The European Union (EU) has threatened to impose sanctions on Turkey, which has angered the powerful bloc by conducting exploration and drilling in Eastern Mediterranean waters disputed with members Greece and Cyprus.

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"We want a positive and constructive relationship with Turkey, and this would also be very much in Ankara's interest," European Commission Chief Ursula von der Leyen said after a meeting of EU leaders early on Friday.

"But it will only work if the provocations and pressures stop. We, therefore, expect that Turkey from now on abstains from unilateral actions," she said.

"In case of such renewed actions by Ankara, the EU will use all its instruments and options available. We have a toolbox that we can apply immediately."

Calls for action grow louder

The EU warning comes amid growing calls within the 27-nation bloc to take a tougher stance against Turkey over seismic and exploratory drilling off Cyprus and Greek islands.

Austrian Chancellor Sebastian Kurz had earlier called for ending EU accession talks with Turkey and for imposing sanctions on the country.

He criticised what he called Turkey's slide into authoritarianism, adding said its recent exploration efforts in the East Mediterranean were a clear infringement of international law.

"We finally need to see a clear reaction to Turkey's actions," Kurz said in Brussels. "The European Union has to finally set up red lines for President (Recep Tayyip) Erdogan, meaning an end of accession talks and sanctions against Turkey."

Carrot and stick

There are no agreed maritime borders between Turkey, Greece, and Cyprus in the East Mediterranean, but Ankara has said it has a legitimate claim in the area.

EU Council President Charles Michel said that the bloc’s leaders had backed a two-pronged approach that offers incentives and deterrents.

The incentives include modernisation of customs union, closer trade ties, and an improved EU-Turkey migration deal, he said. "We will monitor closely the situation week after week," Michel added.

Tensions flared in August after Ankara sent its Oruc Reis seismic survey ship into disputed waters with Greece, escorted by gunboats.

A Turkish and a Greek frigate collided during naval exercises, increasing fears of an accidental outbreak of hostilities between the two NATO allies.

Oruc Reis has now returned to the Turkish coast, paving the way for an easing of the tensions and raising hopes for a negotiated settlement.

Erdogan calls for 'impartiality'

President Erdogan had earlier in the week urged the EU to adopt an impartial line in dealing with the ongoing tension between his country and Greece over the eastern Mediterranean and to provide conditions for a constructive dialogue in a letter he sent to all the EU leaders except for Greece and Greek Cyprus ahead of the European Council summit.

“Our expectation from the EU is to remain impartial, to maintain an equal distance from everyone, as well as to promote dialogue and cooperation,” the Turkish leader said.

“The partial stance that the EU has been demonstrating against my country contravenes the EU acquis and international law. This very partial stance complicates the solution, heightens tensions and harms Turkey-EU relations, as well as our common interests in many areas,” Erdogan said.

EU leaders broke a diplomatic deadlock on Friday and imposed sanctions on Belarus after hours of summit talks, assuring Cyprus that the bloc would also punish Turkey if it continued with exploration in disputed areas of the Mediterranean.

Cyprus, one of the EU’s smallest countries, had blocked the action against Belarus for a month, insisting that sanctions also be imposed on its neighbour Turkey for oil and gas exploration along the coast of the Mediterranean island.

Turkey has two exploration vessels in waters off the coast of the divided island of Cyprus, angering the UN-recognised Greek government in Nicosia.

Turkey is the only country that recognises the self-declared Turkish republic in the north of the Mediterranean island.

Black Sea bonanza: Turkey has recently made a large gas discovery in the Black Sea Photo: Image RYTIS DAUKANTAS/UPSTREAM