Sign in Subscribe
European Union

Greece and Russia: Desperate Times, Empty Gestures

Strategic Insights

— 1 min read

Greek Prime Minister Alexis Tsipras's recent visit to Moscow was a demonstration of the desperate measures his government has taken to alleviate its financial struggles. Despite assurances from Tsipras that he would not ask Vladimir Putin for financial assistance, the meeting between the two leaders resulted in little more than warm words and a proposed gas pipeline across Greece's territory. The gesture politics employed by the Greek government, led by the far-left Syriza party, is a clear indication of the financial pinch the country is facing.

Key Takeaways:

  • The Greek government has resorted to gesture politics to maintain high approval ratings as unemployment increases and the country slips back into recession.
  • The proposed Russian gas pipeline, Turkish Stream, would cross western Turkey, then Greece, Macedonia, Serbia, and Hungary, providing Russia with a significant advantage in the region.
  • Russia's state-owned transport companies are seeking to acquire the Greek state railway and the northern port of Thessaloniki, but their proposal was rejected during the previous administration.
  • Chinese firms, including shipping giant Cosco, are also interested in acquiring Greek ports and infrastructure, with Cosco already controlling a container terminal at Piraeus.
  • The Greek government's priority is to reach a deal with creditors to unlock EUR7.2 billion ($7.8 billion) of loans and avoid default, with a EUR950m repayment due in May.
  • The finance ministry is scrambling to find cash to pay pensions and salaries, raiding unspent EU funds to the dismay of Greek firms working on motorway projects.

Statistics:

  • Greece's financial struggles are evident in its inability to pay pensions and salaries, with the finance ministry scrambling to find EUR950m to meet its obligations in May.
  • The Greek government has received EUR458m from the IMF on April 9th, but this is just a temporary reprieve, and a reset of EUR7.2 billion ($7.8 billion) of loans is still required.
  • Russia's proposed gas pipeline, Turkish Stream, would provide a significant increase in natural gas supply to central Europe, challenging existing EU pipeline infrastructure.
  • Chinese firms, including Cosco, are expanding their presence in Greece, with significant investments in ports and infrastructure.

Sources:

  • The Economist, "A Greek gets no gifts in Moscow" (April 2015)
  • The Economist, "Greece's financial chaos gets worse" (April 2015)

Read more