Russia Moves to Quickly Win New Cold War

To get a sense of what Greece is up against in trying to resist the troika's austerity diktats read the Reuters piece by Hugo Dixon, "Greece Must Walk the Talk, and Soon." Saying that finance minister Yanis Varoufakis has come up with the 458 million euros to meet an April 9 IMF deadline, Dixon opines:

Athens has scraped together enough cash to meet the I.M.F. payment, in part by extracting liquidity from quasi state entities. However, the left-wing government has pretty much exhausted its techniques for squeezing blood from a stone. Meanwhile, it has largely wasted two and a half months in office by lecturing its creditors, sending out mixed messages about its willingness to default and coming up with amateurish overhaul plans.

Now the government needs to get serious and — unless Prime Minister Alexis Tsipras is really willing to default — impose vicious capital controls and exit the euro. 

Athens’s eurozone creditors are still hanging tough. Although they do not want Greece to enter a spiral of self-destruction and are worried about the fallout it if does, they do not trust what the government says. As a result, the creditors rightly want to see some meaningful actions before they lend Greece more money. 

Mr. Tsipras needs to show he means business, by suffering some political cost at home as a result of implementing unpopular measures. Otherwise, there is a risk that the government will take the cash, continue to speak with a forked tongue and still default in June if it can’t get a new long-term deal to its liking.

This is the dominant thinking within the troika: Syriza-led Greece is a mendacious, troublesome political upstart that needs to be made an example of, that needs to be broken publicly on the wheel so every Spanish voter looking to support Podemos or Mick pining for Sinn Féin will think twice before questioning the status quo.

The troika's version of the domino theory for the New Cold War that Washington D.C. explicitly launched last year in Kiev with the coup of Ukrainian president Viktor Yanukovich actually got its start a year earlier with eurogroup chief Jeroen Dijsselbloem's bail-in scheme for Cyprus. At the time Russia did not take kindly to the bail in, interpreting it as a direct attack on her large depositors in Cyprus.

But as Andrew Higgins reports in "Waving Cash, Putin Sows E.U. Divisions in an Effort to Break Sanctions" all is now forgiven:

NICOSIA, Cyprus — When Cyprus seized hundreds of millions of dollars from bank depositors, many of them Russians, as part of an internationally brokered deal two years ago to rescue its collapsing financial system, the Russian leader, Vladimir V. Putin, denounced the move as “dangerous” and “unfair,” warning of a sharp chill in relations. 

But Mr. Putin was all smiles recently when he received Cyprus’s president, Nicos Anastasiades, in Moscow. He hailed relations with the Mediterranean nation as “always being truly friendly and mutually beneficial” and agreed to extend — on greatly improved terms for Cyprus — a $2.5 billion Russian loan.

The shift from fury to declarations of eternal friendship displayed Mr. Putin’s well-known flair for tactical back flips. But it also showed his unbending determination to break out of sanctions imposed on Russia by the United States and the European Union for Moscow’s annexation of Crimea and support for armed rebels in eastern Ukraine.

Mr. Putin has methodically targeted, through charm, cash, and the fanning of historical and ideological embers, the European Union’s weakest links in a campaign to assert influence in some of Europe’s most troubled corners. One clear goal is to break fragile Western unity over the conflict in Ukraine.

On Wednesday, Greece’s new left-wing prime minister, Alexis Tsipras, will be the next to visit Moscow. Ahead of the trip, Mr. Tsipras declared himself opposed to sanctions on Russia, describing them as a “dead-end policy.”

On Sunday, Mr. Putin’s efforts to peel away supporters from the European Union opened a new rift, after the United States ambassador in Prague criticized a decision by the president of the Czech Republic, Milos Zeman, to attend a military parade in Moscow on May 9. And in February, Mr. Putin visited Hungary, the European Union’s autocratic backslider, peddling economic deals.

Russia has so far been unable to turn such hand-holding into something more concrete against sanctions that require the approval of all 28 European Union members. But pressure for a rupture is building.

The rupture might be supplied by Poroshenko's obvious backsliding on the Mink 2.0 ceasefire. As David Herszenhorn reports in "Ukrainian Leader Is Open to a Vote on Regional Power":

MOSCOW — President Petro O. Poroshenko of Ukraine on Monday denounced calls for “federalization” of the country, which Russia has endorsed as a way of granting political autonomy to the areas of eastern Ukraine controlled by pro-Russian separatists.

Establishing greater local autonomy and governmental authority is widely viewed as crucial to settling the nearly yearlong war in the eastern regions of Donetsk and Luhansk, and it was a central plank in a cease-fire accord signed in February. But there are fierce disagreements over how to shape those powers, and how far they would extend.

Speaking at the first meeting of a commission charged with developing amendments to the Ukrainian Constitution, Mr. Poroshenko described federalization as tantamount to breaking apart the country, and said he was so certain Ukrainians would reject the idea that he was willing to put it to a national referendum.

“Why do I dwell in great detail on the idea of federalization?” Mr. Poroshenko said. “Because it is like an infection, a biological weapon, which is being imposed on Ukraine from abroad. Its bacteria are trying to infect Ukraine and destroy our unity.”

Leaders of the self-declared people’s republics in Donetsk and Luhansk have complained bitterly in recent weeks that Mr. Poroshenko and other officials in Kiev, including members of Parliament, were refusing to take the necessary steps to carry out the political provisions in the cease-fire agreement, which was signed in Minsk, Belarus.

***

. . . Separatist leaders noted that they had not been invited to join the commission on constitutional changes, and they took issue with Mr. Poroshenko’s remarks, including his insistence that Ukraine would remain a “unitary state” and his declaration that Ukrainian would remain the country’s only official language.

“These things are absolutely unacceptable,” Andrei Purgin, head of the Donetsk People’s Republic, told the Interfax news agency. “Everything they now say and do contradicts the Minsk agreements that took so much work to achieve.”

As for the commission and the constitutional amendment process, Mr. Purgin told Interfax: “We did not receive any invitations. We don’t have any representatives there.”

I have learned not to underestimate the obedience of the French and Germans when it comes to complying with U.S. orders, but this abrogation of Minsk 2.0 by the junta in Kiev seems impossible to defend. France, Germany, Poland, etc., might fall into the neocon line but it will be hard to secure the unanimity of all 28 EU members for increased Russian sanctions when fighting resumes in Donbass.

That is why it seems like a slam dunk that Putin will extend an offer of financial assistance to Alexis Tsipras when he visits Moscow tomorrow. If favorable terms can be found to extend a $2.5 billion loan to Cyprus, why not the bigger, politically far more important Greece?

Higgins ends his story on Russian rapprochement with Cyprus explaining the result of Dijsselbloem's bail-in. It backfired:

Vasilis Zertalis, the head of Prospectacy, a financial service company, described Cyprus as a “small piece on a big chessboard.” Europe, he said, tried to advance its own position during the 2013 banking crisis by seeking to end Cyprus’s role as a haven for Russian money. 

“They wanted to scare the Russians away,” he said. “But the money that left was from Britain, from other European countries and from America.” 

Ordinary Cypriots and politicians, he said, “all gave up on the European Union” because of the harsh bailout terms in 2013 and “know that the United States will never take a stand against Turkey.” 

“So,” he said, “the only allies Cyprus really has are Russia and maybe China.”

Putin has an opportunity to reach back into the slipstream of time and make a move that Stalin should have made. Stalin should have aided Greece instead of letting the British Empire re-install the monarchy there, setting the stage for the decades-long Cold War.

The choice should be clear now for Tsipras. The heads of the EU want to crush Syriza. I say he has no other choice at this point. He must accept Russia's offer of financial aid.