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### Viewing cable 07ATHENS2171, GREECE AND RUSSIA: THE GROWING TIES -- THAT BIND?

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
07ATHENS2171 | 2007-11-06 15:03 | 2011-05-27 08:00 | CONFIDENTIAL | Embassy Athens
Appears in these articles: www.tanea.gr

`

    VZCZCXRO9211
    OO RUEHDBU
    DE RUEHTH #2171/01 3101503
    ZNY CCCCC ZZH
    O 061503Z NOV 07
    FM AMEMBASSY ATHENS
    TO RUEHC/SECSTATE WASHDC IMMEDIATE 0668
    INFO RUEHXD/MOSCOW POLITICAL COLLECTIVE PRIORITY
    RUEHZG/NATO EU COLLECTIVE PRIORITY
    RUEHBW/AMEMBASSY BELGRADE PRIORITY 0753
    RUEHPS/USOFFICE PRISTINA PRIORITY 0335

` `

    C O N F I D E N T I A L SECTION 01 OF 03 ATHENS 002171

    SIPDIS

    SIPDIS

    E.O. 12958: DECL: 11/06/2017
    TAGS: PREL PGOV RU GR
    SUBJECT: GREECE AND RUSSIA: THE GROWING TIES -- THAT BIND?

    REF: A. 06 ATHENS 1298
         ¶B. ATHENS 2137

    Classified By: CHARGE D'AFFAIRES, A.I., THOMAS COUNTRYMAN.  REASONS 1.4
     (B) AND (D).

    ¶1. (C) SUMMARY AND INTRODUCTION: Since the collapse of the
    Soviet Union, economic, political, religious, and cultural
    ties between Greece and Russia have deepened and broadened.
    Increased economic cooperation -- particularly in the energy
    field -- has been the most conspicuous area of growth, but an
    up-tick in cooperation in other areas is notable as well.  As
    Russia lately has re-asserted its claim to great-power status
    and global influence, primarily through its dominance of
    energy markets, questions naturally have arisen in Athens
    about the expanding relationship and Greece's ability to
    manage it.  Observer opinions are sharply divided over the
    dangers inherent in the expanding relationship; some believe
    Greek diplomacy lacks the expertise and perspective to manage
    it effectively.  So far, GOG efforts are focused on
    protecting Greek interests, particularly in energy.  Greece
    sees its relations with Russia in strategic terms but has a
    hard time articulating the strategy.  END SUMMARY AND
    INTRODUCTION.

    THE EXPANDING RELATIONSHIP
    --------------------------

    ¶2. (U) Bilateral trade drives Greek-Russian relations and has
    significantly grown in volume over the last decade.
    According to statistics published by the Greek Embassy in
    Moscow, total bilateral trade in 2006 amounted to over 4
    billion euro, with Greek exports to Russia (441 million euro)
    dwarfed by Russian imports to Greece (3.58 billion).  Trade
    with Russia accounted for nearly five percent of Greece's
    cumulative trade turnover.  In the period 2004-2006, Russia
    climbed from 14th to 11th largest importer of Greek goods and
    from 5th to 3rd largest exporter to Greece.  Energy
    represents the most important sector in bilateral trade.
    Greek imports from Russia consisted almost entirely of energy
    products (83 percent), with Russia supplying 60 percent of
    Greece's petroleum and 82 percent of its natural gas (ref a).

    ¶3. (C) Russia has also aggressively courted Greece in its
    new-found role as a regional energy transit leader.  After a
    delay of many years, Russia, Greece, and Bulgaria signed an
    agreement on the construction and operation of the
    Burgas-Alexandroupolis (B-A) oil pipeline in March 2007,
    though negotiations subsequently bogged down over
    supply-share arrangements.  The Russians have also pushed the
    Greeks very hard to allow Russian gas to flow through the
    Turkey-Greece-Italy (TGI) interconnector, which was intended
    for Caspian gas, and to permit the Russian South Stream gas
    line to transit Greek territory, an arrangement to which PM
    Karamanlis signed on in June (though that deal too has
    subsequently stalled).  Greek officials and energy executives
    assure us they understand the importance of diversification
    in energy supplies to Europe.  But observers are now
    concerned about Karamanlis's December 18 visit to Moscow,
    where he could finalie B-A -- which Karamanlis considers a
    legacy issue -- with concessions to the Russians on GI and
    South Stream (ref b).

