[LINK] "Desperate for bailout, Cyprus plays risky geopolitical game"

[rfmcdonald]

Peter Apps and Henning Gloystein's Reuters article outlines how the Cypriot phase of the Eurozone crisis, on top of the development of offshore natural gas, complicated by Russian involvement and regional rivalries, are making a mess.

Greek Cypriot officials hoped speeding up gas exploration would help them out of a financial hole. But in doing so, they have raised tensions with the Turkish Cypriots who want a joint approach and a share of the revenue.

Turks and Greeks, Israelis and their neighbors are all discovering potential reserves along their disputed borders.

In Washington and Brussels, there are fears that increasing strains between Cyprus and Turkey could lead to confrontation.

[. . .]

So far, some 200 billion cubic meters of natural gas worth $80 billion at current prices have been discovered in the Aphrodite gas field in Cypriot waters, although the figures still have to be audited.

That would be enough to cover around 40 percent of the European Union's annual gas consumption. Cyprus hopes to start exporting in 2018, but energy analysts say extracting the gas will prove more costly and slower than Nicosia thinks, and Cypriot supplies may run into a global glut, with shale gas plentiful by then in North America, Russia and even Europe.

[. . .]

Russia could certainly be attracted by access to Cypriot gas, tightening its grip on European supply.

A strategic relationship with Cyprus could make it harder for Western states to use the bases for any military action in Syria, and even offer the Kremlin an alternative Mediterranean port should ally Bashar al-Assad lose his civil war.

Whether such a deal would work as well for Cyprus, however, is another question. Barred from NATO by a Turkish veto, the island was officially "unaligned" during the Cold War but has shown little appetite to be a direct Russian satellite.

A bailout from Moscow might solve the immediate banking crisis but greater Russian sway over Cypriot banks could scare off their Russian clients. Many moved money to Cyprus precisely to avoid unreliable Russian banks, rapacious tax officials and the reach of the Russian state itself.