By Noah Donnenberg
As the outcome of the Greek referendum this Sunday has sparked outrage and shock in the European and global community, many find themselves asking the same question: what now? The European Union has been anticipating the possibility of loss of the historical nation since the onset of the 2010 Eurozone bailout following Greece’s first descent into economic turmoil, but now the Greek people are forced to stare the reality of an isolated Greece in the face.
One of the major consequences of the “No” decision reached yesterday was Greece’s likely exit from the Eurozone, a faction who feels “betrayed by the egotism shown in Greece’s debt talks” as European Commission Chief Jean-Claude Juncker said in a BBC press release last week. He stated that “In one night, Europe suffered a major blow and goodwill was thrown to the wind”; this sentiment of deep disappointment is surely shared not only by the ECB, but also by the IMF, to whom Greece is deeply indebted and eschewing any further payment. As Pierpaolo Barbieri stated in the Huffington Post this past week: “creditors did not pull the plug; an irresponsible Greek government did” and this alienation of the creditor base may prove fatal to the Greek economy, because Greece’s economy depends heavily on export to the EU through the EU trading bloc, and through IMF affiliate nations, like the United States. The IMF and ECB aren’t the only parties owed their due: Greece also holds substantial debt in EFSF loans, T bills, bilateral loans, and bonds other than their ECB bonds. Greece’s bankruptcy and alienation of every single one of their key trading partners has left them alone economically. They have no one to buy their goods, and none of the import advantages of E.U. membership or ingratiation to the international community. Greece is friendless, or so it seems.
In the spring of this year, a dialogue started between Greece’s Prime Minister Alexis Tsipras and Russian President Vladimir Putin. Their relationship strengthened when, in June, the EU required the cooperation of all participating nations to continue sanctions agains the expansionist state. Tsapiras freely opposed continued sanctions against his new friend, saying “we need to leave behind this vicious cycle.” Russia and Greece do have much to offer each other, Greece’s position to end EU sanctions, and their 10 billion euro per year patronage of Russian energy make them valuable to the Kremlin. After all, a Greece in political shambles would be to Moscow, a customer lost, and not an insignificant one at that.
In an article, Mehreen Kahn of The Telegraph also proposes that China and Iran are viable new trading partners for the vulnerable nation. The difference in my mind between Russia and any other seedy eastern nation willing to lend a hand, is a key component: motive. Since the military annexation of Crimea last spring, Vladimir Putin has been showing a troubling foreign policy of neo-czarist expansionism. The famous 2006 image of Putin looking at the crown of Czar Peter the Great is symbolic of many of Russia’s newly adopted policies.
The truth remains that there is no such thing as a free lunch, and in the wake of Greece’s exit from the Eurozone, they will need any friends they can get. It is my prediction that the international community will witness a kind of neo-colonial relationship develop between Greece and Russia, as Greece turns more to the Kremlin for salvation. Although, German Chancellor Angela Merkel has stated that she would “not be opposed to further talks with Greece”, an olive branch that Greeks may be eager to cling to in the event of a Russian economic annexation. The international community, including Mr. Putin, will watch with eager eyes as this crisis continues to unfold, but the balance of power in Europe and the future of Greece will remain in contention for some time to come.
If you liked this article, don’t despair! Check out the two other posts in this three-part series about Greece, the Eurozone, and the world economy for more content just like this. And be sure to share these articles on social media if you liked them!
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