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Could Russia Buy Cyprus?

Russia's Mediterranean warm water ports in Syria (mainly Tartus and Latakia) are in danger of disappearing as the Assad regime falters. Luckily for the Kremlin there is desperately needy Cyprus. (Syria some years ago allowed a huge expansion of the Russians' Cold War naval sites in Syria in return for Russian forgiveness of most of Syria's Russian debt.)

Cyprus is in financial trouble and unable to pay its debts. Understandably, the Cypriot Parliament was unhappy with the solution of taxing bank depositors for their savings as a way to satisfy the Eurozone. Russia also was unhappy, since wealthy Russians use Cyprus for banking purposes.

According to openeurope.org news site, "Cyprus is now scrambling to find an alternative, with Finance Minister Michalis Sarris in Moscow today for a meeting with his Russian counterpart. The WSJ reports that Sarris has asked Russia for a €5bn loan as well as an extension of the five year €2.5bn loan Russia gave to Cyprus in 2011. At the same time Cypriot President Nicos Anastasiades will meet with leading Cypriot politicians to try to find a plan they all agree on. Plans being discussed include: separating bad assets from Cypriot banks into a bad bank, using excess cash from social security funds to aid the government, or swapping deposits into longer term bonds to aid banks."

But those aren't the only options. If the Cypriots are in Moscow for a deal, surely that deal might give government-linked Russian oil companies development rights for the sizable undersea deposits known to exist off the coast of Cyprus. Good idea, huh?

Except that would put a new Eurozone country in thrall to the Putin regime. Russian oil concessions almost certainly would result in at least some loss of Cypriot sovereignty. A military port even a possibility, though not without causing Cyprus to leave NATO. Even the prospect of such a development will cause heartburn in the EU--and in Turkey. After all, Turkey controls a part of Cyprus, is a NATO ally and historically is nervous about Russia. It would hate the idea that its big neighbor to the North could also become a neighbor to the West.

Energy diplomacy is paying off for the Kremlin in ways that old-style military power has not. Poland and other Eastern European countries that are dependent on Russian gas are bargaining away their ability to develop their own natural gas deposits by means of fracking. With energy dependence also goes at least some political dependence.

We have a song in America with the line, "I owe my soul to the Company Store."

You can email brucechapman@discovery.org

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