Courcy's Intelligence Brief - 27 March 2013

Items

  • Premature Turkish triumphalism

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    Turkey’s Prime Minister Recep Tayyip Erdogan must feel events are moving strongly in his direction.  Not only has the United States forced an apology to Turkey out of Israel for the May 2010 Mavi Marmara incident, but many in Turkey believe that the Cyprus banking crisis presents Ankara with an unprecedented opportunity to resolve the long-standing dispute between the Greek and Turkish portions of the island. 

    What is not in doubt is that Cyprus (that is the Greek-dominated two-thirds of the island) has been hugely weakened by the banking crisis and will take years to recover.  Furthermore, the offshore banking model for the island’s economy has been destroyed beyond repair.  The best hope for the Cypriot economy, therefore, is the exploitation of offshore gas reserves that could amount to as much as 60 trillion cubic feet.

    Turkey has long disputed Cyprus’s right to exploit these reserves in the absence of a settlement with the Turkish Cypriots, and it was quick to oppose the suggestion during the bailout negotiations that Cyprus could unilaterally mortgage its gas reserves as part of the solution.  Turkey’s foreign ministry issued a statement on 23 March saying: “The resources around the island do not belong only to Greek Cypriots.  They belong to all people that live on the island in the framework of international law.”  It added that any agreement that ignored the equal rights of Turkish Cypriots could spark a fresh crisis in the region.

    The statement said: “Possible plans to put the island’s joint resources up as collateral for a ‘solidarity fund’ or any other loan agreement is just another reflection of the Greek Cypriot illusion that it is the sole owner of the entire island and it risks a fresh crisis in the region.”

    The view in Ankara is that although much of the pain of the Cyprus bailout will be taken by Russian depositors, the long-term ramifications for Cyprus are huge.  The 10bn euro bailout will now be added to Cyprus’s existing public debt, which is already more than 80% of GDP, and will leave Cyprus as the second most-indebted member of the eurozone after Greece.

    It is this long-term weakness, together with the potential disruptive leverage that Turkey holds over Cyprus’s ability to exploit its natural gas reserves, that has led many in Ankara to believe that a favourable solution to the Turkish-Cypriot question may now be a much more realistic prospect than hitherto.

    This sense that Turkey may have an unprecedented opportunity has been increased by the Israeli apology for the Mavi Marmara incident.  There are two reasons for this.  Firstly, the fact that President Obama pushed so strongly for Israel to issue the apology is seen as an indicator of how important the US considers Turkey to be in the new Middle East.  Secondly, the rapprochement between Turkey and Israel makes it less likely that Israel will make common cause with Cyprus over natural gas exploitation to the detriment of Turkish interests.

    The Zaman newspaper summed up the feelings in Ankara well when one of its columnists wrote on 26 March: “Negotiations [between Cyprus and Turkey] will take time to resume since Greek Cypriot President Anastasiades will be very busy and will likely keep a distance from such issues.  Nevertheless, in the medium term a conjunction of various factors can facilitate the solution, which has been unobtainable for half a century.  The EU bailout gave Brussels efficient leverage over the Greek side of the island…It will be forced to accept a negotiated solution.  Greek Cypriots now count on a ‘new treasure’, the rich natural gas reserves recently discovered.  The only feasible way to exploit them is through cooperation with Turkey.  The recent reconciliation between Turkey and Israel gives new opportunities in this area.  The dream of pipelines transporting the gas of the east Mediterranean to the EU through Turkey as well as the NATO membership of a unified Cyprus can become a reality in this new context.”

    The US has multiple reasons for pushing for the Turkey-Israel rapprochement. These include fears over the future of Syria (and its weapons of mass destruction), disillusion with the Muslim Brotherhood’s takeover of the Arab Spring, and the gestating crisis with Iran over its nuclear programme.  A solution to the division of Cyprus along the lines now being envisaged in Ankara would be seen as an additional benefit.  But Ankara might be unwise to count its chickens too early.

    We have two reasons for saying this. The first is that the rapprochement with Israel does not seem to us to be as solid as is being suggested.  Turkey’s centre-right Hurriyet daily was certainly triumphant in its interpretation of the Israeli apology saying: "In the end, Turkey’s indispensability for Israel has been demonstrated once again.  In other words, it was Turkey that won this arm wrestling match.  While the Middle East is going through a great earthquake with all the traumas of the Arab Spring and the processes of disintegration in Syria and Iraq, Israel has chosen to make peace with Turkey as the most important centre of power in the Middle East."

