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Cyprus and Russia Did Not Just Break Up Foreign Affairs

Saturday, April 6, 2013

Category: World

It seems inexplicable that Cyprus’ most heavily invested economic partner -- and the largest source of foreign deposits in the island’s banks -- would refuse a deal on such apparently favorable terms. All the more confusing is Moscow’s apparent decision to forego a chance to solidify its strategic foothold, given Russia’s geopolitical ambitions in the eastern Mediterranean.

There are three likely explanations for Russia’s behavior. First, it is not clear that there was ever a credible deal on the table. Second, Russia did not believe that a last-minute agreement could change Cyprus’ fate. And third, Russian losses from the collapse of the Cypriot banking sector will not be catastrophic. Put simply, Moscow’s decision to turn down a deal with Nicosia was in Russia’s long-term interests.

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