Foreign Correspondence

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Cyprus - Russia's Gateway to the Middle East and Europe

Note: Russia is transferring excessive ammunition and military hardware from the 12th Russian military base in Georgia's Batumi to the 102nd Russian military base in Armenia's Gyumri.
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On 5/04/2005 Bulgaria, Greece and Russia agreed to build a new trans-Balkan oil pipeline, which is expected to ease the pressure on the Bosporus when it starts operating in 2008.
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Cyprus - Russia's Gateway to the Middle East and Europe
Author: Pavel Simonov, AIA Russian section
09.06.05
The Russian Minister of Foreign Affairs, Sergey Lavrov, today concluded his visit to the Republic of Cyprus. It was the third arrival of the head of the Russian foreign policy department to Nicosia in the last 45 years of mutual relations. While on Cyprus, Sergey Lavrov met with the President, the Minister of Foreign Affairs and the Chairman of the Parliament of the Republic. The overall objective of the visit was the signing of an agreement on simplification of a visa regimen between the two countries. In this connection Moscow and Nicosia are paying special attention to cooperation in the economic area, in particular in the sphere of tourism. Additionally , during the negotiations, the parties discussed the question of the Cypriotpeace process, and also the situation of the Middle-Eastern conflict as well as in Iraq.

Kremlin's Regional Objectives
Sergey Lavrov's visit is a part of Russia's political activity, both in the direction of Cyprus , and in the Mediterranean region as a whole.
At the local level, within the framework of the Cypriot conflict settlement, Moscow noticeably beefed up its involvement since February 2005. Leonid Abramov, the special envoy of the Russian Foreign Minister, has played a key role in this .
Prior to that, since the spring of 2004, close contacts between Moscow and Nicosia have become more frequent than ever. During just one year Moscow was visited by: the Minister for Foreign Affairs of Cyprus (April 2004), his deputy (March 2005), and the President of the Republic, who came twice, in October, 2004 and in May, 2005.
In the same year Cyprus was visited by the Deputy Minister of Foreign Affairs of Russia (September 2004), and his special envoy (March 2005), and also by the head of the Russian Orthodox Church (May 2005). The President of Cyprus, Tassos Papadopoulos, is going to visit Moscow again next year.
At a regional level, Sergey Lavrov's visit to Cyprus is a continuation of Russia's political activity in the Mediterranean, which was outlined at the end of the 2004.
During this period of time Russian President Vladimir Putin visited Turkey (the first visit of a Russian leader throughout the history of mutual relations), Egypt, Israel and Palestine.
The Russian Minister of Foreign Affairs visited Syria and Lebanon in the autumn of 2004. A bit later the Syrian President came to Moscow
In the beginning of 2005, the Russian Finance Minister came to Damascus, and the Minister of Science and education visited Cairo.
During this period Russian - Greek relations were developing very intensively. Heads of the Foreign Policy Departments of the two countries met in autumn, 2004. After that the Prime Minister and the new President of Greece separately visited Moscow. Simultaneously, two Deputies of the Russian Foreign Minister and his special envoy to the Cypriot conflict settlement visited Athens. On July 7-8 the Greek Minister of Foreign Affairs plans to visit Moscow.
In its regional politicies the Kremlin is pursuing two main objectives. The first: formation of a new strategic alliance directed against western interests in the Middle East, Central Asia, the Caucasus and Balkans. This alliance, designed by Moscow, will consist of Russia, Iran, Syria and Turkey. In parallel with rapprochement with Ankara, the Kremlin tries to keep a strategic alliance , which came to life in 1996-97 (under other geopolitical realities ) and was uniting Russia, Armenia, and Greece, as well as Syria and Iran.
The second purpose: acceleration of Moscow's involvement in the zone of the Arab-Israeli conflict, which is intended to promote Russian influence in the Middle East. The visits of President Putin to Egypt, Israel and Palestine, the writing-off of a huge part of the Syrian debt, the promotion of an initiative on holding a Moscow conference on the Middle-Eastern conflict settlement – all these actions are intended to achieve the above-mentioned goal.
Role of Cyprus in Russian Geopolitics
Cyprus occupies a special place in the geopolitical plans of the Kremlin, first of all because of its unique geographical position.

