Southern Europe sees its energy advantage

For decades, the countries of Southern Europe lagged economically behind their European counterparts, if not the entire First World. For example, in order to join Europe’s central currency, the euro, in 2001, it was necessary to minimize Greece’s external debt. For the first few years of the 21st, it didn’t really matter^street century, when Greece faced an almost permanent debt crisis, regardless of what was done to strengthen its economy. During this period, Northern European countries consistently performed better economically than their apparent Southern European counterparts.

That all changed now. Southern Europe is currently leading the European Union in terms of growth rate. Two southern European countries in particular, Greece and Cyprus, now enjoy advantages that have recently seemed unattainable. However, due to the desire to switch to renewable energy and the negative effects on the economies of other European countries caused by the war in Ukraine, Greece and Cyprus, home to abundant sunlight and proximity to natural gas supplies in the eastern Mediterranean, they now consider themselves as potential economic stars of Europe.

As the continent continues to attempt to transition to renewable energy, Greece and Cyprus are taking an ambitious and perhaps more intelligent, sustainable and cautious approach. During the annual Eastern Mediterranean Business Summit, held in New York in late April, officials from Greece and Cyprus shared how their countries are taking advantage of the new reality and what their plans are for the future. Unlike most of the rest of Europe, which overwhelmingly switched to renewable energy production a decade ago, both Kostas Skrekas, Greece’s minister of development and investment, and George Papanastasiou, Cyrpus’ energy minister, have made clear that they will continue the development of natural energy sources of gas resources along with the pursuit of the development of renewable energy sources and the export of green energy. Indeed, both countries continue to develop natural gas infrastructure, including supporting a private pipeline from Israeli natural gas fields in the Mediterranean Sea off the coast of Israel to transport natural gas to Europe, depending on its economic viability from a business perspective and taking into account its hydrogen potential, despite the complications and additional costs associated with the war in Gaza and instability in Lebanon.

“We will support any project that will help Greece and Europe diversify gas supplies from Russia, as well as increase gas supplies based, of course, on market signals,” Skrekas noted, taking a much more rational and practical stance than most of his European counterparts have taken during last few years. Papanastasiou added that the European Commission has decided not to finance any fossil fuel projects. “We may be moving at such a pace that existing technology cannot sustain the pace at which we are moving toward transformation,” he warned, reminding the West that if the desire for an energy transition outstrips the technology and raw materials needed to achieve that goal, the results could be opposite to what was intended.

The pragmatism expressed by southern European leaders contrasts sharply with the all-or-nothing approach followed for decades by much of the rest of Europe and bodes well for the countries involved. Unlike Germany, which threw caution to the wind in 2010 energiewende program that in effect refused to develop any energy program that was not renewable, leading to Europe’s massive energy vulnerability following Russia’s attack on Ukraine, Southern Europeans seem determined to protect their traditional energy sources while expanding into mass production renewable energy sources.

“We must take this opportunity,” explained Minister Skrekas, “to reduce our dependence on critical materials originating from China.” “Now it is clear again that we need to exploit our local resources, and in Greece we have many minerals and many critical materials. For example, we have the potential to meet Europe’s entire demand for gallium, which is key to the green and digital transitions.” Cypriot Minister Papanastasiou agrees and notes that “despite the occupation of part of Cyprus (by Turkey), Cyprus is politically very stable. There is currently some instability in the Eastern Mediterranean due to the war between Israel and Hamas, which may result in some civil unrest, … but as Cyprus remains stable, that is part of what I think the United States is seeing in Cyprus right now as Cyprus remains stable .” He added that “if Cyprus decides to supply natural gas to Egypt, it will also help maintain stability in the region.”

Long-term observers of Southern Europe and Europe as a whole may be shocked to think that countries like Greece and Cyprus are the new stability bulls and potential economic stars of the continent, but that seems to be increasingly the case these days. The longer both nations can maintain stability and stimulate investment, the easier it will be for them to continue operating. This will bode well not only for the nations in question, but for the region and continent as a whole. It will be a great irony if the EU single currency exceeds 30^vol birthday, smaller southern European countries, long lagged economically, will be at the forefront of both energy transition and economic vitality as we move into the future.

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