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A Russian Lifeline For Greece? Don't Hold Your Breath

  • Andy Heil

Russian President Vladimir Putin (right) has led a conspicuous effort to highlight tensions between Brussels and Athens, led by Prime Minister Alexis Tsipras.

Russian President Vladimir Putin (right) has led a conspicuous effort to highlight tensions between Brussels and Athens, led by Prime Minister Alexis Tsipras.

If Athens is hoping for a lifeline from Moscow, it had better be prepared to hold its breath.

Because while Russian officials have been eager to make mischief on Europe's fringes, they don't appear to be in any position to bail EU member Greece out of its $300 billion-plus predicament.

Constrained by economic vulnerability and fallout from the Kremlin's military intervention in neighboring Ukraine, Russia has walked a fine line on eurozone member Greece, which is battling to remain solvent despite hundreds of billions of dollars in EU and IMF assistance in the past five years.

The EU infighting over Greek debt and austerity demands on Athens to avoid a so-called Grexit from the common EU currency have left both Greeks and other Europeans bitter, threatening unity on issues of particular interest to Moscow -- including areas like sanctions or the drive to diversify Europe away from Russian energy supplies.

With Greece on the precipice of default, Russian presidential spokesman Dmitry Peskov on June 29 said that Moscow was "concerned about the possible negative consequences for the whole of the EU."

The same day, Foreign Minister Sergei Lavrov was quoted as saying in a conversation with Greek counterpart Nikos Kotzias that he hoped Brussels would avoid "negative scenarios" and expressed "understanding" for Greek government actions.

But despite early suggestions -- from Russia's finance minister, no less -- that Moscow might wedge itself financially between Athens and Brussels, there's no reason to believe that Russian cash is on the way.

"In our view, this is unlikely -- that Russia would be able to provide the resources to its international partners in big amounts in the middle term," Oleg Kuzmin, chief economist for Russia & CIS countries at Renaissance Capital in Moscow, told RFE/RL.

The problem doesn't lie in Russia's roughly $160 billion in reserves, Kuzmin said, so much as in the fact that the total reflects a loss of around $100 billion in the past year. So Russian officials are keen to replenish reserves to the extent possible in what he calls "a very challenging environment" of Western sanctions over Russia's seizure last year of Crimea and falling oil prices.

Still, Russian President Vladimir Putin has led a conspicuous effort to highlight tensions between Athens and Brussels. He has hosted Greek Prime Minister Alexis Tsipras on several occasions since the latter came to power on an antiausterity platform in late January, including on June 19 when the Greek leader turned up in St. Petersburg instead of at debt talks with his EU counterparts. At that meeting, Putin and Tsipras inked a memorandum on Greek participation in a proposed pipeline to carry Russian gas through Turkey.

Russia's finance minister, Anton Siluanov, told CNBC shortly after Tsipras's Syriza party won Greece's election that Moscow "would definitely consider" any potential Greek request for help.

Less senior Russian officials have suggested that Greece might join BRICS, the emerging economies club that also includes Brazil, India, China, and South Africa.

But Putin has also downplayed Russia's involvement and avoided public promises that Moscow might later be accused of abandoning.

Kremlin spokesman Peskov in April batted away a Spiegel report suggesting Moscow might offer Greece billions of dollars in advance payments for gas deliveries through the proposed Turkish Stream pipeline.

With pressure mounting on Athens but bailout talks stalled, Tsipras declared at the meeting in mid-June that the pipeline project heralded "a new era" in mutual relations.

However, Putin immediately struck a more somber note, citing "reasons about which we're all aware" in noting that "our economic ties [with Greece] are unfortunately on the decline."

Putin's spokesman said the topic of economic assistance to Greece hadn't even come up.

Some of the speculation of a Russian bailout of Greece points to Moscow's actions in another EU member state, Cyprus, just three years ago.

With Cypriot credit at junk status and its banks teetering but the government in Nicosia reluctant to subject itself to EU-imposed austerity, Russia provided Cyprus with a 2.5 billion-euro emergency loan on favorable terms in 2012.

But Renaissance Capital's Kuzmin said the two cases could hardly be more different.

"The Cyprus situation was a different story," he said. "Cyprus is a well-known tax haven and Russia traditionally had a very close, direct interaction with Cyprus," he added, alluding to the tens of billions of dollars Russian businesses held in Cypriot banks at the time. "Russian banks and Russian companies do not have direct linkages to Greek economy to this extent."

Another major difference is one of scale, he said, in light of Greece's estimated $250 billion-$350 billion currently owed to international creditors.

"Russia was able to provide small support to Cyprus's economy," Kuzim said, "and it was more important for Cyprus than the same amount [would be if] provided to Greece."

The other difference Kuzim noted was the more "challenging external conditions" posed by sanctions and falling oil prices for on Russia's hydrocarbon-dependent economy.

Neverthless, even in the absence of anything beyond symbolic Russian moves toward Greece, the rest of the West will continue to be wary of efforts to parlay Greek economic tragedy into European or transatlantic divides.

With reporting by Reuters, Bloomberg, Financial Times, and RT