‘Options for Greece outside the EU’
In a move that will undoubtedly concern the EU, Russia has invited Greece to join the BRICS New Development Bank. Should Greece accept, the global economic and political landscape would dramatically change.
Alex Tsipras, Greece’s Prime Minister, described the invitation as unexpected after receiving a phone call from Russian finance Minister Sergey Storchak on Monday, but thanked Russia and said Greece would consider the proposition before making a decision.
Greece said in a statement that, “(Tsiparas) will have a chance to discuss the invitation with the other BRICS leaders during the 2015 International Economic Forum in St. Petersburg”
Headquartered in Shanghai, the £100 million dollar BRICS Bank was set up to rival The World Bank and the International Monetary Fund after both organisations failed to implement reforms to their voting systems. Currently the BRICS nations (Brazil, Russia, India, China and South Africa) are under represented in both institutions, due to outdated voting systems which have not accounted for their recent GDP growth and burgeoning economic clout.
What Implications Would a Greece Departure Have?
The move to make Greece the Bank’s sixth member will certainly rustle a few feathers in Brussels, and may alter the nature of negotiations with Greece and its creditors. The country’s fraught financial situation belies the fact that it still has considerable bargaining power and could also potentially disrupt Europe’s fragile consensus on Russian sanctions. Therefore, despite Greece’s economic situation appearing desperate they hold considerable power.
Russia and Greece have been strengthening their economic ties and now enjoy what some have called “a cosy relationship.” This was further solidified last month with the announcement a multi-million dollar pipeline project between Tsipras and Alexei Miller, which will see the Russian giant Gazprom export natural gas to Greece. It is testament to the relationship that Russia views it’s associations with Greece as long-term.
With EU-Russian relations at an all time low – some commentators even believe the so-called ‘sanctions war’ between the two to be more vicious than anything seegn during The Cold War – this potential financial arrangement with Greece could have far-reaching political ramifications. Were it to accept Russia’s offer, the geopolitical power dynamic between Greece, Russia and the EU would certainly be tipped out of the latter’s favour, and such a formidable financial coalition presents a significant challenge to the global dominance of the IMF and the World Bank too.