By Delphine Strauss
For Genel Enerji, it has been a brutal reversal of fortune. In June, the Turkish exploration group was celebrating the start of exports from northern Iraq’s Taq Taq field, after a breakthrough in talks between Baghdad and the Kurdish authorities.
The flow of oil, promising a revenue stream to fund development of other fields, was the key to the merger with Heritage Oil, under which Genel would gain a London listing and a 50 per cent share in assets valued at up to $6bn (£3.6bn).
In six months, the twists of Iraqi politics have obliterated those prospects. With Erbil and Baghdad deadlocked on how to pay contractors, Genel has halted exports and lost its main appeal to potential partners – its fortunes reflecting the rise and fall of investors’ interest in the Kurdistan region as a whole.
“It leaves them in a fairly difficult position,” said one analyst, noting that Genel had planned to use Heritage shares to settle a $1.1bn debt to the Kurdish authorities, while most other potential partners in the region were also under financial strain.
Mehmet Sepil, Genel’s chief executive and co-founder, declined to comment on Monday, only confirming that the merger had fallen through because there was no foreseeable prospect of receiving any payment for its Kurdish exports.
But the merger talks were complicated by a Financial Services Authority investigation that Heritage had said could prevent executives from Genel or its unlisted parent Cukurova joining the management of the new company.
Genel’s ties with the Kurdish administration also came under scrutiny this summer when Norwegian authorities began a probe into its dealings in shares of DNO, another Kurdistan-focused exploration group.
It is not clear how the end of talks will affect the partnership at the Miran oilfield in Iraqi Kurdistan, where Heritage has a controlling stake and Genel owns a 25 per cent share.
Analysts say there are concerns Heritage could find the going tougher if its relations with Genel or with the regional authorities have soured.
Copyright The Financial Times Limited 2009.
Tuesday, November 24, 2009
Monday, November 16, 2009
Kosovo PM claims poll victory
By Neil MacDonald
Hashim Thaci, Kosovo’s prime minister and leader of the Democratic Party of Kosovo (PDK), has claimed victory in the country’s first elections as an independent state, although the election commission has delayed releasing final results.
Mr Thaci said his party had won at least 20 out of 36 contested municipalities. But the Democratic League of Kosovo (LDK), the lesser ruling coalition partner and still a competitor to Mr Thaci, won the mayor’s race and captured the assembly for Pristina, the capital.
The elections took place peacefully, with the ethnic Serb minority visibly opting to participate in some areas despite calls from Belgrade for a boycott.
Final turnout exceeded 45 per cent, compared with only 40 per cent in the last, pre-independence parliamentary elections two years ago, Kosovo’s election commission announced after polls closed. Turnout in Serb districts, although lower, came to nearly 31 per cent in Strpce, a majority-Serb municipality in the south.
Serbs in isolated southern enclaves – feeling weakening support from the Serbian government in the economic downturn – turned up in larger numbers than in past elections, observers said. But those in the north, where Belgrade exerts stronger influence, still disregarded the contest for municipal councils and mayors in the predominantly ethnic Albanian state.
Hashim Thaci, prime minister, said he appreciated involvement by the disaffected minority group, which makes up about 5 per cent of Kosovo’s 2 million people. He also said, however, that free elections would boost the drive for recognition as a sovereign state.
“Full success [of these elections] will reflect well on the country in the continuing process of Kosovo’s international recognition”, Mr Thaci said. “This is a great step forward for the sovereign state.”
In Gracanica, an enclave outside the capital, Pristina, 28 per cent of Serbs wanted to vote, while 32 per cent refused and 40 per cent remained undecided, said Kontakt, a non-governmental organisation. Running for municipal office would not mean recognising independence, Serb candidates insisted.
Organisers decided to postpone voting in two other Serb municipalities at least until next year, partly to avoid hollow victories by ethnic Albanian candidates, international officials said. New municipal boundaries would bolster Serb autonomy as part of a western-backed plan decentralisation plan.
Kosovo declared independence in February 2008 and gained prompt recognition from the US and most EU members. New Zealand last week became the 63rd UN member state to extend recognition. But Serbia, backed by Russia, has blocked any endorsement at the UN Security Council.
Fraud allegations marred the final days of campaigning, as rival ethnic Albanian parties accused Mr Thaci’s ruling Democratic Party of Kosovo (PDK) of manipulating the Central Elections Commission.
Pieter Feith, chief international supervisor and European Union envoy, called for careful scrutiny of ballot transport after the voting. The European Network of Election Monitoring Organisations (ENEMO) has sent more than 100 monitors to help to ensure international standards.
The election commission did not give regular updates, and election monitors said they would not disclose further turnout figures until the final count.
Prior to independence, the Organisation for Security and Cooperation in Europe (OSCE) organised elections in the disputed territory, which the UN governed as a protectorate for nine years following the 1998-1999 war.
● Church bells in Serb enclaves rang to mark the death of Pavle, the 95-year-old patriarch of the Serb Orthodox church in Belgrade, the same morning. His potential successors are deeply divided about whether to work with EU officials to help the remote minority villages survive.
Copyright The Financial Times Limited 2009.
Hashim Thaci, Kosovo’s prime minister and leader of the Democratic Party of Kosovo (PDK), has claimed victory in the country’s first elections as an independent state, although the election commission has delayed releasing final results.
Mr Thaci said his party had won at least 20 out of 36 contested municipalities. But the Democratic League of Kosovo (LDK), the lesser ruling coalition partner and still a competitor to Mr Thaci, won the mayor’s race and captured the assembly for Pristina, the capital.
The elections took place peacefully, with the ethnic Serb minority visibly opting to participate in some areas despite calls from Belgrade for a boycott.
