Volume 5, Issue 4—September-December 2013

AHI President’s Note: The American Hellenic Institute presents AHI’s Capital Report which is a timely synopsis of recent policy discussions in Washington to help keep you abreast of the latest developments. As a service to our membership and constituency, and to gain an understanding of the position of other entities on our issues, the American Hellenic Institute attends and participates at policy forums or roundtable discussions to ensure the policy positions of the Greek-American community are represented.

The content provided in AHI’s Capital Report is for informational purposes only, and does not necessarily reflect the position or opinion of AHI.

Turkey and the Transatlantic Trade and Investment Partnership (TTIP): Promise and Pitfalls

The American Hellenic Institute (AHI) attended a panel discussion on the significance of TTIP for Turkey, September 3. The Center on the United States and Europe (CUSE) at Brookings hosted the event. Featured speaker Kemal Kirişci, TÜSİAD senior fellow and Turkey Project director, addressed the benefits of including Turkey in TTIP and the negative repercussions that could result from excluding Turkey.

For background, Kirişci stated that upon their successful formation, TTIP and the Trans Pacific Partnership (TPP, an arrangement between several Asian countries and the United States), will comprise just over two-thirds of the world’s GDP and just over 50% of the world’s trade. For obvious reasons, Kirişci maintains Turkey would like to be included, and it should be, when one considers Turkey’s global and geostrategic importance in the world. Ultimately, Turkey would stand to be the “loser” if TTIP comes to fruition, he said. Kirişci believes the loss could correspond to over $20 billion in bilateral trade between Turkey and the United States. Much of this can be attributed to the existing customs union between these two countries and how it was originally formulated. Turkey would have to lower its tariffs and open its markets following a TTIP agreement because it is legally bound to do so every time the EU engages in a trade agreement with a third party. However, third party countries (in this case, the United States), are not obligated to reciprocate, resulting in an uneven agreement that would not ultimately benefit Turkey.

What will the passage of TTIP mean for Turkey? Kirişci maintains TTIP would result in a loss of jobs for Turkey (which could create a subsequent ripple effect on neighboring economies), increased migration pressures, a slowdown in recent economic growth rates, and a potential increase in internal instability.

What, therefore, can be done? Kirişci offered a few suggestions but added that some of these cannot happen, or if they did, would be difficult to manage. First, Turkey could be included in negotiations but because this has yet to happen, it probably will not. The best case scenario would be to keep Turkey informed of the proceedings. Another possible, yet unlikely, solution would be to conduct the TTIP negotiations in such a way as to give those EU candidate countries a way to be included or to allow countries a way to apply for TTIP membership. There is a possibility that Turkey and U.S. could negotiate their own FTA (free trade agreement), but the existing customs union dictates that Turkey cannot negotiate an FTA with a third party that doesn’t already have an FTA with the EU.

Panelist Uri Dadush provided a different viewpoint. He offered that Turkey is not necessarily the only “loser” if TTIP is passed. He stated the “global picture” of world trade is completely different, and even if Turkey were to be included in TTIP negotiations, it would not significantly affect its economy. Dadush also suggested there are more positive reasons for the U.S. and the EU to maintain the current status quo with Turkey than to follow-through with TTIP. Responding to a previous point made by Kirişci, that the current customs union arrangement between Turkey and the U.S. is dysfunctional, Dadush proposed a closer examination and comparison of Mexico’s arrangement with the United States. He posed that there is a lot Turkey can learn from Mexico’s trade trajectory, especially with regard to the United States and creating a similar arrangement of its own in the future.

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Roundtable Discussion on the Southern Gas Corridor

AHI attended a discussion on recent developments in energy cooperation and security in the Southern Gas Corridor at the Brookings Institute, September 9, 2013. Amos Hochstein, deputy assistant secretary for Energy Diplomacy, U.S. State Department; Michael Ratner, energy policy specialist, Congressional Research Service; Greg Saunders, senior director of International Affairs, BP; and Lorenzo Galanti, head of the Economic, Commercial and Scientific Affairs Office, Italian Embassy, participated. Alexandros Petersen moderated.

