International financial institutions need to ensure any East Mediterranean gas-related projects include provisions on how these projects can strengthen overall regional integration, similar to requirements needed for environmental and social-risk feasibility studies, according to a new report by the Atlantic Council on Thursday.
The report; Value Beyond Price: Prioritizing Political Stability and Regional Integration When Financing Eastern Mediterranean Gas highlighted that resource-development activities should contribute to improving regional stability and integration.
As any Eastern Mediterranean (East Med) gas project at scale will need to rely upon financing from international financial institutions, the report said: "international financial institutions can include regional integration and political stability as criteria in energy-project assessments, and can refuse funding to projects that do not improve the stability of the hosting country or countries or the region of which they are part."
The report stressed that "funded projects should definitively enhance the social, political, and economic integration of the beneficiary country and its neighbors."
It detailed that such an approach would require comprehensive work of mutual understanding, which includes investors understanding what any investment in East Med gas means for other countries in the region both politically and economically and in the context of where commercialization of East Med gas stands in the world energy market.
The tension in the Eastern Mediterranean was first ignited when the Greek Cypriots made international agreements to explore energy resources around the island, ignoring the legitimate rights of the Turkish side on the north of the divided island. Western companies, with the support of their governments, embarked on a wide range of natural gas exploration and drilling in the region with the support of the Greek side.
Turkey and the Turkish Republic of Northern Cyprus (TRNC) have warned the parties involved that the natural resources around the Cyprus island should be offered for the benefit of all people on the island.
- East Med Gas Forum - big threat challenging regional integration
The report describes East Med gas as economically feasible but a politically difficult commodity. The report advised that political considerations trump economic issues so that governmental scrutiny on the feasibility of the purchase and sale of gas in the European market supersedes any pressure on companies to make a return on their gas investments.
The report was critical of the role that the Eastern Mediterranean Gas Forum (EMGF) has taken and said it appears as a big threat challenging regional integration, security, and political stability because it is built on excluding regional partners and neighbors - such as Turkey, Lebanon, Syria, and Palestine.
Egypt, Greece, the Greek Cypriot administration, Israel, Italy, Jordan and Palestine formed the EMGF in January 2019 in Cairo.
The report added that the forum is also contributing to an unstable region as a whole by putting Mediterranean integration at risk and rendering the environment vulnerable to all sorts of security threats.
"In some way, while the countries that accept becoming part of the EMGF do so to avoid becoming the weak link in the chain, they risk making the whole chain weaker," the report argued.
By Firdevs Yuksel and Nuran Erkul Kaya