As financial chaos ensues in Greece, the role of the world’s superpowers has come under scrutiny. The United States, Russia and China can all play a major role in the future of the Mediterranean nation, but in a world in which the three major countries have typically clashed with one another, their collective stance on Greece and the Eurozone may surprise observers.
According to Gregory Papanikos, president of the Athens Institute for Education and Research, the United States, Russia and China all want Greece to stay in the Eurozone. This may be a surprise to anyone who has followed geopolitics closely in recent years.
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China and Russia allegiance
China and Russia have certainly been allies for some time, and will typically form a united front on any issue, very much akin to Britain and the United States. But there has been considerable conflict between the two allies and the United States, and it definitely goes against the grain of the cultural zeitgeist for the United States, Russia and China to be united in viewpoint regarding Greece.
However, despite the fact that each of the superpowers desires the Eurozone to remain intact, and supports Greece as a part of it, it also appears that none of them are willing to put their money where their mouth is. Papanikos has also suggested that none of the three nations is prepared to offer direct financial aid, and that their role in the conflict will remain diplomatic only.
Greece recently became the latest casualty of the rather chaotic Eurozone, when the country defaulted on some of its external debts, and banks across the nation operating capital controls as a result. With the Greek people having gone to a referendum in order to decide on the future of physical direction of the country, the state of the nation is now in stasis, with the people having voted against the idea of a bailout.
In the last few days, Mario Draghi, the Italian economist, manager and banker who succeeded Jean-Claude Trichet as the President of the European Central Bank, has stated openly that a so-called ‘Grexit’ looks increasingly inevitable. This would obviously be a massive event in the history of the Greek nation, but would also potentially have a long-lasting effect on the stability and viability of the Eurozone.
Considering that numerous nations in the European political union are also suffering from large amounts of outstanding debt, there have been suggestions in some quarters that a Greek exit from the Eurozone could lead to a contagion within the continent. Italy, Spain and Ireland are all particularly vulnerable, and there is no doubt that the hierarchy of the European Union will want to avoid a Greek exit.
The Stake of the Superpowers
With strong ties between the United States, Russia, China and Europe, it is perhaps not surprising that the three superpowers do not want to entertain the idea of the political experiment being brought to a premature cessation. Russia in particular has massive interests on the European mainland, considering that it is a major supplier of oil and gas to numerous nations. This unquestionably ensures that Russian wields a great deal of power in the European situation, but it is also very much a symbiotic relationship.
Papanikos suggests that each of the three superpowers wants to see Greece remain in the Eurozone as if it were to exit the European Union that it would become less important as an economic entity. This is considered to be an important strategic point for each of the three superpowers, and the views of the nation have apparently been explicitly conveyed to the Prime Minister of Greece, Alexis Tsipras. It is suggested that as long as Greece remains part of the Eurozone then it will remain relatively important for each of the United States, China and Russia both economically and politically.
Although no financial assistance is apparently forthcoming from any of the three superpowers, it is perhaps rather easy to understand why. The United States is already extended militarily on several fronts, is running a massive budget deficit, and now has an external debt nearly equal to $18 trillion. There are a variety of opinions on the significance of this, with some economists considering it to be a trivial issue, while others certainly believe that it is a dire situation for the nation. But what can be said for certain is that the United States is the greatest debtor nation in the history of the planet, and it doesn’t exactly have huge amounts of government cash to beat sploshing around unnecessarily.
Russia has been hit by the dip in oil prices, and although it is not in a vulnerable or perilous financial situation, it is certainly less prosperous than it was previously. And there have been reports from China that the amount of external debt being taken on by the nation has increased exponentially, at a time when numerous asset classes in the nation are clearly in a bubble. Additionally, the Chinese stock market fell significantly in the last couple of weeks, and it is suggested that the overall economic health of the nation is not as healthy as it had been over the preceding decade. China has taken on huge amounts of external debt in order to develop infrastructure rapidly.
No Threat of Greece Contagion
So Greece cannot really hope to look to any of the three superpowers for financial assistance. Russia allegedly wants a stable Greece within the European single currency and Eurozone as it offers a different, and favorable, voice for Russia’s political concerns.
But Papanikos has also echoed of the views of some economists who consider the idea that the crisis in Greece will spread and destabilize to other European economies as baseless. There has not been a world market crash as the result of a potential Grexit, and Papanikos believes no such event will occur.
Many observers are not as certain of this in the medium to long-term as Papanikos, and believe that this critical moment for Greece will prove to be equally so for the Eurozone when one looks back historically. For the time being, though, it seems likely that Greece will remain within the European Union.