This summer, the Trans-Adriatic Pipeline (TAP) was chosen over the much-discussed Nabucco project to bring 10-20 billion cubic meters of gas a year through Greece and Albania to Italy and the rest of the EU. Thus, SOCAR, the State Oil Company of Azerbaijan Republic, catapulted to the world stage. The United States, through its Special Envoy for Eurasian Energy and the Bureau of Energy Resources at the State Department, spent significant diplomatic capital to ensure the Southern Energy Corridor benefits NATO allies and strategic partners in the Black Sea-Caspian region. The panel discussed what might be next for the region, if TAP was the right choice, and responses from other outside parties, such as Russia.

Deputy Assistant Secretary Hochstein clearly stated that energy diplomacy and energy security are now synonymous. He appeared pleased with the decision to select TAP and maintained the United States had nothing to do to influence the decision. He reminded attendees TAP will not solve all energy security issues in Europe. He added political gain should never be what drives these efforts but that decisions need to make sense economically. He believes the question now is, “what will happen to the countries that have been excluded such as Russia and Turkey?”

Saunders shed light on the Shah Deniz project, which is now underway in the southern corridor and the role of Azerbaijan as a huge natural gas producer. He reiterated that global dependence is shifting more toward natural gas, stating, “It’s no longer about oil.”

Galanti commented on the importance of diversification of energy sources, especially with recent events around the Middle East and North Africa, and TAP provides diversification as a benefit. He also believes that a future version of Nabucco is not out of the question, especially as more natural gas is made available.

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Hydrocarbon Exploration and Exploitation Activities within the EEZ of Cyprus

AHI attended a Capitol Hill briefing that featured Yiorgos Lakkotrypis, Cypriot Minister of Energy, Commerce, Industry and Tourism, sponsored by the Congressional Hellenic Israeli Alliance on September 10, 2013.

Lakkotrypis addressed several topics, including: the discoveries, potential and exploration of hydrocarbon resources around Cyprus and the eastern Mediterranean, Cyprus’s energy vision and strategy, Cyprus’s EEZ and natural gas liquefaction plant. He also emphasized the current Cypriot government’s dedication to stability. “The more stability there is, the more investment you can attract,” he said.

The audience asked Lakkotrypis to elaborate on Turkish reaction to Cypriot natural gas explorations, the Turkish role (if any), and how Turkey’s lack of recognition of Cyprus’s EEZ is affecting the process.

According to Lakkotrypis, Turkish reaction to Noble Energy’s exploration of Block 12 was significant, especially when it began in 2011. Since then, Turkish reaction has become much milder. Cyprus attributes this trend as a direct result of indirect U.S. “mediation.” With regard to Cyprus’s EEZ, Turkey believes that the size of one’s coastline determines a country’s EEZ. Furthermore, Turkey claims Cyprus does not actually have an EEZ demarcation with Egypt and that most of Cyprus’s coastline is “Turkish Cypriot.” As a result, Ankara licensed a Turkish company, TPIO, to begin exploration and seismic vessels have been present in the area. Turkey is currently laying claim to blocks 4 through 7. ENI, the Italian company licensed to explore by the Cypriot government, wants a license for blocks 5 through 6. However, the actions of the Republic of Cyprus are within its full sovereign rights and as a result, the Cypriot government is not concerned about Turkish provocations. According to Lakkotrypis, the United States, via the State Department, has been very supportive in recent months, especially since Noble began its exploration.

As far as the possibility of a Turkish-Israeli pipeline is concerned, Lakkotrypis reminded attendees that there are no preconditions on the Cypriot-Israeli relationship. He added both parties are free to develop relationships with their neighbors. Yet it is the minister’s belief that it would not be in Israel’s (or Cyprus’s, obviously) best interests to do this. “Who is to say that Turkey won’t turn on or off the tap on their gas one day?”

As far as potential revenue is concerned, the Aphrodite field could yield up to 20 billion Euros. The estimated job creation for Cyprus and its economy, especially if the future construction of an LNG plant is considered, could be up to 8,000 jobs. Lakkotrypis added Cyprus’s desire to build a knowledge-based economy around energy, similar to that of Norway for example.

Minister Lakkotrypis also gave a similar presentation at the German Marshall Fund on September 11.