Final turnout exceeded 45 per cent, compared with only 40 per cent in the last, pre-independence parliamentary elections two years ago, Kosovo’s election commission announced after polls closed. Turnout in Serb districts, although lower, came to nearly 31 per cent in Strpce, a majority-Serb municipality in the south.
Serbs in isolated southern enclaves – feeling weakening support from the Serbian government in the economic downturn – turned up in larger numbers than in past elections, observers said. But those in the north, where Belgrade exerts stronger influence, still disregarded the contest for municipal councils and mayors in the predominantly ethnic Albanian state.
Hashim Thaci, prime minister, said he appreciated involvement by the disaffected minority group, which makes up about 5 per cent of Kosovo’s 2 million people. He also said, however, that free elections would boost the drive for recognition as a sovereign state.
“Full success [of these elections] will reflect well on the country in the continuing process of Kosovo’s international recognition”, Mr Thaci said. “This is a great step forward for the sovereign state.”
In Gracanica, an enclave outside the capital, Pristina, 28 per cent of Serbs wanted to vote, while 32 per cent refused and 40 per cent remained undecided, said Kontakt, a non-governmental organisation. Running for municipal office would not mean recognising independence, Serb candidates insisted.
Organisers decided to postpone voting in two other Serb municipalities at least until next year, partly to avoid hollow victories by ethnic Albanian candidates, international officials said. New municipal boundaries would bolster Serb autonomy as part of a western-backed plan decentralisation plan.
Kosovo declared independence in February 2008 and gained prompt recognition from the US and most EU members. New Zealand last week became the 63rd UN member state to extend recognition. But Serbia, backed by Russia, has blocked any endorsement at the UN Security Council.
Fraud allegations marred the final days of campaigning, as rival ethnic Albanian parties accused Mr Thaci’s ruling Democratic Party of Kosovo (PDK) of manipulating the Central Elections Commission.
Pieter Feith, chief international supervisor and European Union envoy, called for careful scrutiny of ballot transport after the voting. The European Network of Election Monitoring Organisations (ENEMO) has sent more than 100 monitors to help to ensure international standards.
The election commission did not give regular updates, and election monitors said they would not disclose further turnout figures until the final count.
Prior to independence, the Organisation for Security and Cooperation in Europe (OSCE) organised elections in the disputed territory, which the UN governed as a protectorate for nine years following the 1998-1999 war.
● Church bells in Serb enclaves rang to mark the death of Pavle, the 95-year-old patriarch of the Serb Orthodox church in Belgrade, the same morning. His potential successors are deeply divided about whether to work with EU officials to help the remote minority villages survive.
Copyright The Financial Times Limited 2009.
Ukraine
Europe is on tenterhooks over whether Russia will shut off gas to Ukraine and leave it shivering in January. If that happens, however, blame will fall on Kiev, not Moscow.
Recession-ravaged Ukraine’s political squabbling and populism has hit fever pitch ahead of presidential elections on January 17. That has led the International Monetary Fund to suspend co-operation and delay a $3.8bn loan payment, due on Sunday. The government had already backed off from commitments to increase long-subsidised domestic gas prices. The final straw was President Viktor Yushchenko signing into law, against IMF objections, a parliamentary bill that will raise minimum wages and pensions by 20 per cent – costing 7 per cent of economic output in 2010.
Since Ukraine is reliant on IMF funding to make ends meet, it could struggle to pay its next two monthly gas bills – leading to another winter shut-off. It only just scraped together October’s payment. Yet, for all its bluster, Russia would rather keep the taps open. The Kremlin has belatedly realised the damage to its reputation from shut-offs, and last January’s interruption to European supplies cost state-run Gazprom dearly. Hence Prime Minister Vladimir Putin’s exhortation that Brussels extend a loan to Ukraine.
And why meddle in Ukraine’s electoral process this time? Moscow’s bogeyman, Mr Yushchenko, trails badly in the polls. Either frontrunner, Prime Minister Yulia Tymoshenko or Viktor Yanukovich, is more acceptable to Russia.
Ukraine still has $28bn in foreign currency reserves; the central bank will probably allow some to be used to pay for gas. A bigger question is whether it will plug the budgetary gap by printing money. If so, inflation will result; if not, wage arrears beckon. Either option may put pressure on Ukraine’s currency and asset prices. Europe’s gas consumers must hope they do not become collateral damage.
Copyright The Financial Times Limited 2009.
Recession-ravaged Ukraine’s political squabbling and populism has hit fever pitch ahead of presidential elections on January 17. That has led the International Monetary Fund to suspend co-operation and delay a $3.8bn loan payment, due on Sunday. The government had already backed off from commitments to increase long-subsidised domestic gas prices. The final straw was President Viktor Yushchenko signing into law, against IMF objections, a parliamentary bill that will raise minimum wages and pensions by 20 per cent – costing 7 per cent of economic output in 2010.
Since Ukraine is reliant on IMF funding to make ends meet, it could struggle to pay its next two monthly gas bills – leading to another winter shut-off. It only just scraped together October’s payment. Yet, for all its bluster, Russia would rather keep the taps open. The Kremlin has belatedly realised the damage to its reputation from shut-offs, and last January’s interruption to European supplies cost state-run Gazprom dearly. Hence Prime Minister Vladimir Putin’s exhortation that Brussels extend a loan to Ukraine.
And why meddle in Ukraine’s electoral process this time? Moscow’s bogeyman, Mr Yushchenko, trails badly in the polls. Either frontrunner, Prime Minister Yulia Tymoshenko or Viktor Yanukovich, is more acceptable to Russia.
Ukraine still has $28bn in foreign currency reserves; the central bank will probably allow some to be used to pay for gas. A bigger question is whether it will plug the budgetary gap by printing money. If so, inflation will result; if not, wage arrears beckon. Either option may put pressure on Ukraine’s currency and asset prices. Europe’s gas consumers must hope they do not become collateral damage.
