Greek Prime Minister Alexis Tsipras’ visit to Moscow this week for talks with President Vladimir Putin has fuelled wild speculations about the real intentions of the Greek government.
The visit is taking place while bailout talks between Greece and Europe have reached a very critical juncture.
Greece is again on the verge of bankruptcy, but its euro partners insist that the government stay the course with its austerity programme and the neoliberal structural reforms before they unlock more aid.
While it is hard to say what the Greek prime minister hopes to achieve from his talks with Putin, his overtures towards Russia may represent a sincere attempt on his part to reorient the country’s strategic interests as well as reflect a sense of deep frustration with Greece’s euro partners.
And for good reason.
The financial bailouts by the European Union and the International Monetary Fund have created an economic and social catastrophe of unprecedented proportions for an advanced western nation in peacetime conditions.
Greece’s GDP has sunk by 20 percent since 2010, its level of sovereign debt has risen as a share of GDP to 176 percent, the unemployment rate has exceeded the 25 percent mark, and one out of three Greeks live near or below the poverty line.
The general explanation on the part of Greece’s euro partners and in much of the western media for this dramatic situation is that Greek authorities have been slow in introducing structural reforms while hinting at the same time that the Greek people are lazy.
However, the facts on the ground tell a different story. First, major reform policies have been fully implemented across the private sector labour market, which include increasing labour market flexibility and substantially reducing wages and salaries.
Second, the number of public sector employees has been slashed by over 30 percent since 2009, with corresponding salary cuts ranging anywhere from 28 percent to 35 percent.
Third, public education, public healthcare, transportation, and social services have experienced sharp annual budget cuts since 2010 to the point that Greece may now qualify as a failed state.
|Securing a preferential trade agreement with Russia, and possibly some direct financial aid, will help the country’s beleaguered economy and may force its euro partners to adopt a more flexible approach towards an EU member state which seems to be driven directly into the arms of Moscow.
Fourth, most state-owned assets have been privatised, and those that still remain under public ownership (certain airports for example) may soon get privatised under pressure by Greece’s main creditors.
Finally, as the ultimate proof of how misguided and culturally biased the prevailing story is about Greece’s current misfortunes, every major study shows that Greeks work more hours than anyone else in Europe.
Interestingly enough, the question of why Greece’s economy is in such a mess was pointedly answered by Peter Bofinger, a member on the German Chancellor’s Council of Economic Advisers, in a recent interview on German radio: “excessive austerity”.
In fact, in a private dinner conversation back in late November 2014, Bofinger stated to the author that Greece should have pulled out of the euro when the crisis broke out in May 2010 because he could see the disastrous effects that the bailout plan was going to have on the economy and its people.
The IMF has also admitted on various occasions in the past that it underestimated the negative impact of the austerity measures on the Greek economy, but that did not stop its officials overseeing the bailout of Greece from insisting on more and more of the same deadly medicine.
Today, Greece’s situation is exponentially more dire than it was a few years ago. Liquidity has dried up completely and the debt crisis is no longer confined to the public sector but has expanded into the private sector as well.
The new Syriza-led government has done a lot of screaming about the adverse effects of austerity since it came to power two months ago, but it has failed to convince Greece’s euro partners about the economic and moral merit of its case.
Indeed, both Europe and the IMF insist on the continuation of a failed programme that has caused massive economic damage and untold social pain.
As the eurozone’s unquestionable master, Germany has also refused to consider any talk of a Greek debt write-off, forgetting rather conveniently that its own economic recovery after the war would not have been possible if it was not for the London Debt Agreement of 1953, which cancelled a great portion of German debt.
Germany also impugns the claims of Greece about war reparations. Greece has never been repaid for the hundreds of millions of reichsmarks that the Greek National Bank was forced to give to Nazi Germany during the war or for the atrocities committed on the local population by the German forces during the occupation.
Under these circumstances, it is no wonder why Greece’s leftist government is making overtures towards Russia.
During his talks with Putin, the Greek prime minister may or may not request direct economic assistance from Moscow. He will certainly try, though, to strengthen economic ties between the two nations, especially in the area of energy.
Parallel financial system
In the meantime, the Greek government should not hesitate to introduce a parallel financial system (a “double currency”) in order to address the lack of liquidity and help to boost growth.
And, in the end, if all efforts to convince Greece’s euro partners that the social welfare of a nation’s citizens must take priority over any obligations to creditors fail, an orderly exit from the euro may be the only option left.
It could very well be then that the new Greek government’s overtures towards Russia are in anticipation of an uncertain future regarding Greece’s place in the eurozone, even though its expressed desire is for Greece to remain in the euro.
Securing a preferential trade agreement with Russia, and possibly some direct financial aid, will help the country’s beleaguered economy and may force its euro partners to adopt a more flexible approach towards an EU member state which seems to be driven directly into the arms of Moscow.
As for Russia, it might be willing to provide whatever assistance it can (and without necessarily making financial costs and benefits a priority in its decision-making process) to financially beleaguered Greece in order to have an EU member state on its side.
Greece has already expressed its disagreement over EU sanctions against Russia, and it takes only one EU member to veto sanctions.
In sum, if talks between Greece and Russia lead to a fruitful collaboration between the two countries, the EU will have a hard time keeping Russia in check and may even lose a vital political partner in its quest of a unified Europe.
C J Polychroniou is a research associate and policy fellow at the Levy Economics Institute of Bard College and a contributor to Truthout.org.
The views expressed in this article are the author’s own and do not necessarily reflect Al Jazeera’s editorial policy.