Der Spiegel is reporting that Greece is poised to sign a gas deal with Russia as early as Tuesday that could put up to €5 billion into the depleted Greek coffers, according to a senior figure in the ruling Syriza party.
A senior Greek official said the move could now “turn the tide” for the debt-stricken country, who risks defaulting on substantial IMF loans and possibly exiting the Euro.
During a visit to Moscow earlier this month, Greek Prime Minister Alexis Tsipras expressed interest in building in a pipeline that would bring Russian gas to Europe via Turkey and Greece, according to Reuters.
Under the plan, Greece would receive an advance of up to €5 from Russia based on expected future profits of the pipeline. Greece’s energy minister said last week that Athens would repay Moscow after 2019, when the pipeline is expected to be in service.
Greek officials were not immediately available to comment on the Spiegel report.
Given this is Greece the probability of actual repayment is negligible, given the likelihood of a Greek default is near certain and €5 billion is not enough to change the mechanics of Greek debt sustainability.
Putin very well knows this.
The Russian leader is not acting out of the kindness of his heart, but merely making another calculated move, one which accomplishes two things:
Russia gets to preserve its dominance over the European energy market by extending the Blue Stream all the way to Austria while leaving Ukraine in a complete bargaining vacuum. 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. This is no longer the case
Just as importantly, suddenly Russia will seem like the generous benefactor riding to Greece’s aid in a time of need. This will in turn even further antagonize the Eurozone and further cement favorable public opinion.
Several weeks ago it was reported that Russia already has a higher approval rating among the Greek population than the Eurozone. Russia has now just won a critical ally for the very low price of just €5 billion, without having to restructure the Greek balance sheet should Greece have exited the euro. This also means that all future attempts to impose further sanctions on Russia by Europe will fail thanks to the Greek veto vote.
Russia is hot on the tail of China looking to divide the spoils of the collapsing Eurozone: Beijing has sought to invest in Greece’s infrastructure and bought up €100m worth of short-term government debt last week the Telegraph reported.
The only remaining question following yet another master stroke by Putin is what will Europe do, now that Russia has, in just under one year, not only “annexed” Crimea but fully drawn Greece (and the Mediterranean courtesy of Cyprus) into its sphere of influence.