Moscow Moves

Mr. Tsipras Plays Russian Roulette

tsipras moscow DPA
Alexis Tspiras at the Tomb of the Unknown Soldier in Moscow on Wednesday.
  • Why it matters

    Why it matters

    Greece may be looking for alternatives to its European partners, or merely using the trip to Moscow as a negotiating chip, yet Russia is not in a financial position to help Athens.

  • Facts

    Facts

    • Russia imposed reciprocal sanctions on Europe, imposing bans on agricultural imports.
    • Greece had exported 60 percent of its harvest to Russia, and is looking for an easing of the import ban.
    • Greece is due to pay the IMF €450 million on Thursday.
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    Audio

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The ongoing tensions between Greece and its European partners are unlikely to be eased today when the prime minister, Alexis Tsipras, holds talks with the E.U.’s top persona non grata, Vladimir Putin.

It’s just the latest confusing tactic from the Athens government, which is in the midst of negotiations with international lenders to unlock bailout funds it desperately needs to stay afloat.

On Thursday alone, Greece has to pay around €450 million to the International Monetary Fund.

The deeply-indebted country is not expected to survive long without gaining access to the remaining €7.2 billion, or $7.8 billion, in its current bailout program, which will only be released if its lenders, the European Union, the European Central Bank and the IMF, see that it is making progress in implementing reforms.

E.U. officials are still working with Athens on its list of reforms before they can be approved by the euro-zone finance ministers. Failure to do so could result in Greece being forced out of the euro-zone currency area.

Yet, instead of keeping its eye on the ball, the government in Athens insists on using various diversionary tactics to put pressure on its negotiating partners.

Mr. Tsipras’ two-day visit to Moscow for talks with the Russian president, along with previous ministerial trips to Russia and China, are intended to show Greece’s European partners that Athens has other options.

And the trip comes just after Greece has come up with a massive figure of €278.7 billion that the country claims it is still owed by Germany as reparations for the Nazi occupation during World War II.

These moves are not going down well in Berlin.

“Greece has to know where it belongs,” said Markus Söder, a member of Chancellor Merkel’s Bavarian allies, the Christian Social Union. “Those who are in the E.U. and NATO have responsibilities.”

Eckhardt Rehberg, a member of the Christian Democrats, was also far from impressed with the trip to Moscow. “I can’t imagine that Putin will provide the Greeks with any substantial financial support. Russia has its own problems.”

Johannes Kahrs, a lawmaker with the Social Democrats, the junior partner in the ruling right-left coalition, agreed, saying he didn’t believe “that Russia is prepared to finance Greece.”

“I can’t imagine that Putin will provide the Greeks with any substantial financial support. Russia has its own problems.”

Eckhardt Rehberg, CDU Lawmaker

Indeed, the Russian economy is too weak to significantly help Greece at the moment, suffering from a drop in the price of oil and the sanctions imposed by the West over its dealings with Ukraine.

There were also words of warning to Athens from another prominent German Social Democrat.

“Greece demands and gets a lot of solidarity from the E.U.,” said Martin Schulz, the president of the European Parliament.

“We can therefore also ask for solidarity from Greece and for this solidarity not to be ended unilaterally by pulling out of joint measures,” Mr. Schulz told the Münchner Merkur newspaper, referring to the E.U.-imposed sanctions on Russia.

The relations between Greece and its E.U. partners have been frayed since the radical left Syriza party came to power in January, after campaigning to end the punishing austerity imposed on Greece by international lenders.

Syriza won over Greeks, hit by a contracting economy, massive unemployment and huge hardship. However, its attempts to end austerity have been thwarted by the hardline approach from its lenders, who insist Athens sticks to previous governments’ committments.

Syriza has also been a fierce critic of the Western sanctions imposed on Russia after its annexation of Ukraine’s Crimean peninsula last May, and its support for separatists in the east of the country.

Ahead of Mr. Tsipras’ trip, however, the Greek government has attempted to ease concerns that it might break with the European Union on the issue.

Any change to sanctions would need unanimity in the European Union, but Greece could conceivably block any further sanctions measures or the extension of the current sanctions regime.

Mr. Tsipras’ economic advisor Theodoros Paraskevopoulas, said these fears were unfounded. While Greece viewed the sanctions with skepticism, it would not break with them, he told Germany’s RBB-Inforadio on Wednesday.

“Russia is interested in investing in Greek railways and Greek ports, and that is what will be discussed,” he said. The advisor insisted there would be no discussion of Russia providing Greece with loans.

Economic Relations between Greece and Russia-01

 

The Greek finance minister, Yanis Varoufakis, has already sought to reassure partners, saying that Greece was not seeking any financial assistance outside of the European Union, as it was a matter that could be handled “within the European family.”

Still, Greece will be hoping Mr. Putin can help them in other ways, for example, by dropping the ban on imports of Greek fruit and vegetables that Russia imposed as part of reciprocal sanctions on all E.U. states.

Greece normally sells up to 60 percent of its harvest to Russia, with €180 million coming from its agricultural sales to the Russian market. Any relief on that issue would make a great difference to that industry.

Athens is also banking on some kind of a deal to lower the price of natural gas imports. Russian energy giant Gazprom supplies two thirds of its current needs.

For Mr. Putin, the visit by an E.U. leader marks another welcome crack, however small, in the united front within the European Union on the sanctions issue. Mr. Tsipras is not the first European Union leader to visit Moscow, with Italian prime minister, Matteo Renzi, making a trip there last month – the first by an E.U. leader since the Crimean annexation.

For Greece, the trip may yield more negatives than pluses.

While the Russia trip may secure increased trade and energy deals, it could still be irritating enough to E.U. partners to raise questions about the Greek government’s ability or preparedness to reach a compromise with its lenders.

The Greek demands for war reparations also seem designed to acutely annoy Germany, the biggest contributor to the €240 billion in bailouts Greece has received so far and the country spearheading the euro-zone’s tough stance on reforms in exchange for financial aid.

The war reparations demands have already been greeted with disdain in Germany.

The deputy head of the Christian Democrats’ parliamentary group, Michael Fuchs, was blunt in his response to Mr. Tsipras’ insistence that Germany pay massive reparations: “He can forget it.”

On Tuesday deputy chancellor, Sigmar Gabriel, who is also economy minister, described the Greek move as strategically “dumb.”

Greece, he said, was reliant on euro-zone states creating more space for the country to maneuver, something that would not exactly be helped by such demands.

Mr. Gabriel dismissed the attempt to link reparations with the current crisis, saying “I think that it doesn’t move us forward one millimeter on the question of stabilizing Greece.”

 

Siobhán Dowling covers European politics from Berlin. Donata Riedel is a Berlin-based correspondent covering financial and economic policy. To contact the authors: dowling@handelsblatt.com, riedel@handelsblatt.com.

 

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