How Greece’s Debt Crisis Could Collide with the War in Ukraine
The landslide election victory for the far-left SYRIZA in January’s Greek elections has led to fear in many European capitals that Greece could move into Russia’s orbit.
The current and most pressing issue for Greece is whether or not its government and the European Union will agree to an extension of the fiscally troubled nation’s $273 billion bailout. The present disagreements between the two sides are stark. After a meeting Wednesday, Greek Finance Minister Yanis Varoufakis did not even consent to a joint statement with the other Eurozone finance ministers.
The Greek government, claiming its position is validated by the strong mandate it received in the election, is pushing for less stringent austerity measures and budget surplus targets. European finance ministers, especially Wolfgang Schäuble of Germany, argue that the targets are necessary to reign in the Greek public sector and will, in the long-term, make their economy more competitive. With Greek officials warning this week that their government could run out of money as soon as early March, and Greece’s current bailout program scheduled to conclude on February 28th, this week’s talks had a heightened sense of urgency.
What could happen if the two sides fail to come to an agreement? The Greeks would still need emergency funding, and its possible that they could look to Russia for another bailout. The ties between SYRIZA and Russia are well documented, and SYRIZA has been largely supportive of Russia in the Ukrainian conflict. Prime Minister Alexis Tsiparas has called the Ukrainian government, “neo-Nazis,” and every SYRIZA member in the European parliament has voted against expanding sanctions against Russia. The Prime Minister is also a friend of Alexander Dugin, a prominent pro-Putin ideologue who is close with the Kremlin. In a symbol of how Greece’s relationship with Russia has changed now that it is being governed by SYRIZA, the first foreign official the new Greek Foreign Minister Nikos Kotzias met with was the Russian ambassador.
One might ask why Russia would be interested in forging such a close relationship with the new Greek government, to the point that they could fund a potential bailout. One possible motivation is the European Union’s sanctions on the Russian economy. For the EU to apply any further sanctions, it needs the unanimous consent of all 28 members. If Greece were to rely on Russia for financial aid, it could theoretically be pressured into blocking all future EU sanctions on Russia, in spite of possible Russian escalation.
Although this outcome is a few steps away, the fact that such a path for Greece is even conceivable for Greece highlights the severity of the crises that it and the rest of the European Union faces in the coming months.