Greek Bailout 3.0? It's All Russia's Fault

Despite 30% general unemployment, the majority of youths jobless, GDP forecasts already disappointing, and government asset sales at rock-bottom prices, Greek leaders are preparing to blame any missed growth expectations on Russia. As Bloomberg reports, hopes of a 2014 exit from its deepest recession in a half-century may hit a stumbling block after Russian sanctions last week. "The impact could be quite damaging for industries such as tourism and agriculture amid the fragility of a slowly recovering economy," warns one think-tank as tourist arrivals from Ukraine are expected to drop by 50% and the 'fruit-and-vegetable' embargo will "send prices falling across Europe, hitting both the volume and value of Greek exports towards other countries." Is it any wonder the Greeks are so vociferously slamming "blind obedience to the Cold War strategies of Brussels and Washington."

Russia is Greece’s biggest trading partner, according to data compiled by Bloomberg. The value of total trade between the two nations reached 9.3 billion euros ($12.5 billion) in 2013, surpassing trade flows between Greece and fellow EU-member Germany. As Bloomberg reports,

“The estimated total cost of Russian counter-sanctions for the Greek economy may look tolerable, but the impact could be quite damaging for industries such as tourism and agriculture amid the fragility of a slowly recovering economy,” said Thanos Dokos, director-general of the Hellenic Foundation for European and Foreign Policy, a Greek think-tank. “It also raises questions about energy security in the coming autumn and winter.”

 

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“Arrivals from Ukraine will drop by 50 percent and arrivals from Russia are expected to reach 1.1 million, instead of 1.3 million,” Petropoulos said.

 

Tourism contributes more than 16 percent to Greek gross domestic product, according to SETE data, and Russia has been the fastest growing source market for visitors to Greece. Tourism revenues from Russia increased 42 percent last year to 1.34 billion euros, according to Bank of Greece data.

 

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“The biggest impact from the Russian embargo will be from the indirect fallout as Russia’s ban on EU fruit and vegetables means that large quantities of fresh produce suddenly become available, swamping the market,” he said. This will “send prices falling across Europe, hitting both the volume and value of Greek exports towards other countries,” Polyhronakis said.

As we noted previously, the Greeks are not happy at the "Stop Putin" Coalition's blowback...

the moment Russia retaliated, the grand alliance started to crack. Enter Greece which has hundreds of millions in food exports to Russia, and which was the first country to hint that it may splinter from the western "pro-sanctions" alliance. According to Bloomberg, earlier today the Greek foreign minister and former PM said that "we are in continuous deliberations in order to have the smallest possible consequences, and if possible no significant impact whatsoever."

 

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And making it very clear that this will be a major political issue was a statement by the main opposition party Syriza which today said that the Greek government's "blind obedience to the Cold War strategies of Brussels and Washington will be disastrous for country’s agriculture." In a moment of surprising clarity, Syriza asked govt to immediately lift all sanctions to Russia, as they don’t contribute to a solution of the Ukrainian crisis, and "instead fuel an economic and trade war, in which Greece has unfortunately become involved." Syriza concluded that the government hasn’t weighted Greece’s special interests and bilateral relations with Russia.

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Of course, despite the absence of TROIKA, we are sure whatever Greece needs, Greece will get from its trading-above-par banking bondholder overlords to keep the dream alive.

And sure enough, not minutes after we posted this, the EU comes to the rescue... (as Bloomberg reports).

A European-wide solution to tackle the problems caused by the Russian ban on food imports, using EU crisis response funds, is “under way,” Greece’s Finance Ministry says in statement.

 

Greek govt’s goal is to supplement EU funds with other tools, including national means, if necessary, in order to advance a timely and comprehensive solution: ministry

 

First priority is to assess damage to Greek exporters, work to begin immediately

 

Govt will support farmers hit by ban: ministry