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.