We Aren’t Going to Give Greece any Money

Greece’s withdrawal from the eurozone would have dealt a heavy blow to Germany’s image as the leader of the EU and a personal defeat to Angela Merkel. Looking at what’s happening within the EU, the Americans are becoming increasingly convinced that the Europeans are no longer capable of solving problems. For Russia, Greece is not a priority. Moscow is much more interested in Eurasia, and in this regard it looks forward to seeing the Shanghai Cooperation Organization (SCO) to increase its political clout. Fyodor Lukyanov, Research Professor at the Faculty of World Economy and International Affairs, Higher School of Economics, and head of the Council on Foreign and Defense Policy discussed these and other issues in an interview with Lenta.ru

The Greek referendum is the hottest topic of the week. What actually happened? What does the outcome of this vote mean for Greece and for the rest of the world?

Lukyanov: As strange as it may sound, it’s hard to say what actually happened. The Greeks have demonstrated their unbending will and determination by giving their government a mandate for whatever it was. It’s difficult to say exactly what it was. The irony of this act of direct democracy is that the question put to a vote concerned the subject that ceased to exist by the time of the vote. The terms and conditions posed by the creditors, which were rejected by the Greeks who overwhelmingly voted ‘Ohi’ (No), expired on June 30, when the country defaulted on its obligations. In a situation where it’s not clear what the question is and, hence, not too clear what the answer is, the only choice left is to try to make some sense of the outcome. The result is as follows: even though they exerted strong pressure on Athens and even threatened the Greek government, the European countries took the result of the referendum fairly stolidly, as if saying, well, if this didn’t work, let's keep talking and see what you will come up with next.

If the Europeans weren’t much affected by all of that, then what was the referendum for? How did Prime Minister Tsipras benefit from it?

He was dealt a trump card, which he needed not so much in his negotiations with the creditors as in his dialogue with Greece. There was a storm brewing prior to the referendum, and it seemed that Tsipras could be swept away by the opposition. The result of the vote was quite unexpected: the polls didn’t predict such a decisive "no." As a result, Antonis Samaras, the leader of the New Democracy opposition party, announced his resignation. All the other parties have, in fact, given their blessing to Tsipras for further negotiations. He came to Brussels backed by the Greek people and the political class.

In other words, it was a vote of confidence in Tsipras. He got it. Now what?

It remains an open question. Tsipras received an ultimatum: either Greece, within several days, offers a solution acceptable to its creditors, or all talks come to a halt and the parties start discussing the procedure for a Greek exit from the eurozone. Even though Athens has been receiving such threats for quite a while now, this time things are extremely serious. Germany is playing a major role in this process, and Merkel ultimately wants certainty.
What does this all mean to Germany? Wouldn’t this situation undermine Berlin’s position as the European Union’s leader? Or, is it the other way round and Germany will now be able to show its worth as the main EU country?

Indeed, Germany has a chance to prove its worth as a leader, but this opportunity is fraught with major risks. The burden of managing the eurozone lies with Germany in any scenario, but especially so if they decide to let Greece go. This is a major turnaround. The policy of the past five years to rescue Greece was initiated by Germany – by Merkel personally, in fact. Greece eventually leaving the euro area will come as a major defeat for her. That's not what Merkel was looking for. On top of it, Greece owes most of its debt to German banks. In other words, they want to keep Greece in the eurozone not because it’s a valuable economy, but because a Greek exit will throw major banks in Germany, France and Italy off balance. This would unsettle the multilevel system of financial and economic relations, and no one knows how it would all end. Nevertheless, Germany seems to be faced with a choice: either it takes responsibility for transforming the eurozone - it needs to be done sooner or later in any case – or it backs off and Berlin’s prestige suffers as a result.

I’d like to focus on the issues of damage to prestige and image. Will Greece leaving the eurozone deal a blow to the image of a tight-knit European family?

The image of the European Union has already been dealt a series of blows, as acknowledged by some European leaders who rightly believe that the Greek epic is devastating to the image of the European integration project. Everyone understands that, while the Greece’s problems have been compounded by the actions of other countries, the Greeks themselves are ultimately to blame. Nevertheless, some in Europe sympathize with them, because many see the Greek crisis as the epitome of EU dysfunction, and believe that things and relationships within the EU should be revised. Germany personifies the logic that led Greece to where it is now. The elites in charge of European integration have never asked ordinary people to participate in decision-making out of a belief that it is pointless...

Why is that? Ordinary people can’t figure out complex issues?

Yes. It involved "delicate matters" and legal technicalities. In fact, every time a similar issue was submitted to a referendum, problems arose. The European constitution draft fizzled out that way. The vote in France was, of course, not "for" or "against" the draft, but "for" or "against" Chirac, who, by that time, was widely unpopular. There were unsuccessful, from the point of view of Brussels, referendums in smaller countries, such as Denmark and Ireland, but they were literally forced to re-run their referendums.

"You got it wrong, give it another try"?