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Turkey’s Foreign Policy Challenges Examined

AHI attended a seminar on Turkey’s foreign policy hosted by the Rethink Institute on September 24, 2013. Participants included: Professor Ihsan Dagi, Middle East Technical University; Michael Werz, senior fellow, Center for American Progress; and Fevzi Bilgin, executive director Rethink Institute. The panelists discussed the parameters, priorities and prospects of Turkish foreign policy.

Werz spoke on Turkey’s political transformation and how Turkey’s leading party contributed to the transformation, giving the middle class a voice and a vote for the first time in decades. In his opinion, recent global and domestic events bring a variety of issues to the forefront for Turkey. “If Greece is your most stable neighbor,” he stated, “you know you’re living in a complex environment.” He highlighted Turkey’s influence in Washington and the leverage it has now versus in 2005 by discussing the strength of Prime Minister Erdogan’s relationship with President Obama. Prime Minister Erdogan’s visit to the United States was one of the highest level visits of any foreign head of state to Washington, he added.

Professor Dagi also addressed Turkey’s political transformation and its new role internationally, stating the time had come for Turkey to resolve and minimize its political problems with regard to Cyprus, Greece, and Armenia.

Bilgin analyzed Turkey’s “no problems with neighbors” policy, stating Turkey’s issues have expanded beyond just “problems with Greece and Cyprus.” He also conveyed the belief that changes within Turkey’s domestic politics have affected its foreign policy platform as well and reminded attendees to keep in mind that Turkey remains an important global player, especially as dynamics in the Middle East continue to change and evolve.

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Turkey’s Economy, Foreign Policy in Light of Recent Global Developments

Turkey’s Deputy Prime Minister, Ali Babacan, discussed Turkey’s economic growth and its current position in Europe and globally at a forum held by the Johns Hopkins School of Advanced International Studies (SAIS).

Turkey, with the youngest population of European society, needs to improve its education system. Political reforms have done quite a bit to improve the economy, and he believes Turkey is moving forward, keeping the EU as a bench marker for reforms and standards. He stated that the quality of Turkish democracy is something for Turks to continue aspiring to improve. “We are already in the European mechanism,” he stated, citing Turkey’s current membership in the OSCE and NATO. He said Turkey’s foreign policy interests are similar, if not identical, to those of the United States. In presenting Turkey as a center for international business, Babacan shared that Coca-Cola coordinates its operations in Southwest Asia, the Middle East, Eastern Europe, and North Africa, out of Istanbul.

During the question and answer portion, a representative of the Armenian National Council asked when Turkey would stop threatening scholars of the Armenian Genocide. Babacan replied that it cannot be referred to as “genocide” without evidence. Without answering the question, he went on to say that history is important but it is not for politicians to decide what this event will be called.

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From Rhetoric to Reality: Reframing U.S.-Turkey Policy

The American Hellenic Institute attended an event on United States policy toward Turkey at the Bipartisan Policy Center, October 23, 2013. Former U.S. ambassadors to Turkey Morton I. Abramowitz and Eric S. Edelman were the speakers. Both speakers discussed the important role played by the U.S. and Turkey in the global market and in politics yet acknowledged that at the moment, their relationship is not the best. Ambassador Edelman referred to the polarization of Turkey as a major cause of instability in the country, and Ambassador Abramowitz elaborated on the divergence of Turkey itself.

Both speakers mentioned Turkey’s evolving relations with its neighbors and its changing role in the Middle East continues to affect its relations with the United States. Turkey’s instable foreign policy also reduces its credibility on a global platform. Abramowitz emphasized that having Turkey as an American “partner” in the Middle East would and has continued to benefit the United States. The increased polarization of Turkish society and its struggle with modernization have further affected Turkish domestic and international policy. Prime Minister Erdogan has been struggling to sustain the dynamic nature of Turkey especially as of late with his administration’s responses to domestic unrest and difficulty to negotiate successfully.

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APCO Exec Offers Bleak Assessment of Gas development in Eastern Mediterranean

AHI attended the forum on gas development in the eastern Mediterranean at the Johns Hopkins School of Advanced International Studies (SAIS), October24, 2013. Zeynep Dereli, managing director, APCO Worldwide, discussed the topic. Dereli proposed the idea of eastern Mediterranean gas findings possibly being a reason to secure peace. Without peace, no one can truly profit from these findings. She brought up three main regional conflicts whose lack of a resolution makes EEZ agreements difficult to come by: Turkey and Cyprus, Lebanon and Israel, and Israel and Palestine. Although Noble Energy signed deals with Israel and Cyprus, the company announced on October 3 that these reserves are less than they imagined. Dereli believes that the economic backing necessary for an LNG plant is not there, thereby rendering this possibility infeasible.

