Greece and Cyprus find themselves at odds when it comes to Great Sea Interconnector (GSI), their big project for a subsea electricity cable. A new investigation by the European Public Prosecutor’s Office (EPPO) further complicates things.

Great Sea Interconnector is an envisaged 1,208-kilometer power line that would connect Crete, Cyprus and Israel. Planned for 1,000 MW in capacity and doubled later, the link would provide energy security and lower energy costs for Cypriot consumers, who currently pay the highest wholesale prices in Europe. Cyprus has also been plagued by very high curtailments and rolling blackouts, meaning that a solution is needed urgently.

The EUR 1.9 billion project benefits from a EUR 657 million funding from the Connecting Europe Facility (CEF), for the Greece-Cyprus section. It is also included in the Projects of Common Interest (PCI) list.

Currently, GSI is at the stage of bathymetric surveys in the offshore region between Greece and Cyprus. Italian ships were hired, but they were stopped last year by Turkish naval forces near the island of Kasos, east of Crete. This year, the Greek government appeared ready to reinitiate the surveys, this time with military escort, but in recent days, the government in Nicosia raised new concerns.

Cyprus raises cost issues

Statements by the two governments revealed diverging views about GSI. Cyprus has raised the issue of economic viability, with Minister of Finance Makis Keravnos maintaining a hard line and saying that it is not evident whether the interconnection would benefit his country.

“No one knows how much it will cost consumers and when the project will be completed,” said Keravnos.

Greece responded by reminding the decision makers in Nicosia that an agreement was signed last year, specifying that Cyprus needs to pay EUR 25 million annually to the project promoter, the Greek Independent Power Transmission Operator (IPTO or ADMIE). The first payment is expected this year, if the project is to continue.

IPTO has said that without the remaining decrees from Cyprus Energy Regulatory Authority (CERA or RAEK), it would stop paying Nexans, the French company in charge of building the cable. At that point, the interconnector project freezes.

Essentially, Greece wants Cyprus to pay before it moves ahead with new surveys around Kasos, which could trigger a military showdown with Turkey. On the other hand, the government in Nicosia wants Greece to complete the surveys before providing the money, thus removing any geopolitical risk.

Mitsotakis: Cyprus must show it wants the project

“Cyprus is the primary beneficiary of this project, therefore it must show its commitment,” said Greek Prime Minister Kyriakos Mitsotakis.

Things have been further complicated by EPPO’s new investigation. According to leaks in the Cypriot press, the administration in Brussels is looking into potential mismanagement when EuroAsia Interconnector was the project promoter, before IPTO took over.

Geopolitics at the epicenter

However, the elephant in the room is the geopolitical issue. Greece and Cyprus have delimited their exclusive economic zones (EEZs) in the waters between them, in line with international law. However, they haven’t signed a bilateral demarcation agreement.

Turkey, on the other hand, laid a claim over the marine region. It is one of the few countries that have not signed the United Nations Convention on the Law of the Sea (UNCLOS). In 2022 it signed an EEZ agreement with Libya to solidify its claims, which Greece, Cyprus and the European Union have called illegal.