Greece and Ukraine main items on EU28 menu; the course is set

Jeroen Dijsselbloem, Dutch Minister for Finance and President of Eurogroup (on the left), Yanis Varoufakis, Greek Minister for Finance. Eurozone finance ministers participated in an Extraordinary Eurogroup meeting on 11 February in Brussels, especially staged to discuss the Greek issue. (European Council, Council of the European Union Audiovisual Services, Shoot location: Brussels – Belgium. Shoot date: 11/02/2015).

Jeroen Dijsselbloem, Dutch Minister for Finance and President of Eurogroup (on the left), Yanis Varoufakis, Greek Minister for Finance. Eurozone finance ministers participated in an Extraordinary Eurogroup meeting on 11 February in Brussels, especially staged to discuss the Greek issue. (European Council, Council of the European Union Audiovisual Services, Shoot location: Brussels – Belgium. Shoot date: 11/02/2015).

The world community will be watching very closely today’s gathering of the 28 leaders of the European Union in Brussels. The reason is that its agenda includes two crucial issues; the economic fate of Greece and a discussion on the outcome of a conference in Minsk, Belarus for the future of Ukraine. Yesterday afternoon both those issues were given a first but in-depth scrutiny in two separate gatherings. The Greek minister of Finance Yianis Varoufakis had to convince his Eurozone peers about a new rehabilitation program for his country, during a Eurogroup consultation. At the same time the leaders of France and Germany met with the Russian President at the Belarus capital Minsk to resolve the Ukrainian stalemate.

In the face of it the two issues are completely unrelated. This is a small world though and problems of such importance are interconnected through invisible but important ways. For example, if Greece exits from the Eurozone, Athens might find it helpful to approach Moscow, probably for a better arrangement concerning its imports of Russian oil and gas. In such a perspective Greece’s stance on the Ukrainian question and other topics may become more perceptive to the Russian positions, at a great cost to EU’s unity. Such an eventuality may produce even more destructive results for the EU, if Greece also leaves the EU after abandoning the Eurozone.

Greece: What if…

Presently Greece solicits from Eurozone a more relaxed handling of her financial problems. The over-indebted and crisis stricken country wants to put an end to five years of severe austerity programs imposed on her by its euro area partners/creditors. Athens also asks for a restructuring of her debts. The new government of Alexis Tsipras doesn’t seem ready to settle for anything less. Most likely this is what Varoufakis told his 18 Eurozone colleagues late yesterday night in Brussels. The final answer will very probably be given today, well after midnight, by the European Council of the 28 heads of states and governments in the presence of Tsipras.

Athens can advance very convincing arguments. After five years of relentless efforts Greece has achieved fiscal and foreign account balances. This may be a good base for Athens to stand alone on her own feet outside the euro area, of course after printing an own national currency, say the new Drachma. Such a step would bolster the competitiveness of the country’s exports and the tourist sector. Apart from that Moscow might propose to help Athens with cheaper deliveries of oil and gas, which could be paid (under a system of clearing, with no money changing hands) with Greek agricultural products that Russia badly needs.

Greeks have nothing against Russia

Presently Greek food stuffs are blocked out from the Russian markets under a wider embargo on EU products imposed by Moscow, in retaliation of Brussels’ economic sanctions against Russia. At the time when the EU sanctions and the ensuing Russian embargo were imposed, the Greek farmers had problems understanding why they had to lose millions because Brussels wanted to punish Moscow. They just couldn’t export any more to their Russian Christian Orthodox brothers. Actually a large part of the Greek public opinion is positively inclined towards Russia, in direct contrast with say Poland or the tiny Baltic republics.

Understandably it’s not without good reason, that even the slightest possibility of Greece exiting the Eurozone and probably also abandoning the EU altogether, has alarmed the United States. This was more than evident last Monday when the American President Barack Obama publicly almost accused the German Chancellor Angela Merkel for that. In their joint Press conference after a very crucial meeting in Washington on Ukraine and Greece Obama said: “Angela, the United Sates expect the German appraisal of how could Greece return to growth remaining within the Eurozone”.

It was as if Washington was reproaching Berlin for the Greek woes. Of course Merkel responded that Greece has to comply with the rules of Eurozone. However Obama’s wording and his approach of a solemn statement sent a clear American message to European partners, that this is the worst moment for Eurozone and the entire West to lose Greece. That’s why IMF’s Christine Lagarde had only good things to say about Varoufakis yesterday, after meeting him ahead of the Eurogroup gathering in Brussels. IMF is strongly influenced by the US.

Ukraine and the West

The truth is that Greece probably aided by Turkey in the crucial business of oil pipe-lines laying could end Russia’s severance from the rest of Europe. Who can’t see that Poland and Kiev have formed a formidable wall cutting off Russia from the rest of the continent, like the Iron Curtain of the Cold War? This is a massive geostrategic American project to discipline and neutralise Russia, now being at risk if a depressed Greece is shown to the door of Eurozone by an irritatingly obstinate Germany. This is exactly what the US wants to avoid in order for the Warsaw – Kiev ‘wall’ to hold well.

Let’s now turn to yesterday’s Minsk meeting. According to a Reuters report early on Wednesday, the Russians expected a last minute agreement for a truce in eastern Ukraine to be struck between Poroshenko, Hollande, Merkel and Putin. In any case and whatever the outcome of the Minsk meeting, the two Ukrainian provinces of Donetsk and Luhansk will gain some form of autonomy. It seems, that what remains to be agreed between the West and Russia, are some minor geographical fine points in the ‘border line’ of the two provinces with the rest of the country. As for Crimea this is already Russian territory and nobody can change that.

Connecting Athens to Kiev

Then the fact remains that Kiev (under the complete control of the West) together with Poland, a Russophobe and stout EU member, constitute a solid ‘barrier’ cutting off Russia from the rest of Europe. Add to that the sanctions against Moscow plus the crumbling prices of hydrocarbons and Russia’s future doesn’t look bright at all.

Then only a kicked out from the EU Greece could moderate the isolation of Russia from the rest of Europe. And a Greek rift could be just the beginning… But this won’t happen because later on tonight the New Prime Minister of Greece Alexis Tsipras will be given by his EU peers a good chance to revitalize his ailing country. Greece will most probably remain a solid EU member state and Athens will continue to be a Eurozone capital and a Western cosmopolitan center, no matter what happened during yesterday’s Eurogroup.

 

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