A US Government effort to advance Turkish interests on Cyprus, and block Russia’s relationship with the government in Nicosia, has become the newest campaign of Victoria Nuland (lead image, left), the Assistant Secretary of State in charge of Ukraine and the campaign for regime change in Moscow. The target of the fresh campaign, according to media reporting in Cyprus, is President Nicos Anastasiades. After warning Anastasiades to stay away from Moscow a year ago, Nuland has been back to Nicosia twice – in September, and then again in December – with a combination of threats and rewards to get Anastasiades to submit.
The rewards include new US arms and financing for the Cypriot security forces, ending the 24-year American military embargo on the island. The threats are aimed at terms which Anastasiades and his foreign minister, Ioannis Karouldides, have been negotiating with President Vladimir Putin and Foreign Minister Sergei Lavrov for an expansion of Russian military supplies, port and airforce facilities in Cyprus; and for increased trade and investment to overcome European Union (EU) sanctions.
According to the Cyprus Mail, a long-time promoter of Anglo-American interests on the island, Anastasiades is being pressured, not by the US, but by the Kremlin. Russia “does not want him to sign a settlement of the Cyprus problem,” the newspaper reported last week. The Cyprus Mail was reacting to growing concern among high-ranking Cyprus officials and members of parliament at evidence of Cyprus corruption spilling out of a New York court case.
This is the case pursued by Leonid Lebedev, a Russian politician and businessman on the run from Russian fraud charges. Lebedev, a Cyprus citizen since 2011, now lives in homes in Limassol and Los Angeles. According to the reported speculation in Cyprus, the evidence in the Lebedev case is “a warning to Nik[os Anastasiades] that more revelations would follow, if he did not hold back on the Cyprus talks.” Whether Lebedev’s “revelations” are a Russian threat, or one of Nuland’s, Cyprus sources say they aren’t sure.
Appearing under a penname on March 20, read the full Cyprus Mail story here. An independent Cypriot source, who is close to the case, comments: “all the key ministers, as well as the circle around the president, realize how sensitive the Lebedev case is. That’s why the Cyprus Mail tried defending Anastasiades.”
“We all know that Nik has nothing to do with his law firm since becoming Prez of the Rep,” the newspaper concluded. A Cypriot political analyst scoffs: “You don’t have to be the US Embassy to know that on the weekend, [the President’s] official car is parked at his law office in Limassol so he can catch up on the hot business of the week.”
Nuland’s campaign in Cyprus aims at removing the stumbling block which the president and his officials present to accelerated accession of Turkey to the European Union (EU). As an established EU member since 2004, the Cyprus government says it will veto accession until Turkey ends its partition of the island after Turkish troops invaded in 1974. A deal over the terms of a settlement, creating a power-sharing federation of Greek and Turkish communities, has been foundering, Cypriot sources say, over what kind of military withdrawal Ankara will accept, and who will ensure the troops are removed, and do not return.
Russia says it is backing UN Security Council protection for Cyprus against another Turkish attack. Although Turkish forces used US-supplied arms to invade Cyprus and continue to arm their troops on the island with US weapons, the US has not allowed Cyprus to buy US arms. Russia has filled the breach.
Last November the US Congress passed an amendment to the new military spending law, allowing the embargo to be lifted after the State Department, Pentagon and the intelligence agencies report back to Congress on steps “for enhancing the bilateral security relationship between the United States and Cyprus, including steps to enhance the military and security capabilities of the Republic of Cyprus.”
This was one of the carrots Nuland promised Anastasiades when she was in Nicosia in mid-September last year. She declared then: “We are strong supporters of a Cyprus deal by Cypriots, for Cypriots. Our role is to support this strong process that is going on, and that is what we are here to do today. Thank you very much. I would also say that our bilateral relationship with the island is growing. On the economic side and on the security side, and we look forward to all the people of Cyprus benefiting from that as well.”
Earlier in the year, Nuland had authorized the State Department spokesman to attack Anastasiades for visiting Moscow for talks with Putin. “This is not the time for business as usual with Russia,” the spokesman said, “and [we] have stressed with our European allies and partners the importance of unity and pressing Russia to stop fueling the conflict in eastern Ukraine.” When American and Cyprus reporters pressed Nuland’s spokesman to explain why Turkish military occupation of Cyprus was acceptable to the US, but Russian annexation of Crimea was not, the response was: “Let’s not try and link those kind [sic] of events. We obviously have been very clear about different kinds of events, and I’m not going to try and link them… I’m not going to make any more historical parallels.”
The State Department liked even less that Anastasiades was one of the few EU heads of state to attend the May 9 anniversary parade in Red Square:
Nuland bit her tongue. She had been forced to replace the US Ambassador to Cyprus, John Koenig, after he had publicly accused Anastasiades of endorsing what Koenig called the political assassination of Boris Nemtsov by visiting the Kremlin three days before Nemtsov’s death. Koenig was replaced by another of Nuland’s subordinates, Kathleen Doherty. A Russian speaker like Nuland, Doherty had served in the US Embassy in Moscow between 2006 and 2008. Nuland met with Anastasiades in Nicosia on September 15 (below). Doherty followed a few days later.
Weeks later, on December 2, Foreign Minister Lavrov visited Cyprus. Unlike Nuland, he refused to meet the Turkish leader Akinci on his side of the armistice line.
In his press conference, following talks with Anastasiades and Foreign Minister Kasoulides, Lavrov said the Russian priority is a pact, not only for a bi-communal settlement, but for ensuring Turkish troops are withdrawn, and the Turkish military ‘guarantee’ removed. Lavrov’s language was diplomatic. “As per guarantees regarding Cyprus, it is of course primarily up to the leaders of the Republic of Cyprus in terms of what decision to make. Naturally, the sides should reach agreements that would provide these security guarantees on a fundamentally new basis, which will be acceptable to both Cypriot communities. I am absolutely certain that when a settlement is reached, this role should be primarily played by the UN Security Council.”
