Tsipras’s visit to Putin follows road paved in Soviet times

The journey to Moscow from Athens is a path well-trodden for Greek leaders.

Since the late 1970s, the country’s prime ministers have pursued talks with Russia over trade, energy policy and investment. As current premier Alexis Tsipras follows in their footsteps and sits down with Vladimir Putin, he may find the Russian president as keen for his help as he is to woo Putin.

European Union sanctions over the conflict in Ukraine along with falling oil prices have hurt Russia, just as Greece is locked in talks with euro partners on getting more bailout funds. While Tsipras is seeking ways of saving or raising money, Putin is looking for an ally to undermine the EU’s stance.

“Relations between Russia and Greece have very been close over the years, but this is a new dimension,” Judy Dempsey, senior associate at Carnegie Europe, said from Berlin. “Tsipras is trying to play off Russia against the EU in his negotiations to get what he wants from the euro zone. Clearly this is Putin’s attempt to trade off one EU country against another.”

Russia is ready to discuss easing restrictions on Greek food products, which were imposed as part of the retaliation for EU sanctions, according to two Russian officials, who asked not to be identified because the information is confidential.

Building bridges

Russia doesn’t rule out discussion of possible loans or a discount on gas prices at the talks, Putin’s spokesman, Dmitry Peskov, told reporters on a conference call on Tuesday. Finance Minister Anton Siluanov said Greece hasn’t asked for financial assistance and he won’t be meeting Tsipras.

The EU’s economic sanctions against Russia are due to expire in July, and a unanimous 28-nation vote is required to renew them. Tsipras reiterated Greece’s opposition to the trade and investment curbs on March 31, calling the approach “senseless” and advocating a negotiated solution.

“Politically, it would be a pretty difficult plan for one of the European countries to step out of the EU’s line on Russia,” Austrian Finance Minister Hans Joerg Schelling told state radio on Wednesday. “I don’t think that’s very likely.”

The Greek government said the talks in Moscow are meant to build bridges in Europe rather than burn them. The two Christian Orthodox countries are meeting before their Easter holiday.

“It’s clear that if you can help tension, if you can help to sort out misunderstandings or promote peaceful relationships then you should be able to do that,” Euclid Tsakalotos, the minister for international economic affairs, told Bloomberg Television on Tuesday. “Greece is an independent sovereign country, it has an independent foreign policy.”

Antagonizing Germany

While it’s just rhetoric and promises of cooperation, it risks adding to the tension within the euro region over extending more aid to Greece, according to analysts including Famke Krumbmuller at Eurasia Group.

Greece this week came up with a bill for German reparations from World War II of about 280 billion euros ($304 billion). It was dismissed by Chancellor Angela Merkel’s deputy as a “dumb distraction.” Merkel also believes Greek overtures to Russia are a sideshow, according to government officials.

“The Greek government is trying to provoke its creditors,” Krumbmuller told Bloomberg Television. “The timing of it is extremely bad,” she said of the reparations claim.

The country is paying about 450 million euros to the International Monetary Fund on April 9 and needs about 1.5 billion euros a month to pay salaries and pension.

The government aims to complete talks on a package of economic reforms needed to unlock more funding in time for a meeting of euro region finance ministers on April 24.

‘Bad atmosphere’

“There is obviously a very bad atmosphere and it seems like the Greeks have decided to play a game,” said Joerg Forbrig, a senior program director at the German Marshall Fund in Berlin. “They are playing this card of European unity that is needed in the face of Russia and the Ukraine crisis in exchange for relaxed conditions for European support for the Greek economic situation. It is a gamble.”

Russia was Greece’s biggest trade partner in 2013, mostly due to imports of Russian natural gas, according to data compiled by Bloomberg. Energy Minister Panagiotis Lafazanis said that Greek companies need lower power prices in order to reduce production costs and safeguard jobs.

Tsipras’s predecessor, Antonis Samaras, met with Putin in Brussels in January 2014, laying the ground for a new gas supply deal a month later reducing prices by 15 percent.

Falling energy costs elsewhere meant that Greece still paid 16 percent more than the European average and 24 percent more than Germany for Russian natural gas in 2014, according to Bloomberg Intelligence analyst Elchin Mammadov, who used data from Russia’s Interfax News Agency.

Playing ball

Whether it gets anything from Russia or not, Greece is ultimately likely to fall in line with other EU member states and support an extension of sanctions in July, according to a European diplomat in Moscow, who asked not to be identified because the discussions are confidential.

Konstantinos Karamanlis became the first Greek prime minister to visit the Soviet Union in 1979, two years before Greece joined the precursor of the EU.

A hallmark of his successor, Andreas Papandreou, was a foreign policy of ending Greece’s status as what he called a “client state of the West” by forging closer ties with Moscow, though while soaking up European development funds.

“A trip to Moscow should not set off alarm bells or be seen as a turning point,” said Eirini Karamouzi, a lecturer in contemporary history at Sheffield University. “Even in 1979 when Karamanlis visited Moscow, it was not a change in orientation but an attempt to strengthen the country’s international weight not surprisingly focusing on energy matters. The same logic could apply to today’s situation.” [Bloomberg]

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