Greek PM hastens Russia visit amid cash crunch

John Hadoulis
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Greek Prime minister Alexis Tsipras will urge European counterparts to accept Greece's promises of reform in return for relaxing the terms of its EU-IMF bailout, and to release vital funds to help his country avoid a looming cash crunch

Greek Prime minister Alexis Tsipras will urge European counterparts to accept Greece's promises of reform in return for relaxing the terms of its EU-IMF bailout, and to release vital funds to help his country avoid a looming cash crunch (AFP Photo/John Thys)

Athens (AFP) - Greek Prime Minister Alexis Tsipras on Tuesday unveiled a surprise trip to Russia but also sought talks with European leaders to break a deadlock over reforms that has revived default fears.

The radical Greek government said Tsipras, who was already scheduled to visit Russia in May for its annual Victory Day parade, would now also travel to Moscow on April 8 to see Russian President Vladimir Putin.

"The prime minister will visit the Kremlin following an invitation from Russian President Vladimir Putin," a government source said without giving reasons for the change of date.

Tsipras, a former Communist, has made no secret of seeking closer ties to Russia at a time when Moscow is at loggerheads with the European Union over the conflict in Ukraine.

A number of Greek officials have openly broached the prospect of Athens turning to Russia or China for financial assistance if loan talks with the EU end in failure.

The prospect of NATO member Greece moving into the Russian orbit is alarming to some in Brussels, including European Council chief Donald Tusk.

"Can you imagine Europe without Greece?" the former Polish PM asked in an interview with six European dailies this week.

"The consequences for Europe would not only be financial, the results would be the most dramatic chapter in all the history of the European Union," he said.

Greek daily Ta Nea said the Moscow visit was linked to the cash crunch Athens is facing because it has not received the funds remaining in its 240-billion-euro ($255-billion) EU-IMF rescue package as Brussels has demanded to first approve Greece's revised reform plan.

Athens "sought to bring forward" the meeting with Putin owing to "stifling economic conditions caused in the country from the European side," the daily said on Tuesday.

Upon taking office in January, Tsipras immediately set about trying to renegotiate Greece's hugely unpopular EU-IMF bailout, while at the same time courting Russia.

Days after he came to power, Greece protested against a European Union statement threatening further sanctions against Russia over the crisis in Ukraine.

- 'Illegal' debt -

The speaker of parliament meanwhile announced Tuesday that the house would launch an audit to see if part of the debt could be declared "illegal".

"Our aim is to identify all the components of the debt, to see how the sums in question were spent, what part of the debt went in paying bribes, what interest rates were paid and how these rates were fixed," Zoe Konstantopoulou told a news conference.

The goal would be to see "which part of the debt is legal and which part is illegal," she said.

Greece is still locked in discussions with its European and international creditors about its planned reforms, and Tsipras on Monday said he was confident that a European summit later this week would provide a breakthrough.

Tsipras is also hoping that his first visit as prime minister to Berlin next Monday for talks with German Chancellor Angela Merkel will help Athens' cause, and calm a war of words between Greek and German officials.

On Tuesday, Athens said Tsipras has also asked to meet other key actors in the Greek crisis -- French President Francois Hollande, EU Commission chief Jean-Claude Juncker and European Central Bank president Mario Draghi -- on the sidelines of the EU summit which opens Thursday.

Athens has been scrambling to raise 6.0 billion euros this month for debt repayments, but it has made little progress on persuading the European Central Bank to allow Greek banks to help out by purchasing more state debt.

The ECB is also holding back on 1.9 billion euros in Greek bond profits, until Athens reaches a reform deal with its international creditors.

The debt-wracked country managed on Monday to scrape together over 500 million euros to repay the International Monetary Fund. But it faces another debt deadline Friday when it has to pay over 300 million euros to the IMF, and redeem 1.6 billion euros in treasury bills.

To meet the payments, Athens will auction 1.0 billion euros in three-month treasury bills on Wednesday.

Greece's staunchest critic, German Finance Minister Wolfgang Schaeuble, warned last week that an unintended and disorderly Greek euro exit or "Grexident" -- playing on the popular term "Grexit" for a Greek exit from the euro and an accident -- could not be excluded.