    BEYOND ENERGY
    -------------

    ¶4. (C) The political-diplomatic realm also presents a complex
    picture.  When a common EU position has been identified, the
    Greeks generally adhere to it, and the Karamanlis government
    has supported the NATO-EU line in relations with Russia on
    such issues as the CFE Treaty.  But Greece -- as the only
    Orthodox country among the original EU 15 -- has at the same
    time claimed a special relationship with Russia vis-a-vis
    Western Europe.  During her December 2006 visit to Moscow, FM
    Bakoyannis spoke of Greece's "vanguard role" in strengthening
    ties between Russia and the EU, and last June, she told U/S
    Burns she regarded Greece as a "natural partner" for Russia.
    Putin has visited Athens twice in the last two years, and the
    Russian FM and DefMin have also visited recently.  Such ties
    translate into cooperation -- or at least a convergence of
    positions -- on such concrete issues as Kosovo independence,
    which Moscow (directly) and Athens (indirectly) have opposed.
     Nevertheless, as the EU looks for a common position on
    Kosovo, Athens is attempting to reconcile its support for
    Belgrade with EU realities.  Athens does not see its dual
    partnerships -- with the EU and with Russia -- as conflicting.

    ¶5. (C) Arms procurement is another area of potential
    cooperation, though so far there appears to be much more

    ATHENS 00002171  002 OF 003

    smoke than fire.  Moscow clearly would like to boost arms
    sales to Greece, probably as much or more for the political
    benefit as for the economic benefit, though the latter could
    be substantial.  Rosoboronexport and its agents are a
    prominent presence on the Greek arms-procurement scene, and
    Russian officials often speak of their desire to increase
    sales to Greece.  Greek officials, who often use defense
    procurements to curry political favor with foreign
    governments, have not been unreceptive to Russian advances
    and have discussed many proposals with the Russians.  But
    apart from the TOR missile deal in the late 1990s -- which is
    beset with technical problems and kickback allegations --
    Greece has not signed a contract with Russia for a
    significant military system in years.

    ¶6. (C) The purchase of Russian Beriev BE-200 fire-fighting
    aircraft is one deal the Greeks have been considering for
    some time.  The forest fires in August were an opportunity
    for the Russian planes to prove themselves in the Greek
    context, and Moscow was first to offer them when Greece asked
    for international assistance with aircraft (on a
    cost-reimbursed basis, like most other European countries).
    The Greeks are supposed to conduct an international tender
    this fall to replace their aging fleet of Canadair aircraft.
    The Russian BE-200 and a newer Canadair model are the only
    contenders, but each has problems: the Canadair are more
    expensive to purchase but cheaper to operate, while the
    Russian plane is unwieldy and requires fresh, not salt,
    water, which is at a premium in Greece.  There is, however,
    no question that Russia's swift provision of aircraft last
    August will be a major factor in Greece's eventual purchase
    decision.

    SOME TOUGH QUESTIONS
    --------------------

    ¶7. (C) Observers are sharply divided over whether this
    growing closeness is a cause for concern.  Retired Greek
    Ambassador Alcibiades Carokis told us the Karamanlis
    government was playing with fire in its dealings with Putin
    and wondered whether his former colleagues at the MFA
    understood the implications.  He worried that increased
    dependence on Russian energy could result in increased
    political dependence and questioned whether Greece had either
    the political will or the diplomatic skill to manage its
    relationship with Russia effectively.  "The Russians are very
    aggressive," he said, "and I really don't know what (the
    current Greek leadership) is trying to do."

    ¶8. (C) Other observers take a more nuanced position, noting
    both the advantages and disadvantages of Greece's relations
    with Russia, though they too emphasized the negative risks.
    Andrew Liaropoulos, senior analyst at the Research Institute
    for European and American Studies (RIEAS), surmised that the
    various pipelines could finally make Greece an important link
    in the global energy chain and increase investment and
    technical know-how.  On the down side, however, Greece
    appeared headed for near complete dependence on a single
    energy source, which would likely result in Moscow also
    gaining a greater political voice in the region.  On Kosovo,
    Liaropoulos believed Greek cooperation with Russia added
    diplomatic weight to Greece's desire to preserve existing
    borders; but in the end, Athens could find itself supplanted
    by Moscow as Belgrade's voice to the West (if that ever could
    be said to have existed).

