Greece and Russia's Fruit 'n' Veg-for-Gas Deal (Sort Of)

Not quite the Commanding Heights: Citrus for the Putin.

A lack of export diversity characterizes any number of economically troubled nations, and that holds for Greece and Russia. On Tuesday, Greek PM Alexis Tsipras took his neo-communist stylings to Russia to meet with President Vladimir Putin who openly wishes that the Soviet Union were still around. Actually, what transpired was not the Marxist-Leninist love-in some Western commentators were expecting, but both protagonists making limited moves to thumb their noses at Western (European) powers-that-be: Russia cannot splurge on foreign aid for Greece with energy prices this low, while Greece cannot cut off its EU lifeline absent any other major creditors.

On the part of Russia, it said it would consider lifting sanctions on Greece's fruit and vegetable exports in exchange for more cooperation on energy matters:

Russia was among Greece's leading trade partners before sanctions on its energy industry and Greece's own economic difficulties reduced trade between the two countries by 40%.  Mr Putin called for trade relations to be restored, and said the two leaders had discussed "various ways of co-operating, including major projects in energy".

"Under these plans, we could provide loans for certain projects," he said, adding that it was not a question of aid. One of those plans is for a pipeline called "Turkish Stream", to channel natural gas from the Turkish-Greek border into Greece.

So there were many vague, unspecified mutterings about future cooperation. Big deal. Actually--and this is why the post has the "sort of" qualifier--the mooted pipeline is something of a pipe dream at present with the EU unwilling and the Russians unable to fund it. Moreover, its capacity would be well in excess of what the downstream countries could use:

The Budapest communique underlines that it's a statement of “political intent only, and that further exchange of views and dialogue is needed”. The Turkish minister, Bozkir, told Hungarian media that “after the project’s feasibility studies are over, we’ll be able to give it a more qualitative estimate”.

The caveats come amid Turkish scepticism that Turkish Stream will be built because Russia lacks money and because its capacity exceeds the region's requirements. “Frankly, nobody in Turkey is taking it very seriously,” a Turkish source told EUobserver shortly after Putin unveiled Turkish Stream in Ankara last year.

So it's a lot of bluster in the meantime meant to create a wedge between wealthier EU states and those that are harder up like Greece to possibly get some breathing space for Russia when sanctions against it come up for deliberation again:

Russian leader Vladimir Putin last year in Ankara said he'll build Turkish Stream, a pipeline under the Black Sea to Turkey, after the EU blocked construction of South Stream, a pipeline under the Black Sea to Bulgaria, Serbia, and Hungary. He said Turkish Stream will terminate at a new gas trading hub on the Greek-Turkish border...

Russia is courting Cyprus, Greece, Hungary, and Italy as potential veto-wielders on EU plans to extend economic sanctions before they expire in July. The Greek PM, Alexis Tsipras, is to meet Putin in Moscow on Wednesday, following earlier Putin meetings with Cypriot, Hungarian, and Italian leaders.

Dmitry Peskov, Putin’s spokesman, told the Tass news agency on Tuesday that Russia might exempt Greece from Russian sanctions on EU food exports. “We co-operate in agriculture, and we can fix a decline in trade in this sphere linked to the forced introduction [by Russia] of retaliatory measures”, he said. Nikolay Fyodorov, Russia’s agriculture minister, told Tass that Cyprus and Hungary might also get exemptions.

And before I forget... to the vegatapolitics [sorry]. Trade figures indicate that Greece's exports of agricultural products have fallen significantly at a time it can least afford them due to Russia imposing counter-sanctions on EU members like Greece. From Eurofruit [!]:

In the January-to-October period last year [2014], Greek exports of fresh fruit and vegetables fell by 4 per cent in value terms to €765m compared with the same period in 2013. This despite an increase of around 8 per cent in overall volumes exported. Unable to enter the Russian market, Greek produce has instead been shipped to countries including Serbia, Macedonia and Albania, at considerably reduced prices.

According to Freshmarket.eu, exports of Greek fruit and vegetables to Russia during the January-to-October period last year fell by 31.1 per cent in volume terms and 35.1 per cent in value terms. According to Moscow, although the country is keen to soften the ban’s impact on Greece, a full Greek exemption could be impossible due to global trade rules.

All things considered, the Tsipras-Putin was much ado about not much of anything. At most, we will see a partial lifting of limits placed by Russia on agricultural exports from Greece in exchange for the gas flowing slightly more freely to Greece. That's all, really.