GREECE AND RUSSIA: THE GROWING TIES -- THAT BIND?

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

ATHENS 00002171 003 OF 003


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