Greece: Russian backdoor to fortress Europe?

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tsipras-putin_2-760x430_0An alliance between Greece and Russia could have far-reaching consequences for EU-Russia energy relations and for the success of the EU’s energy policy in South Eastern Europe, writes Constantine Levoyannis, Deputy Head of the Greek Energy Forum in Brussels. According to Levoyannis, it could open the door for Gazprom’s proposed gas pipeline Turkish Stream and even lead to a rapprochement between Turkey and Greece.

Amidst growing international spotlight on talks between Greece and its international creditors: on Wednesday 8th April, Greece’s Prime Minister, Alexis Tsipras, met with his Russian counterpart, Vladimir Putin, in Moscow. The meeting of the two leaders has raised eyebrows both in Europe and across the Atlantic, with the President of the European Parliament, Martin Schulz, most recently expressing concern that Greece’s unilateral stance jeopardises the EU’s common position on Russia and weakens international sanctions.

Tsipras was quick to rebuff criticism of his official visit to Moscow, stating that, “certain people should stop making comments – as if Greece is a debt colony. It is not.” Tsipras highlighted that Greece has the right to pursue a multidimensional foreign policy in line with the country’s geopolitical role as a Member State deeply rooted in the European Union (EU), the Mediterranean and the Balkans. Various commentators suggest that Greece is embarking on its own ‘pivot’ to Asia while Tsipras hailed his meeting with Putin as a historic moment in Greek-Russian relations; an opportunity for Greece and Russia to reinvigorate their relations.

Tsipras’ visit to Moscow, just a day before Greece’s deadline to repay its loan to the International Monetary Fund, also fuelled speculation that Greece was gearing up to request economic assistance from Russia for its bailout program. However, Putin quickly ruled out Russian direct financial aid. The hot topics on the agenda were energy, trade, and investments.

The Turkish Stream element: reviving old projects?

The Turkish Stream pipeline scenario has been hotly debated ever since Putin announced South Stream’s rerouting through Turkey on 1st December 2014. During that announcement, Putin had also declared that a hub would be established on the Greek-Turkish border and urged European leaders to construct relevant energy infrastructure to ensure gas deliveries from this hub to European energy markets. The meeting between Putin and Tsipras provided a unique opportunity to elaborate on these scenarios, both for politicians, analysts and for the business world alike.

Tsipras clarified that Turkish Stream will not run through Greece and that a ‘Greek pipeline’ would be built to facilitate gas flows from Turkey. A Greek pipeline immediately suggests the involvement of DEPA (Greece’s Public Gas Corporation). Tsipras did not name the pipeline, but an energy analyst’s mind goes immediately to the Italy-Turkey-Greece Interconnector (ITGI), which lost out in the race to bring Caspian resources to Europe through the Southern Gas Corridor. The ITGI project’s EU funding through the European Energy Programme for Recovery (EEPR) was subsequently terminated following its failure to agree a commercial deal with the Shah Deniz consortium but the Turkish Stream concept has potentially revived the project’s raison d’etre and rekindled the interest of project promoters DEPA and Edison S.p.A of Italy.

Greece will need to find appropriate funding. This year, the EU will be reviewing its list of Projects of Common Interest (PCI) and the first call for tender for EU funding under the Connecting Europe Facility is open. However, EU Vice-President, Maroš Šefčovič, has already ruled out Turkish Stream, questioning the project’s viability and citing unresolved differences between the EU and Russia concerning the Third Energy Package. At present, it would seem unlikely that the EU will give its blessing (funding) to a Greek pipeline, which begs the question, how will the pipeline be funded and by whom?

Turkish stream meets Hellenic Stream

Enter Russia. Putin may have clarified during the Moscow press conference that Greece did not request economic aid from Russia. Nevertheless, he unequivocally expressed Russia’s desire to invest in Greece, leaving the door open for Greece to repay its loans through Russian investments. Putin declared that the Turkish Stream concept would enhance Greece’s geopolitical standing and its role as an energy hub – music to the ears of any Greek.

