Russia To Renew Land Lease in Cyprus

Posted: February 9, 2015 in Sanctions on Russia Meaningless, War Is The New Economy

SOURCE: http://www.businessinsider.com.au/russia-military-agreement-in-cyprus-2015-2

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Russia is reportedly getting military bases in an EU state
Russia navy
A Russian sailor watches amphibious vehicles move during a naval parade rehearsal in the far eastern port of Vladivostok, July 25, 2014.

Cyprus has offered Russia to have air and navy bases on its territory.

Cypriot president Nicos Anastasiades announced that the country is ready to host Russian aviation and naval bases. The official agreement on military cooperation between the two nations is expected be signed on February 25, 2015, according to Lenta.ru.

There is an old [defence] agreement, which should be renewed as is. At the same time, some additional services will be provided in the same way as we do with other countries, such as, for example, with France and Germany,” Nicos Anastasiades said. “Cyprus and Russia have traditionally had good relations, and this is not subject to change.”

Cyprus’ announcement comes after Russia expressed interest in having a military base in Cyprus in late January, according to the Global Post and Greek Reporter.

Notably, Cyprus is one of the 28-member states in the EU, which have been imposing sanctions on Russia over the past year in response to the actions in Ukraine.

And just like Greece has recently caused a stir by complicating the process of extending sanctions on Russia, Cyprus, too, just voiced some opposition to the additional sanctions on Russia, adding that many EU members share that opinion.

“We want to avoid further deterioration of relations between Russia and the European Union,” the Cypriot president reportedly said.

So military cooperation between Cyprus and Russia is yet another red flag for the EU.

Cyprus

Presumably, the Russian Air Force will use the airbase “Andreas Papandreou,” along with the international airport of Paphos in the southwest of the island, approximately 50 kilometers from the air base of the British Royal Air Force “Akrotiri.” Additionally, the Russian navy will be able to permanently use the base of Limassol, according to Lenta.Ru.

“The Limassol port borders on the British air base of Akrotiri which serves NATO operations and is also an important hub in the electronic military surveillance system of the alliance,” according to the Global Post.

Cyprus

Given Russia and Cyprus’ shady economic relationship over the last two decades (ever since the fall of the USSR), perhaps this isn’t all that surprising.

Russia Today reports that “Russians have transferred over $US30 billion (around $US1 trillion roubles) to Cyprus over the past twenty years, according to a study published by a group of economists from Russia, Finland and Canada.”

In 2013, during the Cypriot financial crisis, analysts estimated that over a third of bank deposits in Cyprus may have had Russian origin, and reportedly, many Russian companies are registered on the island. Some reports even went as far as saying that Cyprus has become “a major money laundering machine for Russian criminals” back in 2013.

Even today, Russia’s current economic problems are reportedly further dragging down Cyprus.

“Russia’s presence in the economy has been a huge supporting factor. Its footprint is everywhere from tourism to real estate, so it is worth monitoring the impact,” said Michael Florentiades, chief economist and head of investment research at XM.com, an online financial services company in Limassol.

Cyprus russia
Two Russian businessmen smoke from hookahs inside a restaurant in Limassol, a coastal town in southern Cyprus on February 20, 2013.

Naturally, Russia’s heavy-duty financial involvement in a EU state “raised concerns among the island country’s Western allies” over the past few years, according to Euractiv.

But the most alarming Russia-Cyprus dalliance came during the height of the Cypriot financial crisis when Cyprus was reportedly negotiating with Russia for a bailout in 2013. The EU was particularly nervous about this because there was speculation that Russia might ask for a naval port and access to the country’s gas reserves in return.

Ultimately, however, Cyprus opted for a “€10 billion bailout agreed with the troika, in return for closing the country’s second largest bank Laiki, and imposing a one-time levy on all uninsured deposits, including those held by foreign citizens.”

Russian signs in Limassol cyprus

On top of all of that, it’s notable that Russia made some major moves in the Mediterranean recently.

In mid-January, Russia announced that it will shift all its natural gas flows to Europe via Turkey, instead of Ukraine.

“Our European partners have been informed of this and now their task is to create the necessary gas transport infrastructure from the Greek and Turkish border,” the head of Gazprom Alexei Miller said in a statement.

Europe gas

Additionally, Russia and Greece’s new government have taken initiatives to explore their military and economic relationship (for example, here, here, and here).

In fact, the new Greek prime minister Alexis Tsipras even stated in early February: “Greece and Cyprus can become a bridge of peace and cooperation between the EU and Russia.”

So this part of the world could soon become very interesting — and a huge pain for Europe.

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