March 23, 2013

Realizing they will never be a world power, the Cypriots have decided to settle for being a world nuisance.
~ George Mikes, Hungarian writer

Cyprus is a big pain in the neck for one and all. Its banks are bust due to reckless lending to Greece. The sunny island is a beehive of tax evasion, money laundering, dodgy trade and espionage.

Now, the threatened bankruptcy of Cyprus has triggered the latest European financial crisis.

Russian businessmen and the Russian Mafia have some 30 billion euros stashed away in Cyprus. Russians make up the second largest biggest cohort of Greek Cyprus’ 869,000 people. Some 260,000 ethnic Turks live in the isolated Turkish Republic of Northern Cyprus, which no one but Turkey recognizes.

A 10 billion euro EU bailout is in the works. But the Germans, who will have to fund most of the rescue, are loath to rescue the Russian mob, and who can blame them?

So the Germans seem set on punishing the wayward Greek Cypriotes and their Russian pals by trying to impose a tax on local bank deposits. This ham-handed plan triggered outrage and fear across Europe, and may ignite a run on banks in Cyprus and Greece. Moscow is furious.

But there’s much more to the Cyprus crisis than its dubious banks. Cyprus has bedeviled Europe and world diplomacy since 1974, then Greek Cypriot far rightists staged a coup and sought union – or “enosis” – with mainland Greece. Turkey promptly intervened with 30,000 troops to protect Turkish Cypriots in the north. Many Greeks fled or were expelled to the south.

Europe and the UN have been trying to sort out the Cyprus mess ever since. After decades of mind-numbing negotiations, former UN chief Kofi Annan proposed a sensible deal in 2004 for a Greek-Turkish federation. Turks accepted, but Greek Cypriots blocked it. Britain, which has two important air bases in Cyprus, backed the status quo.

In the same year, the EU committed the grave error of admitting Cyprus as a member without first insisting that Greek Cypriots agree to a peace deal and Greek-Turkish federation.

Northern Cyprus was left in limbo while the south became part of the EU, assuring the island’s ugly dispute would become part of the European Union. Cyprus should never have been admitted to the EU.

Europeans who opposed Turkish membership in the EU used Cyprus as a pretext to delay admission, infuriating Turkey.

After decades of patient work developing normal relations after centuries of conflict, Greece and Turkey are again up in arms again over Cyprus. Their dangerous problem of overlapping air and sea claims in the Aegean has revived – just when Greece must slash its bloated military budget.

It gets worse. Very large underwater gas deposits were recently discovered between Cyprus and Israel. Both Cyprus and Israel, who are to jointly develop them, could become energy exporters. They have become very close allies.

“Not so fast” say Cyprus’ Turkish minority. ‘That gas also belongs in part to us!” Ankara insists the gas must be shared and has sent ships to back its claim.
Palestine, Egypt, Lebanon and Syria are also advancing claims to the “Aphrodite” gas field off Cyprus -shades of the tense South China Sea. But most likely to clash are the Turks and Israelis.

Turkey is still boiling mad over the Israeli seizure of a Gaza bound relief ship in 2010 and the killing of nine Turks.
Israel has emerged as a major backer of the embattled Greek government, using its influence in Washington and financial clout.

Russia, increasingly interested in the Greece-Cyprus-Syria region, says it will keep a nine-ship squadron in the eastern Mediterranean as Moscow’s worries over Syria, now under western siege, grow by the day. Moscow is hinting that it might bail out Cypriot banks in exchange for the lion’s share of the “Aphrodite” gas fields.

All the elements are in place for a very nasty, dangerous multi-party confrontation in the eastern Mediterranean. The EU could have pre-empted this danger by using a bank rescue of Cyprus to force Greek Cypriots to make a sensible peace deal with their Turkish neighbours. And by forcing Cyprus to fairly share the offshore gas bonanza with neighbouring states. But it probably won’t.

Copyright © 2013 Eric Margolis

This post is in: Europe, International Politics, Russia

8 Responses to “Nuisance Cyprus Could Get Really Dangerous”

  1. I just can’t help imagining a normal world without banks and commodity merchants razing and steamrolling every community in their path.

    Subprime Banking Mess (humour—sadistic, but true to the end)

    LORD, may what they do to others be done to them

  2. God this is something that the media really should be telling us. They are committing suicide because they would rather protect their pride and the mobs greed than save themselves.

  3. I don’t know why the EU allowed them to join. If they falsified financial information, they should be ‘dropped’.

  4. I just found another very interesting read on the Cyprus crisis.Mr.Margolis already mentioned several parts about this posted story,but there is other interesting information given.–finance.html

  5. There seems to be more than meets the eye here,especially where Mr. Margolis mentions that Turkey is still hopping mad at Israel for that attack on the supply ship bound for Gaza by Israel.Just this week President Obama, during his chat with Netanyahu, urged that now is the time to kiss and make up with Turkey,to which Netanyahu said that he was in agreement with Obama….ha?What gives here?It seems that Netanyahu’s willingness to forgive and forget about this Gaza incident is NOT his decision to make.Turkey was not the aggressor here…Israel attacked the supply ship.

    What Mr. Margolis mentions in his column about the gas deposits that were found seems to shine some more light as to what Obama had in his agenda besides attempting to start any peace talks that have been,unfortunately,laid to rest by the Likud Party.As much as I admired Obama for speaking his mind about illegal settlements,that were condemned by just about every country,he managed to anger Netanyahu even more.Strange bedfellows indeed,with the Israeli lobby in Washington dictating American foreign policy in the Middleast.

    Not to get off the subject,my European contacts have expressed their concern that 2/3 of Germans are running scared that the Euro is bound to fail and that 1/2 of all Germans are afraid they will lose their savings should this happen and a return to the lower value DM currency.The writing is on the wall and it seems inevitable that this will happen.Apparently,the german government is in debt to the tune of some 7 trillion dollars (approx.) and German citizens who left their country for a better life in the 60’s and 70’s are now being told by the German government that their pensions which they are receiving from Germany will now be taxed going back to 2005.This is how desperate the situation is with Europe’s economic powerhouse.It is teetering dangerously close to needing a bail out itself in the years to come.I can only feel for the younger generation of Germans who will have no government pension when they retire and all those social programs that Germany and France have enjoyed for over 40 years are going to be extinct,I’m sorry to say.With bankrupt Greece,Spain….Italy and a host of other countries,I see very little hope of a future for the Eurozone.Cyprus has just about sealed this fate with this latest crisis.A wise man once told me back in the 70’s….I wonder how long Europe can sustain their lavish lifestyle…this all costs money…and lots of it.

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