The prospect of a so-called “Russian pivot” by Greece still hangs over Angela Merkel’s head.
The conflict in Ukraine and the attendant economic sanctions imposed on the Kremlin combined with the EU’s anti-trust proceedings against Gazprom have raised the geopolitical stakes of a Grexit. Merkel has repeatedly warned that the consequences of Greece exiting the eurozone go far beyond short-term financial turmoil and political contagion (e.g. the spread of the Syriza “germ”).
And Vladimir Putin is acutely aware of the opportunity.
"Just because Greece is debt-ridden, this does not mean it is bound hand and foot, and has no independent foreign policy,” Putin said earlier this year, as tensions between Athens and Brussels intensified.
The prospect of a BRICS loan aside, any Russian aid to Greece will likely be connected to Gazprom’s Turkish Stream pipeline project which we’ve discussed in great detail in the past. Here’s a brief recap:
Greece has received what The New York Times recently described as “dueling sales pitches” on two proposed natural gas pipelines. One proposal comes from Russia, where the Kremlin is keen to use the tumultuous negotiations between Athens and creditors to advance Moscow’s energy and geopolitical interests. Moscow hopes to essentially buy Athens’ participation in the Turkish Stream pipeline which, as a reminder, will allow Russia to bypass Bulgaria by piping gas through Turkey, then through Greece, Serbia, and Hungary straight to the Austrian central hub. The US proposal involves The Southern Gas Corridor, a project aimed at “improving the diversity of the EU’s energy supply” — in other words, it’s an attempt to help break Gazprom’s stranglehold. Essentially, the corridor will allow the EU to tap into Caspian gas via a series of connecting pipelines running from Azerbaijan to Italy.
Greek Energy Minister Panagiotis Lafazanis does not view the deals as mutually exclusive and as such, proceeded to ink an MOU with Russia for the Greek portion of the Turkish Stream line on June 18 in St. Petersburg.
On Thursday, Lafazanis mapped out the details of the deal in a speech FT says may serve to aggravate PM Alexis Tsipras’ attempts to strike a deal in Brussels this weekend. Here’s more:
Greece has mapped out details of a landmark €2bn gas project with Russia, a scheme that could stir tensions with Brussels just as Athens seeks a third bail-out.
Panayiotis Lafazanis, the firebrand leftist energy minister, presented the project to Greek energy executives on Thursday in a defiant speech, vowing that Athens would not be pushed around by EU institutions, writes Christian Oliver.
EU policymakers are concerned that Russia could take advantage of the crisis to pull Greece deeper into its orbit and pipeline politics is critical to relations between the two nations.
Athens and Moscow say their new project, the so-called South European Pipeline, will bring 47 billion cubic metres of Gazprom's gas into Europe by 2018. Mr Lafazanis promised that it would create 20,000 much needed jobs in Greece.
This promised deal with Russia is a sharp rebuke to Brussels, which wants to reduce dependence on Gazprom and argues that southeastern Europe should diversify its supply by prioritising gas from Azerbaijan.
Lafazanis also took the opportunity to make it clear that Syriza's Left Platform (which he leads) will not allow Tsipras to squander Greece's historic "Oxi" vote by accepting a deal that effectively negates the referendum:
"Greece is no-one's hostage. The Greek people's No vote, and I am referring to all of the people, is not going to become a humiliating Yes."
It certainly looks as though the PM will face an uphill battle in convincing party hardliners to accept an unpopular deal, making it even more likely that Grexit will effectively begin on Monday, paving the way for the "other guys" to step in with a rescue plan.