The Spectre of an Unhappy Triangle Gone: Cyprus, Russia and the EU

It is with mixed feelings that we should have read the news that Michalis Sarris, the Cypriot Finance Minister, left Moscow without an answer to Cyprus’s economic ills. Whatever the responsibility of economic and political elites in Cyprus, it is once again ordinary people who will most feel the consequences of poor management of finances. In this context, the possibility that Russia would come to the aid of Cyprus was a welcome one.

Cypriot-Russian relations to date have been good and operate on a range of levels: economic, political and cultural. Within the EU context, Cyprus has been a positive supporter of Russia; some have even argued that Cyprus acts as a Trojan horse for Russian interests in the EU. Given these good relations, the extensive Russian investment in Cyprus (and vice versa), and the stark fact that Russians have a lot to lose if Cypriot banks collapse or if the 9.9% levy were to be imposed, it was not surprising that the Finance Ministers of these states should meet to discuss the possibilities. What was more surprising were the reports in Cypriot English language newspapers that Russian flags were being waved by demonstrators and that rumours were rife – and given substance by their repetition by Cypriot news outlets – that Russia would definitely come to Cyprus’s aid. Common sense should have dictated otherwise and Russia has now starkly reminded the Cypriot people that there are other priorities beyond being neighbourly and that help comes with a price tag now or must be rewarded by dividends in the future.

Many EU politicians must surely feel a measure of relief that the Russians will not now be able to sell themselves as the saviour of Cyprus and the Euro. For in this sense Russia’s aid would have come at a terrible political price for the EU.

The EU may now be safe from comparisons relating to what it would not do for Cyprus that the Russians would, but the immediate situation remains and, as with Greece before it, Cyprus’s economic woes continue to expose rifts and open up new divisions in the relations between members of the EU. Current media analysis is focused primarily on whether the Cypriot financial sector can be saved. Most analyses are clear on one point at least: if its financial sector does collapse, Cyprus will have to leave the Eurozone.  Few, however, are talking yet about the effect this will have on longer-term political relations within the EU. They are very likely to be dire.

This was always the problem with vaunting the economic benefits of membership as the primary rationale for joining the EU. Economic interdependence was supposed to be the means through which political intertwining could be achieved, it was not supposed to be an end in itself. For too long, the EU’s component parts have lost sight of this. The big worry now is whether they can ever again be brought to a place where political integration is seen as the right and proper objective to pursue.