High Commissioner to Cyprus, Stephen Lillie’s remarks at first Nicosia Risk Forum
High Commissioner Stephen Lillie spoke at the Nicosia Risk Forum on 14 November on Energy and Geopolitical Risks in South-Eastern Europe.
Ladies and Gentlemen, your Excellencies – thank you for the opportunity to address the first ever Nicosia Risk Forum.
My congratulations to Professor George Boustras, Director of the Centre for Risk and Decision Sciences (CERIDES) on the excellent work the Centre is doing - not least today’s gathering - to build Cyprus’s regional expertise.
The Eastern Mediterranean has always been a cross-roads. People, trade and ideas from three continents - Western Asia, North Africa, and all of Europe - have flowed through the region. Cyprus, because of its location, has historically been at the centre of these exchanges: a stopping point between East and West.
Britain rose to power as a seafaring nation and Britain’s links here, and in the Mediterranean more broadly, are longstanding ones. From Gibraltar, to Malta, Greece, Israel, Egypt, and of course Cyprus, the UK has strong historical ties with many countries in the region. Now, the UK is working in partnership with these friends and allies to build upon our shared history, looking to the future, in a way that benefits us both.
And this region is growing in importance. Economic recovery in Cyprus since 2013 has been impressive, diversifying the economy and matching other economic success stories in the neighbourhood. Israel has blazed a trail in developing its tech sector and encouraging start-ups. Reforms in Egypt are leading to strong growth and have lifted many out of poverty.
But significant changes in the economic landscape are being driven by hydrocarbon discoveries.
First with Leviathan in Israel, followed by Aphrodite in Cyprus and Zohr in Egypt. The size of the discoveries so far - estimated at over 50 trillion cubic feet - could be transformative for the countries concerned as well as important for Europe and the wider neighbourhood.
But while the discovery of gas can be a boon for the region, it can also expose other risks. This is a turbulent part of the world.
- existing regional conflicts complicate and polarise international relationships
- terrorists continue to find havens within conflicts and plan attacks
- such conflicts are also leading to increased migration flows, as seen in Cyprus this year, but also in Greece, Lebanon and Jordan
- the ongoing division of this island creates fragility that limits Cyprus’s potential
- the region is not immune to wider global threats such as in cyber-space, from international organised crime and the wider challenges to the rules-based international system that categorise today’s world
Against this backdrop, the UK is stepping up our bilateral engagement with the region - as are others, notably the US. We are building trade. Expanding our education links. But we are also working hard to help deliver security. For example, our work to reinforce the Lebanese border. And our hosting of the London Conference to support Jordanian stability in February 2019.
In this respect, our Sovereign Base Areas in Cyprus provide an important vantage point. They help us identify emerging threats and risks. And they are a vital contributor to regional security. Be that through strikes against Daesh in Iraq and Syria. Or the destruction of chemical weapons facilities used to kill civilians in Syria. We recognise the need to work with like-minded regional partners and our understanding of the region is underpinned by enduring defence engagement, specifically with the Republic of Cyprus.
Looking at the risks I’ve mentioned, it is clear Cyprus has many advantages. It is a pillar of stability in region with a long history of instability. In turn, it offers a welcoming business environment. A hub in the region where people – a large number of them Britons - can live, set up businesses, holiday, and educate themselves.
These advantages flow from its foundations as a western-oriented, democracy with respect for the rule of law. And Cyprus can be a multiplier for these values through its regional relationships. So we welcome the fact that Cyprus increasingly sees itself as a bridge between the EU and the Near and Middle East and has made this a core tenet of its foreign policy.