Lavrov said his talks also “paid special attention to prospects for expanding trade and economic ties despite well-known issues in relations between Russia and the EU. We are confident that there are sound prospects, particularly in expanding contacts in high-tech sectors, as well as in the context of building up investment, considering the interest that Russian companies are showing in Cyprus’ privatisation plans… We greatly appreciate the [Cypriot] support of Russia’s position in the fight against terrorism from the Cyprus leadership and its solidarity in connection with [our] operations in Turkey, which shot down a Russian bomber… We exchanged opinions on the state of affairs between Russia and the EU. We appreciate Nicosia’s interest and the efforts of our Cypriot friends to normalise these relations. We consider Brussels’ actions on freezing ties with Russia absolutely counterproductive. We are convinced that it is in the interests of all nations on our common continent without exception to agree on steps towards shaping a common space of security and cooperation. This implies the adoption of practical measures on harmonising integrational processes in the East and West of Europe and in Eurasia.”
Asked by a Turkish reporter what Russia thinks of the lifting of the US arms embargo on Cyprus, Lavrov replied “I cannot comment on bilateral relations between the United States and Republic of Cyprus.”
In the Moscow think-tank community, there are almost no Russian experts on Cyprus; those who follow the Cyprus-Turkish negotiations have done so from the viewpoint of Ankara or Washington. Gennady Nechaev, military analyst at Vzglyad, is one of the few to anticipate an expansion of Russian military cooperation with Cyprus, despite the attempts of the US to prevent it. “The USSR was the only partner for Cyprus for supplying weapons. Cyprus continues to be a military partner of Russia.” Following the start of the Syrian air campaign last September, Nechaev was forecasting temporary deployment in Cyprus, though not basing, of Russian reconnaissance, support and refuelling aircraft.
For background on the Russian military interests discussed during last year’s presidential meeting in Moscow, read this. A Russian assessment of the potential for facilities on Cyprus to support Russian operations in Syria can be followed here. Today, details of Russian operations plans for the eastern Mediterranean since the collapse of the relationship with Ankara remain as secret as the recent Syrian operation.
After the sacking of Ambassador Koenig, Nuland has been more circumspect in public. She returned to Cyprus with Secretary of State John Kerry the day after Lavrov last December.
In Kerry’s statement to the press, he avoided the serious points of disagreement. “In recent months, it has become clear that the ground really is shifting and tangible progress is being made. And I am more convinced than ever that a resolution to the longstanding division of Cyprus is within reach and with it the many benefits of unity for all the people of the island… My meetings today really reinforced that conviction. I met with President Anastasiades to discuss cooperation on regional threats but also the prospects for settlement. And separately, I met with Mr. Akinci, who shared his views on the settlement process. “
Kasoulides hinted the Americans continue to take Turkey’s side for retaining their military presence on the island. According to the Cyprus Mail, “Kasoulides said the Security Council should undertake and supervise the implementation of the solution including the timing of the withdrawal of Turkish troops, and the timing of return to land the Greek Cypriot constituent state. On guarantees and security, Kasoulides said the topic was high on the agenda of meetings with Lavrov and with Kerry. Turkey wants its guarantee to remain in place and has set this as a red line for the negotiations.”
The public record of the negotiations in Nicosia, Moscow and Washington stopped in December. But what has been going on in the shadows? Have Nuland and Lavrov been twisting Anastasiades’s arm, as Cyprus officials have been telling the local media? Who is using the Lebedev case, and to whose advantage?
Earlier this month Lebedev was in London, where he said he plans on dividing his time between his homes in the US and Cyprus, travelling on his Cyprus passport. He is counting, he says, on the New York court case to repair his fortunes since his Russian oilfield company, Negusneft, ran dry; and the cashflow from his regional electricity utilityTGK-2 was halted by shareholder and police investigations.
Cyprus company records reveal that Lebedev can draw on at least $150 million in cash on deposit for his Cyprus trust in several New York banks. The New York Supreme Court trial of his $2 billion claim against Victor Vekselberg and Leonid Blavatnik isn’t likely to start until 2017, according to the court record. In the meantime, lawyers on both sides have been ordered by the presiding judge, Salliann Scarpulla, to compile documents and other evidence, and apply for subpoenas for witnesses to testify in court. It is anticipated in Cyprus that testimony will be sought from Philippou, as the director of the company which is at the heart of the court case, Coral Petroleum. For the US legal process to reach Philippou, and Anastasiades as well, the State Department must authorize a witness subpoena.
Nuland is in charge. Her record for using the threat of US litigation to apply pressure on foreign political targets was the reason a Vienna, Austria, judge dismissed a US extradition application for the Ukrainian oligarch Dmitry Firtash last year; for details, click to open. Politicians campaigning in the Cyprus election scheduled for May 22 have made the record of official corruption a big vote-getter. Anastasiades isn’t up for election himself, but his party and his associates are vulnerable.
For the political significance of the Lebedev case in Cyprus, this report identifies the roles played by the Anastasiades law firm in Limassol in managing Cyprus companies, bank accounts and personal trusts for Lebedev in the period before Anastasiades became president in February 2013. Theofanis Philippou, the president’s law partner, is not denying the public records of his relationship with Lebedev. An official investigation of whether Philippou acted in concert with Anastasiades, or without informing him, is under way in Nicosia, and also in Limassol, where Lebedev lives at this beachside compound.
Philippou has attempted to deter reporters from asking him to clarify his and his law firm’s relationship with Lebedev. “Pressure to investigate from the US or from Russia will be more difficult for Philippou to ward off,” says a Cypriot investigator.