Greece Signs Pipeline Deal with Russia After European Talks Fail

A day after Greece’s bailout talks collapse, the country agrees to build part of a Russian pipeline.

Greek prime minister Alexis Tsipras answers a question from a reporter in Moscow as Russian president Vladimir Putin looks on, April 8
Greek prime minister Alexis Tsipras answers a question from a reporter in Moscow as Russian president Vladimir Putin looks on, April 8 (Presidential Press and Information Office)

Greece signed a €2 billion pipeline deal with Russia on Friday, a day after European finance ministers in Brussels failed to reach an agreement to prevent the Balkan country from going bankrupt.

Greek prime minister Alexis Tsipras flew to Russia on Thursday for the second time in as many months to attend an economic forum organized by the country’s leader, Vladimir Putin.

Although the timing of the visit may not have been deliberate, Tsipras’ government is determined to repair Greek-Russian relations and has threatened to seek Russian financial support in case EU countries refuse to give it relief from austerity.

Pipelines

The European Union and the United States had urged Greece not to host part of a new Russian pipeline that would allow Europe’s largest provider of natural gas to bypass Ukraine.

The West promotes the Southern Gas Corridor instead, which would pipe gas from former Soviet republics on the Caspian Sea to Europe through the Mediterranean.

East-West tension

The European push for energy diversification took on a fresh urgency last year when Russia’s occupation and annexation of the Crimean Peninsula from Ukraine set back East-West relations to their worst point since the end of the Cold War.

Russia continues to support an insurrection in the former Soviet republic’s southeastern Donbas region where rebels last year shot down a commercial airliner, killing more than two hundred European passengers and crew.

Russia’s aggression in Ukraine came as the country entered into an association agreement with the EU that puts it on a path to membership. Russia fears it might eventually join NATO as well.

Broken ranks

Greece has broken ranks with its allies by speaking out against the economic sanctions they imposed on Russia after it seized the Crimea. But this appears to have won little more than gestures of goodwill in return.

On his first visit to Moscow, Tsipras insisted that he did not seek Russian aid.

“Greece is not a beggar going around to countries asking them to solve its economic problem,” he said.

Russian officials nevertheless said at the time they were considering proposals to ease a retaliatory ban on European food products that hit Greek farmers especially hard.

It is doubtful Russia could do much more. The Western sanctions have conspired with low oil prices to push its economy into recession.

Turkish Stream

Yet Russia continues to embark on expensive energy projects that are of questionable economic value, like Turkish Stream.

This new pipeline, which would deliver Russian gas through Turkey, Greece and the Balkans into Central Europe, is meant to replace South Stream, the pipeline that Russia canceled last year amid European opposition.

Turkish support for the new project is in doubt and other Balkan states have yet to sign up.

Experts also wonder why Russia needs another pipeline. They believe it uses just 60 percent of its existing pipeline capacity — at a time when Russia’s European costumers are busily looking for alternative suppliers.

The reason for building a new Black Sea pipeline seems entirely political. It would enable Russia to bypass Ukraine, which transits roughly half the natural gas the country now sells to Europe.

Pro-Russian left

Panagiotis Lafazanis, the Greek energy minister, nevertheless said on Thursday that Turkish Stream “is not against anyone in Europe or anyone else. It is a pipeline for peace, stability in the whole region.”

It is difficult to take Lafazanis at his word. His remarks are either hypocritical and Greece is trying to use its improving relations with Russia as leverage in its negotiations with the EU — or Greece’s amateur leaders are unwittingly engineering a geopolitical realignment that could see Russia expand its influence in the Eastern Mediterranean.

Lafazanis’ and Tsipras’ pro-Russian orientation owes much to their far-left Syriza party’s rejection of “neoliberalism” in Europe and their unease about Greece’s NATO alliance with the United States. Both politicians were members of the Stalinist Greek Communist Party in the early 1990s, around the time when communism was failing in Eastern Europe.

Crisis summit

Whatever Greece’s motivates, Tsipras’ deal with Putin won’t do him much good when he meets other EU leaders at a crisis summit in Brussels on Monday.

The emergency European Council is Greece’s last chance to secure the final €7.2 billion tranche of its €240 billion bailout program. Without the money, the country could probably not repay a €1.5 billion loan from the International Monetary Fund that is due later this month, nor make good on €3.5 billion in bond redemptions in the middle of July.

Other European countries want Greece to resume economic and pension reforms that Tsipras’ coalition canceled after it came to power in January.

Greece, on the other hand, wants to raise the minimum wage, restore collective bargaining and reverse pension cutbacks and privatizations that previous Greek administrations made in order to qualify for financial aid.