site.btaNew Tensions between Greece and Cyprus Over Construction of Power Interconnector

New tensions have erupted between Greece and Cyprus over a project to build a power interconnector between the two countries, aiming to end Cyprus's energy isolation from the rest of the European Union, according to Greek and Cypriot media reports.

The Eurasian Interconnector (also known as the Great Sea Interconnector – GSI) is intended to connect Greece with Cyprus, and eventually with Israel, linking the energy systems of the EU and the Middle East.

However, disagreements between close allies Athens and Nicosia flared up again this week, after Cyprus’s Finance Minister, Makis Keravnos, said in an interview with the Cypriot edition of Greece’s Kathimerini newspaper that the project was unviable under the current conditions. He cited two independent studies and described the project as financially, technically, and geopolitically complex.

The project is being carried out by the Greek power transmission operator ADMIE. A year ago, Cyprus committed to providing EUR 25 million annually for the project over a five-year period. However, in the same Kathimerini interview, Keravnos said that paying the sum of EUR 25 million "is no simple matter" under today's financial, technical, and geopolitical circumstances. "Certain serious parameters need to be secured first.”

His remarks caused irritation in Greece, where on Wednesday, Deputy Prime Minister Kostis Hatzidakis, speaking to state broadcaster ERT, called on the Cypriot authorities to clarify their position.

“This is a project that primarily benefits Cyprus, as it would eliminate the country’s energy isolation. The Greek government's commitment is clear and has been expressed in many different ways,” Hatzidakis said.
“Our position was and remains clear: the interconnector cannot be paid for solely by Greek taxpayers — it must be a joint effort,” he added.

A few hours later, the Cypriot government clarified its position, though not in the way the Greek side might have hoped, according to the Cypriot outlet Phileleftheros. Cyprus President Nikos Christodoulides supported his finance minister’s comments and emphasized that Cyprus’s position is unified, and that ADMIE must first fulfill its obligations in order for the project to move forward.

In response to a question, Christodoulides said there is no rift in relations with the Greek government, but the outlet commented that recent developments do not support his statement.

The submarine cable is expected to cost EUR 2.4 billion, part of which will be funded by the EU. Once completed, it will be the longest (1,240 km) and deepest (3,000 meters) high-voltage direct current (HVDC) interconnector in the world.

However, the project is facing disputes among stakeholders, mainly over guarantees of revenue for the contractor, given the geopolitical risks involved. The cable would pass through water that Turkey claims as part of its continental shelf, despite objections from Greece.

In July last year, the Italian ship Ievoli Relume, conducting survey work for the interconnector near the Greek islands of Kasos and Karpathos in the southeastern Aegean Sea, was intercepted by five Turkish warships and had to leave the area.

The cable would help Cyprus overcome its energy isolation, but the Greek outlet Oikonomikos Tachydromos (Economic Courier) suggests that obstacles may also stem from domestic electricity producers in Cyprus. Currently, the island’s energy needs are met mostly by diesel generators, and renewable energy accounts for only about 25% of the mix. As a result, Cypriot consumers pay some of the highest electricity prices in the EU.