Cypriots close to sealing €5bn loan from Moscow

One of the problems of having your head up your backside, examining the  internal view of your navel, is that the field of vision is extremely restricted. Frau Merkel having done it again yesterday afternoon (“I never agreed to that, it’s just a theory”), things go from bad to worse as ClubMed picks up the tab for multivariate greed, and the blindness of the eurozone’s founders.

In Greece now, you could grownold waiting for an ambulance, while the nation’s pharmacies have recieved zero government income for three months, and stand close to collapse. The Medical Association of Athens has appealed to the UN, emphasizing – and I quote directly – ‘thousand of Greek patients are in a dramatic situation, and hospitals are unable to meet pharamaceutical care needs because of a default by one of the biggest insurers”. Each morning, an ever-growing crowd of people stand around at Pedion Areos Park, where a makeshift free distribution of agricultural products has taken off. Afterwards they beg for the smallest change from passers-by. This is a society being brought it its knees, and it simply is untrue to suggest that anything like this amount of blame should be attached to the ordinary citizen.

The idea that the new Coalition will start work immediately to rectify this situation is laughable to the point of obscenity. What they’ll do is rob any fund (the latest was part of the State Pension pot) to keep the Troika happy, get the next tranche of funding – none of which will go to the Greeks – and then reveal their urgent need for Bailout3.  Merkel will then appear to shift her ample left buttock, and the next day say no, actually, you got that wrong – I was only farting. Entschuldigen-Sie mir bitte.
But while all this circular egoistic national interest bollocks is continuing, so too does the world of geopolitics. I posted yesterday about some of the realities at the far eastern end of the Mediterranean. Today I bring you news of other Big Players apart from the US trying to muscle in.
Caviar and pelmeni line the supermarket shelves in the seaside Cypriot city of Limassol – so pervasively Russian these days, it’s been dubbed “Limassolgrad” by the locals. As a backlash against austerity spreads across Europe, Cypriot officials say they are determined to avoid the kind of severe budget cuts that sank the Greek economy, and guess what? Smiling Uncle Vlad in the Kremlin has been willing to lend bigtime to help them evade capture by the Terrible Troika of Tosh.
The Russian government last year gave Cyprus a three-year loan of 2.5 billion euros at a below-market rate of 4.5 percent to help it service its debt. Cyprus now needs another 1.8 billion euros by the end of this month to buttress its ailing banking sector. Brussels has said this will be forthcoming, but there is now a question-mark over whether the Cypriots want it. The key, unique element in this situation is that President Demetris Christofias is a communist, and a keen ally of the Russian president, Vladimir Putin. As the only communist leader in the union, there should be some fun and games when Cyprus takes over stewardship of the EU bloc next month. The humour will be soured for the Eurocrats, however, by the reality that a new loan from Moscow should be agreed within the next few days. Analysts say it could be as high as 5 billion euros. And  Moscow is the favoured option even for non-communuist cypriots, because it would come with fewer conditions than a European Union bailout – and help ensure that Cyprus’s 10% corporate tax rate carries on attracting the estimated 50,000 Russian-speakers in Cyprus.

Three individuals will be wrestling with the consequences of that anomoly this morning: the head of the CIA, the head of Mossad, and Recep Erdogan. Once again, it’s mainly about energy….but for the Russians, it’s about power-politics as well.

The last thing the Americans want is a Cuba slap bang in the middle of the Mediterranean theatre. And the Israelis feel similarly: they have a pipeline project due to begin with both Greece and Cyprus – plus of course, the Kremlin is very pro-Syria, and happy to stir up as much instability in the Middle East as possible. Interrupted supplies of oil and gas (and gas is rapidly becoming the main game in town) are exactly what Putin needs to keep his prices high, and his bargaining power with the West at full weight.

Turkey’s resident madman Recep Erdogan has been rattling his somewhat rusty sabres at Cyprus for over a year now, and would dearly love the opportunity created by euromeltdown to invent some spurious reason to annex Cyprus. He never had much chance of doing that at the best of times. With a growing Russian influence on the island, he has none whatsoever.

In short, while the EU’s circular standstill continues even far away in Mexico, the Mediterranean east and south from Cyprus is turning into a Major Powers’ playground. But some of these diplomatic ploys are playing with fire, on the electric railway lines, with a train coming, in the dark. Somebody needs to get a handle on this and soon – otherwise we’ll be dealing with a military mess that could make the demise of the eurozone look like a Sunday afternoon stroll.