So we have had the EUQE and the Greek Election. There appears to be a huge sense of disappointment from the economic editors of the non-financial media that there hasn’t been a good story of market panic to play in exchange for the huge expenses involved in sending their person with a microphone to stand in front of the Parthenon. Here’s a tip to media cos. - Bluescreen backgrounds are so good nowadays you can keep your journalist in the basement of your cheapest to run building and they can still appear to be wherever they are reporting on.
Robert Peston, the BBC's economic editor, decided to explain the lack of movement by first listing all the things that could/may go wrong and finished by suggesting that believing things will be OK is ‘Naive’. Listen to him here min 37.30 onwards. It sounds like he's hoping he will have a story in this one day.
And while we are talking about media Europe woes. Remember the Economist front page indicator alert calling for Euro-doom back in October? Let's have a Dax update,
What now? Tsipras is declaring allegiance to staying in Europe and considering debt renegotiation a no brainier. So what makes him think that those who have lent to him are willing to forgo their investments? The old banker saying ‘If you owe me $10,000 it's your problem, if you owe me $100bio it’s my problem’ springs to mind.
But whilst many feel that the main Greek threat is of killing (through default) the overseas debt hostages that it holds, this may not be the strongest card in Tsipras’s negotiating hand. If push really came to shove that debt could be buried in the ECB coffers and QE’d through an accounting fudge. Printing money to replace money that has otherwise vanished outside the EU with a Grexit, can hardly be considered inflationary. It’s more a loan guarantee backed by printed money.
Perhaps the biggest threat Greece can hold over Europe is over who they may 'have to' turn to for financial help in future and these new partners may not be the West’s best friends. I have been trying to dig up commentary on what would happen if Greece did go whole-hog and leave the EU, yet all I can ever find is references to economic outcome and deep delves into what happens to the debt. I am finding it very hard to find anything on potential political threats to Europe's most geographically important south-east border or opinion as to whom Greece may turn to for new allegiance.
It’s probably worth referring to a couple of old stories covering these issues as a reminder that stories of associations between Greece, China and Russia are nothing new yet seem to have been forgotten in current commentary.
US Mediterranean Powers
China eyes Greek gateway to invest in Europe
However Greece is a member of NATO, so any such future link ups would be frowned upon yet could be used as leverage for compromise.
Greece and NATO: a long lasting relationship The Alternate Minister of National Defence of Greece, Yiannis Ragoussis, tells NATO Review how important NATO is for Greece, as well as about his country’s active membership in NATO
(bold highlights are mine)
'In concluding, I would like to underline that Greece’s current difficult financial situation actually contributes to the moral strengthening of its forces which are working harder than ever to maintain high standards and are making sure our people and our country is secure. Also, allow me to stress that Greece contributes positively in creating the appropriate structures and policies for regional security. Last but not least, enhancing security and stability collectively by forming Alliances has deep roots in Greek culture. Ιn ancient Greece, Athens took the initiative to form the first long lasting Alliance, the Delian League which has frequently been described as having many similarities with modern NATO. Greece, due to her geopolitical position and regional role, her active participation in all international organizations, her initiatives, her bilateral forms of cooperation and her explicit political will for peace, plays an important role in supporting the NATO of the 21st century'
This last paragraph highlights Greece's skills in alliance building but it shouldn't be assumed to always refer to building alliances with your friends.
But this FT article from 2012 is worth revisiting
Greece: Moscow’s new naval partner?
With this paragraph being of particular interest,
"But as western investors retreat, state-owned Russian and Chinese companies have gone bargain-hunting. Cosco, China’s state-owned shipping company, has already won a 35-year concession to operate the Greek port of Piraeus. Russia’s Gazprom is reportedly eyeing the privatisation of Greek gas company Depa and grid operator Desfa.
A 30- or 50-year deal that provides Russia’s navy with basing rights at Piraeus might one day make sense for both sides. Over time, the deal could bring Greece’s cash-starved government as much as $200bn.
It is impossible for Lucas Papademos and his technocratic government to cut such a deal, in part because Greece’s Nato allies would strongly object. But a future Greek coalition led by the New Democracy party, under enormous populist pressure to raise money and to resist demands from Berlin and Brussels, is another matter."
That last line sounds as though it could now be invoked. If for nothing else but a very strong negotiating weapon.
Finally, let's imagine one more threat that Greece could hold over the EU. They could set up as a financial centre happy to handle the grey money of the world to a point that would make previous ventures in Cyprus look positively schoolboy. Sitting outside the EU they could also sell themselves to financial institutions as environments to operate from free from the growing strains of EU regulation (including bonus caps). Just a thought....