Last month, Cyprus President Anastasiades, Greek Prime Minister Alexis Tsipras and the Israeli Prime Minister Benjamin Netanyahu held a trilateral summit in Jerusalem to boost energy cooperation. The focus of the meeting was the East Med pipeline that would transport gas from the Israeli and Cyprus offshore gas fields through Greece to other parts of Europe.
For Turkish President Recep Tayyip Erdogan, a deal with Israel to import oil and gas is well timed. His ties with the EU have become increasingly strained since his wide-ranging purge of perceived participants in July's attempted military coup. Erdogan also has a strained relationship with Russia due to stepped up military action in Syria. Turkey's economy is vulnerable, since it imports over 55 percent of its gas from Russia, according to the Turkish Energy Market Regulatory Authority.
According to policy experts at the Begin-Sadat Center for Strategic Studies, an independent, non-partisan Middle Eastern and global strategic affairs think tank, Israel should rule out building a natural gas pipeline to Islamist Turkey because of the political risk involved and should instead consider using LNG technology for export through Cyprus. Although this would be expensive, it would be a less risky and more durable option over the long term.
But huge challenges remain for reunification to become a reality.
Euthymius Petrou, a former advisor to the Greek Ministry of Defense and expert on Turkish affairs told CNBC that Turkey will play hardball on its sovereignty guarantees over Cyprus. "The Turkish President Erdogan is more inclined to take a hard line on Cyprus to bolster his standing in Turkey as he faces many internal problems," he said.
One big issue is to untangle questions on property and territory exchanges. Another thorny issue is how Turkey will withdraw its estimated 30,000 to 40,000 troops still in Cyprus, and relinquish its role as a security guarantor to safeguard Turkish Cypriots. The withdrawal of Turkish troops stationed on the island is a precondition by the Greek Cypriots for any settlement.
The two Cypriot leaders will present their proposals on Jan. 11 for what territory would form the Greek-Cypriot and Turkish-Cypriot regions in a planned bi-zonal federation.
—By Nasos Koukakis, special to CNBC.com