Trips to Cyprus and Norway revealed similar anxieties about escalation.
At first glance, Cyprus and Norway do not have much in common. One is located in the warm and sunny Mediterranean, while the other stretches to the North Pole. Their circumstances gave rise to distinct socio-political and economic models. But as I visited both back to back for conferences, I had the surprising opportunity to consider their similarities, starting with the fact that they each lie on the extremes of Europe: Cyprus in the southeast, Norway in the northwest. My travels revealed a shared sense of pessimism in both places.
Two themes reoccurred in both countries. One was the “conflict next door,” Russia’s invasion of Ukraine. The other was anxieties about the global economy, transformed by the war in Ukraine. Central to both, according to my conversations in Cyprus and Norway, is the Black Sea region, the new focal point for Eurasia militarily, politically and economically and the place where Europe’s future will be decided.
Cyprus has a complex relationship with Russia. In the early 1990s, Nicosia developed good relations with Moscow for political and economic reasons. Politically, Cyprus benefited from Russia’s rivalry with Turkey and received Russia’s support in the dispute over Turkey’s occupation of Northern Cyprus. Meanwhile, Russian investors and tourists boosted the Cypriot economy. The island has long served as a banking hub for illicit Russian fortunes.
The relationship deteriorated after the 2008 financial crisis. Cypriot banks started to enforce anti-money laundering rules more rigorously, making it more difficult for Russian oligarchs to park their money in the country. In 2018, U.S. regulators convinced Cyprus to suspend its controversial “Golden Visa” scheme, which gave foreigners a passport in exchange for massive investment in the country. The scheme, established in 2013, scored passports for many Russian oligarchs and brought in some 7 billion euros ($727 billion).
The Cypriot economy has expanded since the financial crisis, and it is in a strong position thanks to prudent fiscal policy, but much of its growth was supported by investment, consumer spending and tourism. The services sector – especially, banking, tourism, shipping and real estate – dominate, accounting for nearly 84 percent of Cyprus’ gross domestic product. With investment already decreasing, Cyprus was hesitant during the first days of the Russian invasion of Ukraine to follow its Western partners and impose sanctions against Russia.
After all, Russians accounted for 20 percent of all tourists in the country before the pandemic. Cypriot authorities initially were against banning major Russian banks from the SWIFT international payment network before coming around. In fact, the Russian state-owned VTB Bank quietly transferred all its shares in the Cypriot RCB Bank to Cypriot shareholdings, making it a 100 percent Cypriot-owned bank, in hopes that European authorities would recognize it as a fully European institution. The ploy failed, and RCB had to close its retail business.
Meanwhile, Cyprus agreed to close its airspace to Russian planes but said it might reconsider if Turkey failed to do the same. In fact, it is Turkish activity in the Black Sea and the eastern Mediterranean that led Cyprus to take a stance against Russia over the war while cautiously considering its options. Nicosia aligned with the West – while working closely with the United Kingdom, which has bases in the country – to shore up its position in the eastern Mediterranean.
Most of the people I talked to in Nicosia condemned Russia’s aggression while also complaining about the West’s silence on Turkey and the Northern Cyprus issue. From their perspective, this double standard could only make things worse in the eastern Mediterranean, where Turkey is expanding its influence through its budding relationship with Libya.
On Oct. 3, Turkey signed an agreement with the government in Tripoli to explore for oil and gas off the Libyan coast, without specifying whether surveys would take place in waters south of Greece, where Athens says the Turks have no right to explore. This comes after years of talks between Israel, Cyprus and Turkey, with Israel trying to press the two sides to work together to develop its share of the eastern Mediterranean’s natural gas riches or stay on the sidelines and continue their decades-old stalemate over Northern Cyprus.
Cyprus fears that with the new agreement between Turkey and Libya, Turkey will become more aggressive in the eastern Mediterranean. Russia is focused on the Black Sea, and from Cyprus’ perspective, Turkey is copying Russia’s actions there: Just as Russia’s control over Crimea blocked Ukraine from developing its energy potential in the Black Sea and enabled Moscow to monitor most of Ukraine’s coastal economic operations, Turkey is trying to establish de facto control in the eastern Mediterranean to secure its coastlines and give itself a veto over new energy projects. Adding to the tensions, Greece, Turkey and Cyprus will all hold elections in 2023. Campaign season rarely brings stability.
