For decades now, Cyprus Popular Bank (known in Cyprus as Laiki) has been involved in annual campaigns on the radio, television and at social functions to raise funds for children in need. The Laiki Radiomarathon stretched to Greece, Great Britain and everywhere else the bank had a presence.
In a turn of events, however, it is now the Cyprus government that finds itself in a marathon effort to save Laiki, the lender it has been saddled with since last year owing to CPB’s mountain of bad loans and its exposure to Greek state bonds that were restructured last spring.
Finance Minister Michalis Sarris, the Laiki chief until last August, now has the task of saving not only his former employer but also his country, and is scrambling to get assistance from Russia, the Cyprus ally that was shocked by last Saturday’s Eurogroup decision to slash deposits at Cypriot banks.
It appears that the idea of a tax on smaller deposits came from the Cypriot government and not the Eurogroup, and certain members of President Nicos Anastasiades’s inner circle have expressed their displeasure toward the conduct of Sarris – a technocrat who is not from the ruling DISY party – during negotiations in Brussels.
The strong public reaction that the disastrous measure is likely to have led to would have been too much to handle for any deputy that supported it in a small country such as Cyprus. It is no wonder not a single deputy voted for it.
In the rushed effort to stem what the eurozone considers to be a steady flow of money laundering in Cyprus, the Eurogroup has reopened a continental divide between Brussels (or actually Berlin) and Moscow, which had been bridged since the end of the gas supply crisis between Russia and Ukraine in 2009.
Cyprus has apparently fallen victim to the clash of interests between a German eagle that feels strong enough to stretch its wings even further, and a Russian bear that is not willing to concede any of its sphere of influence, especially if it happens to be where it stores some of its honey.
A similar clash is also seen in Athens, with pressure from Brussels in recent months to prevent the Russian gas companies from getting a foothold in the Greek natural gas market – a market whose potential in terms of production is not yet known.
Instead of falling prey to one or the other beast, Nicosia needs to try to play one off against the other. It needs to capitalize on the fears of a domino effect that a possible ejection from the eurozone would generate in the bloc, and on the Russian need for a gateway to the eurozone’s credit system that Cyprus provides.
Instead of feeling like it is the outpost of Europe, Cyprus (and to a lesser extent Greece, too) has to realize – and act accordingly – that it constitutes the bridge between Western Europe and Russia which neither side can afford to burn. And history has shown that Europe is strong only when it has Russia on its side, if not an integral part of it. That would really make European integration worthwhile and create a superpower that would constitute a genuine pillar of stability and growth.
Cyprus is the chance for the European Union and Russia to come together and start working on a common project that could be challenging and lengthy, but could also be a springboard to something much bigger in the continent’s future. It may well be a marathon even more rewarding than Laiki’s fundraising Radiomarathon for children in need.
[Kathimerini English Edition]