The geopolitical fallout of a Greek euro exit

Geece?s debt crisis has captured international headlines over the past couple of years. Virtually all analysts have focused on Greece?s deficit and mammoth debt, which pose a threat to the entire European economy.

However, focusing on this one-dimensional interpretation of the Greek crisis means we run the risk of missing the crucial question of whether Europe, and the West in general, can afford to have a politically unstable and economically fragile country at the political, cultural and religious crossroads of the Eastern Mediterranean at a time when the broader region is in turmoil, as demonstrated by continuous clashes in Syria and speculation over an Israeli attack on Iran.

Meanwhile, a weaker Greece vis-a-vis Turkey is bound to tempt the extremists across the Aegean Sea.

?Just look at the map and see where Greece is located… I believe we have to open up the debate beyond the purely financial and economic dimensions,? Michael Meister, vice chairman of Angela Merkel?s Christian Democrats (CDU), said recently.

His comments echoed those of another prominent CDU politician, Armin Laschet, who said that a Greek exit could trigger undesirable upheaval in Southern Europe.

?[An exit] could lead to instability in a NATO member state. Russia is standing ready with billions to help Greece in such a scenario,? Laschet said recently. ?Much more is at stake here than just the question of whether Greece meets the criteria [of its bailout],? he said.

Reinhard Goehner, director general of the Confederation of German Employers? Associations, said that ?assistance to Greece is necessary because of the country?s geopolitical significance for SE Europe and the Mediterranean,? while an article in Germany?s Handelsblatt newspaper described Greece as a ?bulwark? against terrorists and a proliferation of conflict risks, warning that ?if we lose Greece as a geopolitical ally because of the euro, we may have to pay a hefty price for it.?

Meanwhile, the rapprochement between Greece and Israel has increased the interest of the Jewish state in retaining Greece as a pillar of stability in the region. For their part, Western governments, always thirsty for energy, could not possibly ignore Greece?s potential transformation into an energy hub for the transfer of oil and gas, while the recent decision to carry out seismic surveys south of Crete and in the Ionian Sea could lead to the discovery of resources also in the Greek exclusive economic zone (EEZ).

European and US analysts deem that Greece?s Western orientation is not under question, but key powers such as Russia and China are keeping a close eye on developments in a country that lies in a delicate geographical location.

The conclusion is that a Greek exit from the euro area would be considerably damaging for Europe as it would signal a failure to deal with a major crisis and at the same time undermine the bloc?s role in the region.

?Greece will always be part of the Western club?

US analyst Ian Lesser, who is also executive director of the German Marshall Fund?s Transatlantic Center in Brussels, is critical of the tendency among Western governments to focus exclusively on the financial aspect of the Greek crisis ?at a time when Greece?s neighborhood, from the Balkans to the Levant, is entering a highly unstable period.? Doing so, he warns, risks missing out on key geopolitical implications.

Nevertheless, Lesser points out in this interview with Kathimerini, even if Greece were forced to leave the euro area, its Western orientation would not be threatened.

Does the policy of European governments toward Greece overemphasize the financial dimension at the neglect of the geopolitical one?

Many American observers would say yes — there has been too much emphasis on finance in isolation from geopolitical concerns. The Western tendency to focus overwhelmingly on finance and political dynamics inside Greece risks neglecting potentially critical geopolitical aspects of the crisis. And this is happening at a time when Greece?s neighborhood, from the Balkans to the Levant, is entering a highly unstable period. I think the balance is already shifting on this, in part because the solutions to the eurozone crisis as a whole are inherently political.

The late Constantine Karamanlis had pronounced that ?Greece belongs to the West.? Would that still be Greece?s clear choice if it were forced to exit the eurozone?

Absolutely. I do not see how the crisis would or should reshape Greece?s longstanding attachment to the ?West.? Greece will always be part of this club.

Given the internal social stress in Greece, should the West be concerned about the country moving closer to Russia and China?

No, this is not a realistic concern. We should be concerned about the stresses in Greece, but I do not see how Russia and China can really take advantage of this, even if there is a bit more investment from these quarters over time. It is easy to exaggerate this.

Is there a difference in the way US President Barack Obama and Republican presidential candidate Mitt Romney approach the Greek crisis, and what could Greeks expect from the election winner after November 6?

The issue has not figured prominently in the election debate. Beyond the question of Greece, both have been critical of EU policy, but in different ways. Romney sees the European crisis as evidence of the perils of the European social model. Obama has been critical of the preference for austerity over growth. But Greece, per se, has not been discussed very much.

What does the crisis mean for Greek-Turkish relations?

It makes it even more important that the Greek-Turkish detente of the last 10-15 years is extended and strengthened.

How does the Syrian crisis (as well as the possibility of an Israeli attack on Iran) influence the strategic equation in the Eastern Mediterranean?

These flashpoints make it even more vital that Greece remains able to play an active diplomatic and security role in the region, alongside its European partners, and the US. Further, looming instability also means that Greece will need strategic reassurance from NATO, on missile defense and other fronts.

?There will be changes, but they won?t be disastrous?

In an interview with Kathimerini, Georgy Muradov, deputy director of the Organization for International Cooperation at the Russian Ministry of Foreign Affairs, spoke to Kathimerini about his concern regarding developments in Greece and the broader Mediterranean region. Nevertheless, the former Russian ambassador to Cyprus remains optimistic that better days lie ahead for Greece.

Apart from any repercussions for other eurozone states, do you think that a Greek bankruptcy could mean dangerous geopolitical implications for the Mediterranean and the broader region?

I don?t even want to think of that. I believe that a way will be found to prevent bankruptcy. Sure, the chance of a currency devaluation or an exit from the currency is still there, but that does not mean bankruptcy. It rather means the beginning of a new policy hammered out by the Greek government.

To be sure, any development regarding the crisis or any similar development that could change the shape of an economy would obviously affect the Mediterranean and the economies of Europe.

That said, I do not think that anything too bad would happen. As a friend of Greece, I believe a way will be found [out of this predicament].

What about relations with Russia?

I believe that expanding ties with Russia will be one of the things involved. At the same time there are good prospects for discovering energy sources on Greek territory. In any case, Greece needs a reboot on all levels, political, economic and social.

It has often been observed in the past that when a state is in a weak position, this could create other sorts of problems for it. Do you think that an aggravation of the crisis in Greece could allow for terrorist acts in Greece or tempt neighboring countries, like Turkey, to try and challenge its sovereign rights?

There is no easy answer to that question as there is in fact evidence that when a country?s strength is one the wane, its competitors do try to exploit its decline.

In my opinion, Greece?s strength has not declined to such an extent as to tempt other countries to try to challenge its borders or sovereign rights. Greece is certainly having a tough time right now, but not as tough as to run the risk of experiencing a situation like the ones suggested in your question.

Moreover, Greece is not alone in the area. Like a family in which one brother stands by his ill brother, I believe that the same will happen with Greece. Greece?s allies will stand by the country. Your country is not alone in this world.

History has shown that both world wars were preceded by economic crises. Could the continuing global economic crisis combined with the unexpected — one-and-a-half years ago — wave of revolutions in the Arab world lead to broader conflicts in the region?

Unfortunately, history shows that major crises like the one that has hit the global economy can lead to conflict, even all-out war. I cannot exclude this possibility. However, I deem that humanity is growing more and more mature. By studying its history, it can protect itself against these developments. For this reason Russia is trying to tackle the crises in Syria, the Middle East and elsewhere with peaceful means and without resorting to outside intervention. Everyone has to be very cautious when it comes to keeping the peace.

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