Alexis Tsipras flies to Moscow amid speculation of bailout from Putin

By The Guardian

The Greek prime minister, Alexis Tsipras, began a controversial visit to Moscow on Tuesday as his debt-stricken country raced to meet tomorrow’s deadline for the repayment of a €450m loan to the International Monetary Fund.

With Greece suffering its worst credit crisis in modern times, the defiant leader flew into Russia amid speculation that president Vladimir Putin might make an offer of financial help he would find hard to resist.

As Tsipras departed Athens, officials said the Kremlin talks should be seen through the prism of Athens’ leftist-led government doing “what is best for Greece”.

 

They described the visit as being both “politically friendly and economically promising”.

The two leaders, who hold formal talks and a working lunch on Wednesday, are expected to sign an array of accords, including a three-year plan to strengthen economic and commercial ties.

The Kremlin meeting is also expected to focus on EU sanctions against Russia, which Tsipras has condemned as a “road to nowhere”. On Tuesday, Russia’s Kommersant business daily reported that a discount on gas deliveries was likely to be top of the agenda. Cash-strapped Greece imports 57% of its gas supplies from Russia.

“We are ready to consider the issue of a gas price discount for Greece,” the newspaper reported, quoting an unnamed Russian government source.

Moscow would also be willing to give Greece loans – just as it had done with Cyprus – on the condition that it had access to “certain assets in Greece”, the source said.

International creditors at the EU, European Central Bank and International Monetary Fund have pressed for a mass fire sale of Greek state properties, ranging from airports to ports, to help balance the books in Athens.

Russia has expressed interest in Greece’s transport sector and the ports of Piraeus and Thessaloniki. Vasily Koltashov, a leftist economist at the Moscow-based Institute of Globalisation and Social Movements, told Kommersant that the Greek railway network, OSE, “could definitely be interesting for Russian business”, along with ports and tourist infrastructure.

Western diplomats are concerned Putin will exploit Athens to further Russia’s ambition of dismembering Europe. Tsipras’s criticism of EU sanctions imposed last year because of the Ukraine crisis could play into Putin’s hands.

“There is also a political component because for Moscow it’s very important that Greece adopts a harder position in relations with Brussels over the sanctions against Russia,” Koltashov said.

Tsipras brought forward his trip by a month, underscoring the significance his government gives to the fellow Orthodox Christian state. Top Russian officials, including the foreign minister, Sergei Lavrov, have publicly said Moscow would “positively examine” a Greek request for aid if one was made.

Besides loans, Moscow could possibly offer to lift Russia’s embargo on Greek food products. Russia banned imports of meat, fish, fruit, vegetables and dairy products from the EU in August as part of its response to western sanctions.

At the request of the Greek ministry of agriculture, Russian regulators will reportedly start inspecting dairy producers in Greece on 20 April for compliance with norms.

The Russian agriculture minister, Nikolai Fyodorov, told journalists on Tuesday that Moscow had discussed ending the embargo on food products from Greece, Hungary and Cyprus – which are noted for using softer rhetoric towards the Kremlin than other European countries. But he said a decision on this was unlikely to be made on Wednesday.

Although eurozone leaders are playing down the Kremlin visit, the talks are bound to further alienate foreign lenders propping up the moribund Greek economy.

Amid renewed scepticism over the Greeks’ ability to remain in the eurozone, Athens’ anti-austerity government has spent most of its two months in power fruitlessly trying to unlock €7.2bn (£5.3bn) in financial assistance from its €240bn bailout programme.

Next week Athens must refund short-term Treasury bills worth a total of €2.4bn with interest payments of €80m due to the European Central Bank later this month.

“If there is no deal, and if we see that Germany remains rigid and wants to blow Europe apart, then we will have to go to plan B,” said Panos Kammenos, who heads the leftist-led administration’s junior rightwing partner Independent Greeks. A plan B would include Athens looking towards Russia, the US or China, he added.

The Moscow talks come as Athens scrambles to deal with a credit crunch that has sparked feverish speculation of an imminent default. Visiting the US, the Greek finance minister Yanis Varoufakis was forced to deny such a scenario telling Christine Lagarde, the IMF managing director, that Greece would honour all its debt obligations, starting with Thursday’s €450m repayment to the Washington-based body.

On Tuesday, Athens’ finance ministry said the IMF had agreed to be flexible in its approach to proposed reforms that have caused deadlock in negotiations with the country’s creditors. The measures are key to unlocking the €7.2bn bailout funds included in the country’s €240bn rescue programme. The aid has yet to be disbursed because of disagreement over policies that Tsipras says are at odds with his Syriza party’s anti-austerity platform.

In private, senior Greek officials say their preference would be to find an amicable solution with western lenders. But with relations becoming ever more strained between Athens and the bodies keeping it afloat, Tsipras is also facing growing calls to look elsewhere. Panagiotis Lafazanis, who as energy minister visited Moscow last week, has said the Kremlin talks could lead to a shift in ties between the two countries. As leader of the far-left faction within Tsipras’s Syriza party, and the cabinet’s effective number three, Lafazanis has considerable say in government policy.

Concern that Greece could fall into Russia’s orbit has caused disquiet in the Obama administration, exacerbating fears that Athens could be headed for the euro exit door with possibly disastrous consequences for security on Nato’s south-eastern flank.

Western diplomats in the Greek capital speak of “a dangerous game of brinkmanship” being played at a highly sensitive time.

“It is as if all the main players in this government are driving and texting at the same time,” said one. “What would be amazing, is if there isn’t an accident some time soon.”

On Tuesday, the Greek finance ministry said after Varoufakis’s talks with Treasury officials in Washington earlier this week, the US government had expressed a willingness to play the role of “honest broker” in negotiations between Athens and its lenders.

In a statement the finance ministry announced: “US officials conveyed the importance the Obama administration places on an honest agreement between Greece and its partners and on preserving the unity of the eurozone.”

How Tsipras comports himself in Moscow – and what support, if any, he gives to Putin on sanctions – is likely to be critical to how creditors, and the US, deal with Greece in the days to come.