Marshall Horn - Why Russia's Gas Pipeline Deal With Greece Is Likely to Be Stillborn

Marshall Horn,

After prolonged discussion and some agonising, Greece has now confirmed that it has a preliminary agreement with Gazprom to build a gas pipeline across Greece from the hub in Turkey.

This agreement bears only a pale resemblance to the proposal that was discussed in Moscow and Athens in March and April.  Most importantly it does not come with a pre-payment.

Greece will not therefore see any financial benefit from this pipeline until 2019 and - unlike the proposals discussed in March and April - what has now been signed can in no way be considered part of a larger bailout package of Greece involving Russia and the other BRICS states (see What Russia Offered Greece, Russia Insider, 25th June 2015).

With Greece in default to the IMF, capital controls imposed on the country and Greece’s banks in only partial operation, there is anyway simply no time now for the sort of financial package involving the BRICS Bank the Russians were talking about in March and April.  Not surprisingly therefore, in recent days the Russian Finance Ministry has moved to downplay that option. 

The underlying story of the Greek crisis is that though there were some elements within the Greek government - notably the Energy Ministry - that were keen on a realignment with Russia and the BRICS, the predominant faction in the Greek government, including at all times the Prime Minister Alexis Tsipras and both the outgoing and the incoming Finance Ministers, Varoufakis and Tsakalotos, always thought in the end solely in terms of a deal with the EU. 

It is doubtful in fact that this pipeline will ever be built.  

Despite some claims to the contrary, the political will to build the pipeline to Turkey is certainly there on both sides, and there is no doubt it will be built.

By contrast the will to build the pipeline in Greece does not seem to be there.  At the moment it looks very much like the pet project of the Energy Minister, Panagiotis Lafazanis, rather than something the entire Greek government is signed up to. 

Given the implacable opposition to the project of the US and the EU, that all but guarantees its failure.

 

 

 

 

 

via Marshall Horn, CFTC Why Russia's Gas Pipeline Deal With Greece Is Likely to Be Stillborn