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Tsipras and Putin: Does Greece Have a Russia Option?

Getting closer to Moscow runs counter to Greece’s economic interests.

Credit: esfera Shutterstock.com

Takeaways


  • Greece has more to lose from alienating the EU and US than it has to gain from cozying with Russia.
  • Greece, member of the EU, has veto power on external affairs, including imposition of sanctions.
  • Russia would benefit from propping up Greece’s economy in a way that keeps it in the Western sphere.
  • Russia is Greece’s third-largest importer of travel services. The share held by Germany and UK dwarfs it.
  • Germany is home to 26% of Greek emigrants. Russia accounts for only 0.2% of Greek emigrants.
  • Greece would have to abandon a lot to leave the EU and join a new pact with Russia.

Some analysts have put forward the scenario that Greece will be abandoned by the European Union and fall into the mouth of Russia. This is also an issue of great concern to many in Washington’s defense circles.

In the words of Jean de La Fontaine, “Everyone believes very easily whatever they fear or desire.”

The scenario of Russia using Greece as the first piece in a new Warsaw Pact is certainly worthy of fear. But does it square with Greece’s interests enough to become the likely outcome? Does Greece really have a Russia option?

Probably not. Greek Prime Minister Alexis Tsipras does appear to be courting favor with Russian President Vladimir Putin. He recently made a state visit to Moscow and criticized EU sanctions against Russia in the wake of the invasion of Crimea. Ultimately, however, Greece has more to lose from alienating the EU and United States than it has to gain from cozying with Russia.

What Russia and Greece have to gain

Presumably, the reason for Greece to move closer to Russia would be to get access to loans. Despite being the smallest of the BRICs, the Russian state does have wealth due to its abundant natural resources (primarily oil and gas).

However, while Mr. Putin might ordinarily love the idea of offering financing galore to fix Greece’s problems, Russia has troubles of its own. Its economy is generally expected to shrink at least 3% in 2015, on the back of falling oil prices and economic sanctions.

It is no real surprise then that, while Mr. Putin seems to be happy to receive Mr. Tsipras’s goodwill, he has not shown much interest in lending the Greeks any money.

Where Greece goes, Turkey will follow?

What about Greece’s strategic location as its primary benefit to Russia? Indeed, access to the Aegean Sea would be a strategic gain for the Russian Navy, except getting there still requires crossing the Turkish straits.

Given the historic Greco-Turkish relationship, the idea that “where Greece goes, Turkey will follow” seems somewhat unlikely. The Russo-Turkish relationship has improved somewhat in the past few years. However, it is nowhere near the point where Turkey would do Russia’s bidding inside NATO.

So, the much bigger bargaining chip that Greece could offer Russia is in its alliances with the EU and NATO. As a member of the Council of the European Union, Greece essentially has veto power on all external affairs of the EU, including the imposition of sanctions.

Similarly, NATO functions under the principle of unanimity. Thus, Greece is a much bigger prize with its membership in Western institutions intact. So, rather than making Greece’s departure from NATO a condition for lending to Greece, Russia itself would benefit far more from propping up Greece’s economy in a way that keeps Athens nominally in the Western sphere.

If, hypothetically, Moscow were to pony up cash for Greece, its strategy would probably be to hold the purse strings as the strings of a marionette. A Grexit would diminish Greece’s value as a partner for Russia.

Greece’s relationship with Europe

There is no question that the euro crisis has stirred resentment in Greece and it is probably fair to say that Mr. Tsipras’s closeness with Mr. Putin is meant to put the EU on alert. Yet, Russia could never hope to fill the EU’s role in Greece’s economy.

Greece’s trade with the rest of the EU makes up 53% of its merchandise exports and 54% of its services exports. Russia, by contrast, only buys 1.3% of Greek merchandise exports and 5% of Greek services exports.


Map of the World Based on Greece’s Merchandise Exports, 2013

Greece’s best chance of regaining its economic footing is by improving its export competitiveness. This means keeping its friends and making new ones.

Further offending its European partners, risking its alliance with the United States and forming a new alliance with a country that is an international pariah after invading Ukraine will only cause more problems for the country.

The travel services sector is particularly important as it represents over 17% of Greece’s GDP and 38% of services exports. As you can see from the cartogram below, Russia is Greece’s third-largest importer of Greek travel services.

Yet, it is dwarfed by the share held by Germany and the United Kingdom, both EU members. France and Italy are not far behind, and both the Netherlands and Belgium make the top 10. Overall, 71% of foreign tourist revenues come from within the EU, whereas only 11% come from Russia.


Map of the World Based on Greece’s Travel Services Exports, 2012

Further, it is worth pointing out that Greece has a large diaspora, nearly half of which remains in the EU. Germany alone is the destination for 26% of Greek emigrants. Russia, despite sharing the Orthodox faith with Greece, only accounts for 0.2% of Greek emigrants.

If Greece were to alienate the United States as well as Australia and Canada, more than 80% of Greece’s emigrants would find themselves in unfriendly territory. From a strategic standpoint, this hardly makes sense.


Map of the World Based on Greece’s First Generation Emigrants (Diaspora), 2013

It is also worth pointing out that if Greece were to leave the EU, Cyprus would be in a very awkward position. For Cyprus, EU membership serves as a bulwark against the Turkish occupying force on the northern part of the Island, but the majority of Cypriots outside the Turkish occupied zone see themselves as Greeks. Cyprus would certainly be less comfortable as an EU member if Greece were to leave.

Strategy or democracy?

Looking at the situation strategically, it is clear that Greece has more to gain from a continued alliance with Europe and NATO. However, in a democracy, strategy does not always dictate policy.

The Pew Global Research Center shows that Greeks have a much more positive image of Russia than people in most European countries.

Even in 2014, after the invasion of Crimea, 61% of Greeks said they had a favorable view of Russia. That compares to only 25% of Brits and 12% of Poles. Meanwhile, only 34% of Greeks reported a favorable view of the United States.

From the point of view of the rest of Europe, Greece is definitely not the most beloved country at the moment, and overtures to Russia are not helping.

Nevertheless, the EU was founded with the goal of making the states of Europe so mutually dependent that a war between them is materially impossible. Once a country has joined, it is not meant to be able to leave.

Even if Greece wanted to leave the EU and join a new pact with Russia, it would have to abandon a lot to do so.

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About Pankaj Ghemawat

Pankaj Ghemawat is the Director of the Center for the Globalization of Education and Management at the Stern School of Business at New York University. Follow him @PankajGhemawat

About Phillip Bastian

Phillip Bastian is an Associate Research Scholar at the Center for the Globalization of Education and Management at NYU's Stern School of Business.

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