I [Heart] Comedy: Russia 'Rescuing' Greece; Other Idiocies

"Psst...Tsipras! I've got you covered if you really want to finish off Greece."

I am utterly entertained by the idea that Russia can help bail out Greece. True, the so-called Greek "socialist" government full of Burberry scarf-wearing and Paris Match magazine-hogging amateurs threaten Western European powers by cottoning up to Vladimir Putin. Still, the idea of Greece becoming a Russian satellite is definitely among the more amusing Syriza rants including asking for WWII reparations from Germany and styling the IMF as a criminal organization. (Remind me to try that last one on people I borrow money from in the future.)

Let's start off with Foreign Policy and its usual sort of unsubstantiated sensationalism about Russia coming to the rescue of Greece:

So far, Russia has largely stayed out of the European financial crisis. But the Greek conundrum provides a tasty incentive to dive in. If Moscow does, it would transform a five-year economic crisis into a geopolitical one. “You don’t want Europe to have to deal with Greece, who is a member of NATO, all of the sudden cozying up to Russia,” Sebastian Mallaby, a senior fellow for international economics at the Council on Foreign Relations said Thursday.

Ahead of the Friday meeting, Russian Deputy Prime Minister Arkady Dvorkovich said he “cannot comment on specific decisions” when asked if Moscow would rescue Athens.

The reliably yellow Daily Telegraph loves reheating this sort of Cold War nonsense:

A communist Greek revolution today may seem a laughable idea. Just as with the Baltic, we like to imagine that the West’s ideological victory in the land of tavernas and so many British summer holidays is irreversible. But it is not. Earlier this year Russia signed an agreement with Cyprus to give Russian naval vessels access to Cypriot ports. On the beaches of Greece’s islands this year you will hear Russian everywhere. The West’s sphere of influence cannot be taken for granted, neither in Greece nor the Balkan peninsular which it caps. We must not be complacent. 

But, back to the real world. Fantasy-loving hacks aside, let's take a look at some hard numbers. Even with upgraded forecasts, the one-trick Russian economy--dependent as it is on energy exports--will shrink a lot this year and barely grown next:

The World Bank has raised its GDP growth forecasts for Russia "to reflect a further stabilization of global oil prices". It lifted its forecast for 2015 to a contraction of 2.7 per cent, up from the contraction of 3.8 per cent it predicted in April. In addition, it has bumped up its growth forecast for 2016 to 0.7 per cent from the decline of 0.3 per cent it forecast a month ago.

Oil prices have stabilised and recovered slightly this year after plummeting in the second half of 2014. The rouble has followed a similar trajectory, falling hard in the second half of 2014 as oil prices dropped and the west imposed sanctions on the Russian economy for its role in the conflict in Ukraine, before the currency staged a recovery in the first half of this year.

Greece's total public debt amounts to some EUR 305 billion, of which it owes Europe's crisis fighters EUR 195 B in emergency funding incurred since 2010. If Greece were truly "going socialist," they would of course choose to repudiate all its debts to European lenders post-crisis or, at the very least, give them a major haircut. You must be joking if the Greeks are counting on the Russians to pay the hated Western Europeans back.

So, the real question then is whether Greece becoming a Russian satellite would compensate for it being subjected to the same sorts of economic sanctions that Russia now faces as a result of debt repudiation or unilaterally erasing between, say, half to two-thirds of its debts. Actually, trade with Russia is around 5% of Greece's total trade--most of which are energy and raw materials. Unless Greece can import a wide range of everyday products from Russia, alienating Western Europe won't solve matters. That Russia itself isn't importing a whole lot of useful things right now it can re-export to Greece doesn't bode well for Greece following the de-globalization route.

Bottom line: Sure Greece and Russia can get together to thumb their noses at the West, but it's an empty gesture. Nobody doubts that Russia is worse off now after going rogue, and Greece is more than welcome to follow its example. But, if it thinks Russia can "replace" the EU as a major sponsor, think again. Russia doesn't have a wide range of goods to sell to Greece. Nor would Russia spend any considerable amount of money bailing out Greece to benefit Western powers who are its ultimate foes.

As the saying goes, how can Russia help Greece when it can't even help itself?