CYPRUS AND RUSSIAN GEOPOLITICAL GAME PLAN

When the bailout plan was first announced, it included Russia extending its existing € 2.5 billion to the Cyprus by five years as well as reducing that loan's interest rate. Now, Russia has said NIET.

Russia also said NIET to buying off any Cyprus bank. Russia also declined any interest in Cyprus natural-gas reserves. Why would Russia be acting this way towards Cyprus? The obvious answer is that Russia knows exactly who's sitting at the poker table: it's not Cyprus that Russia is playing, it's the EU. If Russia had entered into good-faith negotiations with Cyprus, that would have helped the EU, by reducing the amount of EU support that Cyprus needs. This said, any deal that Russia would have made with Cyprus could have been vetoed by Germany, or the Eurogroup, or the ECB, or even possibly the IMF.

So Cyprus has not other option but to go ahead with the bailout proposed by the Troika.

By doing nothing which might help the EU, Russia is making a risky move to essentially seize Cyprus from the hands of Europe, and to gain an important foothold in the eurozone. Sure a lot of Russians with deposits in Cyprus stand to lose a lot of money. But even if that does happen, Russia will be waiting on the sidelines with a lot of new money if needed, to snap up Cypriot assets at bottom sale prices.

There's no doubt that the best outcome for Cyprus, and for the EU, would have been for Russia to extend its help, before Cyprus's banks reopen on Tuesday, but Russia doesn't want what's best for Cyprus, or for the EU: Russia wants what's best for Russia.