Russian Roulette

Spearhead Analysis – 02.04.2015

By Enum Naseer
Senior Research Analyst,
Spearhead Research

putin_och_tsiprasThe winds of change are blowing in Europe: the old establishment has been threatened by the emergence of leftists on the political scene. It started with Greece, sending ripples to the likes of Spain and Italy. Post the initial awe and excitement as Syriza formed government it became obvious that the status quo in Europe was not going to cede power without putting up a fight. Between the Austerity Ayatollah and the Greek government, tensions are running high at the moment—the ante had already upped when populist anti-austerity slogans began gaining resonance with the people of Europe. The former, seems locked on a path of intimidation and coercion against the Tsipras administration stressing that Greece honor its commitments and adhere to the general framework of agreements leaving little room for the new government to make changes.

 The European Central bank may have denied allegations of blackmailing the Greek government into giving in but the recent string of events has provided reason to be skeptical about the ECB’s claims.  Tactics such as cutting off the main source of financing for Greek banks weeks before the deadline and threatening to cut off Emergency Liquidity Assistance were indicative of malafide intentions. The idea is to protect the status quo, to weaken the alternatives to it and to counter the wave of dissent that is ushering in change in European politics. Greece has time and again reiterated its desire to talk things out with international creditors in order to renegotiate its 240 billion euro debt to deliver on its promise of leading the electorate out of economic depression.

Warren Buffet may believe that forcing Greece out of the EU might actually be conducive to maintaining harmony within the Eurozone but it cannot be denied that in wake of such an event, polarization is only bound to increase. Even if Russia does not suffice entirely as an alternative to the EU given its own economic predicament, the post-cold war order in Europe will be served a heavy blow. The geopolitical dimension cannot be discounted: Greece cozying up to Russia will take a toll on unity within the NATO alliance. Negotiations between Greece and its creditors will have a bearing on ties between the EU and Russia. The US, unquestionably, is the biggest stakeholder and is most likely to mount pressure on the EU to loosen the ‘noose’ around Greece’s neck.

So far, what is playing out in the political theatre is being attributed to the Tsipras administration’s desperation. It is pertinent to point out however, that despite the dismissive attitude of the German and French governments vis-à-vis the importance of Tsipras’ meeting with Putin scheduled for April 8, anxiety hangs heavy in the air.  The Greek government plans to negotiate a possible reduction in price of gas from Russia and the lifting of the embargo on some Greek products. Till now, Syriza has held its ground effectively in the face of vehement criticism. While this might be a dangerous gamble for Syriza to take on and victory might entail achieving minor concessions regardless of whatever heavy-duty rhetoric is fed to the electorate, this will determine the future of anti-establishment parties like Spain’s Podemos, Ireland’s Sinn Féin and even Italy’s rightist Northern League. The coming days will provide greater clarity as traditional and populist parties engage in an epic face-off. It is safe, to assume though, that as long as Greece can play Europe and Russia against each other, it is not entirely in a bad position. Feeding Germany’s ego by engaging it in a staring contest whilst establishing itself as a worthy opponent and testing the elasticity of the relationship will only enhance Greece’s stature. The concept of power, after all, is fickle and illusory.