Moody’s Adds Gasoline to the Fire in Cyprus – Downgraded to Junk



by John Galt
March 13, 2012 13:00 ET


As many of my readers and listeners are aware, I have been tracking the deterioration of the situation on the island of Cyprus for some time, highlighted by the recent possibility of that island becoming the center of a new conflict between Greece and Turkey. On March 4, 2012 the Turkish Prime Minister added to the pyre by stating that the Turkish portion of Cyprus should be annexed by Turkey to:
“if ongoing talks between Turkish and Greek Cypriots for reunification fail to produce a solution, Turkey’s minister for European Union Affairs has said.”
(See: Turkish Cyprus might be annexed to Turkey, minister says from Today’s Zaman, March 4, 2012)


Needless to say the Foreign Ministry walked that statement by Egemen Bağış back to prevent the already high tensions during the reunification talks from failing outright but the Greek government on Cyprus followed up with a volley of their own:

Greek Cyprus, Israel sign cable deal

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This is part of an ongoing tit-for-tag between Greece and Turkey which is accelerating as the discovery of petroleum resources in the Eastern Mediterranean presents a challenge to Turkish hegemony in the Eastern Med if Israel aligns itself with Greek Cyprus and the nation of Greece. Today, the economic situation took a drastic turn with the equity markets on the island already down over 90% from peak to trough. The story from the Athens News says it all:

Cyprus gets junk rating

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With what appears to be the final series of negotiations underway to reunite the divided island and Turkey drawing closer to the Islamist nations like Iran, this news does nothing but add fuel to an already dangerous regional fire.