That skyfallSkyfall is where we start
A thousand miles and poles apart
Where worlds collide and days are dark

ADEL’S PROPHETIC SONG AT THE OSCARS  click on the song and listen as you read it sum’s up whats just happened perfectly.

The capitalists will sell us the rope on which we hang them, said Vladimir Lenin. And for his successor in the Kremlin, Vladimir Putin, Cyprus shows the truth of that maxim. 

The West’s financial weakness has become its Achilles heel. Greed and naivety have left an EU member in a vital strategic location at imminent risk of falling into Russia’s hands. 

Fury among ordinary Cypriots at what they see as a ham-fisted European raid on their savings has stoked a search for an alternative economic saviour — Russia.

On Wednesday, the island’s finance minister was holding talks in Moscow about a loan, after his country’s parliament rejected a €10 billion EU-led bailout.

We do not yet know what Moscow’s terms for such a loan would be, but the likely result is a bonanza for the Kremlin, which stands to gain a naval base in a world hotspot and preferred access to the gas riches that lie deep below the Mediterranean seabed.

That would mark a stunning renaissance after the Soviet collapse of 1991, which saw the Kremlin’s empire shrivel to its Russian heartland and the West triumphantly welcome the former captive nations into NATO and the EU. 

For Europe, it will be a humiliation.

The common currency was meant to unite Europe politically and economically. Now it is driving one of its weaker members into the arms of a regime whose rule is based on corporate looting and murder, and pays only lip-service to the democratic ideals supposedly cherished by the EU.

For Britain — whose colonial rule over the island ended only in 1960, after a bloody civil war, and which retains two sovereign military bases in Cyprus — the blow would be particularly heavy. 

It has been almost 25 years since we grimly talked of countries falling within Russia’s sphere of strategic influence. That could be about to happen again and the consequences would be just as disturbing as those felt during the Cold War.

For Cyprus is on the doorstep of the world’s most explosive region. In its casinos, brothels and banks, Israelis, Iranians, Russians and Saudis forget their differences in pursuit of pleasure and profit.

You can buy anything in Cyprus, the saying goes, from a villa on the beach to the entire country. The Russians started with the first and are on the way to the second.

It is easy to imagine how the Kremlin masterminds will laugh at the West’s weakness in coming years.

First, they pumped money into Cyprus, buying everything from real estate and banks to officials and politicians.

One of Europe’s poorest countries, Cyprus rolled over instantly when the oligarchs came calling in the early Nineties. Tens of thousands of Russians flocked to the island. 

They have newspapers, schools, churches, banks and lawyers. Many of them are decent and honest, eager to escape the unfriendly climate (meteorological and legal) back home. Cyprus requires no visas for Russians. 

The island set up hundreds of thousands of companies for Russians and took in billions of dollars — often in cash — with no questions asked. By the time the hapless bureaucrats who police the world’s financial system tried to get a grip, it was too late.

It was all too clear what kind of clientele the island was attracting — I still treasure a Russian-language newspaper I picked up on a visit in 1999. Its front page bore an advertisement for a law firm that specialised in defending clients ‘charged with racketeering, extortion and organised crime’. 

Meanwhile, politically, Cyprus effectively became a warm-water outpost of the Russian Federation. 

It shunned NATO. Cables exposed by WikiLeaks show U.S. diplomats describing their exasperation with former president Demetris Christofias, a Russian-speaking, Moscow-educated communist. He proudly called himself Europe’s ‘red sheep’. 

The island paid only lip-service to international attempts to clean up the financial system. Mystifyingly, the West turned a blind eye. 

After strident protests from Greece, European countries dropped their objections and allowed Cyprus to join the European Union in 2004.

That was a huge mistake. It sabotaged any chance of peace in the Cyprus conflict, which has left the island divided between the Greek-run south and a Turkish puppet state in the north.

The Turks had agreed to a deal that would have ended the crippling division of the island. But once in the EU, the authorities in the south refused to budge. That has left both parts of the island a playground for organised crime, money laundering and sinister games by outsiders.

Worse, admitting Cyprus to the EU has given Russia eyes and ears in Brussels. In vain, top European officials went to Nicosia to urge officials to stop leaking secrets on trade, energy and security to Moscow.

‘We are a small country. Russia is a big friend and Brussels is far away,’ a friend of mine was told by a smirking Cypriot official.

