Energy and Our World

This article originally ran on Forbes.com on June 4, 2024. All rights reserved.

Daniel B. Markind is a Forbes.com energy column contributor. The views expressed in this article are not to be associated with the views of Flaster Greenberg PC.

For decades, the countries at Southern Europe have been the economic laggards when compared to their European peers, if not the First World as a whole.  For example, in order to join the European central currency, the Euro, in 2001, Greece’s external debt had to be minimized. (Source). That didn’t matter much for the first few years of the 21^st Century, as Greece faced almost permanent debt crises no matter what was done to bolster its economy. (Source). During this period, the countries of Northern Europe consistently performed better economically than their ostensible peers in Southern Europe.

That has all now changed.  Southern Europe now leads the way in the European Union in growth rates.  Two countries in Southern Europe, in particular, Greece and Cyprus, now find themselves with advantages that recently seemed unachievable. However, thanks to the desire to transition to renewable energy and the negative effects on the economies of other European countries caused by the war in Ukraine, Greece and Cyprus , home of abundant sunlight and close proximity to natural gas supplies in the Eastern Mediterranean, now find themselves the potential economic all-stars of Europe.

As the continent continues to try to switch to renewable energy, Greece and Cyprus are taking an ambitious and perhaps more intelligent, balanced and cautious approach. At the annual Eastern Mediterranean Business Summit held in New York City in late April, Greek and Cypriot officials spelled out how their countries are benefitting from the new reality, and what their future plans are. Unlike much of the rest of Europe, which a decade ago shifted overwhelmingly toward renewal energy production, both Kostas Skrekas, Greece’s Minister of Development and Investment, and George Papanastasiou, Cyrpus’s Minister of Energy, made clear that they will be pursuing the development of natural gas resources along with seeking the development of renewables and export of green energy.  Indeed, both countries are continuing with the development of natural gas infrastructure, including supporting a private pipeline from the Israeli natural gas fields in the Mediterranean Sea off the Israeli coast to transport natural gas to Europe, depending on its economic viability in business terms and given its hydrogen-ready potential, and notwithstanding the complications and additional costs from the Gaza War and the Lebanese instability.

“We will support any project that helps Greece and helps Europe to diversify from the Russian gas and also increases the supply of gas based, of course, upon market signals” noted Mr. Skrekas, striking a far more rational and practical stance than so many of his European counterparts have taken over the last few years.  Mr. Papanastasiou added that the European Commission has decided against funding any projects that relate to fossil fuels.  “Perhaps we are moving at a pace that the existing technology cannot support the pace we are going towards transition” he cautioned, reminding the West that if the desire for energy transition outstrips the technology and raw materials needed to achieve that goal, the results can be the opposite of what was intended.

The pragmatism expressed by the Southern European leaders stands in sharp  contrast to the all-or-nothing approach pursued for decades by much of the rest of Europe, and portends well for the countries involved.  Unlike Germany, which in 2010 threw caution to the wind with its energiewende program that in effect refused to develop any energy program that was not renewable, and thereby resulted in creating Europe’s tremendous energy vulnerability after Russia attacked Ukraine, the Southern Europeans seem determined to protect their traditional energy sources while they also expand into mass production of renewables.

“We have to take this opportunity, “ explained Minister Skrekas, “to diminish our dependence on critical materials coming from China.”  “Now again, it is very clear that we have to exploit our local resources, and in Greece we have many minerals and many critical materials. For instance, we have the potential to cover the entire needs of Europe in gallium, which is crucial for the green and digital transition.”  Cypriot Minister Papanastasiou agrees, and notes that “despite part of Cyprus being occupied (by Turkey), Cyprus is very stable politically.  There is some instability right now in the Eastern Mediterranean with the war between Israel and Hamas, that could result in some civil unrest,…but as Cyprus remains stable this is part of what I think the US now sees in Cyprus, as Cyprus remains stable.”  He added that “if Cyprus decides to provide natural gas to Egypt, that is also to help keep stability in the region.”

Long term observers of Southern Europe and of Europe as a whole may be shocked at the thought of countries like Greece and Cyprus being the new bullwork of stability and potential economic all-stars of the continent, but that now seems more and more to be the case. The longer both nations can maintain their stability and induce investment, the easier it will be for both to continue. That will portend well not just for the nations at issue, but for the region and the continent as a whole. It will be a great irony if, as the EU single currency passes its 30^th birthday, it is the smaller countries of Southern Europe, long the economic laggards, who will lead the way both in energy transition and economic vitality as we move into the future.