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Greece on the verge of default: flirting with Russia, quarrels with the EU

Recently Spiegel Online, citing its sources, reported that Greece plans to request aid from Russia to avoid the threat of state bankruptcy. According to the report, the government headed by Alexis Tsipras intends to ask Moscow to decrease gas prices for Greek households. Moreover, the Greeks want to achieve a cancellation of the embargo on exports of Greek agricultural products to Russia, which was launched as counter-sanctions in summer 2014. The Minister of Energy, Panagiotis Lafazanis, and the speaker of the Greek parliament, Tanasis Petrakos, will discuss these issues during their two-day visit to Moscow, which starts on Monday.

Petrakos told Spiegel that Greece wants “to deepen its relations with Russia in the energy sector” and get significant mutual benefit from this. The Greek delegation will talk to the Russian Minister of Energy, Alexander Novak, and the head of Gazprom, Alexei Miller. The periodical reminds that Gazprom controls about 70% of the Greek gas market.

“When possible support by Beijing or Moscow is discussed, Greece primarily counts on selling national property and on its geopolitical position. According to our source, Greece is ready for closer cooperation with Russia, which will enable Moscow to improve its influence on the regional gas market. Athens will also welcome Russian and Chinese investments in its state corporations – for example, the unprofitable railway or the port of Thessaloniki,” Spiegel reports.

Prime Minister Alexis Tsipras will visit Moscow on April 8th. The periodical notes that the EU is concerned about attempts to build close relations with Russia and the fact that many members of the government consider Moscow a closer partner than Brussels.

“There are serious concerns that Russian President Vladimir Putin will use the chance to divide the EU countries and extend his influence in the south of Europe. Observers expect that Tsipras will explore the possibilities of support for his government via loans from the Kremlin during the visit. Previously, the Greek prime minister denied such plans, but recently Athens, represented by the vice premier Dragasakis, has confirmed that it is searching for sources of financing beyond the euro zone, primarily China.” It should be noted that the Chinese company of Cosco Group is the front runner for purchasing a 67-per-cent share of Port Pyrenees, the largest passenger port of Europe.

It is unknown what the Kremlin will demand from Athens for decreasing gas prices. Spiegel assumes that Moscow will try to improve its influence in the regional gas market. In this context we should remember about the competitive project of the Southern Energy Corridor by the EU, as Greece is a part of it. For example, since 2019 Azerbaijani gas should be imported to Europe through Greece by TAP. It cannot be ruled out that in the context of Russian-Greek rapprochement there will be attempts to prevent or postpone implementation of TAP for a long period of time. It will enable Russia to gain time and space for maneuver during the implementation of its own ambitious project Turkish Stream.

However, the flirting of Athens with Russia could be an attempt by Greece (which is two steps from default, according to Fitch) to strengthen its positions in negotiations with its creditors (the European Commission, the European Central Bank and the IMF), who have recently received a new plan for the reconstruction of the dialogue from Athens.