In Background, Russia

By Ambrose Evans-Pritchard, The Telegraph (UK), April 23, 2015

The U.S. is scrambling to head off a Greek pipeline deal with Russia, fearing a disastrous change in the strategic balance of the Eastern Mediterranean as Greece’s radical-Left government drifts into the Kremlin’s orbit.

Greece Russia flagsErnest Moniz, the U.S. Energy Secretary, said his country is pushing for an alternative gas pipeline from Azerbaijan that would help break the stranglehold that Russian state-controlled firm Gazprom has on European markets.

“Diversified supplies are important and we strongly support the ‘Southern Corridor’ to bring Caspian gas to Europe,” he told a group of reporters on the margins of CERAWeek oil and gas forum in Houston.

He insisted that it was vital to uphold “collective energy security” in Europe.

Greece’s foreign minister, Nikos Kotzias, said Gazprom made a “very good offer”, with guaranteed gas supplies for 10 years at good prices. He asked how his Syriza government could justify turning down such an opportunity unless the Western powers could come up with something better.

The once-unlikely “Turkish Stream” deal with Russia has suddenly become a stark reality as President Vladimir Putin seizes an opportunity created by the eurozone’s inept handling of the Greek crisis. Under the terms of the offer, Russia would supply 47bn cubic metres (BCM) of gas to Greece, generate much-needed revenue for the Greek authorities, create 2,000 jobs and turn the country into an energy hub.

Sources in Athens have confirmed to The Telegraph that it could also bring €3bn (£2.2bn) to €5bn in advance payments, greatly alleviating Syriza’s budget strain as it raids local authority funds in a last, desperate attempt to put off default.

The eurozone has agreed to cut its demand for a primary budget surplus in Greece to 1.5pc of GDP this year

The deal was due to be signed on Tuesday, but overtures from Washington caused a delay, much to the irritation of the Russians. The talks were complicated by Greek complaints over Gazprom’s tough line on “take-or-pay” violations by the Greek natural gas company DEPA, whereby it was required to pay for unused gas.

It is now clear that Greece is playing every possible card in an escalating form of four-way brinkmanship, in this case trying to play off Washington against Moscow.

This is a high-risk strategy as it risks irritating Syriza’s increasingly exasperated friends in the White House, all the more so as tensions between Russia and the West flare up again over Ukraine. It also risks pushing Moscow too far.

Mr Kotzias said after a trip to Washington this week that the U.S. is preparing a “counter-offer” and will send an emergency mission to Athens in coming days, led by the State Department’s energy troubleshooter, Amos Hochstein.

Greek premier Alexis Tsipras met Gazprom’s chief executive, Alexey Miller, in Athens earlier this week but few details have emerged. The discussions have a deliberate air of mystery, seemingly intended to keep everybody off balance.

The deal is being handled by Panagiotis Lafazanis, head of Syriza’s Left Platform. “Cooperation between Greece and Russia is of major importance for us. The pipeline issue is among our top priorities. We continue talks and hope that very soon we will reach an agreement that will benefit our country, the economy and people,” he said.

There is no longer any chance of a breakthrough in European Monetary Union (EMU) debt talks with Greece at this Friday’s meeting of finance ministers in Riga, Latvia. However, the eurozone has at least agreed to cut its demand for a primary budget surplus to 1.5pc of GDP this year. This was Syriza’s original demand, but has itself become onerous as the country spirals back into recession.

Mr Tsipras told German Chancellor Angela Merkel that Greece had already “done enough” and called for an interim release of EMU funds for the rest of April.

“Ms Merkel is their last hope; she sees there is more to Greece and Grexit than just the monetary union, there are geopolitical risks at stake,” said Carsten Brzeski, chief economist at ING.

Mr Kotzias said the West seems to have trouble accepting that Greece is a sovereign state like any other. “I have to wonder why, when other countries go to Russia, no one mentions it. But when Greece goes, we’re the Devil. We have normal diplomatic relations like everybody else. Why is everybody pointing fingers at us?” he said.

Critics dismiss such arguments as disingenuous. The EU currently has sanctions against the Russian energy sector, and Mr Kotzias is himself a former Stalinist who backed martial law in Poland and the Soviet Union’s iron-fist policy against Solidarity in the 1980s.

The concern is that Syriza’s flirtation with Moscow goes beyond normal diplomacy and may evolve over time into a strategic shift, causing Nato’s Eastern flank to unravel, and dooming any chance of maintaining a united EU stance against Mr Putin.

The Greeks know this. They seem determined to extract the maximum political leverage from the new Cold War.

Read also:
Blame Germany for Greece’s uphill euro zone struggle, by Eric Reguly, The Globe and Mail,  April 24, 2015

Greece not playing a game of chicken on debt, Reuters, April 24, 2015

Russia guarantees supply of 47 bn cubic meters of gas to Greece, RT.com, April 21, 2015

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