  We present four epochs of high-resolution infrared spectroscopy of the
peculiar X-ray binary Cygnus X-3. The observations cover quiescent, small
flaring and outburst states of the system as defined by radio and X-ray
monitoring. The underlying infrared spectrum of the source, as observed during
radio and X-ray quiescence and small flaring states, is one of broad, weak HeII
and NV emission. Spectral variability in this state is dominated by modulation
at the 4.8 hr orbital period of the system. H-band spectra confirm the
significant hydrogen depletion of the mass donor. The closest spectral match to
the quiescent infrared spectrum of Cyg X-3 is an early-type WN Wolf-Rayet star.
  In outburst, the infrared spectrum is dramatically different, with the
appearance of very strong twin-peaked HeI emission displaying both day-to-day
variability and V(iolet)/R(ed) variations with orbital phase. The most likely
explanation appears to be an enhanced stellar wind from the companion. Thus
X-ray and radio outbursts in this system are likely to originate in
mass-transfer, and not disc, instabilities, and the lengthening of the orbital
period will not be smooth but will be accelerated during these outbursts.
Furthermore, the appearance of these lines is suggestive of an asymmetric
emitting region. We propose that the wind in Cyg X-3 is significantly flattened
in the plane of the binary orbit. This may explain the observed twin-peaked HeI
features as well as reconciling a massive Wolf-Rayet secondary with the
relatively small optical depth to X-rays, if the disc wind is inclined at some
angle to the line of sight.