    But that’s not quite how it is being seen in Israel.  The clue is in the actual wording of the apology, which is far from fulsome.  Erdogan was after a full public apology for the raid on the Mavi Marmara (a Turkish-owned ship trying to run the Israeli blockade of Gaza) and the killing of nine Turks by Israeli commandos.  In the event, what Israel actually said was: “In light of Israel’s investigation into the incident which pointed to a number of operational mistakes, the Prime Minister [Binyamin Netanyahu] expressed Israel’s apology to the Turkish people for any mistakes that might have led to the loss of life or injury and agreed to conclude an agreement on compensation.” 

    What Israel has done is to allow Turkey to boast about its complete victory over Israel without disputing this interpretation.  But the fact remains that the apology was itself fairly mealy mouthed, and Erdogan’s other principal demand, that Israel lift the blockade of the Gaza Strip, has not been met.  All Netanyahu agreed to was to ease restrictions on the entry of civilian goods into the Palestinian territories for as long as calm prevailed.

    Furthermore, sources in Jerusalem have reported that Netanyahu has made it clear to Greece’s Prime Minister Antonis Samaras that the rapprochement with Turkey will not be at the expense of good relations with Greece – or, presumably, Cyprus.  During the three years that relations between Israel and Turkey have been in the doldrums, Israel has been assiduous in improving ties with Athens.

    Our final thought on Turkey’s hopes that Cypriot weakness could lead to an early settlement of the Cyprus divide on terms favourable to the Turks is that an entirely opposite scenario is not beyond the bounds of possibility.  Enosis, it may be recalled, was the movement calling for the union of Cyprus with Greece.  When an illegal referendum was held in May 1950, against the wishes of the ruling British colonial government, 95.7% of participants voted in favour of Cyprus leaving the British empire and joining Greece.

    In the end, Britain created an independent Cyprus in 1960, but the 1974 Greek-supported coup against Archbishop Makarios in Cyprus was organized by a hardline pro-enosis group, and it was this that sparked the Turkish military intervention to protect the Turkish population of northern Cyprus and to facilitate the division of the island that persists to this day.

    What is so extraordinary about the euro crisis, and perhaps not sufficiently appreciated, is that scenarios in Europe that even five years ago would have been considered completely beyond the realms of possibility are no longer entirely impossible to imagine.  A return of the Colonels in Greece?  An authoritarian political figure making headway in Italy, Spain, or Portugal?  All of these possibilities are now at least within the realm of the imaginable, albeit still on the extreme edges of what might be possible.  And so it is with Cyprus.  In circumstances in which both Cyprus and Greece were forced to leave the euro – an outcome which is by no means impossible to imagine – a revival of the spirit of enosis in Cyprus could be envisaged.  In other words, the Turkish triumphalism that has been on display in some quarters during the past week is undoubtedly premature and could even prove to be seriously misjudged.  JdeC.

  • Beijing continuing to stoke Asia tensions

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    North Korea has been grabbing all the headlines in Asia during the past week, but alongside this relations between China and Japan continue to deteriorate.

    The depth of the distrust in Japan-China relations was clearly on display on 24 March when Japan’s Foreign Minister Fumio Kishida publicly described China as a “threat”.  Kishida told the Japan Broadcasting Corporation (NHK): “[China’s] opaque way of increasing its military spending and aggressive maritime advancement is a threat not only for Japan but also for the region as a whole.”

    Japan’s Prime Minister Shinzo Abe complemented this with a phone call to European Council President Herman Van Rompuy in which he urged the European Union to maintain its arms embargo on China.  This prompted China’s foreign ministry to respond on 26 March, through spokesman Hong Lei, by telling Japan to “correct its mentality” and to do more “to enhance mutual trust with its neighbours and work for regional peace and stability rather than act contrarily”.

    On the subject of the EU arms embargo, Hong said: “The EU’s embargo on arms exports to China is neither in accordance with the development of China-EU relations nor in line with the world tide of peace, development, and cooperation.”

    The next day, on 27 March, China tried to make the Senkaku/Diaoyu dispute with Japan a cause for solidarity with Taiwan.  Yang Yi, a spokesman for China’s Taiwan Affairs Office, said that mainland China and Taiwan should set aside their differences in order to confront Japan over the Diaoyu/Senkaku Islands.  He said that protecting the rights of fishermen from the mainland and Taiwan is the responsibility of both sides, and he said: “Japan is solely responsible for the current issue over the Diaoyu Islands.”

    The day before, a four-ship Chinese amphibious task force was reported to have reached the James Shoal, which is only 80km from Malaysia and is the southernmost of the territories claimed by China in the South China Sea.  It is 1,800km from mainland China.  The official Xinhua news agency described the crew assembling on the deck of one of the ships to pledge to “defend the South China Sea, maintain national sovereignty, and strive towards the dream of a strong China”.