That’s exactly right. "You chose the wrong answer." However, it doesn’t work with Greece, because the crisis is acute. If the circumstances were milder, then, I think, the Greeks would be offered a chance to choose again.
Whatever it was, the politicians always found ways to explain to the citizens of Germany, France or Denmark why European integration is good for them personally. However, beginning in the early 21st century, when they tried to bring European integration to a whole new level, explaining anything became impossible. On the one hand, this is due to the simple fact that everything was very complicated. On the other hand, no one was sure any more whether it was good or bad. European integration started to seem like riding a bicycle: you must keep pedaling in order not to fall, and it doesn’t really matter which way you're going.

Might it also be that the European officials - the people who engage in this integration process - have completely lost touch with the people and live in their own little universe?

Absolutely. But the case of Greece is also remarkable for the fact that it shows that national leaders - not members of the European Commission, who, by definition, tend to think in supranational terms, but rather the heads of the EU countries - have come to think in pan-European ways. That is, in this situation they think not about what it means for their homeland, but what it means for the entire European Union. The fact that the elites exist above and beyond their respective nations speaks to the disconnect between them and the masses. Today, ordinary citizens in France or Germany think of themselves as Europeans more than, say, 50 years ago, but they still identify themselves as French or German in the first place. Not the elite. There is an objective reason for that: most European issues are addressed at levels other than national. However, explaining this to people who pay taxes to their respective governments, not the European Union, is extremely difficult.

A case in point: a study conducted by Pew Research Center was published recently and caused quite a stir. It found that more than half of respondents in France, Germany and Italy don’t believe that NATO should intervene if Russia goes to war with the Baltic countries. This is a disaster for NATO. What the Lithuanians and Estonians have been saying all the time, "Deep down, you don’t want to protect us," turned out to be the truth. It's not because the Germans don’t like the Estonians, but because the Germans don’t want to get involved in a conflict. Especially with Russia - a large country with nuclear weapons. This is another example of the disconnect between the elite and the masses. The elite is not trying to tune into the sentiments of the populace or to explain anything to it, but is instead trying to brainwash them with propaganda.

Since we are talking about NATO, it’d be nice to know what Washington thinks about the Greek crisis. Greece is a member of NATO, and one of the few countries that used to regularly pay its contribution to NATO.

To be more precise, Greece is one of three such NATO members. Only two countries other than Greece did so: the United States and the United Kingdom. That’s ridiculous: Athens complied with NATO standards and spent at least two percent of its GDP on defense, which no one else in continental Europe did. The Americans used to hold Greece up as a model in this regard. However, reducing military spending is one of the measures that the EU is now prescribing for Greece. Clearly, there is a contradiction. Washington is following these developments with great anxiety. Obama is in regular contact with Merkel, Hollande, and Tsipras, which, generally speaking, is a rare occurrence: typically, US leaders have not bestowed this honor on Greek prime ministers.

However, it is commonly believed in Russia that the Greek crisis was engineered by the Americans in order to weaken Europe. I think this is too simplistic an approach. On the contrary, the Greek crisis for the United States is yet more proof that Europe is unable to make its own decisions. It creates problems, but cannot resolve them. The Americans don’t understand what the problem is all about. Argentina or Bolivia went bankrupt on many occasions. The mechanisms to overcome the crisis are known: all you need to do is write off a certain amount of debt and restructure the rest. The Americans are very annoyed. In addition, Greece is a NATO member located in an area that is important from the perspective of what’s happening in Ukraine and the Middle East. So, the Americans are putting pressure on the Europeans, demanding that they reach a final resolution. Publicly, they do so fairly mildly, but the pressure is much stronger behind the scenes.

What does this mean to us? The United States has already stated that Greece needs to be saved, otherwise Russian warships will soon dock in its ports. To what extent are these concerns justified?

The eurozone crisis won’t do us any good. We can, of course, gloat: you lectured us for a long time about how things work, but look at you now - you can’t even help yourselves. However, the European economic and currency problems could set off a new global economic crisis, resulting in plummeting oil prices, declining business activity and so on. Even if this scenario doesn’t materialize, things will still be bad for us, as we are still closely tied with the EU despite our political differences.

With regard to Russia’s behavior and despite the West’s fears about "Putin taking Greece away from us," Moscow is acting very cautiously. Meeting with Tsipras in St. Petersburg is okay, but giving money to Greece is out of question. Clearly, giving money to Greece today would be a waste, like when we gave three billion to Yanukovych just before the Maidan protests. Therefore, Russia will wait and see if Greece stays in the eurozone or not. Only after this becomes clear, at least in general, can we talk about some kind of involvement, be it in the form of assistance or investment. With regard to Russian political influence, the West greatly exaggerates it. That is, if an opportunity presents itself, Moscow will certainly grab it, but it’s not involved in a big game in southern Europe, since it has another priority area in mind.

There were publications that said that Greece will distract Europe from the Ukraine crisis. Is that true? If yes, is it good for us?