The UK is also strengthening its relationship with Cyprus across the board, building on our common history, common legal system and institutions and strong people-to-people links. We are doing this in ways which, firstly:
Contribute to Cyprus’ stability
- following the financial crisis in 2013, the UK supported Cypriot efforts in administrative reform, and we continue to do so
- the UK and Cyprus share the principle of the common law, making us natural partners in the field of legal reform. We are supporting these reforms through training, and engaging with the vibrant Cypriot legal community based in the UK
- and we work together closely to tackled organised crime affecting both of our countries, including smuggling and people trafficking
Secondly, we are working to develop our bilateral defence relationship in ways which make the Sovereign Bases a part of what we do together, rather than standing separately. This includes jointly developing a regional dimension to our defence engagement, particularly using the UK’s strengths in defence education and training. We hope this might lead to further opportunities for developing political networks and co-operation across the region in future too.
But two inter-related issues cast a shadow as Cyprus seeks to fulfil its potential as a hub for a more stable Eastern Mediterranean:
- tensions relating to hydrocarbons
- and the lack of settlement of the Cyprus problem
The full extent of the region’s potential hydrocarbons wealth is unclear, and it will be some years before gas (or money) starts flowing. But there is potential for energy to be a regional game-changer. The challenge is to ensure that this transforms the region’s prosperity, rather than being a source of inter-state tension and conflict.
The UK’s position is clear: we recognise the sovereign right of the Republic of Cyprus to exploit the natural resources in its EEZ, and we want to see exploration go ahead. We believe Cyprus’ hydrocarbons should be developed for the benefit of all Cypriots and urge all parties to look for ways by which the development of hydrocarbons can support a settlement.
I welcome President Anastasiades’ public restatement last week that the Republic has plans for the development of a Sovereign Wealth Fund for the future proceeds of natural gas revenue. Further details of how this will work will be an important confidence building measure; passage of the relevant legislation would send a powerful signal of commitment to ensure that the future natural resource wealth will benefit all Cypriots.
While there is cause to be optimistic about the potential for exploiting hydrocarbons, it remains true that Cyprus is still heavily dependent on crude oil for energy. As the cost of renewables falls, especially for photovoltaics, I would suggest that Cyprus should consider its overall energy mix. Increased use of solar, wind and other purely renewable energy will benefit future generations, contain the risk of over-reliance on hydrocarbons, and ensure that Cyprus can meet EU targets for the reduction of CO2 emissions.
It is impossible to talk about regional stability and conflict in the Eastern Mediterranean without addressing the Cyprus issue. Since 1974 the Republic of Cyprus has become a success story: a flourishing modern European state with a strong economy. But Turkish Cypriots are not doing so well, and Greek Cypriots are not reaping the full benefits of living in a single united country and market within the EU; nor can they take advantage of another substantial market in close proximity to the island, in the form of Turkey.
A reunited Cyprus would allow the island to achieve its full potential, to unlock significant economic benefits through increased opportunities for trade, shipping, investment and the growth of education and tourism. It would open up the possibility of new energy and economic partnerships in the region, allowing Cyprus to truly become a regional economic hub.
This would also be good for regional stability, removing a major source of contention between Greece and Turkey as NATO members, possibly paving the way for Cyprus to become a Partnership for Peace member state and subsequently a full member.
These are undoubtedly challenging times globally, with many political and economic uncertainties globally, and with fundamental tenets of the rules-based international system increasingly under question. I haven’t yet mentioned Brexit. I’m happy to come back to this in discussion but let me just observe that while much of the media focus is on the economic aspects of Brexit we are also working hard to secure a strong future security partnership between Britain and the EU. This is a UK strength and we want to contribute to common efforts. As the Prime Minister has said, Europe’s security is our security and that is why we want cooperation and consultation on foreign policy and external security issues.
Let me conclude by emphasising that in these challenging times we need to redouble collective efforts to increase prosperity and reduce sources of insecurity: I believe we have that opportunity now here in the Eastern Mediterranean. The UK is leaving the EU but we are not leaving Europe. We will still be confronted with the same growing, shared threats. We need to work together to defend the rules based international order, we need to co-operate to protect our values and democratic principles and together we need to adapt to the challenge and opportunities that globalisation is posing to our economies and societies. I know that in Cyprus, we have a trusted European friend, ally and partner whom we can work with to overcome these challenges.
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