    Local observers said that never had such a powerful Chinese force been seen operating so far south.  The ships visited all the Chinese-held territory in the Spratly Islands.  One military attaché was quoted by local media as saying: “This is quite a show of sovereignty – an amphibious task force.  It has got everyone talking.  The Spratlys is one thing, but turning up at James Shoal is quite another.  Once again China is showing that it is quite unafraid to send a message to the region – and in a year when Asean is chaired by Brunei, turning up there in such a fashion is pretty strong symbolism.”

    On 26 March, China denied that one of its naval vessels had fired on Vietnamese fishing boats in waters close to the Paracel or Xisha Islands on 20 March.  A Xinhua report said that the allegations “revealed the ulterior motives of relevant Vietnamese authorities”.

  • Chavez’s successor challenged by increasing violence

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    It seems certain that Hugo Chavez’s appointed successor, Nicolas Maduro, will win Venezuela’s 14 April presidential election comfortably .  Nevertheless, there are some signs of disquiet in the Chavista camp.

    What seems to have slightly rattled the Maduro team is the news that homicides increased by 14% in 2012 to 16,072.  The murder rate is now 54 per 100,000 inhabitants compared with 48 in 2011.  This is more than twice the rate in Peru where this week the government felt compelled to announce the creation of an elite police intelligence team to crack down on criminal gangs.

    The Chavista’s response to this challenge has been a typical one: they are blaming the rise in murders on the opposition.  Figures released by the government have sought to emphasize that violence is concentrated in states which are either currently under opposition control, or were until December’s regional elections.  Independent figures show that the violence is at least as bad in Chavista-run states.

    Maduro has made much of the fact that the violence in Miranda, the state run by Henrique Capriles Radonski, his rival in the presidential election, is amongst the worst in the country, with a murder rate of 96 per 100,000 inhabitants.  However, the murder rate in many Chavista-run states in the east of the country, where there is no excuse for a lack of cooperation between governors and the central government in security matters, is also very high, according to the independent NGO Observatorio Venezolano de Violencia (OVV).  For instance, the murder rate in Delta Amacuro is 87 per 100,000; in Bolívar 83; Sucre 79; Monagas 62; and Anzoátegui 56.  Nueva Esparta, until recently in the hands of the opposition, was the lowest in 2012 on 54. 

    Overall, the OVV figures show the violence to be generalized across the country.

    Gang-related violence is not the only worry.  Political violence could also increase.  There was a relatively serious clash between pro-Chavez groups and opposition students in Caracas on 21 March.  The students were demanding greater electoral transparency.  Typically, Maduro claimed the protesters were part of a broader conspiracy to destabilize the government.  He also said that the students were funded by the US.

  • Risk pointers

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    *** Israeli fears over economy.  On 25 March, Israel’s Finance Minister Yair Lapid said he was “very worried by the economic data presented to me” by senior Treasury officials.  Following discussions with Prime Minister Binyamin Netanyahu and “marathon meetings” with top officials, Lapid is reported to be planning to slash $4.3bn from spending. 

    However, “detailed decisions” on the spending cuts have not yet been taken.  According to a report in the Jerusalem Post on 25 March, Lapid said: “After I finish the discussions with heads of the Treasury and the prime minister, I will turn to the Israeli public and present it with the state of the economy as it really is and the decisions necessary to return it to the right path.”

    *** German arms smuggling.  Germany’s Customs Office of Criminal Investigations (ZKA) said in its 2012 report that the smuggling of arms and weapons to countries in crisis has been increasing rapidly.  According to the report, which local media sources have seen, there were 136 investigations for violations of the Military Materiel Law and the Foreign Trade Law, 35 more than in 2011. 

    ZKA’s chief Norbert Drude was quoted as having particular concerns “about Iran’s aggressive procurement efforts”.  Drude is reported as saying that 75% of the investigations are related to Iran.  Specifically, Drude said that Iran is seeking technical equipment for the development of nuclear weapons.  He also mentioned biological and chemical weapons.

    *** Egypt’s President Mursi opposes military intervention in Syria.  On 26 March, Egypt’s President Mursi told the Arab Summit in Doha: “Egypt rejects any foreign military intervention to resolve the Syrian crisis as the Syrian people are able to overcome this ordeal.”

    *** Russian public’s biggest worry is corruption.  A recent opinion poll from the Levada Centre, conducted during February, indicates that Russians have become less worried about the economy and more worried about corruption, social inequality, and immigration.  Although inflation still tops the list of worries, with 68% of respondents citing it as their biggest worry, this is down three percentage points since 2010.  Those worried by unemployment has also dropped from 47% to 35%.  Corruption, on the other hand, now concerns 39%, up significantly from 28%.

    Another area that is rising up the scale of worries, albeit from a low base, is immigration.  17% now express concern about this as against 10% in 2010.  Inequality now worries 35% as against 29% in 2010.  Civil rights and democratic freedoms, on the other hand, seem hardly to be a concern at all, troubling just 4% of respondents.