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Did Putin Sell Out Greece?

Leonid Bershidsky is a Bloomberg View columnist. He was the founding editor of the Russian business daily Vedomosti and founded the opinion website Slon.ru.
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There's been a rash of conspiracy theories about secret concessions that Russian President Vladimir Putin is supposed to have made to Western leaders. The latest asserts that Putin could have helped Greece exit the euro but reversed course at the last moment, thus pushing Greek Prime Minister Alexis Tsipras into the cold embrace of European Union leaders.

QuickTake Vladimir Putin

The Greek newspaper To Vima reported earlier this week that Tsipras had asked Putin for a $10 billion loan so that Greece could transition back to the drachma. If it reintroduced the national currency, it would need foreign reserves to back it up, and Greece was out of euros. According to the report, Russia floated the idea of a $5 billion advance on the construction of a gas pipeline through Greece, a branch of the Turkish Stream project that Russia and Greece agreed to build in June. 

To Vima is a reputable newspaper with good political sources, so 17 legislators from the opposition New Democracy party have officially asked Tsipras whether the report was true. The prime minister probably will deny it, as the Kremlin did Wednesday. Putin's press secretary, Dmitri Peskov, told the news agency Interfax that "the Greek leadership never asked Russia for help." Still, if the report were true, it would tie up a few loose ends.

In a recent interview, former Greek Finance Minister Yanis Varoufakis said there was a "small group, a 'war cabinet' within the ministry, of about five people" that worked on a scenario for a Greek exit from the euro, but no decision was made to carry out the plan. On July 10, Varoufakis wrote in The Guardian that an exit from the euro would have required resources that Greece didn't have:

To exit, we would have to create a new currency from scratch. In occupied Iraq, the introduction of new paper money took almost a year, 20 or so Boeing 747s, the mobilisation of the US military’s might, three printing firms and hundreds of trucks. In the absence of such support, Grexit would be the equivalent of announcing a large devaluation more than 18 months in advance: a recipe for liquidating all Greek capital stock and transferring it abroad by any means available.

The support only could have been obtained from a few countries, Russia and China in particular. China was reluctant to help Greece exit. When Premier Li Keqiang met with European politicians and bureaucrats in Brussels in June, a Foreign Ministry spokeswoman, Hua Chunying, said China "hopes to see that Greece will stay in the euro zone" and that "members of the euro zone are able and wise enough to solve the debt problem appropriately." Russia appeared more welcoming: In May, Deputy Finance Minister Sergey Storchak suggested that Greece could join the BRICS nations -- Brazil, Russia, India, China and South Africa -- and that the group's new development bank could help with loans.

That may be why Tsipras called Putin on July 6, the day after Greeks voted overwhelmingly to reject the conditional bailout proposals of the country's creditors. The readout of the call provided by Russia said only that the parties discussed the vote results "as well as certain matters to do with the further development of Russian-Greek cooperation."

Perhaps Tsipras's call was part of a bluff to strengthen his negotiating position with the creditors by making them think he had other options. If so, the bluff worked, but not quite as intended. On July 8, European Union President Donald Tusk told Tsipras: "Seek help among your friends and not among your enemies, especially when they are unable to help you."

Tusk seemed to suggest that Tsipras had been asking Putin for help.

Tusk got at least one thing wrong, however: Russia easily could provide the $10 billion that To Vima said would be necessary for Greece to switch to the drachma. Even though Russia is smarting from low oil prices, it still has more than $360 billion in foreign reserves. Yet Putin didn't offer the help. 

Alexander Baunov of Moscow Carnegie Center, who once served as a Russian diplomat in Greece, suggested that Putin had little to gain: Support for Greece wouldn't secure a Greek vote against economic sanctions, if only because the Tsipras government was not stable enough, and it wouldn't ensure access to any lucrative assets. Conspiracy theorists from the Zero Hedge blog, however, figured Putin must have backed down as a concession to Chancellor Angela Merkel of Germany:

Merkel suddenly has a massive debt of gratitude to pay to Vladimir, whose betrayal of the Greek "Marxists" is what allowed the Eurozone to continue in its current form. The question then is what is Vlad's pro quo in exchange for letting down the Greek government (and handing over its choicest assets to the (s)quid), whose fate was in the hands of the former KGB spy.

This collusion talk is reminiscent of fears among Ukrainians that the U.S. is selling them out to Putin in exchange for his help in achieving a deal with Iran. Along the same dubious logic, could it be that non-interference in Greece was the European part of the same deal that allows Putin to freeze the Ukrainian conflict with the tacit approval of his Western adversaries?

That theory is probably too convenient. Yet Putin's behavior, both in the Iran talks and in the Greek crisis, clearly shows he is no mad dictator. He's doing his best to signal to Western leaders that he's a responsible player who is only aggressive when it comes to areas he considers his home territory. He's not explicitly asking for anything in return, just a blind eye to his attempts to subvert Ukraine and a certain distance from the anti-Russian Ukrainian leaders. The West's response to the Ukraine crisis will tell us whether the conspiracy theorists are on to something.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author on this story:
Leonid Bershidsky at lbershidsky@bloomberg.net

To contact the editor on this story:
Max Berley at mberley@bloomberg.net