The European Union will on Monday decide what sanctions to impose on Turkey for its decision to drill for oil and gas in Cypriot territorial waters.
The EU warned Turkey in June that it faced "targeted measures" if it does not stop drilling which could mean possible travel bans and asset freezes of Turkish companies and individuals involved in the drilling.
"The provocations of Turkey are unacceptable to all of us," German Minister of State for Europe Michel Roth said on arriving at the talks. "We have now found a balanced language that keeps all our options open, including of course sanctions."
His Austrian counterpart, Alexander Schallenber, added: "We will decide today about a number of measures against Turkey, among others less money, less loans by the EIB (European Investment Bank), suspension of negotiations on air traffic agreement, but it goes without saying that more sanctions are also possible."
Turkey sent a first drilling ship to anchor off Cyprus tow months ago, a move that was heavily condemned by the EU after pressure from Cyprus and Greece.
European Commission President Jean-Claude Juncker described the action as "unacceptable."
European leaders also issued a formal statement saying Turkey's drilling is "illegal" and that the bloc's "stands ready to respond appropriately."
It said: “The European Council underlines the serious immediate negative impact that such illegal actions have across the range of EU-Turkey relations.
“The European Council calls on Turkey to show restraint.”
But Turkey says the exploration is legal because it is in the territorial waters of Northern Cyprus which is not recognised by any country other than Ankara.
It sent a second ship to explore a borehole off the northeastern coast of the island’s Karpas Peninsula at a depth of 3,300 metres.
What is the history of Cyprus?
In 1570, the predominantly Greek-speaking island of Cyprus came under the control of the Ottoman Empire. Over the centuries, many Turks settled on the island and a sizeable Turkish Cypriot community grew up.
But by the 19th century, the Ottoman Empire was in decline and it leased Cyprus to the United Kingdom in 1878.
By the time Cyprus became an independent country in 1960, the Greek-speaking community made up around three-quarters of the population but Turkish speakers were still a sizeable minority.
Post-independence relations between the Greek and Turkish Cypriots were uneasy and there had been outbreaks of violence between nationalist groups in the 14 years leading up to the coup.
What happened in 1974?
Relations between the two sides came to a head in July 1974 when the military junta that was ruling Greece at the time staged a coup d’etat so it could annex Cyprus as a part of Greece.
Responding to this, the Turkish military staged an invasion and captured the northern city of Kyneria, the northern corridor between Kyneria and the capital Nicosia and the Turkish quarter of Nicosia itself.
After three days, the military junta fell in Greece leading to the establishment of the democratic Third Hellenic Republic in Athens.
In Nicosia, the Greek Cypriot politician Glafcos Clerides assumed the presidency and control of the Republic’s government as the Greek army withdrew.
Following the failure of peace negotiations in Geneva, Turkey started a second invasion on 14 August and annexed the cities of Morphou, Karpass, Famagusta and the Mesaoria as well as holding onto territory they had captured during the first invasion.
A UN-backed ceasefire was eventually declared with a buffer zone running through the country which remains in place today.
What is the status of Northern Cyprus?
Turkey recognises Northern Cyprus, which takes up around 36% of the island’s landmass, as the Turkish Republic of Northern Cyprus.
The United Nations recognises it as a territory of the Republic of Cyprus currently under Turkish occupation.
Cyprus and Turkey have had no formal diplomatic relations since 1974.
What has this got to do with energy exploration?
The dispute comes because the area where Turkey is sending ships is off the northern coast of the island.
Cyprus and the EU consider the north to be part of the Republic of Cyprus and the waters surrounding it to be part of the Exclusive Economic Zone (EEZ) which means EU nations have the exclusive right to fish, drill and carry out other economic activities.
But as Turkey recognises Northern Cyprus as independent, with its own EEZ, Ankara says it is within its rights to drill there.
Energy Minister, Fatih Donmez, said: “Turkey will continue its operations in its own continental shelf and in areas where the Turkish Republic of Northern Cyprus has licensed Turkiye Petrolleri without stopping”.
He added that unilateral agreements made between Cyprus and the regional countries that attempted to “steal” the rights of Turkey and Turkish Cypriots had “no legal validity."