Far from the Mediterranean, on the North Sea coastline, the war in Ukraine is seen similarly. Norway and Russia have their own complex relationship. Norway shares a 196-kilometer (122-mile) border with Russia but only in the Arctic, an underdeveloped area that could become significant for global trade. They also share a maritime boundary, extending almost to the North Pole, in areas valuable for fishing and shipping. As a result, Norway wants to maintain good relations with Russia while also developing its strategic partnership with the United States within NATO.
Since the war began, Norway has begun to replace Russia as Europe’s main source of natural gas. This was great news for Norwegian energy profits, but it also made Norwegian energy infrastructure a more enticing target for sabotage. Suspicious drones have been observed around Norway’s refineries, and there are reports of Russian-flagged research vessels close to offshore exploration sites. As a result, Norway has sent warships, coast guard vessels and aircraft to patrol its offshore gas facilities.
Although Norway stood with the West and blamed Russia for the war, Oslo hesitated to fully implement Western sanctions. In March, Norway excepted Russian fishing vessels from a Western port ban; it increased restrictions in October. They established a new agreement on fish stock management – a long-standing area of cooperation between them – in late October, but Moscow said it may suspend the deal if Oslo tightened its port ban any more.
Norway worries about relations and its own security if the situation in the Black Sea escalates and triggers more sanctions. The Russian Northern Fleet is close to the Norwegian border. For more than a decade, Russian President Vladimir Putin has made it central to Russia’s military strategy, rebuilding and modernizing it, amplifying its neighbors’ fears that Russia is militarizing the Arctic. Oslo took note of Russia’s recent exercises in the Barents Sea involving submarines designed for intercontinental nuclear weapons.
Military experts also note that since 2017, Russia has violated international law by blocking maritime perimeters for the conduct of snap military exercises in the Black, Baltic and Barents seas, effectively blocking all economic activity in the areas for extended periods. This limits NATO’s ability to fully control the coastlines and is an effective hybrid instrument that the West struggles to counter.
In theory, Russia’s interest is still in avoiding tension in the Arctic and Barents seas, which it needs secured to protect its own fishing and shipping industries. But Norway and other northern states see a connection between Russia’s position in the Black Sea and its actions in the Baltic Sea, and they worry that tensions in the former could spread to the latter.
Therefore, most of my conversations in Oslo ended in a similar manner as those in Nicosia: Everyone seems to agree that Russia needs to be managed on the European borderlines. The alternative is worse. Norway’s membership in NATO and its partnership with the U.S. bind it to the Western sanctions against Russia. Cyprus’ EU membership and its partnership with the U.K. (Washington’s closest ally) binds it to Western sanctions as well.
But both worry that further escalation in the Black Sea and more sanctions would trigger Russian aggression in their neighborhood. Neither seems to believe that negotiations are near, and both think the winter will see an escalation in hybrid warfare, even if in the eastern Mediterranean it is Turkey that is more likely to upset the status quo, not Russia.
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Antonia Colibasanu is Geopolitical Futures’ Chief Operating Officer. She is responsible for overseeing all departments and marketing operations for the company. Dr. Colibasanu joined Geopolitical Futures as a senior analyst in 2016 and frequently speaks on international economics and security topics in Europe. She is also lecturer on international relations at the Romanian National University of Political Studies and Public Administration and associate professor for the Romanian National Defense University Carol I Regional Department of Defense Resources Management Studies.
Prior to Geopolitical Futures, Dr. Colibasanu spent more than 10 years with Stratfor in various positions, including as partner for Europe and vice president for international marketing. Prior to joining Stratfor in 2006, Dr. Colibasanu held a variety of roles with the World Trade Center Association in Bucharest. Dr. Colibasanu holds a Doctorate in International Business and Economics from Bucharest’s Academy of Economic Studies, where her thesis focused on country risk analysis and investment decision-making processes within transnational companies. She also holds a Master’s degree in International Project Management. She is an alumna of the International Institute on Politics and Economics at Georgetown University.
Thomas Nilsen - Barents Observer.