Israeli gunboats intercepted a Cypriot ferry called the Sunny Boat earlier this month as it sailed between the port of Larnaca and the Lebanese city of Juniyah.
The Israelis said the interception, and one the following day involving another Cypriot ferry, was designed to stop the flow of Palestinian guerrillas from Cyprus to Lebanon through Christian-controlled areas north of Beirut.
The Cyprus government promptly issued an anguished denial that Palestinian guerrillas ever traveled through Cyprus, best known as a summer vacation resort to thousands of Scandinavian tourists.
But, according to sources here, a contingent of fighters loyal to Yasser Arafat, chairman of the Palestine Liberation Organization, had indeed flown from Baghdad, Iraq, into Cyprus over Christmas for transit to Lebanon.
'Open Secret' Exposed
And, despite official denials, yet another of Cyprus' "open secrets" had been exposed to public view: Behind the facade of a sunny Mediterranean resort, Cyprus has increasingly become a way station for an abundance of spies, fighters for a multiplicity of causes and smugglers motivated solely by money.
These days, the bar at Nicosia's Hilton Hotel, one of the island's premier watering holes, occasionally evokes memories of the film "Casablanca" as a swirl of furtive conversations unfolds in a welter of languages, including Arabic, Hebrew, Russian and English, as well as Greek, the mother tongue of most Cypriots.
"The place is like Beirut in the old days," said a longtime resident who fondly recalled when agents such as Kim Philby, the Englishman who spied for the Kremlin, used to frequent the bar at the St. Georges Hotel in the Lebanese capital. "Cyprus is overrun with spies and dirty tricks, only here very little seems to reach the surface."
A Logical Alternative
Much of the intrigue of Beirut, along with a substantial part of international business operations, fled when the civil war erupted in Lebanon in 1975. Cyprus seemed a logical alternative, since the island is centrally located, maintains good relations with both Israel and the Arabs and quickly established itself as a trading center, with modern communications, despite the presence of 30,000 Turkish troops on the northern third of the island since 1974.
There are two major British military bases on the island, at Akrotiri and Dhekelia, whose presence has attracted Soviet interest for years.
Last year, seven British servicemen were acquitted after Britain's longest-ever espionage trial. They had been accused of being ensnared in a Soviet spy ring by the charms of Filipino bar girls.
A British security committee report to Parliament named Cyprus as a place of "temptations and risks of blackmail" because of the sexual improprieties and heavy drinking among young soldiers on the island.
Last August, the Akrotiri base was attacked with mortars, rockets and automatic weapons by unknown assailants. After the attack, the newspaper of the powerful Akel Communist party, which won a third of the vote in the last election here, started campaigning to have the bases removed.
In addition to the bases, the British maintain a sensitive eavesdropping center at Ayios Nikolaos in western Cyprus, from which the 9th Signals Regiment listens to communications in Syria, Libya, Saudi Arabia, Egypt and Iraq.
"The government cannot pretend that the role of the bases and monitoring stations is innocuous," Akel said.
U.S. Monitoring Station
Another "open secret" in Cyprus, one that every taxi driver knows but which the government either denies or professes no knowledge of, is the presence of a U.S. monitoring station in the Troodos Mountains, with radar and other equipment aimed at the Soviet Union.
Washington also reportedly uses the Akrotiri base for flights by U-2 and SR-71 surveillance jets to photograph secret areas in the region.
The United States has just bought a large piece of land in Nicosia for a new embassy, which Eastern European diplomats assert will become a major U.S. listening post. The Soviet Union bought an equally large tract of land next door.
Although the island has a population of only 655,000 people, both the Soviet Union and the United States maintain unusually large embassies in Cyprus, with more than 20 accredited diplomats in each. The other country with a large embassy is Libya, which has 22 diplomats, but there are also large numbers of Israelis, Syrians and Cubans.
"The British and the Americans are all over the Soviets, and vice versa," said one well-informed official. "The Syrians watch the Israelis and the Iraqis and the PLO, while the Israelis are watching everybody else."
The Iraqis have not opened an embassy in Cyprus, apparently because they are concerned about offending Turkey. So diplomatic--and some say intelligence--functions take place at the offices of Iraqi Airways. The office's roof is crammed with strange-looking radio aerials.
Last year, a small bomb exploded at the Iraqi Airways office. It apparently was part of a trap: After the explosion, the airline manager bolted from his home, hopped in his car and sped about 100 yards toward the office before the car exploded, killing him.
Last October, Cypriot authorities operating on a tip believed to have been from Israeli intelligence intercepted three containers of arms destined for PLO guerrillas in Lebanon. The mortars, Katyusha rockets and rocket-propelled grenades were listed on the manifest as "scented soap" being shipped from the Sudan.
Murder of Three
In September, 1985, two Palestinians and a British youth murdered three Israelis in the marina at Larnaca, in the apparently mistaken belief that the three tourists were an intelligence team.
While that particular mission was built on a false premise, there is evidence that the area may indeed be a base for Israeli intelligence operations. Local residents say that occasionally, Hebrew radio transmissions from yachts in the area are so powerful that they drown out the British Broadcasting Corp.'s World Service.
In December, Artin Bahutourian, a 70-year-old Armenian who was described as the "Cabaret King" of the Middle East because he controlled bar girls from Baghdad to Cairo, was found strangled in his home. Two theories prevail: that the Soviets were angered at the revelation of their use of his bar girls as spies against British servicemen, or that the PLO felt double-crossed by the capture of the containers of weapons in October.
"The Cypriot government is in a real dilemma," said a veteran journalist, who asked not to be quoted by name. "They seem to have decided to turn a blind eye to a lot that goes on here as long as none of the groups or spies or whatever actually do anything in Cyprus. When they cross that line, the government cracks down."
Strictures of Islam
A sizable portion of the island's transient population is made up either of Arabs or foreigners working in Arab countries who flock to Cyprus for a vacation away from the strictures of Islamic law. A majority of Cyprus' trade is still conducted with the Arab world, although tourism is the primary hard-currency earner for the island.
While appreciating the money brought into Cyprus by Arabs, residents apparently feel some resentment against them; in 1985 there were anti-Arab riots. The government later sent out envoys to the Middle East to apologize, but incidents still flare occasionally.
According to Western diplomats in Nicosia, the Greek Cypriot government that rules the southern two-thirds of the island is keen to keep Arab governments from recognizing Turkish rule of the northern third. The island remains divided by the presence of Turkish troops, who invaded in 1974 after a coup d'etat sponsored by Greece against the government of Archbishop Makarios, and by decades of often violent friction between the majority Greek and minority Turkish populations.
The Cypriot government also stands neutral in inter-Arab disputes, so that a growing number of Arab publications and dissidents have found a base here away from tyrannical regimes and censors at home. Even a large number of foreign correspondents have been attracted to the island's relative openness and freedom, which they formerly found only in Beirut's intellectual atmosphere.
A recent study showed that 67 out of 155 of the prisoners in the island's main jail are foreigners. Most of them were convicted of drug smuggling.
Officials believe that Cyprus has become a major transit station for heroin being smuggled from Lebanon's Bekaa Valley to Europe and the United States, prompting the U.S. Drug Enforcement Administration to open a large office here.