This weekend’s news was dominated by the sorry tale of Greece, where a referendum on whether to accept the terms of a new European Union bailout failed by a landslide. Now Greece’s Eurozone creditors face the uneasy choice between offering a more generous bailout plan, or accepting a Greek departure from the Euro.
Sunday’s referendum was just the latest debacle in the five-year tug-of-war between Greece and other Eurozone members. The ruling Syriza party has been openly hostile to the austerity-focused conditions of EU bailout loans — which run counter to their left-leaning economic agenda — as well as to the EU negotiation process itself. The spur-of-the-moment referendum was itself largely a surreal PR stunt: the deal voters were evaluating had in fact been withdrawn by the EU prior to Sunday’s vote.
Unfortunately, the situation in Greece is untenable. Banks remain shut, and ATM users can withdraw only 60 euros a day. The country defaulted on its IMF loans last week, the first advanced industrialized economy to ever do so. An emergency summit of Eurozone leaders is convening on Tuesday to hear new Greek proposals, but it is unclear whether German leaders in particular can be convinced to accept a more generous bailout deal. Failing that, Greece will begin its Eurozone exit, creating turmoil in international markets.
But as I wrote over at CNN.com, “Grexit” would result in more than just financial problems. Greece’s exit from the Eurozone is likely to draw it closer to Russia, with security implications for other EU and NATO member states.
Ties have been growing between Athens and Moscow in recent months:
During his visit last month at the St. Petersburg International Economic Forum, for example, Greek Prime Minister Alexis Tsipras spoke of the Greek and Russian relationship, hinting that Greece was “ready to go to new seas to reach new safe ports”… the Russian energy minister just recently announced a $2.77 billion pipeline project in Greece, and Moscow followed this with an informal invitation to Greece to join the BRICs’ New Development Bank.
Given its current economic problems, Russia cannot afford to bail Greece out entirely. But it could certainly provide funding for sizable infrastructure projects.
In the short-term, Grexit would certainly be a boon to Russian propagandists, “allowing anchors on Russian state TV to highlight further evidence of the decline of the European Union and of Western civilization more broadly.”
And in the longer-term, a Russia-friendly Greek government could even act as a spoiler within the EU and within NATO, including a veto over any extension of sanctions on Russia.
Until this point, the White House has largely avoided commenting on the Greek crisis, other than reassurances that U.S. banks are largely insulated. But as Eurozone leaders make the final choice on Greece’s future, U.S. leaders would do well to consider how a Grexit could impact U.S. security aims in Europe.
You can read the whole piece on the security implications of the Greek crisis here.
This article first appeared on Cato at Liberty.