    ¶9. (C) Ioannis Michaletos, a RIEAS Balkan Analyst, similarly
    ved was poised to move beyond the
    energy sector: Greece had a perennial problem attracting
    foreign investment and thus needed the capital, but
    increasing "state capitalism" in Russia and the growing power
    of the siloviki (the former and current security force
    personnel occupying increasingly prominent positions in
    Putin's Russia) meant Greece could find its financial system
    penetrated by Russian intelligence agents.  Michaletos and
    Liaropoulos were also pessimistic about the Greek
    leadership's ability to manage the relationship.  They argued
    that Greece continued to work on an ad hoc basis in its
    dealings with Russia and that Greek diplomacy lacked the
    expertise and perspective to see the "global picture."

    A MORE POSITIVE VIEW
    --------------------

    ¶10. (C) Chrysanthos Lazaridis, senior political advisor to
    New Democracy MP Antonis Samaras, took a more sanguine view.
    Lazaridis agreed that Greek diplomacy appeared unprepared to
    deal with the expanding Russian relationship and said
    Greek-Russian relations would continue to be defined by

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    short-term objectives and peripheral concerns, which the
    Greek leadership mistook for "global" issues.  But he
    believed Greek-Russian diplomatic overtures in any case were
    mostly for show and lacked real substance.  Apparent
    cooperation on such issues as Kosovo represented a
    convergence of interests that would evaporate once the issues
    were settled.  Similarly, the pipeline projects were not
    important in the long run given the energy independence
    offered by transporting oil by sea.  Thus, while the Greek
    leadership was largely unprepared to deal with Russia, the
    problems were not so great that they wouldn't work themselves
    out.

    QUO VADIS, MOSCOW?
    ------------------

    ¶11. (C) Johns Hopkins-trained Constantine Schinas,
    Expert-Counsellor on Russian Affairs in the MFA A5
    Directorate for Russia and the CIS Countries, offered perhaps
    the most balanced view, though he expressed real concern
    about the direction in which Russia appeared to be
    developing.  Schinas said the core of the relationship was
    economic, while much of the politics was "symbolic."  He
    noted Greek-Russian historical ties but said Greece's
    "special relationship" with Russia stemming from the common
    Orthodox faith really functioned only on a sentimental level.
     Periodic summits took place and bilateral action plans were
    sometimes signed but there was no real substance.  Similarly,
    despite the hype, there were few military sales to Greece,
    primarily because Greece did not want to commit to systems
    that would not be NATO-compatible.

    ¶12. (C) Economics -- and the energy question, in particular
    -- was another matter.  Schinas said as Greece had grown
    increasingly dependent on Russian energy, the GOG had watched
    with concern Moscow's attempts to use the cut-off of
    supplies, first in Belarus then in Ukraine, for political
    purposes.  Schinas thought the Kremlin had miscalculated and
    may have learned its lesson, but these incidents were
    troubling.

    ¶13. (C) This brought Schinas to the crux of the matter.
    Russia might simply be interested in maximizing its energy
    market share and thus had an interest in Western Europe
    prospering and growing economically.  On the other hand,
    Russia's recent movement toward authoritarianism was
    disconcerting and raised the possibility that its ultimate
    goal was reasserting its political power through energy.

    COMMENT
    -------

    ¶14. (C) So far, the Greeks have looked out for, and defended,
    specific interests, and we have seen them take tough
    negotiating positions with Moscow on energy deals.  But the
    Greeks often define their interests in regional, not global
    and strategic, terms.  This has been evident across a range
    of issues, from Afghanistan, to NATO enlargement, to security
    in the Aegean.  Our conversations with Schinas at the MFA
    suggest there are some in the GOG who are thinking about the
    big picture on Russia.  But we agree with those who question
    Greece's ability to manage its relationship with Russia
    effectively.

    ¶15. (C) The Greeks clearly enjoy being courted by the
    Russians, even if they often play hard-to-get.  Putin has
    visited twice in the last two years, and we do not expect any
    slowdown in Russian advances.  This is why high-level visits
    to Greece by U.S. officials, such as Secretary Bodman's visit
    later this month, remain important.
    COUNTRYMAN

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