Cyprus is just part of a much larger contest being played out across the region.
Not without reason, much of the news coverage of Cyprus has focused on the financial implications of the debt stricken island. Some depositors face losing up to 60 percent of their savings. Two excellent articles on the subject can be found here and here.
But there are larger forces at play. Berlin, Brussels, Moscow and even London and Tel Aviv are locked in a good old fashioned game of power politics, with machinations and ambitions which are more reminiscent of the Great Powers in the 19th century.
A quick look at the map will show you why Cyprus matters, indeed, why it has always mattered.
Situated in the Eastern Mediterranean, the island is almost equidistant between North Africa, the Levant and Turkey. It has been a crucial staging post for invasions, as well as an anchor for any power aiming to dominate the Eastern Mediterranean. The opening of the Suez Canal in the middle of the 19th Century gave the island added significance, and it was no surprise that Cyprus was swallowed into the British Empire not long after the Canal was complete. For European powers trading with the east, the Canal zone is critical, ergo Cyprus is critical.
For Russia, the Easter Mediterranean and Black Sea are its primary opening to the world’s oceans. During the Cold War, Russia dominated the region; Egypt, Libya and Syria were Soviet client states, and this was backed up with a powerful fleet based in the Ukraine. Today, however, the picture is very different. Gadaffi is gone, Egypt is pro-West (though that may change) and Syria is close to collapse. Granted, Russia has reinstated its permanent Mediterranean Fleet but it is no longer the dominant force it once was. This partly explains why Moscow was happy for its Oligarchs to buy up swathes of Cyprus, for where money accumulates, so does political influence. Russia was close to sewing up Cyprus as a quasi overseas dependency, like a Mediterranean Cuba.
As Mohamed A. El-Erian say; “A greater strategic role in Cyprus would compensate Russia for its diminishing influence in Syria, another Mediterranean access point. Meanwhile, its involvement in the development of Cypriot gas fields would give it an even greater say in the supply of energy to western Europe.”
For Israel, discoveries of trillions of cubic feet of natural gas deposits between it and Cyprus are a mixed blessing. On the one hand they offer the prospect of both energy security and even Israel becoming a net exporter of energy. On the other, such riches inevitably draw the attention of other regional powers into what had been a comparatively peaceful front for Israel; the sea. Israel needs to tread carefully; cooperation with Cyprus risks damaging still further relations with Turkey. Exporting to Europe would mean a stable market, but would require investment and a beefing up of Israeli naval assets, which would in turn provoke the ire of Russia and Egypt. Breaking into the European market would also aggravate Russia, which seeks to dominate the energy market in Europe as a way of compensating for its diminished influence in Eastern Europe.
Even though Britain granted Cyprus independence, it maintained 98 square miles of territory in the form of two huge military bases: Akrotiri and Dhekelia. These bases were used during the invasion of Iraq, and serve as an intelligence and supply base for British and American forces in the Middle East. Not only are they unsinkable aircraft carriers, they provide Britain with a comparatively cheap way of maintaining influence in a critical region without having to support a battle fleet. This is especially important now following the Arab Spring and the continuing carnage in Syria. The reappearance of Russia onto the scene underlines the significance of the bases.
Western powers want to have influence in Cyprus as a way to ensure the safety of strategic sea lanes at a time of growing radicalism and instability–especially regarding the growing number of Islamist governments–in the Middle East
This is partly where Brussels and Berlin come in (Berlin being the EU’s enforcer in all but name). The aim of ever closer union demands that each member of the EU be sufficiently integrated into the European economy… preferably dependent on it. It is bad enough that half of Cyprus is occupied by Turkey, but having the other half effectively owned by Russians was simply unacceptable. If the EU wants to be a global economic, diplomatic and even military player in its own right, full control over Cyprus is critical. Not only would it guarantee a source of energy for the Bloc, it would provide a forward base for influence in North Africa and the Middle East. It would also act as a gate keeper for Suez and subsequently trade passing too and from Asia. Put simply, Cyprus is too important to the EU’s regional and global aspirations to be left to chance. Viewed this way, the economy of Cyprus has been sacrificed for a greater grand strategic goal.
Brussels may have actually achieved a geopolitical master stroke in Cyprus, at once crippling Russian gains, and making the island dependent on the central institutions of the EU.
The story is of course far from over. There is no guarantee the current deal will last, or that the leaders who agreed the deal will still be in place in a year. However by virtue of history, economics, geography and the eternal struggle between states, Cyprus will continue to be a geopolitical battlefield for decades to come.