By Jonathon Burch
ANKARA (Reuters) - EU-candidate Turkey will freeze relations with the European Union if Cyprus is given the EU presidency in 2012, Turkish Deputy Prime Minister Besir Atalay was quoted as saying by the state-run news agency Anatolian late on Saturday.
The comments could signal a new low point in ties between the European Union and Turkey which began accession talks to the bloc in 2005.
They also come at a time of heightened tension in the eastern Mediterranean where Turkey is locked in a row with Cyprus over potential offshore gas deposits and Turkey's relations with one-time ally Israel are frayed.
In what looked set to trigger a showdown between Turkey and EU-member Cyprus, Cypriot President Demetris Christofias said on Sunday Cyprus would start drilling for hydrocarbons "within the next few days.
"If the peace negotiations there (Cyprus) are not conclusive, and the EU gives its rotating presidency to southern Cyprus, the real crisis will be between Turkey and the EU," Anatolian quoted Atalay as telling Turkish Cypriot Bayrak Radio and TV at the end of a trip to northern Cyprus.
"Because we will then freeze our relations with the EU. We have made this announcement, as a government we have made this decision. Our relations with the EU will come to a sudden halt."
An official at the European Commission declined to comment on Atalay's statement.
The internationally-recognised Greek Cypriot government is due to take on the six-month rotating EU presidency in July 2012. Turkey does not recognize Greek Cyprus as a sovereign state.
Cyprus has been divided since a Turkish invasion in 1974 triggered by a brief Greek-inspired coup. U.N.-sponsored peace talks between Turkish Cypriots and Greek Cypriots have stumbled since they were relaunched in 2008. The United Nations has set an October deadline for a peace settlement but it is unlikely an agreement will be reached by then.
While Muslim Turkey started EU accession talks in 2005, progress has been slow, largely because of the conflict with Cyprus. The EU says Ankara must meet a pledge to open up traffic from the Greek Cypriot part of the island under a deal known as the Ankara protocol. Turkey says the EU should end its blockade of the Turkish Cypriot enclave.
Adding to tensions is an escalating row between Turkey and Cyprus over Greek Cypriot plans to launch gas explorations around the island and Christofias' announcement on Sunday is likely to draw a firm reaction from Turkey.
Turkey has already voiced strong opposition to the plans and on Saturday Turkish Foreign Minister Ahmet Davutoglu said they amounted to "provocation" and it would consider carrying out its own offshore surveys with northern Cyprus if drilling went ahead.
Earlier this month, Turkey's European Union Minister Egemen Bagis issued a veiled threat to Cyprus over the issue.
Asked about exploratory drilling for natural gas by Greek Cypriots, Bagis told Turkish media: "It is for this (reason) that countries have warships. It is for this (reason) that we have equipment and we train our navies."
Friction in the eastern Mediterranean is already high after a sharp decline in ties between Turkey and Israel following the 2010 killing of Turkish activists in an Israeli raid on a ship bound for Gaza.
Prime Minister Tayyip Erdogan said on Thursday Turkish warships could be sent to the eastern Mediterranean at any time and Israel could not do whatever it wants there.
Cyprus has said it would block Turkey's EU-entry talks if Ankara continued to oppose its energy plans. The United Nations has appealed for a peaceful resolution to the dispute, saying both sides of the island should benefit from any reserves.
The European Union this month told Turkey not to issue threats against Cyprus.
Greek Cypriots represent Cyprus internationally and in the European Union, while Turkey is the only country to recognize the Turkish Cypriot state.
"COMMITTED TO EU ACCESSION"
While Cyprus remains a stumbling block to Turkey's entry into the EU, some EU members have voiced opposition to its accession over several other factors ranging from Turkey's cultural differences to fears of an influx into the EU of Turkish migrant workers.
Turkey has introduced many significant reforms over the past decade and has witnessed booming growth rates but the country is still one of Europe's poorest in terms of per capita income.
On Sunday, Turkey's Finance Minister Mehmet Simsek said Turkey was still committed to entering the EU but that this was not solely based on economic gains the country would make.
"There are people, there are certain circles who are beginning to question the EU accession story," Simsek said in an interview with Britain's Sky News.
"But my government is committed to EU accession not because of economic benefits that it might offer in the future it's more about Turkey's political, economic transformation."
The rotating presidency has lost some influence since the EU Lisbon treaty, but a determined country can still shape the agenda.
Of the 35 "chapters" -- policy areas of EU law -- Turkey has completed one, and 18 have been frozen because of opposition by EU member states including Cyprus and France.
(Additional reporting by Michele Kambas in Nicosia and Juliane von Reppert-Bismarck in Brussels and London bureau, editing by Myra MacDonald)