Cyprus Offshore Hydrocarbons
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OIL RINK prio:Layout 1 6/18/12 11:16 AM Page 2 Cyprus Offshore Hydrocarbons: Regional Politics and On 26 November 2011 the Friedrich Ebert Foundation (FES) and the PRIO Cyprus Centre (PCC) jointly organized a one-day conference in Nicosia “Cyprus Offshore Hydrocarbons: Wealth Distribution Wealth Distribution and Regional Politics.” The conference brought together international specialists and local experts from both communities in Cyprus. This report is based on expanded and updated versions of the papers presented at the conference. The conference examined the political dimensions of the search for hydrocarbons in Edited by offshore Cyprus, especially the impact of these developments on the negotiations to solve Hubert Faustmann the Cyprus problem. By extension, the conference also surveyed the broader implications Ayla Gürel of hydrocarbon politics for the countries of the Eastern Mediterranean. Gregory M. Reichberg An equally important dimension of the hydrocarbon issue concerns wealth management and distribution. Thus part of the conference was designed to contribute to the debate that is just starting in Cyprus on natural resource revenue management. Case studies of resource management in Norway and Sudan enabled a comparison of good and practices in this domain. By the same token, options for wealth distribution in Cyprus, both within and between the two main communities on the island, were also explored. PCC REPORT PCC 1/2012 Distribution Wealth and Politics Hydrocarbons: Offshore Regional Cyprus ISBN: 978-82-7288-441-2 REPORT 1/2012 The report can be ordered from: PRIO Cyprus Centre P.O.Box 25157, 1307 Nicosia, Cyprus Tel: +357 22 456555/4 [email protected] This report can be downloaded from: www.prio.no/cyprus OIL RINK prio:Layout 1 6/18/12 11:16 AM Page 1 About the editors Hubert Faustmann is the local representative of the Friedrich Ebert Foundation in Cyprus. He is Associate Professor of History and Political Science at the University of Nicosia. He has published extensively on the British Colonial Period in Cyprus as well as Cypriot politics, history and society since 1960. He is the editor-in-chief of the refereed journal The Cyprus Review and President of the bi-communal NGO Cyprus Academic Forum (CAF). Ayla Gürel is a senior research consultant at the PRIO Cyprus Centre in Nicosia. Since 2005 she has worked on several research projects about the plight of displaced persons on both sides of the island and the associated question of property rights within the context of the Cyprus problem. She has numerous publications related to these topics. Her more recent research engagement concerns the issue of hydrocarbons exploration and exploitation offshore Cyprus. Gregory M. Reichberg is a Research Professor at the Peace Research Institute Oslo (PRIO), and currently serves as Director of the PRIO Cyprus Centre in Nicosia. He has published widely on the ethics of war and peace. As director of the PRIO Cyprus Centre, he coordinates research and dialogue activities on the search for a political settlement to the island’s division. The report can be ordered from: PRIO Cyprus Centre P.O.Box 25157, 1307 Nicosia, Cyprus Tel: +357 22 456555/4 [email protected] This report can be downloaded from: www.prio.no/cyprus CYPRUS OFFSHORE HYDROCARBONS REGIONAL POLITICS AND WEALTH DISTRIBUTION Edited by Hubert Faustmann Ayla Gürel Gregory M. Reichberg A joint publication by the Friedrich Ebert Stiftung and the PRIO Cyprus Centre PCC Report 1/2012 Peace Research Institute Oslo (PRIO) Hausmanns gate 7 PO Box 9229 Oslo NO-0134 OSLO, Norway Tel. +47 22 54 77 00 Fax +47 22 54 77 01 Email: [email protected] Web: www.prio.no PRIO encourages its researchers and research affiliates to publish their work in peer reviewed journals and book series, as well as in PRIO ʼs own Report, Paper and Policy Brief series. In editing these series, we undertake a basic quality control, but PRIO does not as such have any view on political issues. We encourage our researchers actively to take part in public debates and give them full freedom of opinion. The responsibility and honour for the hypotheses, theories, findings and views expressed in our publications thus rests with the authors themselves. Friedrich Ebert Stiftung (Foundation) 22 Vasileos Pavlou, Apt, 301 1046 Pallouriotissa Cyprus Tel. +357 99 72 25 43 Email: [email protected] The views expressed in this publication are not necessarily those of the Friedrich-Ebert-Stiftung or of the organizations for which the authors work. © Friedrich Ebert Stiftung and Peace Research Institute Oslo (PRIO), 2012 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or utilized in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without