What Should be the ESG Preconditions to Development of the Cyprus Gas Fields?

by K. Katsos and J.E. Katsos

Abstract

(Added 10/12/2020) The discovery of natural gas deposits off of the southern coast of Cyprus was initially met with jubilation and trepidation. The deposits potentially provide a new source of revenue for an island hit hard by the global financial crisis and subsequent EU intervention. Almost immediately, however, stakeholders to the decades-old conflict on the island - including the governments of Turkey and Greece, the EU, and the UN - expressed concerns over whether and how the deposits could impact the conflict between Greek- and Turkish-Cypriots. The existing literature on the impact of extractive industries on conflict zones bolsters concerns that the find could make the conflict more, not less, violent. Turkey’s own attempts at exploration and drilling in Cypriot maritime territory is evidence of the escalation of conflict.

This paper suggests that the existing literature on the private sector’s ability to promote peace may provide a potential means to turn the discovery into an asset for resolution of the conflict through proper creation and management of a public-private partnership, mirroring previous efforts in Middle East and African states. This paper uses the existing literature on the impact of the private sector on peace to suggest a series of recommendations for management of natural gas extraction in Cyprus. The paper proceeds by first reviewing the existing literature on business in conflict contexts, with a specific focus on management practices of the extractive industry in conflict zones. This is followed by a description of the Cyprus Conflict, the impacts of the global financial crisis on the island, and the natural gas discovery in the so-called Aphrodite Basin of the south-eastern Mediterranean Sea. The paper then examines how the literature’s recommendations might best be implemented in Cyprus. Finally, some concluding thoughts and recommendations for stakeholders to the Cyprus Conflict are given.

You can find the paper here: What Should be the ESG Preconditions to Development of the Cyprus Gas Fields?.