Greece’s Russian fantasy; Russia’s European delusion

The striking outcome of this Sunday’s Greek referendum is that the collective attitude departed so decisively from common sense. The question on the ballot was convoluted, but the voters were well-informed about the EU’s demands. Having spent a week lining up at ATMs, Greeks grasped the reality of the coming bankruptcy—and yet, they chose to reject the clear demands of their creditors.

One important part of the explanation for an apparently self-punishing choice is Russia. Many Greeks see Russia as a state that upholds its sovereignty and defies the EU diktat. This rosy view—centered on the idea of dignity—conveniently overlooks Russia’s aggression against Ukraine and its threats against the independence of the Baltic states. But never mind, what matters is Russia’s sympathy for their travails. This sympathy was richly supplied to Prime Minister Alexis Tsipras, who, in mid-June, took a break from the difficult negotiations with the Brussels bureaucrats to attend the St. Petersburg economic forum. He returned with no financial aid, which Russia is incapable of providing, but with a promise of a new gas pipeline to channel Russian gas to Europe through Greece. The promise is cheap, since the hastily conceived and hugely expensive project will probably never materialize (not to mention that Turkey is less than enthusiastic about the route). Nevertheless, to the desperate Greeks, it appeared the best hope for escaping the clutches of their European creditors.

Russia has encouraged Greek defiance of the EU not because of a historic affinity with Greece. Rather, Russia has its own issues with Europe. Having found itself economically boxed in after its invasion of Ukraine, Moscow needs to bolster its own belief in Western weakness. Official Russian propaganda paints the EU as morally corrupt and politically divided. In this context, the Greek “No” boosts morale. Between 60 and 70 percent of Russians now express an unfavorable opinion of the EU—a reversal from previous decades, when favorable opinions were in a similar range.

Cooperation: a bitter pill

This odd meeting of the Russian and Greek minds reveals very poignant irony. Just as economic reality dictates that Greece must swallow bitter pills from Brussels to get its house in order, Russians must also cooperate with the EU to get their lost-in-transition country back on the modernization track. During the wasted presidency of Dmitri Medvedev, there was a “partnership for modernization” program between Russia and the EU. But when Vladimir Putin took the reins of power back in early 2012, he saw that initiative as the source of discontent that prompted street protests in Moscow and resolutely put an end to it. He mobilized the country around a new “patriotic” agenda centered on the annexation of Crimea. The deliberately-fueled confrontation with the West fit very well into this regime-consolidation strategy.

Modernization was thus sacrificed for the sake of ensuring the Russian regime’s grasp on power. The deeply corrupt group of Putin’s courtiers failed to foresee that Russia’s inevitable economic decline would imperil their political survival. They never expected the EU to gather the resolve to impose meaningful economic sanctions. Failing that, they expected the sanctions regime to soften as the conflict dragged on into a second year. Now, they are at loss about how to escape from a trap of their own making.

The whole process has been something of a come-uppance for Putin. Indeed, he was offended less by the European decision to extend sanctions than by the matter-of-fact way Russia’s fate was decided by the EU bureaucracy, essentially without any debates or reservations. He even took a short break from playing the great-and-defiant leader to call U.S. President Barack Obama to ask why his recently displayed moderation in manipulating the Ukraine crisis had not been properly rewarded. The conversation was apparently entirely unsatisfactory, as it transpired that Obama didn’t care about Putin’s moderation and wanted Russian troops out of Eastern Ukraine. After that, Putin gathered his National Security Council and instructed his henchmen to prepare a new set of foreign and security policy doctrines, accusing the West of pursuing an “unfriendly course.”

Schadenfreude (yet another Russian import)

Russia may find some pleasure in threatening to punish the sanctions-fixated EU with counter-sanctions—much in the same way the Greeks found joy in rejecting the EU’s demands for financial discipline. Tsipras called Putin the morning after the referendum and received hearty congratulations for Greece’s exercise in democracy. But he didn’t get a single ruble in urgently needed credits. Escalating budget cuts in Russia have begun to inflict pain on Putin’s own oligarchs, not to mention pensioners. The international arbitration court’s ruling that Russia must pay $50 billion for expropriating the assets of former oil giant Yukos looms large over the stressed and shrinking Russian state budget.

Nevertheless, Putin and Tsipras keep pretending that they could somehow join efforts in resisting EU pressure. While this is perhaps only a minor irritation for Brussels bureaucrats, it is to the great detriment of the deeply troubled Greek and Russian peoples.