Copyright The Financial Times Limited 2009.
How Europe can be heard in Washington
By Jeremy Shapiro and Nick Witney
As Europeans gossip and conspire over the new post-Lisbon appointments to represent the European Union’s external face, they know only too well how global power is slipping away from them. European elites agonise over the spectre of irrelevance.
No doubt it was this anxiety that impelled EU leaders to press for the EU/US summit meeting in Washington earlier this month. With the guard about to change in Brussels, this was never going to be a productive encounter. The visitors got what they deserved – 90 minutes of the president’s time, and a lunch with Vice- President Joe Biden.
At least the experience may help Europeans take on board two important truths about Barack Obama, the man whose election so delighted them a year ago. First, his foreign policy strategy is to reposition America for the post-American world. Understanding that the US’s brief moment of global dominance has come and gone, he aims to ensure America gets its way by forging tactical alliances. He will work with China on the global economy, with Russia on nuclear disarmament, and with anyone else who can help serve the US’s interest.
Second, his self-declared pragmatism means a rigorous approach to how he allocates his time and energy. He will attend to those who can be useful, not the merely sympathetic. Glad-handing Europeans with nothing to offer will be a low priority.
For Europeans these are difficult truths to absorb. But they will not again carry weight in Washington until they grasp that a post-American world requires a post-American Europe. Such a Europe must discard a set of damaging illusions that, 20 years on from the end of the cold war, still shape its approaches to the US.
The first such illusion is of continuing dependence on US protection. With the Russian military a shadow of its Soviet predecessor, this is no longer the case. But it underlies Europe’s habitual deference to the US.
The second illusion is to mistake shared values for a transatlantic identity of interests. This encourages the widespread European belief that if Americans act in uncongenial ways this is a product of their naiveté – requiring Europeans tactfully to set them back on course.
These two misperceptions lead to a third – that the need to preserve a close and harmonious transatlantic relationship must always trump any more specific European objective. But a vital and healthy transatlantic relationship requires tough negotiations to establish compromises that work for both sides – even if, as the often-combative trade and competition policy dealings across the Atlantic show, that may mean the occasional row.
Such conciliatory attitudes lead European elites to feel – their fourth illusion – that confronting the US from a joint European position would be counter-productive, if not indecent. So the EU member states opt to do their defence and security business under US direction in Nato – and prioritise their bilateral links with Washington over almost everything else. The British may pride themselves on the most celebrated “special relationship”, but most other European nations also quietly believe they have a special “in” with Washington which is the best route for promoting their national interests.
Americans find all this attention-seeking tiresome, but will naturally not pass up the opportunities to divide and rule.
Some Europeans think the answer lies in a proper EU/US strategic dialogue, and they have plenty of proposals for new forums and further summitry to force such a dialogue. But that requires the EU, collectively, to have something to say, which in turn means Europeans must steel themselves to discuss, within the EU, the big strategic issues on which Europe will need to be able to engage the US in the post-American world.
Afghanistan should be an object lesson. European leaders have been happy to ignore this intractable issue in their regular EU meetings, delegating the problem to Nato and American leadership. They now find themselves with over 30,000 troops committed to a troubled campaign, and consigned to the ante-room while they wait to learn the new American strategy, which they must then defend to their publics as their own.
Russia and the Middle East are two more items on an unappetising list of problems that Europeans must address, not in the spirit of second-guessing where the US wants to go, but to assert common European positions. Failing that, even the most charismatic and forceful new EU leaders will find even photo-opportunities in Washington, never mind serious attention, in increasingly short supply.
Jeremy Shapiro is a director of research at the Brookings Institution. Nick Witney is a senior policy fellow at the European Council on Foreign Relations
As Europeans gossip and conspire over the new post-Lisbon appointments to represent the European Union’s external face, they know only too well how global power is slipping away from them. European elites agonise over the spectre of irrelevance.
No doubt it was this anxiety that impelled EU leaders to press for the EU/US summit meeting in Washington earlier this month. With the guard about to change in Brussels, this was never going to be a productive encounter. The visitors got what they deserved – 90 minutes of the president’s time, and a lunch with Vice- President Joe Biden.
At least the experience may help Europeans take on board two important truths about Barack Obama, the man whose election so delighted them a year ago. First, his foreign policy strategy is to reposition America for the post-American world. Understanding that the US’s brief moment of global dominance has come and gone, he aims to ensure America gets its way by forging tactical alliances. He will work with China on the global economy, with Russia on nuclear disarmament, and with anyone else who can help serve the US’s interest.
Second, his self-declared pragmatism means a rigorous approach to how he allocates his time and energy. He will attend to those who can be useful, not the merely sympathetic. Glad-handing Europeans with nothing to offer will be a low priority.
For Europeans these are difficult truths to absorb. But they will not again carry weight in Washington until they grasp that a post-American world requires a post-American Europe. Such a Europe must discard a set of damaging illusions that, 20 years on from the end of the cold war, still shape its approaches to the US.
The first such illusion is of continuing dependence on US protection. With the Russian military a shadow of its Soviet predecessor, this is no longer the case. But it underlies Europe’s habitual deference to the US.
The second illusion is to mistake shared values for a transatlantic identity of interests. This encourages the widespread European belief that if Americans act in uncongenial ways this is a product of their naiveté – requiring Europeans tactfully to set them back on course.
These two misperceptions lead to a third – that the need to preserve a close and harmonious transatlantic relationship must always trump any more specific European objective. But a vital and healthy transatlantic relationship requires tough negotiations to establish compromises that work for both sides – even if, as the often-combative trade and competition policy dealings across the Atlantic show, that may mean the occasional row.
