Cyprus, for one more time in its turbulent history, finds itself smack in the middle of international geopolitical interests. It also faces a barrage of unprovoked military threats by none other than the Neo-Ottoman bully of the Eastern Mediterranean – Turkey! The reason for this unstable climate is the birth of a new revolution that has suddenly flared up across the region. In the next few years, it will mature and transform the entire basin forever.
The EU is glowing with joy; Turkey is being utterly ignored and hates losing face; Israel is making new economic and military alliances with Cyprus; multinational corporations are lining up to get a strong footing in the area; big foreign investors are eager to establish photovoltaic parks to harness the sun’s energy or set up casinos; the USA has already secured a prominent position led by Texas-based Noble Energy Exploration Corp; Canada, Russia and France are adding their names to the list; China is investing over 600 million Euros for a Chinese trade center in Larnaca, and India has expressed interest in making massive investments worth billions on the island! The list of nations willing to play a part in this revolution seems endless; all positive economic signs!
One can say these developments will certainly become contributing factors to sustainable economic growth and equally play a major role in shaping the island’s future and new identity – from one of dependence on imports, to one of becoming a serious exporting nation! When that happens, Cyprus will finally reduce its reliance on the whims of tourism and subservient industries that visionless governments have so far failed to address due to complacency, corruption and incompetence.
The stream of foreign interests are groundbreaking indeed, but these should be treated with caution and a pinch of salt; especially when it comes to pollution and conservation of the environment! Cyprus certainly does not have a clean record on the protection of its own environment. If no stringent measures and conditions are put in place to safeguard the island and its citizens, euphoria may turn into a nightmare.
Markets work better when they are open and transparent and, if handled with sound economic planning based on the Rule of Law, such ventures in Cyprus can provide the leverage necessary to transcend the nation into new horizons. Without a doubt, participating foreign companies will introduce new highly sophisticated technologies, scientific know-how, new professions and trades to spinoff a barrage of industries never envisioned before. Universities and young people will finally aim for greater opportunities at home rather than migrate abroad. Cyprus will then have the potential to become an internationally recognized financial centre.
Why the sudden interest in Cyprus… and why now? The answer is simple: Natural gas! Cyprus’s first ever hydrocarbon discovery has plenty of it: 5-8 trillion cubit feet or 140-230 billion cubic metres’ worth. Enough to last for more than 200 years!
As a matter of fact, the U.S. Geological Survey estimates that the recent underwater discovery of huge untapped natural gas fields of the Levant Basin (an area that abuts Israel and Cyprus) will find more than 123 trillion cubic feet of removable natural gas. That equals 20 billion barrels of oil. The potential of the geopolitical shift and demographic changes that the hydrocarbon discoveries could bring about in the area, are rife for economic prosperity for both Cyprus and Israel.
Global energy demand for natural gas is estimated to rise by more than 60 percent through 2040 (The Outlook for Energy, Exxon Mobile) while China and India will become the largest consumers of this increase in energy consumption. Combined together, these two countries will absorb 50% of that energy growth and as the world population grows to staggering figures – estimated to reach 12+ billion by the year 2050 (US Census Bureau) – energy demand will become even higher. The need for energy to make electricity will remain the single biggest driver of demand.
This bonanza bodes well for Cyprus, especially now, which is struggling with high unemployment, a junk-status credit rating, and a sagging economy. All well and good, but does Cyprus have the technical expertise and infrastructure to deal with such highly sophisticated technologies? Most importantly, can it handle a massive environmental disaster if necessary? If the Mari disaster is to be used as a measuring stick, then Cyprus is not capable of handling doomsday scenarios such as oil spills and other major disasters.
Past records indicate that the Cypriot government is suffering from myopia and does not seem to have the ability or the long-term vision to deal with such a gift from Mother Nature. In fact, it has utterly failed to publicly debate, inform or even be honest with the people about its plans with this hydrocarbon windfall. In reality, the general public has been kept in the dark. It’s as if Cypriots cannot be trusted or do not have the intelligence to ascertain matters of national importance – only their government does – so it assumes!
After months of debating with the rest of the political parties behind closed doors, the government has finally announced its plans on how to administer this natural gas bonanza; they will all have their fingers dipped into the pie – probably the reason why politicians never discuss the issue! Silence is bliss!
A politically motivated decision was made to divide the gas operation between two existing organizations, bloated with public servants: DEFA (Public Company for Natural Gas) and CERA (Cyprus Energy Regulatory Authority). For one more time the socialist/communist government applied its monopolistic policies and has ensured more “jobs for the boys”, while the opposition keeps quite on this issue.
What Cyprus needs is a sovereign Petroleum-Gas Fund controlled by the Central Bank that allows no government, politician or political parties and unions to go near it. Experts and top economists such as Noble-Laureate Christopher Pissarides and other renowned economists and academics share similar views and have spoke out publicly on how positive they feel about Cyprus establishing its own sovereign Petroleum-Gas Fund. It’s a wise ambition and the only way forward. If handled sensibly, it will guarantee long-term prosperity for generations to come.
The Petroleum Fund of Norway is a classic example of the ultimate success! Most importantly, it operates independently and it’s under the full control of the Central Bank of Norway. Its structure is based on absolute transparency, openness and total accountability, but above all else, no squandering government or petty politicians can lay their hands on its revenues. The national treasury receives a small percentage annually to be used on national projects – last year it received 18 billion Euros! Today, it enjoys a 500+ billion Euro Trust Fund earning millions in interest while its blue chip property portfolio has been growing rapidly. Astutely, and as a precautionary measure, the Fund has recently set out to buy prime real estate in London, Tokyo, New York, Paris and elsewhere to guarantee long-term prosperity for the nation and future generations; for one day, the oil and gas will stop flowing!
The Cypriot government, instead of reaching out to seek advice from progressive and advanced nations that operate under a true democratic system, meritocracy and transparency such as Norway and others, has failed to make such consultations! It has also failed to request expert consultation from outsiders (brain-imports) and homegrown technocrats, academics and economists on how best to set up an equally non-politically attached revolutionary Gas Fund. Sadly, such a proposal goes against the grain of the existing meddling and self-serving political system on the island.
Cyprus needs to break down the barriers of political stagnation to aim for a plan based on a meritocratic system that puts the welfare of citizens and the nation first; if not, then there is no hope! A national Petroleum–Gas Fund is necessary to stop dogmatic governments from squandering the wealth and ambitions of future generations. Cyprus demands leaders with vision, but sadly, such calibre of leadership is in very short supply indeed!
Author of:
WHO SHALL GOVERN CYPRUS – Brussels or Nicosia? -Political analysis
ANDARTES – a revolutionary riveting novel
PORPHYRA in PURPLE – a metaphysical spellbinding novel
All books are available from: Bookshops, Barnes & Noble, Amazon.co.uk, Amazon.com, Waterstone’s, Kindle and the Internet. Other published articles can be found on Google under “Vanishing Cyprus” or under “Andreas C Chrysafis.
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