Could the BRICS nations bail Greece out?
On Sunday, Greece voted overwhelmingly to reject the bailout terms offered by its international creditors in a snap referendum — giving their Prime Minister, Alexis Tsipras a huge victory and mandate to rebuff the austerity measures conditioned on their loan.
However, the crisis is far from over, primarily because the offer that Greece was given by the troika (the European Union, the International Monetary Fund and the European Central Bank) no longer stands, with commentators arguing an inevitable end to Greece’s place in the Eurozone (or far worse, the European Union). Tsipras has said he is open to negotiation and will resume talks with his European partners immediately. “The people today replied to the right question,” he mentioned. “They did not answer to the question in or out of the euro. This question needs to be taken out of the discussion, once and for all.”
The Independent’s Ben Chu has mentioned three likely scenarios that could result from Sunday’s no vote. The first two involve either the Greeks or the international creditors surrendering and yielding to their opponents while the last involves neither yielding and a prolongation (and worsening) of the status quo. The first option would mean Tsipras accepting some major austerity measures, which wouldn’t look too good back home. On the other hand, the creditors backing down would imply a win for the radical left, and could lead to similar leftist revolutions taking place in other European countries (starting with Spain and Portugal) — as Bershidsky claims, “A Tsipras victory would encourage similar populist forces in other southern European countries and give voters a reason to back them.” The last option, though, would prove to be far worse. The deadlock between Greece and its creditors would lead to Greece defaulting on a €3.5bn bond repayment to the European Central Bank, and could lead to the country’s eventual ouster from the Eurozone. After all, the only way Greece would be able to pay a debt that is 180% of its GDP would be by minting its own currency.
However, there might be another way out for Greece — by taking up Russia’s offer to join the BRICS New Development Bank. Earlier this May, Russia had invited Tsipras to join the New Development Bank — a global lending institution financed by the five BRICS nations to thwart Western dominance. It would be foolish to discount the potential of these emerging economies: These five countries account for 42 percent of the world’s population and 27 percent of global GDP — with Putin claiming the BRICS’ GDP calculated at purchasing power parity is greater than that of the G7 (I mean, if he says it, it must be correct, right?).
That said, Putin’s top aide Yury Ushakov did mention that “Greece will be discussed at both [BRICS/SCO] summits [to be held from 8–10 July 2015], particularly during informal conversations. Especially now that the results of the Greek referendum are in, and there is intensive consultation underway within the euro zone.” He, however, stressed that the talks would be informal and wouldn’t lead to Greece joining the proposed bank or getting any loans from the BRICS nations.
But that’s not to say all hope is lost. It would be especially beneficial for Russia, however, if Greece does join the BRICS bank. A helping hand from Moscow could mean that Athens would veto any future EU sanctions on Russia over its belligerence in Ukraine — which Russia really does need at this point. After all, isn’t that why Moscow signed an energy deal with Greece last month, sidelining Ukraine and bringing Russian gas to Europe via Turkey and Greece?