Such conciliatory attitudes lead European elites to feel – their fourth illusion – that confronting the US from a joint European position would be counter-productive, if not indecent. So the EU member states opt to do their defence and security business under US direction in Nato – and prioritise their bilateral links with Washington over almost everything else. The British may pride themselves on the most celebrated “special relationship”, but most other European nations also quietly believe they have a special “in” with Washington which is the best route for promoting their national interests.
Americans find all this attention-seeking tiresome, but will naturally not pass up the opportunities to divide and rule.
Some Europeans think the answer lies in a proper EU/US strategic dialogue, and they have plenty of proposals for new forums and further summitry to force such a dialogue. But that requires the EU, collectively, to have something to say, which in turn means Europeans must steel themselves to discuss, within the EU, the big strategic issues on which Europe will need to be able to engage the US in the post-American world.
Afghanistan should be an object lesson. European leaders have been happy to ignore this intractable issue in their regular EU meetings, delegating the problem to Nato and American leadership. They now find themselves with over 30,000 troops committed to a troubled campaign, and consigned to the ante-room while they wait to learn the new American strategy, which they must then defend to their publics as their own.
Russia and the Middle East are two more items on an unappetising list of problems that Europeans must address, not in the spirit of second-guessing where the US wants to go, but to assert common European positions. Failing that, even the most charismatic and forceful new EU leaders will find even photo-opportunities in Washington, never mind serious attention, in increasingly short supply.
Jeremy Shapiro is a director of research at the Brookings Institution. Nick Witney is a senior policy fellow at the European Council on Foreign Relations
Thursday, November 12, 2009
A new era as Turks and Kurds learn to co-operate
By David Phillips
Iraqis have stepped back from the brink by agreeing on a law that will allow elections to go forward in January. While this averts postponement of the ballot, which would have required the US to recalibrate its withdrawal from Iraq, the contentious process is a harbinger of difficulties to come. Once elections are held, Iraqis still have to establish a coalition government and overcome deep divisions on issues such as hydrocarbons, revenue-sharing and the status of Kirkuk, a city claimed by Kurds, Arabs and Turkmen. Given these flashpoints, Iraqi Kurds are placing as much importance on relations with Ankara as with Baghdad. Turkey is also hedging her bets in case Iraq’s elections trigger sustained violence that polarises Iraqis and destabilises the region.
It was only in February last year that Turkey massed 100,000 troops for a major cross-border operation to root out the separatist Kurdistan Workers’ party (PKK) from its hide-out in the Qandil Mountains of northern Iraq. In a dramatic reversal, Ahmet Davudoglu, Turkey’s foreign minister, made a historic visit to Iraqi Kurdistan just two weeks ago to sign landmark deals opening a Turkish consulate in Erbil and border-crossings for travel and trade. Both sides have made the strategic decision that their interests are better served through co-operation than confrontation.
The rapprochement is born from pragmatism and geographic necessity. Kurds know that their future lies to the west, not as a landlocked rump state in the Middle East. Their access to Europe goes through Turkey. Conversely, Iraqi Kurdistan is Turkey’s gate to Iraq and lucrative relations with the Gulf states. Turkey and Iraqi Kurdistan are natural economic partners. Their annual trade has jumped to $5bn (€3.3bn, £3bn) since the overthrow of Saddam Hussein. It will rise to $10bn this year and $20bn in 2010. There are 1,200 foreign companies in Iraqi Kurdistan, half of which are Turkish; 90 per cent of goods sold in Iraqi Kurdistan are made in Turkey.
In addition, Iraqi Kurdistan has 45bn barrels in estimated oil reserves and huge natural gas fields that Turkey needs to fuel its economy and to fill the Nabucco pipeline with supplies for Europe. A Turkish energy company, Genel Enerjy, has signed production-sharing agreements for the Tak Tak and Tawke oilfields in Iraqi Kurdistan that will produce 1m barrels per day – more than 20 times Turkey’s current domestic production.
There is an old adage that, “Kurds have no friends but the mountains”. Yet they increasingly see Turkey as a prudent power and protector. They recall it was a haven to almost a million Iraqi Kurds who fled to the mountains after the Gulf war in 1991. However, they know Turkey will not act out of the goodness of her heart. It will guarantee security in Iraqi Kurdistan because it enables her to influence the balance of power in Iraq.
Turkey’s security establishment is obsessed with Iraq’s territorial integrity. It fears the emergence of an independent Iraqi Kurdistan would inspire Kurds in Turkey to seek greater self-rule. Recent statements by Masoud Barzani, Iraqi Kurdistan’s president, have helped calm Turkish anxieties; Mr Barzani affirms that Iraqi Kurds accept their fate as part of a democratic, federal republic of Iraq in which political power and control of natural resources are decentralised.
In the 1990s, Ankara denied the very existence of Turkish Kurds, calling them “mountain Turks”. It declared a state of emergency and launched a scorched earth policy that devastated the country’s south-east where Kurds reside. Recently, however, it has taken a more conciliatory approach.
While maintaining security, the government of prime minister Recep Tayyip Erdogan has expanded cultural rights and invested heavily in social services and infrastructure in Kurdish areas. Building on Turkey’s repentance law, it is also beginning to explore some kind of PKK amnesty. It has turned to the Kurdish Regional Government to accelerate the PKK’s demobilisation by more vigorously disrupting cash flow, weapons supplies and the organisation’s logistics.
The interests of Turkey and Iraqi Kurdistan currently converge, but co-operation could founder unless both sides accommodate the core interests of the other. Without progress on Turkey’s PKK problem, neither side will realise the full scope of benefits from today’s positive trends.
