Has Greece Been Dealt a Hand of Pocket Rockets or the Hammer?

Greece’s new government has been hinting at pocket rockets or double aces, the best Hold'em poker hand you can hope to have, amid the on-going negotiations over reforms demanded in return for aid from its creditors for some time now.  Nevertheless, the Greek government has yet to provide significant indications other than its tiresome rhetoric.   

This could be changing, however, as Alexis Tsipras, Greece’s prime minister, could be holding off to play this hand next week, on 8 April, when he talks at the Kremlin. Before his visit to Moscow, Tsipras has delineated sanctions against Russia as a “road to nowhere” and that his government would be seeking closer ties with Russia, as he told the Russian news agency Tass. 

These sanctions have hit cash-strapped Athens quite hard as Russia has banned European Union food imports in retaliation for sanctions stemming from the insurgency in Ukraine. Greece exports many agricultural products to Russia, which roughly account for 41 percent of total Greek exports to the country.

Panagiotis Lafazanis, Greece’s energy minister just returned from two days of talks in Moscow where he met with his counterpart Alexander Novak and Gazprom chief executive, Alexei Miller, seeking a further reduction in the price of gas and a lifting of Russia’s counter-sanctions.  "We are seeking lower prices for natural gas so that they reach the level paid by other European countries," he told a news conference in Athens following his visit.

Lafazanis announced that major Russian companies would participate in a Greek tender for deep-sea oil and gas exploration. Hopefully, this will lead the Greek government to formulate a fair and stable licensing framework whose aim will be to attract international investors. Greece has given investors an extension to submit their bids for test drilling in 20 offshore blocks in the Ionian Sea and off southern Crete. Potential bidders have until July 14 to express their interest.

Furthermore, Lafazanis said Greece wanted to upgrade its energy relations with Russia and favored extending a "Turkish Stream" gas pipeline to its territory.  Following the $40 billion South Stream project debacle which would have passed under the Black Sea to Bulgaria and carried up to 63 billion cubic meters (bcm) of gas annually to Europe, Russia has now set its hopes on Turkey, hoping to start constructing a pipeline with the same capacity to a hub, on the Turkey-Greece border, by the end of 2016.

As Lafazanis stated, this opens up a new, promising chapter in bilateral energy relations between Greece and Russia, which is very significant given the critical conditions present in the area and in Europe. Lafazanis went on to say that he is against the EU-wide sanctions and any “energy quarantine” against Russia. 

Tsipras is expected to follow his energy minister’s cue and discuss Greece’s and Russia’s newly rediscovered relationship. Among other things, Tsipras’ meetings in Moscow should focus on energy relations and lifting the ban on Russia’s counter-sanctions. These meetings are of grave importance to the Greek government as Tsipras brought them forward by a month, rescheduling his trip to the “fraternal” Orthodox state.

In spite of that, Tsipras finds himself in a precarious situation, pushed back against a wall that is held up by internal and external supporters of the prime minister. His internal supporters being his government and SYRIZA Party Members as well as his right-wing partners in this government, the Independent Greeks (ANEL).  His external supporters are the voters who placed their confidence in Alexis Tsipras on the 25th of January but also those who have now come to take a fondness in him.

Based on the latest opinion poll undertaken by the University of Macedonia between 25 and 27 March 2015, Tsipras manages to round up 69,5% overall positive and very positive views.   His popularity as prime minister has also recorded a 42% increase compared to the previous opinion poll (10-12 January 2015).

When up against a wall the only course of action is moving forwards.  So, these figures could pronouncedly stock Tsipras’ arsenal and invigorate his confidence when [re]negotiating with his counterparts.  Also the wide[r] support does not leave much room for those criticizing, inside and outside of Greece, that Tsipras does not represent the views of the majority of Greeks. 

It is without a doubt that the EU and the US are also taking this into account and will be closely watching as the talks between Tsipras and Putin unfold.  The EU seems to persist with its tough stance on Greece, and offers little to no concessions. The US, on the other hand, knows all too well that Greece’s geopolitical value far outweighs its poor fiscal performance and is openly voicing its discontent regarding the evolution of the situation.

Any brave statements made in Moscow next week would deal the Greek government a hand of “Russian pocket rockets” when showing up to the next Eurogroup to broker Greece’s future.  If we were to assume that Russia will concede to lifting the ban on the counter-sanctions it has imposed and provide further economic stimulus to Greece, then this would most definitely enhance Tsipras’ negotiating strength but not necessarily his position. This would entirely depend on the decision-making process in Brussels, however. 

Another thing to keep in mind is the fact that as the EU struggles to break free from its energy dependence on Russia and find alternative routes and suppliers, Russia is setting the foundations to ensure its supply of gas into Europe remains intact.  Russia plans to do this via its Turkish Stream gas pipeline, which would fortify Greece’s position as an energy hub.  Furthermore, should Russia take an interest in any of the offshore blocks in the Ionian Sea and off southern Crete this would seriously hinder the EU’s policy of diversification of supply.  Most likely, the EU is taking note of these possible future developments.

On the other hand, if the outcomes of Tsipras’ meetings yield no significant results, it could all go the other way and would be as if Greece had been dealt the “Russian hammer”, otherwise a 7-2 off suit, which is considered to be the worst hand in Hold’em. This could happen should Tsipras’ expectations fall short after the meeting with his counterpart, Vladimir Putin.  Putin might not want to lift the ban on the counter-sanctions imposed on Greece, as Greece is a member of the West that imposed sanctions on Russia. This would also indicate that no financial aid would be coming Greece’s way either. To make things even worse for Tsipras, all he could get in return is a pat on the back, a Spasiba, and a bottle of vodka commemorating the event.

In the end, Tsipras will have to play the hand he’s dealt, so we will just have to wait and see how the visit to Moscow develops

Christos Brakoulias is Deputy Head, Greek Energy Forum Brussels Office