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

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

This morning’s key headlines from GenerationalDynamics.com

  • 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 havebeen working through the weekend to try to find 6 billion euros tosatisfy 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%Russian oligarchs who have been either investing or money-launderinglarge sums in Cyprus for years. Many Russians are going to be badlyhurt in losing 25% of their savings, and there may be some retaliationagainst Europe, such as by freezing or taxing European assets investedin Russia. Cypriot citizens are also close to a state of panic, inview of the approaching chaos when the banks open again, on Tuesday atthe earliest. The moment that the banks open, every account holderwill be at the bank to withdraw their money, for fear that a newbailout will be needed in the near future. Cyprus’s major industryfor the past few years has been banking, and that industry is about tocollapse, as Russians and other large depositors withdraw their money.The collapse of the banking industry will lead to job losses, andalready there are large public protests by bank employees for exactlythat reason. Everyone in Europe is looking desperately fora way to kick the can down the road for a few months, butEurope 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, andreturn to its former currency, the pound. However, Turkey’s ministerto the EU has a better idea — use the Turkish Cyprus lira ascurrency. The lira is already used in the northern part of Cyprus,the part occupied by Turks since the end of the bitter 1974 betweenGreece and Turkey. Separately, Turkish Cyprus minister has suggestedthat if Greek Cyprus’s banks all went bankrupt, the citizens couldopen 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 governmentand resigned on Friday, after a fallout among ministers,and called for a “National Dialog”:

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

My conscience compels me to take this decision to pave the way forthe return to [National] Dialogue under the auspices of thepresident, to which there is no alternative, [paving the way forformation of] a salvation Cabinet that includes all politicalforces.”

The conflict in Syria has been increasingly spilling across theborder into Lebanon, especially in the northern Lebanon cityof Tripoli. In recent days, warplanes from the regime ofSyria’s president Bashar al-Assad have been striking targetsin northern Lebanon. Sectarian fighting has been increasingaround Tripoli, and really surged after Mikati announcedhis resignation.

Lebanon’s government itself is split along sectarian lines. Theterrorist group Hizbollah is part of Lebanon’s government, supportedby Iran. Hizbollah has been supporting the al-Assad regime, causingconflict within Lebanon itself. Lebanon has gone without anygovernment for long periods in the past, and with the collapse ofMikati’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 hadfully 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 exchangeof ambassadors:

“We will see what will be put into practice during theprocess. If they move forward in a promising way, we will make ourcontribution. Then, there would be an exchange of ambassadors.

We took a stand but we managed to resolve the process withoutbeing [overly] intractable. We are at the beginning of a processof elevating Turkey to a position so that it will again have asay, initiative and power, as it did in the past.”

Erdogan particularly appeared to be linking an exchange of ambassadorsto the end to Israel’s blockade of Gaza, something that’s not going tohappen. Erdogan’s last sentence reflects the fact that Turkey hasbeen marginalized in Mideast peace negotiations, because Erdogan hasrefused to talk to anyone from Israel. YNet andHurriyet (Ankara)

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

Erdogan plans to launch his peace initiative by visitingthe Palestinian territories:

“I may eventually visit Gaza and the West Bank inApril. This visit would take place in the context of a generaleffort to contribute to the resolution process [of the Palestinianissue].”

Meanwhile, the new U.S. Secretary of State John Kerry is going to beshuttling around the Mideast to launch a new peace process, andground to resume peace talks.”

The earliest Mideast peace process that I remember was HenryKissinger’s “shuttle diplomacy” in the early 1970s. Since then, therehas 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, becauseJews and Arabs will be re-fighting the genocidal war that followed the1948 partitioning of Palestine, and the creation of the state ofIsrael. Al-Arabiya

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