It’s not clear how much clever planning goes into decisions that are taken on the fly in the middle of a financial crisis, but as some of the dust settles in Cyprus, the Greek part of the island—bruised, battered, angry at Europe, hating and fearing the Turks—is going to need friends. There’s a short list of available partners, and given the depth of Cyprus’ likely future economic problems, the island is going to have to pay a high price for such future friends.As Yuri Zhukov argues in Foreign Affairs, one possible friend is Russia, whose leaders are calculating that their leverage can only increase as Cyprus starts to weather the harsh regimen the EU is imposing on it:
The dismantling of Cyprus’ banking sector and the subsequent decline in foreign investment and tourism are bound to push the country into a deep and protracted recession. Newly discovered gas bounties offer a possible path to recovery. But maritime borders and exploration rights remain a major point of contention. As Cyprus braces for hard times, its growing demand for external political support and technical expertise will compel it to rebuild ties with its former patron, whose wealthiest citizens may now become the “big, angry shareholders” in Cyprus’ future. Sweetheart deals on energy and even naval basing rights are possible. In the end, Russia’s exodus from the island of Aphrodite may prove brief.
Russia may well find more opportunities in the aftermath of the crisis. The biggest problem could be that western Europe will be opposed to Russia’s getting its hands on the Mediterranean’s natural gas supplies. The Europeans have seen what comes from giving Russia an upper hand in energy markets. Are we looking at Berlin and Ankara vs. Russia and Athens in the Mediterranean, with the US and Israel acting as tie-breakers?Interesting times ahead.