Iraqis have stepped back from the brink by agreeing on a law that will allow elections to go forward in January. While this averts postponement of the ballot, which would have required the US to recalibrate its withdrawal from Iraq, the contentious process is a harbinger of difficulties to come. Once elections are held, Iraqis still have to establish a coalition government and overcome deep divisions on issues such as hydrocarbons, revenue-sharing and the status of Kirkuk, a city claimed by Kurds, Arabs and Turkmen. Given these flashpoints, Iraqi Kurds are placing as much importance on relations with Ankara as with Baghdad. Turkey is also hedging her bets in case Iraq’s elections trigger sustained violence that polarises Iraqis and destabilises the region.
It was only in February last year that Turkey massed 100,000 troops for a major cross-border operation to root out the separatist Kurdistan Workers’ party (PKK) from its hide-out in the Qandil Mountains of northern Iraq. In a dramatic reversal, Ahmet Davudoglu, Turkey’s foreign minister, made a historic visit to Iraqi Kurdistan just two weeks ago to sign landmark deals opening a Turkish consulate in Erbil and border-crossings for travel and trade. Both sides have made the strategic decision that their interests are better served through co-operation than confrontation.
The rapprochement is born from pragmatism and geographic necessity. Kurds know that their future lies to the west, not as a landlocked rump state in the Middle East. Their access to Europe goes through Turkey. Conversely, Iraqi Kurdistan is Turkey’s gate to Iraq and lucrative relations with the Gulf states. Turkey and Iraqi Kurdistan are natural economic partners. Their annual trade has jumped to $5bn (€3.3bn, £3bn) since the overthrow of Saddam Hussein. It will rise to $10bn this year and $20bn in 2010. There are 1,200 foreign companies in Iraqi Kurdistan, half of which are Turkish; 90 per cent of goods sold in Iraqi Kurdistan are made in Turkey.
In addition, Iraqi Kurdistan has 45bn barrels in estimated oil reserves and huge natural gas fields that Turkey needs to fuel its economy and to fill the Nabucco pipeline with supplies for Europe. A Turkish energy company, Genel Enerjy, has signed production-sharing agreements for the Tak Tak and Tawke oilfields in Iraqi Kurdistan that will produce 1m barrels per day – more than 20 times Turkey’s current domestic production.
There is an old adage that, “Kurds have no friends but the mountains”. Yet they increasingly see Turkey as a prudent power and protector. They recall it was a haven to almost a million Iraqi Kurds who fled to the mountains after the Gulf war in 1991. However, they know Turkey will not act out of the goodness of her heart. It will guarantee security in Iraqi Kurdistan because it enables her to influence the balance of power in Iraq.
Turkey’s security establishment is obsessed with Iraq’s territorial integrity. It fears the emergence of an independent Iraqi Kurdistan would inspire Kurds in Turkey to seek greater self-rule. Recent statements by Masoud Barzani, Iraqi Kurdistan’s president, have helped calm Turkish anxieties; Mr Barzani affirms that Iraqi Kurds accept their fate as part of a democratic, federal republic of Iraq in which political power and control of natural resources are decentralised.
In the 1990s, Ankara denied the very existence of Turkish Kurds, calling them “mountain Turks”. It declared a state of emergency and launched a scorched earth policy that devastated the country’s south-east where Kurds reside. Recently, however, it has taken a more conciliatory approach.
While maintaining security, the government of prime minister Recep Tayyip Erdogan has expanded cultural rights and invested heavily in social services and infrastructure in Kurdish areas. Building on Turkey’s repentance law, it is also beginning to explore some kind of PKK amnesty. It has turned to the Kurdish Regional Government to accelerate the PKK’s demobilisation by more vigorously disrupting cash flow, weapons supplies and the organisation’s logistics.
The interests of Turkey and Iraqi Kurdistan currently converge, but co-operation could founder unless both sides accommodate the core interests of the other. Without progress on Turkey’s PKK problem, neither side will realise the full scope of benefits from today’s positive trends.
UN envoy focuses on progress in unification talks
By Kerin Hope
Alexander Downer, United Nations special envoy to the latest Cyprus reunification effort, insists that after 14 months of open-ended bicommunal talks he is still “cautiously optimistic” about a settlement.
One hopeful sign, he says, is that Demetris Christofias and Mehmet Ali Talat, the Cypriot leaders, are meeting more often in order to tackle key issues such as power-sharing and property ownership in a future federal state.
After almost 50 sessions the leaders ”have made significant progress – though not equal progress in all (negotiating) chapters,” Mr Downer says. “But they’ve agreed on an enormous number of things.”
These include most issues concerning the economy and European Union responsibilities – seen as the least contentious of the six chapters – as well as a large chunk of the governance and power-sharing chapter that dominated the discussions earlier this year.
But chapters on property, territory and security – issues that brought several previous peace initiatives to a halt - have still to be discussed in depth.
The Australian former foreign minister, now a political consultant, flies in regularly to facilitate the negotiations, with UN-appointed experts providing legal and technical help.
His “good offices” mission – the venue for the talks – occupies a modest one-storey building at the former Nicosia international airport in the UN-controlled buffer zone separating the Greek and Turkish Cypriot parts of the island.
Mr Downer’s qualifications for the job include mediating a peace agreement in a civil conflict in Papua New Guinea and helping the UN organise a referendum in East Timor.
Yet the UN is deploying significantly fewer resources than during the ill-fated peace effort of 2002-04 that resulted in the “Annan plan” – a 10,000-page blueprint covering almost every detail of establishing a loose federation on Cyprus that only a handful of islanders claim to have read.
That plan was dropped after 76 per cent of Greek Cypriots who voted rejected it in a referendum - although it was approved by 65 per cent of Turkish Cypriots in a separate vote.
This time the UN does not intend to impose deadlines, Mr Downer stresses, in spite of Mr Talat’s concerns about reaching a deal before his presidential term runs out in the spring.
