aiming to enter the European Union. This influx has considerably pressured Cyprus’s resources and infrastructure, making migration a critical socio-political issue.
Cyprus has responded with various initiatives, including collaboration with the EU, to support Lebanon and efforts to designate safe areas in Syria for refugee returns. The island keeps the highest proportion of asylum seekers among EU member states, showcasing the notable influence of migration on its society. The current situation has impacted domestic politics, with migration emerging as a key subject of debate in anticipation of the European elections and has contributed to the increase in ultra-right sentiment.
According to the Nicosia government, a notable challenge is the role of Turkey in facilitating illegal migration to Cyprus. Turkey’s policy of granting student visas to migrants who then cross the Green Line to seek asylum exacerbates the migration issue. As an island nation, Cyprus faces unique challenges in managing these flows, with migrants often unable to move further into Europe, resulting in a high number of asylum seekers remaining in the country.
Strategic and Security Considerations
The presence of a large contingent of Turkish troops in the north and the militarisation of the region create a persistent threat of instability. The Green Line, a UN-patrolled buffer zone, demarcates the division, but the potential for conflict remains, underscored by the recent war in Gaza, which highlights that no conflict remains frozen indefinitely.
International support, particularly from the United Nations Peacekeeping Force in Cyprus (UNFICYP), is crucial for maintaining stability. The annual renewal of the peacekeeping mandate, dependent on unanimous agreement by the UN Security Council, underscores the importance of international cooperation. The buffer zone, although small, plays a vital role in preventing escalations and maintaining a semblance of peace on the island.
Conclusion
Its historical division, strategic economic initiatives, and developing international relations marks Cyprus’s geopolitical landscape. The ongoing occupation of the northern part of the island remains a significant barrier to its full economic and political potential.
The strategic location and the discovery of gas fields present a promising avenues for economic growth and enhanced geopolitical relevance. Cyprus’s adherence to international law and EU policies has helped to navigate complex relationships with major global powers, despite inherent challenges.
The way the island has handled the migrant crisis and its energy collaborations show that it actively works to maintain stability and encourage regional cooperation.
As Cyprus continues to balance its historical ties, economic aspirations, and geopolitical challenges, the island nation stands at a critical juncture. Future developments, particularly in resolving the Cyprus issue and capitalising on energy resources, will be pivotal in shaping its role in the Eastern Mediterranean and beyond.
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