In the run-up to meetings between Greek Prime Minister Alexis Tsipras and Russian President Vladimir Putin early next month, EU and IMF leadership seem to be softening their position where much needed Greece funds are concerned. Scheduled to begin examining Greece’s revamped reforms pledges, the so-called Brussels Group is today examining the documents submitted. In the larger frame, it still remains to be seen what the Kremlin play will be on Greek geo-strategy and economics.
Last week, Greece sent the country’s creditors a long list of reforms along with a pledge to create a budget surplus this year. The “Brussels Group” nod will be needed in order for Tsipras to get unfrozen much needed funds, and to prevent default. The rub for Greece right now is to create the economic atmosphere needed to satisfy Brussels, while at the same time living up to anti-austerity pledges to the Greek people. It is not clear at this time whether or not Tsipras has hedged on the promise, in order to glean the funding to stay solvent.
The mood in between Greece and its lenders improved rather dramatically on the news Tsipras had accelerated a meetup with Putin in Moscow, the obvious fears being a Greco-Russian alliance of one sort or another. France, for one, is now trying to play mediator in between Tsipras’ group and the hard line coming from Merkel’s (above) German bankers. On this Merkel’s opposition, Thomas Oppermann, the Social Democrat Bundestag floor leader, declared a coming catastrophe should Greece default. He told Bloomberg and other media:
“A Greek exit from the euro zone would be a political disaster, not only for the euro zone but for the whole idea of Europe.”
Evidence of Germany’s and Greece’s “disconnect” surfaced in questioned news from the former’s Bild newspaper, a report claiming controversial Greek finance minister Yanis Varoufakis was considering resigning. As for the minister’s take, since the latest negotiations, he’s kept a fairly low profile. This could be a sign Greece prefers an EU deal, rather than some more extreme move toward aligning with Putin and Russia. The famous or infamous (depending on to whom you speak) Tyler Durden, over at Zero Hedge, encapsulates the middle view with:
“As Syriza faces the unenviable proposition of either completely giving up on its campaign promises or plunging the Greek economy and banking system into a drachma death spiral, it appears as though Athens is playing the one card it has left, which is threatening to effectively surrender itself to the Kremlin.”
Other subtle indicators on the state of Greece finances are reflected in the county having sold off a good number of commodities, including the Bank of Greece unloading 5,849 Sovereign coins back in January. With Russia investing in gold more than most any other nation, it’s better than speculation to wonder at a direct loan from Moscow with just such collateral in mind. Putin has been hedging toward putting Russia on the gold standard, a move some experts say would be at least a pint sized stake through the heart of America’s Federal Reserve. Russia currently maintains over 1200 tons of the precious metal in reserve.
Meanwhile Fitch cut Greece’s credit rating Friday, out of fears the country would go belly up on indebtedness, according to EUBusiness. New from Gold Seek frames what seems a “do or die” negotiation showdown this weekend. Total bank deposits in Greece fell to €152.4 billion euros in February, down from €160.3 billion in January, or the lowest deposits level since June 2005.
It would seem timing is crucial here in between the parties concerned. If the EU-Greek bailout talks flop, before Tsipras visits Moscow, then clearly Putin will hold all the cards. The IMF, EU, and interested parties in the west surely know this. I’d be very surprised if the “Brussels Group” failed to give the go ahead to at least postpone Greece’s departure. The only card yet to be played is under the dome of the Kremlin Senate.