“There’s no timeframe, it’s up to the leaders to work out the timelines and agree on them,” he says. “The Turkish Cypriots want to complete the negotiations by early next year and the Greek Cypriots don’t want to be suffocated by asphyxiating deadlines.”
Mr Christofias and Mr Talat - fellow leftwingers and self-described friends – start their twice-weekly sessions with frank private discussions before sitting down with their advisers and UN experts, according to Cyprus-based officials.
Yet hopes that two veteran Cypriot politicians committed to healing the island’s 35-year division would be able to achieve a breakthrough have so far not been realised.
Mr Downer points to a recent agreement on setting up a rotating federal presidency as a sign of “real progress” though details of voting procedures have still to be worked out.
Moreover, the two leaders have started to discuss the complex property issue which will also have an impact on opportunities for Greek and Turkish Cypriots to return to homes they abandoned in the 1974 conflict.
After 35 years of division, many Greek Cypriots would prefer to receive compensation or sell their holdings in the Turkish Cypriot north of the island rather than live there after a settlement.
“It’s a complicated issue, legally and economically,” Mr Downer says. “For example, if compensation is going to be a big part of the solution, where does the money come from? You have to work out ways of financing it.”
An agreement on property would also help resolve the issue of how much the territory in north Cyprus would be handed back to the Greek Cypriots in a settlement, he says.
A few issues on security have been agreed, for example that a reunified Cyprus would not have an army, Mr Downer says.
But the continued presence of Turkish and Greek military forces on the island under current treaties of alliance, and the Turkish Cypriot position that a treaty of guarantee is still essential although Cyprus is a member of the European Union, are potential stumbling blocks to a deal.
Both Cypriot leaders have recently sounded considerably less upbeat than Mr Downer about the course of negotiations so far.
Mr Christofias said in Brussels in October that his expectations for the talks “had not been justified” and blamed Turkey’s political and military leadership for the lack of progress.
Mr Talat said in a Financial Times interview in September that overall he was “not satisfied with the pace of the talks” and that the current initiative is the “last chance” of resolving the Cyprus problem.
Yet making pessimistic public statements is also part of the negotiating process, Mr Downer suggests.
“When you go and talk to the two sides, it all depends what mood they’re in,” Mr Downer “They’ll run a different line on different days. We run one line - that this process can succeed. ”
Alexander Downer, United Nations special envoy to the latest Cyprus reunification effort, insists that after 14 months of open-ended bicommunal talks he is still “cautiously optimistic” about a settlement.
One hopeful sign, he says, is that Demetris Christofias and Mehmet Ali Talat, the Cypriot leaders, are meeting more often in order to tackle key issues such as power-sharing and property ownership in a future federal state.
After almost 50 sessions the leaders ”have made significant progress – though not equal progress in all (negotiating) chapters,” Mr Downer says. “But they’ve agreed on an enormous number of things.”
These include most issues concerning the economy and European Union responsibilities – seen as the least contentious of the six chapters – as well as a large chunk of the governance and power-sharing chapter that dominated the discussions earlier this year.
But chapters on property, territory and security – issues that brought several previous peace initiatives to a halt - have still to be discussed in depth.
The Australian former foreign minister, now a political consultant, flies in regularly to facilitate the negotiations, with UN-appointed experts providing legal and technical help.
His “good offices” mission – the venue for the talks – occupies a modest one-storey building at the former Nicosia international airport in the UN-controlled buffer zone separating the Greek and Turkish Cypriot parts of the island.
Mr Downer’s qualifications for the job include mediating a peace agreement in a civil conflict in Papua New Guinea and helping the UN organise a referendum in East Timor.
Yet the UN is deploying significantly fewer resources than during the ill-fated peace effort of 2002-04 that resulted in the “Annan plan” – a 10,000-page blueprint covering almost every detail of establishing a loose federation on Cyprus that only a handful of islanders claim to have read.
That plan was dropped after 76 per cent of Greek Cypriots who voted rejected it in a referendum - although it was approved by 65 per cent of Turkish Cypriots in a separate vote.
This time the UN does not intend to impose deadlines, Mr Downer stresses, in spite of Mr Talat’s concerns about reaching a deal before his presidential term runs out in the spring.
“There’s no timeframe, it’s up to the leaders to work out the timelines and agree on them,” he says. “The Turkish Cypriots want to complete the negotiations by early next year and the Greek Cypriots don’t want to be suffocated by asphyxiating deadlines.”
Mr Christofias and Mr Talat - fellow leftwingers and self-described friends – start their twice-weekly sessions with frank private discussions before sitting down with their advisers and UN experts, according to Cyprus-based officials.
Yet hopes that two veteran Cypriot politicians committed to healing the island’s 35-year division would be able to achieve a breakthrough have so far not been realised.
Mr Downer points to a recent agreement on setting up a rotating federal presidency as a sign of “real progress” though details of voting procedures have still to be worked out.
Moreover, the two leaders have started to discuss the complex property issue which will also have an impact on opportunities for Greek and Turkish Cypriots to return to homes they abandoned in the 1974 conflict.
After 35 years of division, many Greek Cypriots would prefer to receive compensation or sell their holdings in the Turkish Cypriot north of the island rather than live there after a settlement.
“It’s a complicated issue, legally and economically,” Mr Downer says. “For example, if compensation is going to be a big part of the solution, where does the money come from? You have to work out ways of financing it.”
An agreement on property would also help resolve the issue of how much the territory in north Cyprus would be handed back to the Greek Cypriots in a settlement, he says.
A few issues on security have been agreed, for example that a reunified Cyprus would not have an army, Mr Downer says.
