World View: Cyprus, Russia Face Bitter Financial Chaos Next Week

This morning's key headlines from

  • Cyprus and Russia face bitter financial chaos next week
  • Turkey suggests that Cyprus convert to the Turkish lira currency
  • Lebanon's government collapses as Syria's turmoil crosses border
  • Turkey's Erdogan backs off on accepting Israel's apology
  • Turkey and U.S. begin brand new Mideast peace initiatives.

Cyprus and Russia face bitter financial chaos next week

Cyprus's president leads overnight financial crisis talks (Kathimerini)
Cyprus's president leads overnight financial crisis talks (Kathimerini)

Cyprus's President Nicos Anastasiades and government officials have been working through the weekend to try to find 6 billion euros to satisfy the EU's qualifications for a 10 billion euro bailout loan. However, there are no easy solutions, and the latest plan is a 20-25% "tax" on deposits over 100,000 euros, something that will hurt the Russian oligarchs who have been either investing or money-laundering large sums in Cyprus for years. Many Russians are going to be badly hurt in losing 25% of their savings, and there may be some retaliation against Europe, such as by freezing or taxing European assets invested in Russia. Cypriot citizens are also close to a state of panic, in view of the approaching chaos when the banks open again, on Tuesday at the earliest. The moment that the banks open, every account holder will be at the bank to withdraw their money, for fear that a new bailout will be needed in the near future. Cyprus's major industry for the past few years has been banking, and that industry is about to collapse, as Russians and other large depositors withdraw their money. The collapse of the banking industry will lead to job losses, and already there are large public protests by bank employees for exactly that reason. Everyone in Europe is looking desperately for a way to kick the can down the road for a few months, but Europe may have run out of road. Guardian and Kathimerini

Turkey suggests that Cyprus convert to the Turkish lira currency

One possible scenario is that Cyprus will leave the euro zone, and return to its former currency, the pound. However, Turkey's minister to the EU has a better idea -- use the Turkish Cyprus lira as currency. The lira is already used in the northern part of Cyprus, the part occupied by Turks since the end of the bitter 1974 between Greece and Turkey. Separately, Turkish Cyprus minister has suggested that if Greek Cyprus's banks all went bankrupt, the citizens could open accounts in Turkish Cypriot banks. Hurriyet (Istanbul)

Lebanon's government collapses as Syria's turmoil crosses border

Lebanon's Prime Minister Najib Mikati dissolved the government and resigned on Friday, after a fallout among ministers, and called for a "National Dialog":

"Today, I announce the resignation of the Cabinet in the hope it will constitute the only gateway and [call on] the central political blocs in Lebanon to fulfill their duties.

My conscience compels me to take this decision to pave the way for the return to [National] Dialogue under the auspices of the president, to which there is no alternative, [paving the way for formation of] a salvation Cabinet that includes all political forces."

The conflict in Syria has been increasingly spilling across the border into Lebanon, especially in the northern Lebanon city of Tripoli. In recent days, warplanes from the regime of Syria's president Bashar al-Assad have been striking targets in northern Lebanon. Sectarian fighting has been increasing around Tripoli, and really surged after Mikati announced his resignation.

Lebanon's government itself is split along sectarian lines. The terrorist group Hizbollah is part of Lebanon's government, supported by Iran. Hizbollah has been supporting the al-Assad regime, causing conflict within Lebanon itself. Lebanon has gone without any government for long periods in the past, and with the collapse of Mikati's government, that may happen again. Daily Star (Beirut) and Reuters

Turkey's Erdogan backs off on accepting Israel's apology

On Friday, Turkey's prime minister Recep Tayyip Erdogan said he had fully accepted Israel's apology for the 2010 Mavi Marmara incident, but on Saturday, he appeared to be backing off. Erdogan gloated, saying of the apology that "it was offered the way we wanted," but said that he would not immediately agree to the exchange of ambassadors:

"We will see what will be put into practice during the process. If they move forward in a promising way, we will make our contribution. Then, there would be an exchange of ambassadors.

We took a stand but we managed to resolve the process without being [overly] intractable. We are at the beginning of a process of elevating Turkey to a position so that it will again have a say, initiative and power, as it did in the past."

Erdogan particularly appeared to be linking an exchange of ambassadors to the end to Israel's blockade of Gaza, something that's not going to happen. Erdogan's last sentence reflects the fact that Turkey has been marginalized in Mideast peace negotiations, because Erdogan has refused to talk to anyone from Israel. YNet and Hurriyet (Ankara)

Turkey and U.S. begin brand new Mideast peace initiatives.

Erdogan plans to launch his peace initiative by visiting the Palestinian territories:

"I may eventually visit Gaza and the West Bank in April. This visit would take place in the context of a general effort to contribute to the resolution process [of the Palestinian issue]."

Meanwhile, the new U.S. Secretary of State John Kerry is going to be shuttling around the Mideast to launch a new peace process, and "trying to find common ground between both sides to see if there is ground to resume peace talks."

The earliest Mideast peace process that I remember was Henry Kissinger's "shuttle diplomacy" in the early 1970s. Since then, there has been one new peace proposal after another. However, as I wrote in "Mideast Roadmap - Will it bring peace?" in 2003, no peace process can possibly work, because Jews and Arabs will be re-fighting the genocidal war that followed the 1948 partitioning of Palestine, and the creation of the state of Israel. Al-Arabiya

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