On Friday June 19th, Greece and Russia’s presidents appeared on stage together, adding a new layer of complexity to Greece’s tug of war with its European creditors.
The Greek government’s $1.7 billion debt payment to the International Monetary Fund (IMF) comes due on June 30. Negotiations fell apart the previous weekend on how to pay back the debt. The stalemate revived speculation that Greece could leave the eurozone if a deal is not reached, sending European markets in a downward spiral.
According to the Associated Press, Russia would consider granting Greece a bailout in the event of a “Grexit” from the eurozone. The quote came directly from President Vladimir Putin’s spokesperson, Dmitry Peskov.
“If the Greeks ask for a loan then we will consider it, but they have not yet asked,” Peskov told the AP. “We would do this because they are our partners and this is a normal practice between countries who are partners,” he added.
A Nation of Seafarers
Tsipras’s comments, made on stage next to Vladimir Putin, were interpreted by many as a thinly-veiled threat to his European allies.
“We are a seafaring nation that knows how to navigate through storms and is not afraid of heading to new seas and reaching new harbors.”
Russia’s relationship with Western powers has been tenuous since the start of the Ukrainian conflict. Western allies have grown increasingly wary of Russian aggression and are seeking to limit the country’s sphere of influence. By implying that Greece has alternatives to EU/IMF funding, Tsipras is playing into those fears.
Shot Across the Bow
Russia signed a deal with Greece on Thursday June 18th to build a pipeline that will help double its capacity of natural gas imports to Europe. (Source: The Wall Street Journal, June 19, 2015.)
Built by gas giant Gazprom OAO, the “Turkish stream” of the pipeline travels through Greek territory, so the two countries will forge a partnership for that stretch of the project. Analysts suspect the timing of the deal was meant to foreshadow a possible bailout package.
It is possible that Tsipras’s strategy will work before the June 30 deadline, negating the chance of a Russia-funded bailout. Minutes after his speech, the European Central Bank announced increasing the level of emergency funds available to Greek banks from 83 billion euros to 84.1 billion euros. (Source: The Wall Street Journal, June 19, 2015.)
European Debt Crisis Explained