But the continued presence of Turkish and Greek military forces on the island under current treaties of alliance, and the Turkish Cypriot position that a treaty of guarantee is still essential although Cyprus is a member of the European Union, are potential stumbling blocks to a deal.
Both Cypriot leaders have recently sounded considerably less upbeat than Mr Downer about the course of negotiations so far.
Mr Christofias said in Brussels in October that his expectations for the talks “had not been justified” and blamed Turkey’s political and military leadership for the lack of progress.
Mr Talat said in a Financial Times interview in September that overall he was “not satisfied with the pace of the talks” and that the current initiative is the “last chance” of resolving the Cyprus problem.
Yet making pessimistic public statements is also part of the negotiating process, Mr Downer suggests.
“When you go and talk to the two sides, it all depends what mood they’re in,” Mr Downer “They’ll run a different line on different days. We run one line - that this process can succeed. ”
Leaders wrestle to break island’s bitter deadlock
Few outside observers still have doubts about the Greek and Turkish Cypriot leaders’ commitment to ending the island’s 35-year division.
After 14 months of regular meetings, their blue-upholstered armchairs at the United Nations “good offices” mission outside Nicosia have acquired a comfortable, well-worn look.
Demetris Christofias and Mehmet Ali Talat are well-qualified negotiators, with a shared trade union background and sufficient language skills to argue the details of a peace settlement in English.
Self-interest also plays a role. If a deal on setting up a bizonal, bicommunal federation is reached, Mr Christofias and Mr Talat would almost certainly be the first to hold the rotating presidency of a reunified Cyprus.
If not, both men are likely to be punished by voters and replaced by hardline nationalists who might opt for a permanent partition of the island.
Yet the UN-sponsored talks are dragging. Last week Mr Christofias admitted that the leaders were not yet ready to discuss in depth the issue of property, which, together with territory and security, lies at the core of a settlement.
“This is a comprehensive and difficult issue and they will go on working,” says Alexander Downer, former foreign minister of Australia and UN special adviser to the negotiations.
Though Nicosia-based diplomats try to avoid talk of deadlines and last chances, Mr Talat is already feeling the heat. His leftwing Republican Turkish Party was defeated last April at a parliamentary election in the north by Dervis Eroglou, whose National Unity Party favours a two-state solution.
Without at least a framework deal in place, Mr Talat’s chances of winning a second presidential term in the April poll look increasingly slim.
Public opinion in the north, once overwhelmingly in favour of reunification – and access to the benefits of European Union membership – is hardening.
“The talks don’t have a positive image and people aren’t very hopeful,” says Emine Erk, a Turkish Cypriot human rights lawyer. “There seems to be a zero-sum attitude, that you’re only happy with the talks if the other side is giving ground.”
Mr Christofias in turn faces pressure from “rejectionists” in the Greek Cypriot south, including influential media barons and members of the centrist Democratic party, which is the junior partner in his communist-led coalition government.
While communist discipline still appears strict, some analysts doubt whether Mr Christofias has the full support of his party on reunification.
However, the election victory of George Papandreou’s Socialist party in Greece has given the island’s pro-settlement politicians a welcome boost.
Mr Papandreou intends to rebuild the close relationship with Turkey he established as foreign minister 10 years ago.
“We have to revive a dynamism that will not only help Turkey on its course towards Europe but contribute to a solution of the Cyprus issue,” he said during a visit to Nicosia.
Next month’s EU summit, at which the bloc’s 27 heads of government are due to assess Turkish progress, will test the resolve of both Mr Papandreou and Mr Christofias. They hope that Turkey will inject fresh momentum into the Cyprus talks, as well as its own bid for accession, by agreeing to open one of its ports to Greek Cypriot traffic.
But if not, Mr Christofias has implicitly ruled out using a veto against Ankara, saying: “Our intention is not to punish Turkey.”
Many Greek Cypriots are uncertain about the benefits of signing up to a federal state that they would have to finance in its early years, as Turkish Cypriot per capita income is about half that of the south.
Greek Cypriots have avoided fostering cross-border relationships because of a widely held view that any form of bicommunal contact – from schoolchildren exchanging visits to football matches against teams from the north – implies “recognition” of the self-proclaimed Turkish Cypriot republic in the north.
The issue of “recognition” also places constraints on trade across the Green Line, the unofficial border between north and south, which has been developing gradually under an EU umbrella.
Most Turkish Cypriot products are still shipped to Turkey for export, while goods purchased by Greek Cypriots are generally transported in bulk and packaged in the south for sale locally.
“When Cyprus joined the EU in 2004 we were promised direct trade with the Union. That hasn’t happened,” says Oya Barcin, head of trade development at the Turkish Cypriot chamber of commerce.
Both sides of the island are feeling the impact of the global slowdown, following a collapse in the holiday property market and a sharp decline in tourist arrivals this year.
Greek Cypriot unemployment has reached 5.5 per cent, the highest rate since 1974. Turkish Cypriots have also lost jobs in the construction sector in the south.
A weak recovery is forecast for the south, while the isolated economy in the north faces continuing stagnation.
Studies indicate that reunification would bring sustained growth in tourism and business services, the pillars of the Greek Cypriot economy.
Higher education, which underpins the Turkish Cypriot economy and is expanding in the south, would become a growth sector, while the north’s mass tourism market would quickly be upgraded.
“There would obviously be the short-term costs of economic adjustment, but the medium-term prospects, with Greek Cypriot companies gaining access to the large Turkish market, would be very exciting,” says Charilaos Stavrakis, Greek Cypriot finance minister.
Settling issues of property and territory would unlock domestic investment and allow a federal Cyprus to develop a long-term strategy for attracting foreign investment, according to UN advisers. As a result of the island’s frozen conflict, ownership of property worth an estimated €20bn – mainly in the north – remains in dispute.