Gas could be a blessing or a curse for the eastern Mediterranean, according to Dereli. Although the discoveries in Israel and Cyprus could potentially end up supplying Europe’s energy demands, Turkey and Greece and Cyprus have many unresolved disputes. There is a lot of rhetoric regarding pipelines between a “triangle” of energy partners, Israel, Greece and Cyprus; Dereli contends it would not be as viable an option as one which utilizes, links and includes Turkey.

Referring to the occupied portion of Cyprus as the Turkish-controlled North, Dereli maintained that the international water disputes around Cyprus are also an obstacle in addition to the strained relations between Israel and Turkey. During the question and answer period, Dereli stated her belief Turkey has a significant say over what happens in the eastern Mediterranean because of Cyprus. Turkey’s leverage is great although strained relations have caused Turkey to exercise more restraint. She is of the opinion that Turkey needs more incentive to find peace, and that if the European Union continues to keep Turkey out because of Cyprus, that this will not help the situation because they are hiding behind one specific issue. Creation, cooperation, and economic incentives can help the peace process as well, according to Dereli.

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Turkish Foreign Policy at a Time of Global and Regional Transformation: Vision and Challenges”

The Center on the United States and Europe at Brookings (CUSE) held a discussion on Turkish foreign policy that featured Turkish Minister of Foreign Affairs Ahmet Davutoğlu, November 18, 2013. The foreign minister addressed Turkey’s position internationally and how they hope to move forward with a new vision, new methods of dealing with challenges, and more effective crisis containment. He identified two key crises which face Turkey: the aftermath of the Arab sprint and the current global/economic crisis. Economic crises generally fuel social and cultural political crises in many parts of the world. As a result, Davutoğlu expressed his concern about the rise of rightest movements in neighboring countries.

As far as Turkey’s foreign policy focus is concerned, Davutoğlu identified three main areas: 1) strengthening ties with its transatlantic partners, 2) expanding its policy of “zero problems with neighbors” to open Turkey to new areas, and 3) reaching out to new regions in order to further Turkey’s influence. Davutoğlu said that not being a part of the European Union was not Turkey’s fault. “We had a proactive vision…especially with Cyprus in 2004…” He added Turkey wants and needs to be included in TTIP (Transatlantic Trade and Investment Partnership) negotiations because Turkey’s vision is transatlantic, and Turkey values its relationship with the United States.

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Europe after the Lisbon Treaty: Are EU member states still sovereign?

AHI attended a conference that examined the impact the Lisbon Treaty has had on the EU. The Institute of World Politics hosted the conference, December 4, 2013. Tymoteusz Zych, professor, University of Warsaw and an expert at the Adam Smith Institute, spoke on the subject.

Zych briefly provided a history of the EU, its founding principles and the framework of the organization. He also expanded on the structures of central EU institutions such as the European Parliament, the European Commission, its Court of Justice and the European Central Bank. As Zych describes, the EU is an international organization, confederation and federation. After passage of the Lisbon Treaty, some organizational changes included a full-time presidency within the European council, the creation of the High Representative position for foreign affairs and security policy, and the extension of double majority voting, to name a few.

Zych also discussed the high coal usage in many EU countries, especially the more industrialized ones. EU goals regarding the environment are to reduce greenhouse emissions by 20% until 2020 and establish energy efficiency. Zych then addressed falling fertility rates in EU. Many countries are far below the 2.1% threshold needed to retain growth, a problem exacerbated by a quickly aging population and higher retirement ages.

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Looking Ahead: Greece's Priorities for its Upcoming Presidency of the EU Council

AHI attended a discussion with Greek Deputy Minister for Development and Competitiveness Panagiotis Mitarachi hosted by the Center for Strategic and International Studies (CSIS), December 13, 2013. Heather Conley, CSIS, moderated the discussion.

