Founder, The Mediterranean Growth Initiative
Senior Policy Adviser, ELIAMEP
THE GREEN PIVOT POLYTHEMATIC ALLIANCES
The first two decades of the 21st century have seen the international scene’s rearrangement. Firstly, on the geopolitical front, we are witnessing a return to a multipolar global order characterized by the reappearance of regional powers and the absence of a clear global hegemon. Secondly, the slowdown of globalization, caused by the financial crisis, climate change, trade tensions, and the pandemic has brought about a retraction of global trade and Global Value Chains; mercantilist ideas are once again tempting DC, Paris, Berlin, Beijing, and Moscow. In these last years, we have seen how trade, technology, currency, and capital market supremacy has shaped foreign policy and security priorities.
Given these political, technological and socioeconomic re-arrangements, the future will be regional and polythematic. With the EU Green Deal, Europe is courageously pivoting its trade and economic model to address the aggressive threat of climate change. It is ambitiously aiming to be the first carbon-neutral continent by 2050. Therefore, Cyprus’s foreign policy must be redrawn to capture the potential in these new realities. What worked in the past, will not work in the future.
Cypriot foreign policy should adjust to reflect the trend of geopolitical and trade regionalism and at the same time operate in the context of the EU’s Green Deal. Concurrently, it should be undergirded to Eastern Mediterranean’s geopolitical realities. If this is achieved a pragmatic and renewed economic, trade, and investment profile, with a policy toolkit that delivers Cypriot geopolitical priorities will be created.
Firstly, only Greece, and to a lesser extent Italy, the UK, and Israel, feature as primary Cypriot trade partners. Instead, excluding Greece, the primary Cypriot trade partners are Libya and the Cayman Islands. Conspicuously absent are the US, France, Egypt, the United Arab Emirates. Secondly, Cyprus’s trade profile is heavily reliant on brown energy sources: mineral fuels and oils are Cyprus’s second-largest import and export, whereas its primary is shipping—a carbon-heavy industry.
Cyprus needs to address these two issues. On the one hand, it will have to significantly shift its economic and trade profile’s composition to better align it with EU Green Deal’s goals. On the other hand, it will have to broaden its profile’s scale and scope in regional value chains and investment. This will help Cyprus create sustainable future growth, attract investments, tap into EU funds, build security alliances.
Cyprus should strive to increase its trade volumes from new coalitions and reciprocal partnerships. Such a move will further intertwine its partners’ interests to Cyprus’s and thus strengthen the existing security frameworks. The goal should be to integrate Cyprus into regional and Global Value Chains. Cyprus boasts a geographic location at the crossroads of continents, but this does not yet reflect in its economic and trade profile.
- Investments in infrastructure such as the Euro-Asia Interconnector should be encouraged. Emphasis should be given to sectors such as transport, tourism (by sea and air), and grids in green utilities (solar, wind, water).
- The EastMed Gas forum is a blueprint framework that can encourage cross-border regional investment in other sectors. The Eastern Mediterranean gas market is a reality only because of private capital commitment weighing risk and opportunity.
- With the privatization of the Cyprus Stock Exchange, Cyprus can drive a regional stock exchange, data and indices hub, along the lines of the Vienna Stock Exchange (Vienna and Prague), and other regional capital market exchanges.
- Cyprus has a strong services sector. As the EU’s southeastern frontier, it can become a strong, credible, well-governed services hub for Middle Eastern and Asian markets into European and international ones.
- And once a solution to the Cyprus problem is finally agreed upon, Cyprus – in all of its capacity in the Greek and Turkish communities – can support Turkish entrepreneurs in venturing into new investments and markets.
- It is a fact that the entire Mediterranean region’s trade is brown energy- and old economy-based. For the EU to succeed in its green goals, it needs to have the Mediterranean, Europe’s proximate region, transition to a green model and build the necessary grids and infrastructure. This is an opportunity that Cyprus must capture.
As an island with limited territory, we can only magnify our regional footprint and potential if we connect to regional value chains. By connecting to such value chains in accordance with our geopolitical realities, we will propel our prosperity, security, and growth.
The onset of the EU’s Green Deal, in combination with the tumultuous geopolitical situation we are currently experiencing, is a propitious moment for Cyprus to take the initiative and promote stronger economic and trade collaborations and investments with partners. In paving the future of Cypriot foreign policy, geopolitics and trade should go hand in hand.