Excerpt : GEAB 94 / Apr 2015
The Greek crisis is about to end… and it won’t be a European cheque which saves it but the fact that Greece is about to find the money to pay off its debt itself. Russia? The US? …
Lack of political will to save Greece
Since 2009 the GEAB has repeatedly said that the Greek crisis was ridiculous in accounting terms compared to the EU’s means and that its resolution was only a matter of political will… unfortunately absent on all fronts in 2014:
. political weakness of Barroso’s EU in particular, preventing Europe from solving the problem with a few cheques
. the Greek political system’s corruption, preventing any hope of solving the country’s malfunctioning
. German paralysis, unable to respond to the so-called paradoxical injunction between its interest in resolving the Greek crisis and its interest in not resolving it
. the opposing political will of a whole bunch of Western players (financial, military, Greek oligarchs in particular), thriving on all the country’s faults.
But things have changed remarkably in these last few months…
The Greco-Turkish « Cold War » at the heart of the Greek crisis
To very briefly summarize, the residue of Greek archaism comes from the fact that it has never been able to free itself from its “Cold War” with Turkey. But this situation is finally about to clear itself under the influence of the very large changes underway.
A 200 year old simmering conflict with Turkey[1], in fact put the country under military tutelage. This tutelage showed itself particularly clearly during the Colonels’ dictatorship (1967-1974) but didn’t disappear with the end of this junta.
Which is why Greece spends 2.5% of its GDP on its army, the highest proportion of military spending/GDP of the whole EU 28 – followed by the UK and France (both 2.2%), then Portugal (2.1% – another aberration moreover…). Globally, the biggest spender and by far is Saudi Arabia with 9%, followed by Israel at 6%[2]; whilst the US spends 4.7%, Russia 4.2% and China 2.1% (2013 data)[3].
Only since 2010 has Greece, « thanks » to austerity measures, begun to be able to reduce this spending. But the inevitable collusion of interests between the institutional political forces and the military hasn’t allowed it to go very far in this direction. The EU neither hasn’t risked pushing Greece in the right direction from this point of view considering the fact that, besides the US, the major arms suppliers to Greece are Germany (25%) and France (12%), two key-giants of the Eurozone[4].
Turkish Stream to the rescue of the Greek crisis
But Syriza’s election, a non-institutional party, to lead the country is a real revolution in this sense. The new Greek government thus has the advantage of being free of all of the Greek state machine’s ancestral guardianship. And the pressures it faces to resolve the crisis quickly is forcing it to find strong and fast solutions. The reduction of the country’s military budget is one.
As we have already seen, an excellent opportunity now exists to resolve the 200-year-old Hellenic-Turkish crisis, provided by the proposed Russian gas hub on the Greco-Turkish border. For the record, Euro-Russian tensions led to Russia’s abandonment of the South Stream pipeline project which was going to pass through Bulgaria but which the EU ruled infringed European competition rules. Right away Putin announced a replacement project this time centred on Turkey, turned into an energy hub… a naturally irresistible project for Erdogan[5].
But for this project to happen, Greece must also give its agreement. However, Euro-Russian tensions in 2014 would have made things really difficult for an institutional government, suitably obedient, forced to get into line with the EU’s official policy of anti-Russian sulking. But for Tspiras, involved in a job of disputing and improving European policies, it’s much less difficult to agree to go to Moscow and consider cooperating in the framework of such an attractive project.
Thus, first having sent Varoufakis to see Lagarde in Washington a few days earlier[6], Tsipras went at Putin’s invitation and the foundations were laid for a Greco-Russian “memorandum of cooperation”[7]. Turkish Stream will distribute the gas, not only Russian but perhaps from elsewhere[8], to Europe via Greece. And the major distribution crossroads will even be located on the Greco-Turkish border, de facto putting an end to the “Helleno-Turkish Wall”.
Therefore, it’s not surprising to see, in the wake of Tsipras’ visit to Putin, the characteristic signs of goodwill between Greece and Turkey[9], nor exuberant optimism from the UK Foreign Secretary, Philip Hammond, on the resolution of the Cypriot problem. And the fact is that UK has some interest there…
And oil suddenly appears !
Because the third converging axe of the Greek crisis’ resolution (and the Greco-Turkish one in its wake) is Eastern Mediterranean oil. The media don’t mention it much but Greece rests on huge hydrocarbon deposits[10].
The previous government had grasped the dossier, already seeing it as a solution to its economic crisis as well as its geopolitical structural crisis. Thus it signed exploitation and development contracts for three sites with Canadian, UK and European (Italian and Irish) companies in May 2014[11]. But its enthusiasm had to cool slightly when it was forced to recognize that rather than reducing tensions with its Turkish neighbour as hoped, the project seemed to revive them[12].
