GREEK PM IN MOSCOW: RHETORIC (APPARENTLY)

C O N F I D E N T I A L ATHENS 002375 SIPDIS SIPDIS E.O. 12958: DECL: 12/19/2017 TAGS: EFIN EINV ENRG EPET GR KPRV PGOV PREL RS SUBJECT: GREEK PM IN MOSCOW: RHETORIC (APPARENTLY) UNMATCHED BY DEEDS Classified By: DCM THOMAS COUNTRYMAN. REASONS 1.4 (B) AND (D). ¶1. (C) SUMMARY: During a December 17-18 visit to Moscow, Greek PM Karamanlis signed with Russian President Putin and Bulgarian President Parvanov an agreement establishing a company to construct the Burgas-Alexandroupolis oil pipeline through Bulgaria and Greece. Press reports also indicate Putin and Karamanlis discussed the South Stream gas pipeline, though little headway was made toward agreement. Beyond the energy talks, Karamanlis and Putin reportedly engaged on a broad range of topics, including EU-Russia relations, the Balkans, Cyprus, and defense cooperation. Embassy hopes to get a readout from Karamanlis's office upon the delegation's return from Moscow. END SUMMARY. BURGAS-ALEXANDROUPOLIS -------------- ¶2. (SBU) According to press reports, expanding energy cooperation between Russia and Greece dominated talks during the Greek Prime Minister's visit to Moscow December 17-18. The visit gave a push to the Burgas-Alexandroupolis oil pipeline project as the three interested parties -- Greece, Russia and Bulgaria -- signed a protocol for the establishment of an international development company to oversee construction in the first months of 2008. The Greek press reported that Karamanlis said there were still steps to be taken, but that this was a landmark indicating actual implementation of the project was close. The Russian President also characterized the signing of the protocol as the penultimate step for constructing the pipeline. Addressing an official dinner at the Kremlin before concluding his visit, Karamanlis underscored the significance of the protocol, which, beyond its economic significance, "will constitute a very important step for achieving international energy security." He furthermore noted that Greece looked "forward to the mutually beneficial cooperation of our two countries in other sectors as well, such as natural gas." SOUTH STREAM -------------- ¶3. (SBU) Press reports indicated plans for the new South Stream natural gas pipeline were also discussed, though it is unclear whether headway was made toward a deal. In June, Karamanlis announced Greece's involvement in South Stream, which would bring Russian gas across the Black Sea to Bulgaria and on to other European countries. The Greek Prime Minister said in Moscow that discussions were still in preliminary stages, admitting that more detailed plans needed to be worked out. He announced that experts from both countries would examine technical and economic details of the project, aiming for another bilateral agreement. Putin, on the other hand, linked the South Stream project with the expansion of the Greek/Russian agreement on Russian natural gas supply by saying that Athens was interested in doubling its natural gas imports from Russia through the proposed South Stream pipeline between 2016 and 2040. (NOTE: This would mean that Greek consumption of Russian natural gas would go from 2.8 bcm currently to up to 5.6 bcm in 2040. Currently, Greece consumes 3.7 bcm of natural gas. END NOTE.) OTHER ISSUES -------------- ¶4. (SBU) Beyond the energy talks, Karamanlis and Putin reportedly engaged on a broad range of topics, including EU-Russia relations, the Balkans, Cyprus, and defense cooperation. During a joint press conference with Karamanlis, Putin said they had discussed the situation in the Balkans, particularly the "Kosovo problem," and the Cyprus issue. Putin put particular stress on how Russia and Greece might contribute to the promotion of international stability. "In effect, what is on the agenda is the important issue of what world order will be established for many decades to come. Alongside other states, our countries should make their weighty contribution to the development of dialogue between civilizations, making the modern world more just and democratic, and free from reliance on brute force and blackmail," Putin said. ¶5. (SBU) In the defense field, Putin and Karamanlis agreed that bilateral cooperation was rapidly developing in many different directions, though they did not specify what such cooperation might entail. (NOTE: Just before Karamanlis's visit, the Greek supreme defense and foreign policy council (KYSEA) announced Greece's intention to purchase several hundred Russia BMP armored personnel carriers, which is the first such major arms deal in many years. END NOTE) During the press conference, Putin said Russia was willing to sell Greece any system short of nuclear weapons. ¶6. (SBU) Karamanlis also spoke warmly of Greek-Russian cooperation. He reportedly congratulated Putin on the recent Duma election three times, a gesture the Greek press highlighted as in direct contrast to most European leaders' skepticism concerning the elections. When asked by a Russian correspondent to comment on the reaction of "Brussels bureaucrats" to the Greek PM's visit to Moscow, Karamanlis said: "Greece is a European country and moves along within European policies ... however, on the bilateral level (policies) develop according to national interest. Our good relations with Russia are to the benefit of my country and, in the end, (to the benefit) of Europe." VISIT TO THE RUSSIAN PATRIARCH -------------- ¶7. (SBU) Karamanlis also met with Patriarch Alexei II in a highly symbolic protocol visit at the Danilovskii Monastery. The Patriach welcomed the Greek PM with a warm address that emphasized the excellent relations between the Churches of Greece and Russia and expressed concern about the health of Greek Archbishop Christodoulos, who is suffering from cancer. Karamanlis thanked the Patriarch for his concern about Archbishop Christodoulos and in turn emphasized that "Orthodoxy is the most tested bridge of communication not only between our two Churches but also between our two peoples in our march to the future." COMMENT -------------- ¶8. (C) Karamanlis's moves toward Russia are viewed positively by much of the Greek press and public, which attach considerable value to the common Orthodox heritage and leftist nostalgia. In signing the Burgas-Alexandroupolis deal with the Russians and Bulgarians, Karamanlis is able to make good on a legacy issue of strengthening Greece's position as an energy-transit hub. He is also trying to position himself as taking a "balanced" position between the U.S. and Russia -- in contrast to what some Greeks believe is the overly pro-American line of his Foreign Minister and political competitor Dora Bakoyannis. Many Greek foreign-policy and military officials and specialists, however, are more skeptical and tell us they are wary Greece is going down a risky path. ¶9. (C) We do not believe that Karamanlis's drawing closer to Moscow represents a fundamental re-alignment in overall Greek policy. But on certain specific issues, such as moving toward signing a deal on the South Stream gas pipeline and the obsequious congratulations to Putin on the recent Duma elections, Karamanlis has taken positions that are not helpful. Karamanlis evidently believes he can maintain a balance in relations with Russia and the West. The danger, however, is that, having drawn closer to Moscow on energy, Athens may find itself under pressure to side with the Russians on other issues, such as relations with Iran. We have told the Greeks the U.S. has no problem with better Greek-Russian ties. At the same time, we continue to ask how Greece can reconcile its support for the Turkey-Greece-Italy gas inter-connector with the competing South Stream project -- a question to which we have yet to receive an adequate reply. SPECKHARD