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Is .city confusingly similar to .citi? UDRP says yes

Kevin Murphy, August 14, 2012, Domain Registries

In one of the more surprising twists to hit the new gTLD program, Citigroup has claimed that its proposed dot-brand gTLD, .citi, is not “confusingly similar” to the proposed generic gTLD .city.
The company appears to be trying to avoid getting into a contention set with the three commercial applicants for .city, which would likely put it into an expensive four-way auction.
It’s a surprising move because you’d expect a financial services company to want to at least try to mitigate the risk of future .city/.citi typo-based phishing attacks as much as possible.
Indeed, its .citi application states that the mission of the gTLD “is to further assist Applicant in accomplishing its mission of providing secure online banking and financial services”.
Nevertheless, the company is now arguing, in a few comments filed with ICANN today, this:

CITI and CITY are not so similar in an Internet context as to create a probability of user confusion if they are both delegated into the root zone. Thus, the .CITI application should not be placed into a contention set with the .CITY application.

The new Citigroup position is especially bewildering given that it has argued the exact opposite — and won — in at least two UDRP cases.
In the 2009 UDRP decision Citigroup Inc. v. Domain Deluxe c/o Domain Administrator, Citigroup contended that:

Respondent’s citywarrants.com domain name is confusingly similar to Complainant’s CITIWARRANTS mark.

The panelist in the case concluded that the Y variant of the name was merely a “mistyped variation” of and “substantively identical” to the Citigroup trademark.
A similar finding appears to have been handed down in Citigroup v Yongki, over the arguably generic citycard.com, but the decision is written in Korean so I can’t be certain.
The company’s current view, which I’m going to go out on a limb on and characterize as expedient, is that ICANN has delegated multiple ccTLDs that have only one character of variation in the past (it hasn’t — the ccTLDs it cites all pre-date ICANN) without causing confusion.
It also states in its comments that the meaning and proposed usage of the two strings is “very different” (which one commenter has already suggested is historically dubious).
So what’s going on here?
Is Citigroup really willing to risk potential phishing problems down the line to save a few measly bucks today? On the face of it, it looks that way.
If it is put in a contention set with the three .city applicants, it could wind up at auction against Donuts ($100m funding), TLD Registry Ltd (apparently backed by the Vision+ fund) and Directi.
Will Citigroup’s gambit pay off?
That’s down to a) the String Similarity Panel and b) whether any of the .city applicants tries to force the company into the contention set via a String Confusion Objection, which seems unlikely.