Greece isn’t the only country to have discovered deposits in the eastern Mediterranean. They can also be found off the Israeli, Lebanese, Syrian and Cypriot coasts…[13]
At of this stage, the only country to have dared to start moving its pawns and begin exploitation is Israel. As regards all the other countries, exploration is so risky in geopolitical terms that progress is extremely slow.
There are further deposits along the Albanian[14] and Italian Adriatic coasts. The exploitation of Greek hydrocarbon deposits at the junction of the Balkans and the Middle East has all the ingredients of a multiregional conflagration.
Towards new geopolitics in the eastern Mediterranean
Eastern Mediterranean geopolitics must therefore change considerably for anyone who gives the go-ahead for the exploitation of these deposits.
And this is precisely what is now happening with the detent between Greece and Turkey now in view which provides a favourable context for Greece’s exploitation of its deposits in exchange for Turkey becoming a gas distribution crossroads… and why not oil.
Indeed, in the wake of a giant gas pipeline network’s construction, doubling up with an oil pipeline could undoubtedly be done for relatively little extra cost. Thus Turkish Stream could also provide an answer to the question that one cannot help but ask: will Greece be saved at the cost of continual oil spills in its idyllic islands?
The fact is that our team has often asked itself, since 2009, if Europe really can’t afford the Greek paradise and if it’s really necessary to cover the Cyclades with factories, turning them into a Ruhr Gebiet[15], to satisfy the Germans’ principles of economic responsibility
It’s likely that Greece will satisfy the Germans by becoming an oil producing country… but hoping that environmental damage will be limited thanks to the possibility of the exploration zones’ direct connection to the Turkish-Russian distribution network. Let’s hope from this point of view that no one skimps on the choice of the most reliable drilling technology in the world… and that the EU will impose this choice on private operators. Greece alone, under pressure to survive, undoubtedly hasn’t the means.
End of the arm wrestling competition between oil and weapons… but not of History
In this power struggle between oil interests and military interests, our team believes that oil has already won; the signs which enable us to say so are stemming from the current reorientation of the Western arms markets. The contracts recently signed by Dassault in Egypt and India could be to compensate for those that they will no longer sign with Greece… and Russia[16].
Germany also is turning irresistibly towards Egypt, but also Saudi Arabia… which also asks a lot of questions moreover[17].
With the prospect of savings on military spending, savings on the price of gas[18] and oil profits, in a world where everything is anticipation, Greece will soon become solvent again.
Therefore, if our team anticipates that solutions to the Greek crisis are going to “miraculously” appear between now and this summer, we are also aggrieved that a debt crisis which could have been very quickly resolved by Europe and political will will be ultimately resolved by Russia/Turkey and greed.
But the key is that we stop talking about the Greek crisis, that Tsipras’ methods are given credit for that, and that one more European Wall falls this year, paving the way to new geopolitics on the borders of Europe and the Middle East, based on well thought out cooperation (i.e. between equals).
On the basis of a “memorandum of understanding” between Turkey and Greece on the horizon from this summer, let’s hope for the creation of a “Mediterranean organization of oil producing countries” gradually bringing other former enemies together and founding a new model for the essential international governance of energy which has every chance of being multi-polar too.
If such stakes are poorly managed, this “attractive” solution will quickly turn into a nightmare. But the end of the Greek crisis isn’t, of course, the “end of history”… so goes the world.
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[1] Source : Greek-Turkish relations, Wikipedia
[2] The sums spent by Israel and Saudi Arabia on defence are huge enough to suggest that these two countries’ gradual disarmament is a real challenge for world peace. We must just hope that this objective of disarmament doesn’t happen through the use of this weaponry.
[3] Source : The World Bank, 2013
[4] We recommend a reading of Frank Slijper’s excellent analysis of insane Greek military spending. Source : ExploreGreece, 02/03/2015
[5] Source : Reuters, 01/12/2014
[6] Source : Deutsche Welle, 05/04/2015
[7] Source : Daily Sabah, 10/04/2015
[8] It would probably only depend on Europe “connecting” Algerian or Iranian gas, as well as Russian gas, to the Turkish terminal in the framework of its policy for energy independence.
[9] Source : World Bulletin, 09/04/2015
[11] Source: Enikos, 15/05/2014
[12] Source: The Guardian, 10/11/2014
[13] Source: Nexity/Le blog Finance, 28/12/2013
[14] “Events” may also happen on the Albanian side, directly related to negotiations over the exploitation of Greek deposits. Indeed, if Greece has a hold over Albania on its European candidacy, Albania has a hold over Greece on its hydrocarbon deposits, and that will be a give and take. A track has recently been suggested by the Albanian the president’s statements over Kosovo’s “return” to the greater Albania… which made the Serbian president as well as Mogherini scream… but the show isn’t over. A Great Albania in exchange for Greek oil? Source: EUObserver, 09/04/2015
[15] Germany’s industrial region par excellence. Source: Wikipedia
[16] Source : International Business Time, 11/04/2015
[17] Source : Deutsche Welle, 11/04/2015
