Greece looks to Putin as debt negotiation deadline looms

As Eurozone leaders prepare for a special summit this Monday to try and clinch a deal on Greece's debt crisis, Athens is set to hold talks with Moscow, 12 days before it must either pay back its creditors or go bust. An Athens-Moscow alliance may allow Greece the leverage it desperately needs.

Russian President Vladimir Putin (front) and Greek Prime Minister Alexis Tsipras arrive for a meeting at the St. Petersburg International Economic Forum 2015 (SPIEF 2015) in St. Petersburg, Russia, June 19, 2015 REUTERS/Grigory Dukor

The European Central Bank (ECB) has raised the level of emergency funding for Greek banks by a reported €3.3 billion, following a request from the Bank of Greece. The Bank insisted that the country's financial system was still stable, despite Greeks withdrawing  their money in the billions this week, fuelled by the fresh deadlock in loan talks.

The Greek government is insisting a deal is still possible, with Prime Minister, Alexis Tsipras, saying "those who invest in crisis and terror scenarios will be proven wrong." The ECB’s emergency liquidity measure is aimed at keeping the banks open, at least for a few more days, as the deadline for a debt deal quickly looms.

Though the majority of Greeks do still want to stay in the Eurozone. Professor Vassilis Monastiriotis, from the London School of Economics’ European Institute, told RFI enthusiasm is running low. He said that “increasingly people get alienated and frustrated by the harsh stance, as it’s perceived, of the European Institutions.” and that there is “definitely a very limited realisation of the consequences of the cost of a Greek exit.”

The Greek government has signed a preliminary deal with Russia over the construction of a gas pipeline through the Mediterranean country. Tsipras flew to St. Petersburg whilst the 11th hour debt negotiations rambled on in Europe.

Panagiotis Lafazanis, Greece’s Energy Minister, called Friday’s pipeline agreement “historic”, saying “our message is a message of stability and friendship. The pipeline we are beginning today is not against anyone in Europe or anyone else, it is a pipeline for peace, stability in the whole region."

Relations between Russia and Europe have grown increasingly strained since the outbreak of conflict in Ukraine, and this deal may be seen as shattering Europe’s united front.

In response to the agreement, the European Union has said the continent already has enough pipelines to meet all its “current and future needs”. The EU currently gets a third of their gas imports from Russia, almost a half of which flows through Ukraine.

Professor Monastiriotis is skeptical that the pipeline will actually go ahead, saying the timing is “all about sending political signals and creating some pressure for a more favourable stance by the Europeans on the debt negotiations.”

The Russian government has said that loan negotiations were not discussed with the Greek Prime Minister at the meeting, and Deputy Director of the Centre for European Reform, Simon Tilford, told RFI Russia is in no position, nor is it willing, to take on the financial burden of Greece.

European Union President, Donald Tusk, has called an emergency summit of the leaders of the 19 eurozone countries in Brussels on Monday, after finance ministers on Thursday failed to break the five-month deadlock between the anti-austerity government in Athens and its EU-IMF creditors.