Deputy Minister Miterachi discussed Greece’s upcoming EU presidency in light of the following topics: priorities (growth, jobs and cohesion), further integration of the Eurozone, migration (including a need for an improved EU policy and better border mobility), and an integrated approach to maritime affairs. He emphasized that trade will continue to be a key driver for growth in Europe and the importance of TTIP (Transatlantic Trade and Investment Partnership). He also commented on Greece’s current economic state and that this was Greece’s first year of meeting its budget objective since the start of the recession. “People need to know that Greece is open for business,” Miterachi stated. He reminded attendees that unemployment is still high but there are ways to further stimulate growth (such as the Trans-Adriatic Pipeline and what this means for Greece and its neighboring countries).

During the question and answer portion, Miterachi was asked about the Macedonia name dispute. He replied Greece will look for policy stances from its neighbors to be more accommodating as they work to resolve the problem. When questioned about Greece’s maritime strategy and stance on Cyprus’s right to its EEZ, he replied Greece not only supports Cypriot President Nicos Anastasiades but also considers exploiting potential resources in the Mediterranean a priority. Greece looks forward to raising the EEZ topic at a European level, he said. Conley interjected that it was in the best interest of the United States and Greece that the United States Senate “finally” ratifies the UN convention on the Law of the Sea Treaty. In her opinion, this is long overdue.

Miterachi also addressed questions regarding the ongoing TTIP negotiations and external elements and how they will affect the EU presidency. The European Commission is the negotiating party and it reports directly to the European Council. Regarding why fostering research and development is not a more integral part of the development ministry’s principles, he commented that Greece has the potential to become a huge provider of human capital and could possibly become an IT hub in the future because of the quality of its workforce (a trait which makes Greece similar to Israel). This is not necessarily reversing the “brain-drain,” but it is seen as an opportunity in the future and the ministry hopes to capitalize on it further. Miterachi reminded attendees that a lot of progress has been made. For example,the OECD ranked Greece first in structural reforms this past year and the privatization process is continuing to bring in more capital, such as the potential completion of the old Athens airport.

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AHI Takes to Capitol Hill as 113th Congress Continues

AHI met with the staff of several key members of Congress, including those that serve on the House Committee on Foreign Affairs, as a means of reaching out throughout the duration of the 113th Congress.

AHI met with the offices of: Rep. Joe Courtney (D-CT), Rep. John Carter (R-TX), Rep. Howard Coble (R-NC), and Rep. Jim Costa (D-CA). Staff members were provided copies of the one-hour PBS documentary, “Cyprus Still Divided: A U.S. Foreign Policy Failure” and overviews of the policy statements advocated by AHI. Members were also encouraged to support H.Res.187, condemning any attempt to use the current economic crisis as a means of imposing a settlement on the people of Cyprus.

AHI also attended a Capitol Hill briefing on November 20, 2013 titled, “The Importance of the Halki Seminary for International Religious Freedom.” The Congressional Hellenic Caucus hosted the briefing that featured remarks by Archbishop Demetrios, Primate of the Greek Orthodox Church in America; Dr. Anthony J. Limberakis, National Commander, Order of Saint Andrew the Apostle Archons of the Ecumenical Patriarchate in America; and Dr. Elizabeth H. Prodromou, Affiliate Scholar, Center for European Studies, Harvard University and former Commissioner and Vice-Chair of the U.S. Commission on International Religious Freedom.

On December 2, 2013, AHI attended the Third Annual St. Andrew’s Human Rights and Religious Freedom Reception on Capitol Hill, sponsored by representatives of the Helsinki Commission, the Tom Lantos Human Rights Commission, the International Religious Freedom Caucus, the Congressional Caucus for Freedom of the Press, and the Hellenic Caucus. The discussion on “Hallmarks of a Democratic Society – Freedom of the Press, Human Rights and Religious Freedom” featured Li Xiaoron, human rights scholar and advocate.

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For additional information, please contact Georgea Polizos at (202) 785-8430 or at pr@ahiworld.org. For general information about the activities of AHI, please see our Web site at https://www.ahiworld.org.

The American Hellenic Institute is a nonprofit public policy organization that works to strengthen relations between the United States and Greece and Cyprus, and also within the American Hellenic community.

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