However, it is important to note that Greece’s involvement in this project serves also to enhance and fulfil Russia’s own geostrategic priorities and interests in the region. Greece’s publicly owned energy assets are of strategic importance to the region. With history as our greatest teacher and more specifically: Gazprom’s bid to buy DEPA in 2012 – Russia’s eagerness to secure Greece’s involvement in the Turkish Stream project goes far beyond obvious commercial benefits.

It seems logical to suggest that any potential funding of a Greek pipeline by Russia would go hand in hand with a deal regarding the privatisation of DEPA to a Russian company, in typical quid pro quo fashion. Such a deal would pave the way for the construction of the Greek pipeline that Tsipras mentioned, and revive ITGI in all but name, giving birth to “Hellenic” Stream.

In order for the above to happen, the privatisation of DEPA has to be cleared by the European Commission, which would explain Putin’s comment urging that Russian investors in Greece be treated equally. Russia’s previous attempt to buy DEPA was unofficially snubbed by the European Commission, through fears that Russia would abuse its position in a regional market in which it is already the dominant gas supplier.

Geopolitical implications and considerations

Whether Russia’s recent gambit in South East Europe succeeds remains to be seen. What can be said with certainty is that Russia is continuing to make further inroads into Europe’s most fragile and isolated regions, the Eastern Mediterranean and the Aegean.

The visit of Alexis Tsipras to Moscow comes just a month after the visit of Cypriot President, Nikos Anastasiades. His visit too was greeted with widespread international angst. During Anastasiades’ visit, Putin had expressed Russia’s will to play the role of an honest broker in Cyprus reunification talks, taking advantage of the good relations that Russia maintains with both Turkey and Cyprus.

In a similar vein, Russia’s proposed Turkish Stream gives Greece and Turkey reason to find common ground and open an enhanced dialogue on energy issues – an element that Tsipras alluded to during the Moscow press conference.

One could say that Russia is using its cultural and religious ties with Greece and Cyprus to create cracks in EU unity on Russian sanctions and is simply serving its own selfish interests. But one cannot help but see the irony in how Russia could be the global power that brings about reconciliation between Greece, Cyprus and Turkey.

Greece and Turkey’s energy relations are frozen as long as no solution is found to the long standing dormant conflict in the Aegean Sea. Furthermore, Greece’s relations with Turkey have come under more strain in recent years over the exploitation of hydrocarbons in Cyprus. The Eastern Mediterranean is traditionally the US’s backyard (home to the US’s second largest naval base outside the US: Souda Bay, Crete, Greece) and a region in which the EU has failed to pay necessary attention.

Events in the region in the past years including the war in Syria, have led to an increase in Russian as well as Chinese naval presence – making the Eastern Mediterranean a pertinent geostrategic hotspot. The reinvigoration of relations between Greece, Cyprus and Russia and the EU’s inability to reconcile differences between northern Member States and the Union’s two problem children, serve to strengthen Russia’s foothold in the Eastern Mediterranean.

Political momentum is building. Energy as a factor that unites.

Turkish Stream and the creation of a gas hub on the Greek Turkish border, coupled with the planned TAP and TANAP pipelines, give Greece and Turkey more reason to enhance cooperation on energy matters. Approaching these issues of common interest could enable Greece and Turkey to tackle more challenging issues such as the Cyprus problem and the Aegean conflict with more zeal in the future through the Greek-Turkish High Level Cooperation Council.

Turkish stream may have no supply contracts signed at present, but the political momentum is building slowly in its favour. The most recent sign of increased political momentum is the signing of a Joint Declaration on the Strengthening of Energy Cooperation in Budapest on 7th April between the Foreign Ministers of Hungary, Serbia, FYROM, Greece and Turkey. The Joint Declaration does refer to the Southern Gas Corridor implicitly, but Turkish Stream has become an unavoidable topic of discussion. As the energy infrastructure puzzle of South East Europe is pieced together, three elements will be put to the test: 1. The impact/success of the newly formed High Level Group on Central and South East Europe (CESEC), 2. Turkish Stream’s viability, and most importantly 3. The future of EU-Russia energy relations.

Editor’s Note 

Constantine Levoyannis is Deputy Head of the Greek Energy Forum in Brussels. The opinions expressed in the article are personal and do not reflect the views of the entire Forum or the company that employs the author.This article was first published by Natural Gas Europe and is republished here with permission.

 

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