Does Greece really weigh what is asking for today in Russia?

Greek Prime Minister, Alexis Tsipras, at the last European Council last March (TVnewsroom European Council, 20/03/2015)

Today is the day that Alexis Tsipras meets Vladimir Putin in Moscow to discuss about business and trade under a spiritual Easter atmosphere for the “Orthodox brothers”. The date of this summit was strategically decided to be this week, in order to put some pressure, at least this is what the Greeks believe, to the European leaders-creditors who are deciding the fate of the Greek economy; only one day before the maturity of Greece’s loan payment to the International Monetary Fund (IMF).

In addition to that, the Greek government, despite Germany’s denials, keeps on claiming the latter’s reparations of the World War II (WWII) with the exception that since yesterday is also shouting the exact amount that Germany owes; the Greeks claim the exact amount to be 278.7 billion euros. However, the German government rejects this demand as “nonsense” and isn’t willing to take any actions in order to pay one euro of this amount back.

All the above seem to be desperate last-minute tactics of the Greek government to ensure that it will be in a more privileged position on 24 April when the European finance ministers will gather in Riga for the next Eurogroup meeting, which is bound to be decisive for Greece.

Greece turns to Russia

Greece seems to be placing its hopes for investments that will revive the national economy on Russia. The expectations are high and there are even probabilities that Mr Tsipras will not return empty handed from Kremlin after all. In the agenda of the two leaders is included Russia’s interest for the purchase of Greece’s public companies such as the port of Thessaloniki and ΤrainOSE and the possibility that Russia will offer a discount on gas and new loans.

Particularly, the Russian newspaper Kommersant business daily, citing an unnamed Russian government source, has stated on the visit: “We are ready to consider the issue of a gas price discount for Greece”. However, neither Gazprom nor the Energy Ministry commented on this statement leaving the issue wide open.

The discounts may come but will certainly not be for free. The inclusion of Greece in the Turkish stream pipeline could be one of the terms on Russia’s demands in order to provide help. Also, another term could be Russia’s access to Greek public assets. That could lead to further privatizations which is highly supported by the European Union (EU) and could help unlock the next tranche of 7.2 billion euros; money that Greece desperately needs to make ends meet.

What is more, it is believed that the Greek prime minister will have extensive talks on the issue of agricultural products embargo that Russia imposed to the EU as retaliations to the latter’s economic sanctions against the former. Russia through its agriculture minister Nikolai Fyodorov stated that is thinking of removing this ban from Greece, Cyprus and Hungary; something that will not happen today but is going to be especially profitable for Greece which is facing a huge downturn of its economy during the first months of 2015.

If this is implemented, the Greek agricultural exports will significantly increase, lifting up national confidence. EU has both eyes turned on today’s meeting with its officials discreetly stating that is expecting the equal treatment of all member states and that every member should be expressed with a unified voice, but always within the EU. That Brussels is not seeing well the Greek flirt with Kremlin is more than obvious. The real question however is whether it sees it as “pressure”, as the Greeks would assume, or as reasons to “give-up” on its member state.

Will Greece pay IMF?

Whatever the outcome of the meeting between Alexis Tsipras and Vladimir Putin will be, the Greek government will not avoid paying its debt to the IMF by depositing 450 million euros tomorrow. Besides, Yanis Varoufakis, the Greek Finance Minister, who took the plane to Washington, Headquarters of IMF, and back for just one day, has assured the IMF’s managing director Christine Lagarde that he will pay this loan with no further delays.

Greece found this time the money needed by extracting liquidity from quasi-state entities which means that it basically borrowed money from herself; a solution that was chosen only temporarily. This payment and the fact that Greece declares to meet all its obligations to the creditors is a call to the EU leaders to provide the last tranche of 7.2 billion euros in order to avoid an imminent bankruptcy.

Even if Greece is willing to arrange the accounts with all its creditors, the IMF’s repayment is only a drop in the ocean of debt to be paid. The two next crucial ones, just before the Eurogroup meeting of the 24 April, are on 17 and 20 April. The first concerns short-term debt of 1 billion euros while the second is some 80 million euros of interests to be paid to the European Central Bank (ECB). This means that the Greek government has to struggle to find the money which raises concerns to the citizens of the Southern country about the type of national expenses that will potentially have to be cut down.

WWII‘s reparations in figures

The issue of German reparations has long been on the table but always vague and without any specific number given. As of yesterday the amount of money that Greece demands is accounted at 278.7 billion euros; close to the national’s outstanding debt. It seems that the left-wing party Syriza is mainly trying to put pressure on Germany in order to have a more lenient treatment regarding the measures that must be implemented.

On the other side, Sigmar Gabriel, Economy minister of Germany and Vice Chancellor, characterized this demand as “stupid” and blamed Greece about exploiting this matter in order to overcome its debt crisis. Furthermore, the German government argues that is not going to change its position and claimed that these reparations had been paid back in the 1960s with a 115 million Deutsche Mark payment.

No matter what pressure Greece “tries” to put on Germany though, it is quite certain that the latter will keep on rejecting every claim on war reparations stating that they have the political and legal right to do so.

Will an agreement be stricken at the next Eurogroup?

It is now up to Greece to show that it really wants to be saved, the European Commission (EC) has stated. Further measures are needed to be added to the list of reforms sent by Finance Minister Varoufakis last week, in order to have a possible agreement at the next scheduled Eurogroup on 24 April. Greece is running out of time and cash and has until 19 April to find a common solution with the institutions (EU-ECB-IMF) in Brussels Group level to take a short liquidity breath.

From what we have already seen so far, Greece shows to be willing to act but on its own terms. The Greek government looks for money everywhere at the moment but at the same time appears decided not to implement measures that will hurt the poor people; promises that were the reason of Syriza’s victory in the elections of January 25.

However, the lack of time and the creditors’ pressure for additional austerity measures may lead Greece to abrogate these promises if money doesn’t soon come from the “correct” sources.