The ambitious plan for an electricity interconnection between Greece and Cyprus has dealt a serious blow to the reputation of the government of the Republic of Cyprus. Ambiguous and even contradictory statements made by senior ministers and the president of the Republic of Cyprus have set the stage for a scenario that would have been unthinkable a few months ago, while relations between Athens and Nicosia are at an all-time low and a serious diplomatic crisis is unfolding.
Kathimerini presents the key figures in the Cypriot government who are involved in the project, as well as their stances so far. It also explains why a plan aimed at ending Cyprus’ energy isolation has created so many opponents on the island. According to analysts and officials interviewed by Kathimerini, the main problem is that the Cypriot government does not appear to speak with one voice. President Nikos Christodoulides has failed to take a clear position and has backtracked on what has been agreed.
The opponent
The project’s main opponent is Cyprus’ finance minister, Makis Keravnos. In his latest statements, he attempted to dismantle the project completely by questioning its viability. He presented two studies that he had commissioned to support his position, ignoring the dozens of studies that had already been conducted to secure EU funding for the project.
The strongman of the Cypriot economy is an experienced economist who has enjoyed a long career as a senior executive in large companies both abroad and in Cyprus. He served as minister of labor and then minister of finance in Tassos Papadopoulos’ government from 2003 to 2005. He subsequently resigned to take up the position of executive director at the Hellenic Bank Group, a decision that was met with criticism.
He was appointed minister of finance in 2023 by President Christodoulides, and in recent months his name has been mentioned as someone who could be replaced in a possible reshuffle. However, that would be particularly challenging at this stage, given that Keravnos is spearheading the effort to finalize and submit the state budget. In Cyprus’ presidential system, parliamentary approval of the budget is not guaranteed, especially at this time when President Christodoulides was not elected with the backing of any party and does not have a majority in the House of Representatives. Furthermore, Keravnos is spearheading a significant tax reform – the first in Cyprus for decades.
“Keravnos is in the middle of a series of critical bills that must pass through Parliament, including the annual budget. The president needs his support because he is so influential, so I don’t think Christodoulides wants to say anything too harsh that would cause a major rift in their relationship,” notes energy expert Charles Ellinas.
The supporter
In contrast, the country’s energy minister, George Papanastasiou, appears to disagree with Keravnos, having described the project as “feasible” last week. He rejects the idea that he and the minister of finance have different positions on the matter, stating that they simply handle it differently.
Papanastasiou is one of the technocrats appointed by the Christodoulides government and has decades of experience in the energy sector. He worked at BP for 26 years in various managerial roles in different countries, and was CEO of VTT Vasiliko during the construction of the energy storage and management terminal in Vasiliko, to the west of Larnaca.
However, sources involved in the project in Athens note that Papanastasiou had, in fact, made many ambiguous statements in the past and expressed reservations about allocating funds to Greece’s Independent Power Transmission Operator (ADMIE) before the project was completed – a stipulation clearly set out in the signed intergovernmental agreement. These sources also claim that the entire Cypriot government is actually opposed to the project, and that the differing opinions are merely a diversionary communication tactic.
The ambiguous
President Christodoulides appears to be trying to reconcile the differing views within his government. “Under normal circumstances, these kinds of discussions and disagreements wouldn’t happen publicly, but would be kept within the cabinet. The president would step in and make the final decision,” says Ellinas. “In this case, however, everything is being done publicly, and the president seems unable to make a final decision, instead making various general statements without taking a clear position.”
The energy interconnection project – in its previous form as the EuroAsia Interconnector, headed by businessman Nasos Ktorides – had the strong support of the previous Anastasiades government. However, in 2023, EuroAsia declared its inability to pay the contractor company Nexans the advance payment stipulated in the contract for the start of cable construction. Despite having received part of the grant from the European Commission, EuroAsia did not have its own funds and had not entered into any loan agreements.
In October 2023, following a request from the Cypriot government, ADMIE took over the project at a very low price – a distress sale – in order to prevent the project from failing and the loss of European funding. The project was then renamed the Great Sea Interconnector (GSI). Following this, the Cypriot government changed its stance dramatically, objecting to the project’s sustainability, refusing to pay a €25 million installment and overturning the intergovernmental agreement.
>