At the local level, the Greek part of the island serves as an "outpost" of the Russian influence in East Mediterranean (the missile's crisis of 1997-99 has obviously shown that).
At the regional level, the Republic of Cyprus is a "gateway" for Russia to the Middle East. Nicosia maintains an important place in the concept of the strategic partnership between Athens and Damascus. In parallel, Cyprus has extensive economic relations with Lebanon, Israel and Libya, as well as close relations with Palestine.
The activity of the Russian secret services on the island, both unilateral, and joint with local security services is the best evidence of the importance Cyprus has in the regional policy of Russia. During the Soviet period, Moscow used the territory of Cyprus in order to conduct confidential operations to harm the interests of the USA and Britain in the Middle East. The gathering of intelligence information was conducted there as well as contacts with agents from Greece, Turkey, Israel, and also Lebanon and Egypt.
Victor Botchkarev, who in the early 70’s headed Soviet military intelligence (GRU) in Nicosia, noted in his memoirs that "the friendly relations of the USSR of President Makarios and his government , the presence of our informants in the defense and law enforcement agencies of the government" promoted Soviet intelligence activity on the island.
At present Cyprus is used by the secret services of Russia for gathering data on US political activity and military objectives in the Eastern Mediterranean and in the Middle East. The activity of Russian intelligence toward the direction of Israel also originates from there. For the last five years Cyprus has been one of the main bases of Moscow’s secret operations against political refugees from the Northern Caucasus, who reside in the Middle East, and their allies in Northern Cyprus, Turkey and Lebanon.
At the global level, Nicosia recently became of great value to Moscow's foreign policy. On one hand, Cyprus traditionally has had close political and economic relations with Russia, on the other - last year it became a member of the European Community. Thus the number of the Kremlin's allies in Brussels increased. Simultaneously, from the economic point of view, Nicosia has undertaken a role as one of the main links between the EU and Russia. Cypriotes were preparing for this mission for a long time . In August, 2001 the head of the Cypriot Ministry of Foreign Affairs noted that he expects that "Russia is going to benefit from our introduction into the European Community, for it can utilize Cyprus with whom it already has multilateral strong relations, for the development of connections with Europe".

The Partner Number…

The strategic value of Moscow's relations with Nicosia can be explained not only bypolitical motivation .
In the last few years Cyprus has maintained its hold on fourth place in the volume of investments flowing into the Russian economy, following the USA, Germany and Britain. According to the ambassador of Russia in Nicosia Andrey Nesterenko, by the end of 2004 Cyprian investments had reached $6 billion. In the same year commodity circulation between two countries made approximately only $97 million. Russia’s main exports to Cyprus are crude oil, a significant part of which is re-exported to Israel. Cyprus, for its part, mainly exports to Russia clothes, footwear and foodstuffs. On June 7, the speaker of the Russian Ministry of Foreign Affairs, Alexander Yakovenko, noted the achievements of Russian firms in the Cyprian market. As an example he mentioned the oil company LUKOIL, which in 2002 won the tender of a purchase of several automobile filling stations in the Greek part of the island.
However, the latest statements of Moscow's representatives on successful economic cooperation with Nicosia are actually intended to hide a real situation in this area. Cypriot investment in the Russian economy really continue to grow, primarily due to Russian companies registered on the island (by the end of the nineties the number reached almost 3 thousand). However, by almost all other parameters, a decrease in the economic cooperation of the two countries is evident . The dynamics of commodity circulation for last seven years bears eloquent testimony to this. In 1998 it made $742 million, in 2000 - $229 million, and in 2003 only $86 million.
There are several reasons for this progression .
The first reason in the change of the method of taxation of Russian companies registered in Cyprus. According to the bilateral agreement reached at the end of 1998, they were assessed exclusively on the island, and at scanty rates - 4.25 %. Shortly before the introduction of Cyprus into the EU the tax was raised to 10 %. Secondly, while adapting to the European Community rules, authorities of the island have strengthened control over finances coming from abroad. All this has led to the closing of some Russian firms and to the beginning of an outflow of their capital from Cyprus. Further, the head of one of the Russian official departments has publicly declared that Nicosia has undertaken to transfer to Moscow all the data on Russian owners of offshore Cyprian companies. And though the Cypriotes immediately denied this statement, it promoted a further loss of trust of Cyprus on the part of Russian businessmen.
The last reason lies in the introduction of a visa regimen between Cyprus and Russia, which took place after the Greek part of the island became a member of the European Community. Together with a general rise in prices, this change has harshly harmed not only trade between the two countries, but also Russian tourism to Cyprus.
Therefore , Sergey Lavrov's visit to Nicosia was an attempt to break this retrogression in the sphere of economic relations. The agreement on simplification of a visa regimen between the countries was signed exactly for this reason. During the negotiations the Minister of Foreign Affairs of Russia emphasized the variety of activity in their trading connections.
Moscow is seriously worried about the existing dissonance between the level of political contacts with Nicosia, and the economic cooperation. The Kremlin is afraid that a further deterioration in this area will deprive mutual relations of a practical base, and that in turn could lead to a weakening of Russian political positions on the island.



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