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May 31, 2013

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Aphrodite's possibility: Everyone wins in the eastern Mediterranean
By Marc Grossman and Tom Miller

With the violence spilling over the border into Turkey in the form of car bombs, the crisis in Syria surely topped the agenda when President Obama met Turkish Prime Minister Recep Tayyip Erdogan last week.

We hope they also took a few minutes to discuss the opportunity to make progress on one of the world's most intractable problems – the division of Cyprus – by harnessing the discovery of a natural gas field about 100 miles south of Cyprus called Aphrodite. Getting that gas to market could revive the Cypriot economy, enhance Turkey's relations with Israel and lay the foundations to end Cyprus' division, a requirement for Turkey's long-sought membership in the European Union.

Because of the collapse of Cyprus's banking sector, experts estimate its GDP could shrink by 15% this year and another 15% in 2014. The EU's first bailout plan initially created more controversy than confidence; it will take years for Cyprus's GDP recover.

The Aphrodite field could change the trajectory of that recovery. There are press reports that Houston-based Noble Energy, the company that found Aphrodite in 2011, estimates that the field contains 142 billion to 227 billion cubic meters of gas worth $45 billion at current prices.

Further exploration could reveal even more. If that gas can be exploited, it would jumpstart the Cypriot economy by generating revenues to replace those once created by the financial sector.

Turkey can also benefit from Aphrodite. Imagine, for example, an LNG plant on Turkey's southern coast built to move Aphrodite's resources to energy hungry manufacturers and consumers or a pipeline to put the gas into Turkey's existing networks. The economic benefit for Turkey from Aphrodite, along with a resumption of talks on their EU membership, which French President Francois Hollande says that he now supports, should be sufficient to end Turkey's current opposition to further exploration and exploitation of the gas deposits.

The restoration of ties between Turkey and Israel could also come positively into play. In March, President Obama brokered a conversation between Israeli Prime Minister Netanyahu and Erdogan; Netanyahu apologized for the loss of life in the Gaza flotilla raid in 2010 and said that Israel would compensate the victims. With Turkey and Israel talking again, they can more easily identify the mutual benefits in helping develop Aphrodite. Energy cooperation might also increase the chance that the Israelis would again lobby in Europe for Turkey's EU membership.

There is no quick, single grand bargain to end Cyprus's division – even one financed by a $45 billion windfall. What Aphrodite makes possible is that leaders in Athens, on both sides of the Green Line in Nicosia, in Ankara, Brussels and in Washington can take steps today to lay the foundations for a future solution.

They can start by designing a regime to exploit the Aphrodite field that restores confidence in the Cypriot economy and benefits Turkey. An arrangement that works for everyone will then require focus by Cypriot leaders, perhaps positively for the first time, on some of the toughest reunification questions, including sovereignty, mutual recognition and how to share economic benefits.

It would of course be best if the two Cypriot parties could themselves see Aphrodite's advantages and take action, but history tells us that they will need outside encouragement. The US and the EU can make this a political joint venture.

US diplomacy has at least twice almost succeeded in bringing about a Cyprus solution. The EU has responsibility to support a Cypriot economic recovery and EU membership for Turkey remains a powerful vision, but Turkey cannot join while Cyprus remains divided; the closer Turkey gets to the EU the better chances of a Cyprus settlement.

Working for an end to the division of Cyprus is not hopeless. The two sides came close to a settlement in 2004, when former UN Secretary General Kofi Annan proposed a plan that was put to a referendum on the island. Greek Cypriots voted no; Turkish Cypriots said yes.

Greek Cypriot and Turkish Cypriot leaders have changed since then and public positions have hardened. But Cyprus's current president, Nikos Anastasiades, supported the Annan Plan, which is based on a bizonal, bicommunal federal solution. The current Turkish Cypriot leader, Dervis Eroglu, is more of a nationalist than his predecessor, but Aphrodite's possibilities and some strategic thinking in Ankara, Washington, Jerusalem and Brussels should get everyone's attention.

The power that could be unlocked from the Aphrodite field can do more than light homes, support businesses and create jobs. Aphrodite's power is also political, with the potential to promote economic cooperation between Greece, Turkey, Israel and all Cypriots in the short term and open the door to solving the Cyprus conundrum in the years ahead. This would take at least one item off President Obama's and Secretary Kerry's "to do" list and prove again that when apparently unrelated events offer the opportunity to solve hard problems, leaders should act.

Grossman is a Vice Chairman of The Cohen Group, a Henry Kissinger Senior fellow at Yale University and a former US Ambassador to Turkey. Miller is President of the International Executive Service Corps, a former US Ambassador to Greece and US Special Cyprus Coordinator. The opinions and characterizations are the authors' alone and do not necessarily represent official positions of the US government.

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