At last, an opportunity to use my Putin cartoon.
According to Spiegel, citing a senior figure in the ruling Syriza party, Greece is poised to sign a gas deal with Russia as early as Tuesday which could bring up to €5 billion into the depleted Greek coffers….
…the Russian leader is not acting out of the kindness of his heart, but merely engaging in another calculated move, one which kills two birds with one stone:
Following the death of the South Stream, whereby the EU pressured Bulgaria to refuse passage of the Russian gas pipeline to Europe, Russia needed an alternative route of bypassing Ukraine (and Bulgaria) entirely, something which according to Kremlin’s plan should happen over the next 3 years. And with Hungary and Serbia all eager to transit Russian gas to the Austrian central european gas hub, Greece was the missing link for a landline transit. With this agreement, Russia gets the green light to extend the Blue Stream all the way to Austria and preserve its dominance over the European energy market while leaving Ukraine in a complete bargaining vacuum.
Perhaps just as importantly, suddenly Russia will emerge as the generous benefactor riding to Greece’s salvation, in turn even further antagonizing the Eurozone and further cementing favorable public opinion. As a reminder, several weeks ago we showed that Russia already has a higher approval rating among the Greek population than the Eurozone. In this way, Russia has just won a critical ally for the very low price of just €5 billion, without even having to restructure the entire Greek balance sheet should Greece have exited the euro and been attracted to the Eurasian Economic Union. Which also means that all future attempts to impose further sanctions on Russia by Europe will fail thanks to the Greek veto vote. (slightly edited for readability)
Finally, for those confused about the flow of funds, here it is:
Russia (Gazprom) gives Greece money, which Greece uses to repay the IMF, which uses the Greek money to fund a loan to Kiev, which uses the IMF loan to pay Russia (Gazprom).
A perfect circle.
Given this perfect circle, I don’t see what’s to stop Russia simply paying Greece’s debts, especially if it’s going to get the money back via Ukraine.
Putin would seem to be holding all the cards. By paying Greece’s debts, it would make Greece dependent on Russia, and keep it exercising its European veto on Russia’s behalf. Also, by paying Greece’s debts, it would be preventing a Greek default which could bring down the European banking system, with the implicit threat that it could precipitate such a crisis any time it liked. And in the process it would be able in a few years to export gas to Europe via Turkey and Greece, and be able apply pressure on Ukraine (by turning off gas supplies completely).
Greece offers Russia a back door into the EU, and they’ll want to keep Greece in the EU, acting as a Russian proxy. It might be Tsipras who attends EU conferences, but it may as well be Putin.
I’ve been expecting a Greek default almost any day. But now I wonder whether Greece will now “unexpectedly” manage to keep paying its debts, stave off bankruptcy, and remain in the EU.
All thanks to Uncle Vlad. Who, despite being an antismoker, may yet turn out to be the man to bring down the EU, and with it the EU smoking ban.