In a way, this is true. Talk of Ukraine disappeared from European media. But this does not mean that Ukraine has been completely forgotten. First, for some European countries, such as Poland and the Baltic countries, Greece is important only economically, not politically, whereas they are very much concerned about the future of Ukraine. Second, Germany has invested a lot of effort in resolving the Greek and Ukrainian crises. If it fails at both, it will deal a heavy blow to Berlin and Merkel personally. The interest in Ukraine and the desire to invest in it may subside, but no one will ever forget about Ukraine.

That does it for Greece. Let’s move on. The SCO and BRICS summits took place this week. How important are these organizations and where are they headed: are they gaining or rather losing their political weight?

They are important, and their clout is on the rise. But they are completely different, even though we often speak of them in the same breath. BRICS is not an organization, but rather a club that most resembles the G7. This is an association of the countries that are united by certain basic ideas about the world order. BRICS comprises the countries that are not part of the Western world, but are large and influential. It is important to understand that "non-Western" doesn’t mean "anti-Western." All the letters in this acronym, except for the “R,” make every effort to avoid being seen as anti-Western. Therefore, the BRICS documents are always balanced. These countries will never support anti-Russian policies, but will never join Russia in its struggle against American hegemony. The United States and Europe are looking at this association with a great deal of envy and animosity. On the one hand, they say that BRICS is an absolutely artificial union; on the other hand, each BRICS summit draws a lot of attention and suspicion: "What if they agree on something?" Admittedly, this speculative structure has, in fact, begun to take on an institutional form. BRICS created the New Development Bank and the Contingent Reserve Arrangement. Of course, this is not aimed against the IMF, but it is meant as an alternative.

The SCO is a regional organization. Eurasia is now in the spotlight. It is home to ISIS and conflicts in the South China Sea and the East China Sea. Given the efforts to consolidate Eurasia and turn it into a subject rather than object of international politics (against the backdrop of closer ties between Russia and China), the SCO may well go from a rather sluggish organization with an unclear mandate to a promising coordinator, especially if India and Pakistan join it. 
Russia needs BRICS as a symbol and the SCO as a policy tool. The SCO is important precisely because of its diversity. We support India’s plans to join the SCO, as we will no longer be "one on one with China." China is no longer interested in the SCO the way it used to be. Partly because in the past Moscow used to block Beijing’s initiatives, in particular, with regard to creating the SCO Development Bank. By the way, it was a mistake, because China is still investing in the region, but now it does so directly, and Russia has no say in it. On top of that, China has created the Asian Infrastructure Investment Bank, to which Russia is a party, but we’re on the sidelines (we are the third largest country in terms of contributions to this bank, but Russia’s contribution amounts to only about six percent of the bank’s total reserves). So, our goal now is to revive China’s interest in the SCO. And Putin said so directly, arguing that the SCO must become Eurasia’s core structure.

The deadline for the nuclear deal with Iran was moved back this week again. However, most likely, the deal will soon be signed, because too much effort has gone into coordinating its terms and conditions. How will relations between Moscow and Tehran proceed after the sanctions on Iran are lifted?

I think that that the deal will be signed, because the two major stakeholders - Iran and the United States - really want it. The fact that the talks have been extended is a good sign, because the parties are really working on coordinating every last detail. According to the negotiators, "nothing is agreed until everything is agreed."

What’s next? On the one hand, many in Russia hope that Iran will greatly appreciate the support provided by Russia in challenging times. On the other hand, there are many others who believe that the Iranians will dump us and become friends with the United States and the EU. In fact, neither scenario will come to pass. Gratitude is a rare thing in international relations. Besides, we believe that we supported Tehran in the years of sanctions, while Iranians believe that Russia only pretended to support Iran, since we actually voted in favor of the sanctions. However, the apprehensions that Iran will become a US ally are groundless. Iran is a one-of-a-kind, self-assured and very independent state. The Iranians’ mistrust of the United States is not going anywhere in the foreseeable future.

Of course, as soon as Iran is no longer isolated, it will start exporting oil and prices will decline, which is bad for Russia. Naturally, we will have to fight for a place on the Iranian market. However, this doesn’t mean that Russia should have stayed out of the negotiations between the P5+1 and Tehran, helping Iran put up with the West. Iran wants to break out of its isolation. If that’s the case, then sooner or later it will do so. Will it serve Russia well, if by this time it has a reputation as a country that hindered the normalization of relations between Iran and the West?

Why didn’t normalization happen earlier?

Changes in the regional context gave an impetus to the negotiations. The Americans are watching in horror as their entire system of relations in the Middle East is unraveling. In these circumstances, the lack of normal contacts with a clearly stable and powerful country is bad for the United States. That is, the West recognizes Iran's role in stabilizing the region. Russia has all the more reason to do the same. It’s the beginning of a new era: as in its best times, Iran is back on the big international stage. 

Source: Valdai Club