A paradox is afoot in the Russo-European relationship. The new government in Greece has formed an unlikely friendship with Putin’s Russia, and now there are rumblings that suggest Russia could provide Greece with a one-time bailout by paying the principle owed on their debt that is the single greatest economic threat to the Eurozone, and potentially the world economy. Given Russia’s precarious economic position, this move looks paradoxical; however, saving Greece may give Putin a strategic advantage over EU sanctions.
The Greek Crisis Since Syriza
The European sovereign debt crisis is the greatest threat to European monetary integration since the Eurozone’s inception. Greek debt is holding the single market in crisis and testing the patience of member states to pay for other countries’ fiscal mistakes. In order to avoid defaulting on its debt, Greece must pay over 20 billion euro this year, provided that the European Central Bank does not authorize a restructuring. Recently, the victorious far-left coalition, Syriza vowed to end austerity and leave the Eurozone. However, this coalition was able to fund its campaigning with Russian money. Greece’s new Prime Minister, Alexis Tsipras, is unabashedly Russian-sympathetic. One of his first moves as Prime Minister was entertaining the Russian ambassador to Greece. Russia may be his first official state visit, all of which has raised concern with Europe’s ruling elite.
Putin’s Soft Power Projections: A Political Hybrid Warfare
While there is much debate about sanctions’ effect on the Russian economy, the overwhelming evidence suggests they have shaken the confidence of Russia’s oligarchs – the critical buttress to Putin’s power vertical. For Putin to have the political capital to stay the course on Ukraine and the Eurasian Union, he must find a way to get oligarchs back into European capital markets. The strongest example of this dynamic is the ban on Russian participation in the SWIFT network of interbank finance. Europe is the primary place for Russian oligarchs’ wealth expansion, and Putin desperately needs them earning money in Western markets again.
Similar to Moscow’s hybrid warfare strategy of public relations and concealed intervention, Russia may undermine Western policy by utilizing its soft power portfolio to fund opposition parties in key European states. Perhaps the most tangible example of this is Victor Orban’s government in Hungary who is unabashed in its admiration for Russia and it’s intention to establish an illiberal alternative to NATO and the EU. Russian money can be found in the coffers of the UK’s UKIP far right party, France’s National Front, and many others. While many analysts have posited that Putin is supportive of Eurosceptic agendas, such a conclusion does not fully explain the potential for Russia to bail out Greece. An alternative hypothesis is that it is in Russia’ best interests to have a strong, albeit Russia-sympathetic, Eurozone from which oligarchs can profit. Therefore, while sanctions may not be reversing Putin’s course on Ukraine, they are losing his oligarch friends billions of dollars.
Western Policy Responses
There are several conclusions the West should take from these circumstances:
- Putin’s soft power is far-reaching. Following Russian money shows which countries are of interest for Russia to influence with through soft power methods. Applying the defense sectors responses to Russia’s hybrid warfare to their understanding of Russia’s political campaign funding will keep the West one move ahead so the bulwark of European politics is not upset in elections.
- Regardless of whether or not sanctions are affecting the Russian economy, they are influencing the power calculations of Vladimir Putin. If he is willing to spend tens of billions to see European governments treat Russia with more leeway, then there must be a greater return for his interests: the return of Russian capital to European markets.
- The greatest threat to Russian capital is volatility in the energy market. As long as oil prices remain low, Russia’s ability to project both soft and hard power will be diminished. Allies may consider working with Saudi Arabia to keep prices down until Russia’s moves are properly countered.
- Most importantly, Eurozone countries must not allow Russia to dictate terms in economic matters. The Greek debt crisis needs to be solved post-haste, lest they grow impatient and turn to Russian money. The threat of Russia buying its way into controlling interest over sanctions and EU policymaking is tangible.