The government of Cyprus has launched a second licensing round for offshore exploratory drilling amid hopes that new fossil fuel deposit discoveries will boost the eurozone country's drooping economy, with record unemployment and a near-junk status credit rating due to its banks' high exposure to Greek debt. An initial licensing round in 2007 only won interest from US firm Noble Energy—which discovered a huge find of some 8 trillion cubic feet of natural gas. Last year, it began drilling in Block 12, the southeastern section of the Cypriot economic zone, which sits close to a large Israeli gas field. However, the effort is raising tensions with Turkey—which claims that blocks included in the second licensing round are within its continental shelf. The Cypriot Foreign Ministry called the claim "unfounded and contrary to international law." The statement said: "The Republic of Cyprus calls on Turkey to end its illegal, provocative and arrogant behavior, to steer clear from issuing threats and to adhere to the UN Convention on the Law of the Sea."

Particularly controversial is the probable Israeli role in the offshore plans. Israeli energy company Delek has proposed a partnership with Cyprus to build a facility on the island to jointly export gas discovered in Cypriot and Israeli waters. Israeli Prime Minister Benjamin Netanyahu paid a historic visit to Cyprus on Feb. 16—the first ever by an Israeli leader to the nearby island nation. Netanyahu declared the two countries' warming ties a "natural relationship" in light of shifting alliances in the region—a clear reference to Israel's recent rift with Turkey. He said that Israel and Cyprus are studying the possibility of a common pipeline to export gas to Europe. (Greek Reporter, Feb. 18; AP, Bloomberg, Feb. 16; Today's Zaman, Turkey, Feb. 14; AP, Feb. 13)

In 1974, Cyprus was split into a Greek-speaking south and a Turkish-speaking north, amid a wave of mutual ethnic violence. The Turkish armed forces intervened to back up the northern breakaway state, as Greek Cypriot leaders pressed for union (enosis) with Greece. The crisis was sparked by a short-lived coup by pro-enosis forces. Thousands were displaced in the brief war, with roughly a third of each community transferred to the other side of the island. A "Green Line" dividing the two zones is still policed by United Nations troops. (BBC Cyprus country profile, Global Security)

Turkish Cypriot leader Rauf Denktaş died last month at the age of 88, hailed as the founder of the northern breakaway state. Having led the Turkish community during the crisis of 1974, Denktaş became president of the Turkish Federated State of Cyprus in 1976, winning a second term in 1981. Two years later he helped bring about the formation of the Turkish Republic of Northern Cyprus, when independence was formally declared, serving as president from 1983 until 2005. (AP, Jan. 27)

While Greek Cyprus in the south remains the island's internationally recognized government, Turkish Northern Cyprus is recognized only by Ankara, and remains a "phantom republic." Right-wing Israeli politicians have openly invoked a "Cyprus model" for separation of Israeli Jews and Arabs.

Last year, an explosion at a Cypriot naval base killed 12 and knocked out the island's biggest power plant. The blast was supposedly sparked by a brush fire that ignited ammunition and weapons Cyprus' authorities confiscated in February 2009 from a ship sailing off the island's coast. The Cypriot-flagged ship was suspected of carrying the war material from Iran to the Gaza Strip. (The Guardian, July 11, 2011) But the blast followed the decision of Cyprus' left-of-center government to recognize the sovereignty of Palestine—sparking much paranoid speculation about a Mossad "false flag" attack.

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