The meeting between Greek Prime Minister Alexis Tsipras and Russian President Vladimir Putin on Wednesday in Moscow will not resolve Greece’s bailout problem, says a Financial Times report.
There is speculation that after the impasse in negotiations between Greece and lenders and the country’s serious liquidity problem, Tsipras is going to Moscow to put in effect a possible Plan B: Greece defaults on creditors and bondholders, exits the euro zone and receives short-term funding from Moscow in order to keep the Greek banking system afloat. In exchange, Greece vetoes European Union sanctions against Russia and boycotts the gas transatlantic pipeline that would help Caspian gas reach Europe through 500 kilometers of Greek territory, thus bypassing Russia.
However, according to writer of the report Wolfgang Munchau, such a scenario is unlikely for several reasons.
The first reason is that Russia’s economy is in bad shape at the moment, and it will decline by 3.8 percent in 2015, mainly due to the fall of oil and gas prices. Investments in Russia have declined significantly. Foreign exchange reserves are also falling noticeably. A continuation of sanctions will make the Russian economy more vulnerable.
Greece will need to consider to what extent it would want to be tied to a country that will be clearly focused on its own economic crisis management. Russia is also aware of the tens of millions of euros from euro zone members that have sunk into the Greek economy and Moscow would not likely take the risk.
Second, Greece cannot have bilateral relations with Russia because it will be out of the EU and lose all rights of member states. And Greece would not want to be on its own and have Putin as its creditor, Munchau says.
Third, in case Russia and the EU re-establish relations by coming to an agreement over Ukraine and sanctions are lifted, Greece will not be able to have a special relationship with Russia.
And finally, the political dynamics within the EU are such that it is not in Greece’s benefit to collide with them. Athens is still receiving European funds and it will be disastrous if no more subsidies are forthcoming for the Greek economy.
The writer concludes that Tsipras should forget about allying with Putin and focus on an economic plan that would help Greece come out of the crisis. He also says that Europe and Greece should avoid the danger of miscalculation: “The EU might underestimate the political and economic consequences of a Grexit. And the Greeks might overestimate the potential of Russian Plan B.”
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