/ world today news/ The Greek authorities must pay the IMF more than 1.5 billion euros, in the event that this is not done, a default on the Greek debt can be declared. Market players point to Russia as one of the countries that can help Greece, but Russian experts are of the opinion that such a scenario is hardly possible: for Russia, the Greek default is not at all scary, but the country itself does not have enough funds to to cover Greek debts. Russia’s GDP decline accelerated to 4.9% year-on-year, while in April the decline was 4.2%.
“The decline that the Russian economy experienced at the end of 2014 and the beginning of 2015 largely played out the negative scenario of Russia’s “disengagement” from foreign markets,” says the head of the department of stock markets and financial engineering at the Faculty of Finance and Banking case at RANHiGS Konstantin Korishchenko. According to him, the consequences of the probable Greek default and the possible collapse of the Chinese market will be significantly more painless for Russia than for the heavily indebted Western market.
Possible help
Greece’s total debt stands at €320 billion, or 177% of GDP. Of these, Greece owes Germany about 56 billion euros directly. “The Greek economy needs radical reforms, and while the changes in the southern European country’s economy are being translated into life, huge cash injections are needed,” said chief analyst at UFS IC Alexey Kozlov. According to his words, taking into account the external background and the pressure that Russia’s economy is currently experiencing, now it cannot increase financial aid to Greece in a sufficient amount.
But, notes Kozlov, the issue of aid to Athens is not only economic, but also political in nature. In particular, Prime Minister Alexis Tsipras even visited the St. Petersburg International Economic Forum in 2015. Therefore, Kozlov believes, Russia can provide Greece with aid in a volume permissible for itself – from 1.5 to 4 billion euros. But according to his words, it can only be about loans for specific projects, and they will clearly be insufficient for Greece: in July, the country has to pay another 5.95 billion euros.
Moreover, according to the analyst from the Finam investment holding, Anton Soroko, the possible aid to Greece will complicate Russia’s relations with the European Union. “Russia has no right to go against the opinion of the creditor countries. However, Greece is a member of the EU, so, first of all, the problems in the country’s economy must be solved within the community”.
In addition, he believes, the use of any preferential and gratuitous payments would be disadvantageous for Russia. Because, according to the Ministry of Economic Development of Russia, the decline in Russia’s GDP accelerated to 4.9% on an annual basis, while in April the decrease was 4.2%
The main consequences
As Konstantin Korishchenko notes, Russia will suffer much less than other countries from the possible default of Greece, but still, the consequences can be tangible. “For Russia, the consequences of such a development of events may turn out to be more painless than for Europe, but still sensitive,” says Korishchenko.
First, he says, there will be a “flight to quality” – selling debt to developing countries and buying US bonds. This will entail a contraction of the stock market and cause a delay in the lending process. Second, the Greek events coincided in time with the collapse of the Chinese market, which will cause a negative wave in the markets, even bigger than Greece.
But according to Koryshchenko, “after the restructuring of the Greek debt, it will be much easier for Russia and other potential partners of Greece to develop joint projects, without fearing that the provided credits will go to repay the debts to the old creditors “. One of them is the “Turkish Stream” project – a gas pipeline from Russia to Southern Europe along the bottom of the Black Sea. For the implementation of this project, Russia has already agreed to grant Greece a loan of 2 billion euros
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