One arresting example is the derelict resort of Varosha outside Famagusta – a popular Mediterranean playground in the 1960s – with crumbling high-rise hotels surrounded by barbed wire.
“Just the rebuilding of Famagusta as a high-quality resort would make the whole island more prosperous for years to come,” says Symeon Kassianides, a Greek Cypriot businessman.
But so far neither Mr Talat nor Mr Christofias has tried to put forward a vision of a prosperous, reunited Cyprus offering a wealth of opportunity to both communities.
After 14 months of regular meetings, their blue-upholstered armchairs at the United Nations “good offices” mission outside Nicosia have acquired a comfortable, well-worn look.
Demetris Christofias and Mehmet Ali Talat are well-qualified negotiators, with a shared trade union background and sufficient language skills to argue the details of a peace settlement in English.
Self-interest also plays a role. If a deal on setting up a bizonal, bicommunal federation is reached, Mr Christofias and Mr Talat would almost certainly be the first to hold the rotating presidency of a reunified Cyprus.
If not, both men are likely to be punished by voters and replaced by hardline nationalists who might opt for a permanent partition of the island.
Yet the UN-sponsored talks are dragging. Last week Mr Christofias admitted that the leaders were not yet ready to discuss in depth the issue of property, which, together with territory and security, lies at the core of a settlement.
“This is a comprehensive and difficult issue and they will go on working,” says Alexander Downer, former foreign minister of Australia and UN special adviser to the negotiations.
Though Nicosia-based diplomats try to avoid talk of deadlines and last chances, Mr Talat is already feeling the heat. His leftwing Republican Turkish Party was defeated last April at a parliamentary election in the north by Dervis Eroglou, whose National Unity Party favours a two-state solution.
Without at least a framework deal in place, Mr Talat’s chances of winning a second presidential term in the April poll look increasingly slim.
Public opinion in the north, once overwhelmingly in favour of reunification – and access to the benefits of European Union membership – is hardening.
“The talks don’t have a positive image and people aren’t very hopeful,” says Emine Erk, a Turkish Cypriot human rights lawyer. “There seems to be a zero-sum attitude, that you’re only happy with the talks if the other side is giving ground.”
Mr Christofias in turn faces pressure from “rejectionists” in the Greek Cypriot south, including influential media barons and members of the centrist Democratic party, which is the junior partner in his communist-led coalition government.
While communist discipline still appears strict, some analysts doubt whether Mr Christofias has the full support of his party on reunification.
However, the election victory of George Papandreou’s Socialist party in Greece has given the island’s pro-settlement politicians a welcome boost.
Mr Papandreou intends to rebuild the close relationship with Turkey he established as foreign minister 10 years ago.
“We have to revive a dynamism that will not only help Turkey on its course towards Europe but contribute to a solution of the Cyprus issue,” he said during a visit to Nicosia.
Next month’s EU summit, at which the bloc’s 27 heads of government are due to assess Turkish progress, will test the resolve of both Mr Papandreou and Mr Christofias. They hope that Turkey will inject fresh momentum into the Cyprus talks, as well as its own bid for accession, by agreeing to open one of its ports to Greek Cypriot traffic.
But if not, Mr Christofias has implicitly ruled out using a veto against Ankara, saying: “Our intention is not to punish Turkey.”
Many Greek Cypriots are uncertain about the benefits of signing up to a federal state that they would have to finance in its early years, as Turkish Cypriot per capita income is about half that of the south.
Greek Cypriots have avoided fostering cross-border relationships because of a widely held view that any form of bicommunal contact – from schoolchildren exchanging visits to football matches against teams from the north – implies “recognition” of the self-proclaimed Turkish Cypriot republic in the north.
The issue of “recognition” also places constraints on trade across the Green Line, the unofficial border between north and south, which has been developing gradually under an EU umbrella.
Most Turkish Cypriot products are still shipped to Turkey for export, while goods purchased by Greek Cypriots are generally transported in bulk and packaged in the south for sale locally.
“When Cyprus joined the EU in 2004 we were promised direct trade with the Union. That hasn’t happened,” says Oya Barcin, head of trade development at the Turkish Cypriot chamber of commerce.
Both sides of the island are feeling the impact of the global slowdown, following a collapse in the holiday property market and a sharp decline in tourist arrivals this year.
Greek Cypriot unemployment has reached 5.5 per cent, the highest rate since 1974. Turkish Cypriots have also lost jobs in the construction sector in the south.
A weak recovery is forecast for the south, while the isolated economy in the north faces continuing stagnation.
Studies indicate that reunification would bring sustained growth in tourism and business services, the pillars of the Greek Cypriot economy.
Higher education, which underpins the Turkish Cypriot economy and is expanding in the south, would become a growth sector, while the north’s mass tourism market would quickly be upgraded.
“There would obviously be the short-term costs of economic adjustment, but the medium-term prospects, with Greek Cypriot companies gaining access to the large Turkish market, would be very exciting,” says Charilaos Stavrakis, Greek Cypriot finance minister.
Settling issues of property and territory would unlock domestic investment and allow a federal Cyprus to develop a long-term strategy for attracting foreign investment, according to UN advisers. As a result of the island’s frozen conflict, ownership of property worth an estimated €20bn – mainly in the north – remains in dispute.
One arresting example is the derelict resort of Varosha outside Famagusta – a popular Mediterranean playground in the 1960s – with crumbling high-rise hotels surrounded by barbed wire.
“Just the rebuilding of Famagusta as a high-quality resort would make the whole island more prosperous for years to come,” says Symeon Kassianides, a Greek Cypriot businessman.
But so far neither Mr Talat nor Mr Christofias has tried to put forward a vision of a prosperous, reunited Cyprus offering a wealth of opportunity to both communities.
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