permission in writing from the copyright holder(s). ISBN 978-82-7288-441-2 Production and Cover design: Action Global Communications CONTENTS Contributors .................................................................................................................................1 introduCtion ................................................................................................................................5 Hubert Faustmann , a yla Gürel and GreGory m. r eiCHberG ProjeCtinG For Control oF Warm Waters: turkey's PosturinG For HydroCarbon HeGemony in tHe eastern mediterranean ..............................7 yiorGHos leventis WealtH sHarinG and GeoPolitiCal strateGies: exCludinG HydroCarbons From tHe CyPrus neGotiations ..................................17 erol kaymak eastern mediterranean Gas and turkey’s Position ................................................23 didem akyel CollinsWortH tHe ProsPeCts For exPloration and exPloitation oF oil and Gas in tHe aeGean and tHe eastern mediterranean: some observations ..............29 Harry tzimitras lebanon: eFForts to establisH a HydroCarbon seCtor .........................................39 Gary lakes oPtimal natural WealtH manaGement ..........................................................................45 leonor CoutinHo HydroCarbon resourCes and revenue manaGement: tHe Case oF norWay ..................................................................................................................57 lars even andersen viCtims oF tHe resourCe Curse: tHe Case oF tHe tWo sudans .............................73 Øystein H. r olandsen CyPrus HydroCarbons: tHe dilemmas oF early develoPment ............................81 Gary lakes oFFsHore HydroCarbons and WealtH distribution in CyPrus: intervieWs WitH miCHael sarris and mustaFa besim ................................................87 elias Hazou 1 CONTRIBUTORS Lars Even Andersen is PRIO’s Deputy Administrative Director. Mr Andersen has been at PRIO since 1998 and held a variety of positions, including operational peace-building work in conflic t zones, as well as finance, management, and leadership roles. Mr Andersen has an Executive MBA in economics. He figures in the top-50 ranking list of chess players in Norway. His main current research interests are on economic aspects of globalisation, and their influence on social dynamics and dimensions of security. Mustafa Besim (Assoc. Prof.) has been a faculty member of Eastern Mediterranean University since 1998. He has lectured on economics, public finance, international finance, corporate finance, and project finance and appraisal. His fields of specialisation are public finance, economic development and investment appraisal. Dr. Besim was assigned to the Technical Committee on Economic and Financial Aspects for the Cyprus talks in 2003-4, 2008-2011. Dr. Besim has a number of publications on the Turkish Cypriot economy with topics from under ground economies, tax compliance, productivity, the future of the Turkish Cypriot economy to the recent global financial crises. He has presented papers at conferences, mainly on taxa tion, sustainability of the Turkish Cypriot economy, significance of the state budget and under ground economy, and fiscal federalism. He obtained his Ph.D. in Public Policy from the University of Birmingham. He is also an alumnus of the Tax Analysis and Revenue Forecasting Program of DCID, Duke University and the Investment Appraisal and Risk Analysis Program of Queen’s University. Didem Akyel Collinsworth has been working with the International Crisis Group’s Turkey/ Cyprus Project based in Istanbul, Turkey since March 2009. She is the Turkey/Cyprus Analyst and covers Turkey-EU relations, the Cyprus problem and Turkey’s role in the region in general. She has a BA from Washington and Lee University (Virginia, USA) in Political Science and a graduate diploma from Johns Hopkins School of Advanced International Studies (SAIS) in Bologna, Italy. She speaks English, Turkish, Italian and some French. Leonor Coutinho is a senior researcher in economics at Europrism (Cyprus) and a Special Scientist at the University of Cyprus. She holds a Ph.D. from the European University Institute (Florence). Her research interests include macroeconomics, and international economics and finance, with special focus on the EU and neighbour regions. She has been engaged in a number of research projects, including projects financed by the EU and the Cyprus Research Foundation, and has published in professional journals, including the open economies review , 2 Cyprus Offshore Hydrocarbons the review of economic surveys , and international Finance . She has been a research fellow of the Portuguese Science Foundation at Georgetown