Why Europe will never give up Greece

Preventing Russian influence in the Mediterranean is the real reason why Europe will never allow Greece to leave the euro zone, according to global investor Marc Faber.

“This is a political issue overlooked by many people,” the infamously pessimistic economist told CNBC on Monday. “If Greece leaves, the North Atlantic Treaty Organization [NATO] countries led by America are very afraid that Russia will establish closer relationships [in the Mediterranean].”

Many economists agree that if Athens does default on its multi-billion dollar debt repayments, $840 million of which is due Tuesday to the International Monetary Fund (IMF), the chances of a Grexit, i.e. Greece leaving the euro currency bloc, are high.

But, should that occur, “the Russian fleet can move into the Mediterranean from the Black Sea,” Faber said.

Russia’s occupation of Crimea and east Ukraine in the Black Sea makes an entry into the Mediterranean very possible due to the Black Sea’s close proximity, Faber explained, adding that a Grexit essentially provides Putin the perfect opportunity to do so.

Greece is generally regarded as a gateway to the Mediterranean, it is also a key NATO outpost in the Balkans.

Faber’s theory is underscored by European worries of closer ties between Athens and Moscow following Greek Prime Minister Alexis Tsipras’ visit to Russia in April.

Not only has Tsipras condemned the economic sanctions imposed on Russia, Athens is mulling over an offer by Moscow to play host to a pipeline bringing Russian gas to Europe. Putin has reportedly said he’s willing to provide the cash-strapped nation with funds if Athens agrees to the project, according to several reports. The U.S. has urged Athens to resist Russia’s offer, advising Greece to back a Western pipeline connecting Europe to Azerbaijan natural gas instead, as Europe looks to reduce its reliance on Russian energy.

“It is clear that Tsipras is allowing Putin to drive a wedge between European countries concerning their stance on Russia,” British think tank Civitas said in a note last month.

The European Union has reason to be concerned over relations between Greece and Russia, said Dimitrios Triantaphyllou, associate professor at Istanbul’s Kadir Has University. “Zbigniew Brzezinski’s [former U.S. national security adviser] recent comments in an interview that should Greece come closer to Russia, it could paralyze NATO, should serve as a warning of the dire consequences,” he wrote in a blog post last month.


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Craig Erlam

Craig Erlam

Senior Market Analyst, UK & EMEA at OANDA
Based in London, Craig Erlam joined OANDA in 2015 as a market analyst. With many years of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while producing macroeconomic commentary. His views have been published in the Financial Times, Reuters, The Telegraph and the International Business Times, and he also appears as a regular guest commentator on the BBC, Bloomberg TV, FOX Business and SKY News. Craig holds a full membership to the Society of Technical Analysts and is recognised as a Certified Financial Technician by the International Federation of Technical Analysts.
Craig Erlam