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The
Greek "White Knight" Emerges: Putin To Give Athens €5
Billion For Advance Gas Pipeline Fees
18
April, 2015
With
Greece teetering on the edge of insolvency and forced to raid pension
and most other public funds, ahead of another month of heavy IMF
repayments which has prompted even the ECB to speculate Greece should
introduce a parallel "IOU" currency,
a white knight has appeared out of nowhere for Greece, one who may
offer $5 billion in urgently needed cash. The
white knight is none other than Vladimir Putin. “Just
because Greece is debt-ridden, this does not mean it is bound
hand and foot, and has no independent foreign policy,” Putin
said previously.
According
to Spiegel,
citing a senior figure in the ruling Syriza party, Greece is poised
to sign a gas deal with Russia as early as Tuesday which could bring
up to €5 billion into the depleted Greek coffers.
The move
could now "turn the tide"
for the debt-stricken country according to a senior Greek official.
As Reuters
adds,
during a visit to Moscow earlier this month, Greek Prime Minister
Alexis Tsipras expressed interest in participating in a pipeline that
would bring Russian gas to Europe via Turkey and Greece.
Under the proposed deal, Greece would receive advance funds from Russia based on expected future profits linked to the pipeline. The Greek energy minister said last week that Athens would repay Moscow after 2019, when the pipeline is expected to start operating.
Greek government officials were not immediately available to comment on the Spiegel report.
Of
course, this being Greece, the probability of actual repayment is
negligible: after all the likelihood of a Greek default is
astronomical, and €5 billion will do little to change the mechanics
of Greek debt sustainability. And Putin very well knows this.
However,
the Russian leader is not acting out of the kindness of his heart,
but merely engaging in another calculated move, one which kills two
birds with one stone:
- Following the death of the South Stream, whereby the EU pressured Bulgaria to refuse passage of the Russian gas pipeline to Europe, Russia needed an alternative route of bypassing Ukraine (and Bulgaria) entirely, something which according to Kremlin's plan should happen over the next 3 years. And with Hungary and Serbia all eager to transit Russian gas to the Austrian central european gas hub, Greece was the missing link for a landline transit. With this agreement, Russia gets the green light to extend the Blue Stream all the way to Austria and preserve its dominance over the European energy market while leaving Ukraine in a completely barganining vacuum.
- Perhaps just as importantly, suddenly Russia will energy as the generous benefactor riding to Greece's salvation, in turn even further antagonizing the Eurozone and further cementing favorable public opinion. As a reminder, several weeks ago we showed that Russia already has a higher approval rating among the Greek population thatn the Eurozone. In this way, Russia has just won a critical ally for the very low price of just €5 billion, without even having to restructure the entire Greek balance sheet should Greece have exited the euro and been attracted to the Eurasian Economic Union. Which also means that all future attempts to impose further sanctions on Russia by Europe will fail thanks to the Greek veto vote.
Russia
is not alone in seeking to divide the spoils of the collapsing
Eurozone: Beijing has also sought to invest in Greece's
infrastructure and bought up €100m worth of short-term government
debt last week the Telegraph reports.
Ironically,
it was none other than Germany's finance minister Wolfgang Schauble
who said the Greeks are free to pursue deals with Russia and China as
they rush to avoid an impending bankruptcy. Turns out the Greeks
decided to do precisely as the German suggested, and the outcome will
certainly not be to Germany's liking.
The
only question following what may well be another masterful stroke by
Putin is what will Europe do, now that Putin has in the span of under
one year, not only "annexed" Crimea but fully drawn Greece
(and the Mediterranean courtesy
of Cyprus)
into its sphere of influence.
*
* *
While
we are sure the European leadership will be 'disappointed' at
Greece's get-out-of-Troika-jail card thanks to Russia, The Greek
people have already expressed their opinion on just who they trust
more...
Despite
all the western propaganda...
*
* *
Finally,
for those confused about the flow of funds, here it is:
Russia
(Gazprom) gives Greece money, which Greece uses to repay the IMF,
which uses the Greek money to fund a loan to Kiev, which uses the IMF
loan to pay Russia (Gazprom).
A
perfect circle.