The most scandalous display of Russian influence was in the spy scandal of 2010, when the flame-haired spy Anna Chapman and nine other undercover ‘illegals’ were arrested in America by the FBI.

The prize quarry for the American spy-catchers was the spies’ boss, who went under the name Christopher Metsos. A seasoned Russian spook, he had fled America as the FBI swooped.

Metsos, whose real name was Pavel Kapustin, was arrested in Cyprus — only for the authorities there, inexplicably, to release him on bail. He promptly disappeared. America was furious.

Other scandals abounded, involving arms sales and money laundering for rogue regimes.

The result of the sleaze was nemesis worthy of the Greek legends in which Cyprus features so prominently. When the island’s financial system capsized in the wake of the disaster in Greece, it found it had no friends in Europe.

Now it has run to the arms of Russia, for whom the Cypriots’ woes are little more than a strategic opportunity. For decades, its only ally in the region has been Syria — Russia has its only overseas naval base in the Syrian port of Tartus.

Though the semi-derelict floating dock is of little use for the Kremlin’s clapped-out navy, it has other functions. Russia’s fearsome GRU military intelligence service uses the toe-hold on the Syrian coast for espionage, arms sales and other clandestine work.

But if the Assad regime falls, Russia’s redoubt will be threatened, too — and Cyprus would become an even more valuable prize.

A whiff of the intrigues that bubble below the surface came in 2010 when the body of the GRU’s second-in-command, General Yuri Ivanov, washed up on a beach in Turkey. He had been visiting the Russian base in Tartus. Few believe the official story of a swimming accident. General Ivanov was in charge of a programme of assassination against the Kremlin’s enemies abroad.

Fear: As Obama’s America retreats from Europe, we can no longer rely on a friendly superpower to protect our interests

Our shrunken defense budget and waning geopolitical clout will be pitifully exposed as a resurgent Russia shows it is back in the Great Game.

It is these murky games that await the Cypriots if they bow to Russia and offer a naval base to Mr Putin’s Kremlin as part of any economic deal.

Make no mistake. Putin, who termed the collapse of the Soviet Union the ‘geopolitical catastrophe of the century’, sees the humiliation of the hated West as the prime goal in his desire to restore Russia’s greatness. Where the Czars and Communists failed, he may succeed, in snatching a client state in the balmy Med. In 1992, after the collapse of the Soviet empire and economy, the 50 ships of Russia’s once-mighty Mediterranean fleet departed those waters, leaving what Russian strategists bitterly term a ‘NATO lake’.

Under Putin, the coffers brimming with petro-roubles, the country is hurling money at its naval forces again.

Its $659 billion (£440 billion) rearmament programme will add 18 warships and more than 30 other vessels to its fleet by 2016, including six submarines. Mr Putin is also shopping abroad: he has ordered two state-of-the-art Mistral helicopter carriers from France.

As a further signal of intent, the Kremlin only recently announced it was sending a fleet of five-to-six warships to the Med. How will NATO, many of whose members are pre-occupied with economic troubles, feel if those warships are patrolling the region from a Cyprus harbour in years to come?

Read more:

Since yesterday was the 20th of the month and it fell on a week day, the  updated its Internet site with February’s data. That data showed that they purchased another 200,000 ounces of gold for their official reserves, and here is Nick Laird’s most excellent chart showing the change. Officially reported Russian gold reserves are now 31.4 million troy ounces.

Russia May Review Share of Euro in Reserves, Medvedev Says 

Cyprus’s financial crisis may force Russia to review the share of euros in its international currency reserves, the world’s fourth-largest stockpile, according to Prime Minister Dmitry Medvedev.

An unprecedented levy on deposits in Cyprus banks that was backed by European finance officials as a condition for the country to receive a bailout, was “not just unpredictable, it’s evidence of some inadequacy,” Medvedev said, according to a transcript of his interview with Interfax and foreign media on the government’s website.

“We have 41 percent or 42 percent of our reserves in euros,” Medvedev said. “It’s big money, and we, like any country, value predictability.”

Russia’s foreign currency and gold reserves stood at $522.1 billion last week. The dollar accounts for 46 percent of the stockpile, while 40.5 percent is held in euros, First Deputy Central Bank Chairman Alexei Ulyukayev was cited as saying by RIA Novosti Jan. 24.

More…