Geopolitics has so far been absent from the eurozone crisis. But is that about to change? As banks, businesses and Brussels begin accepting the possibility that Greece may indeed exit the euro—until recently an inconceivable proposition—the political ramifications could be just as profound as the economic consequences.Europe has been so consumed with putting out the fiscal fires that its attention has been diverted from the geopolitical upheaval threatening to engulf the eastern Mediterranean. If Greece falls then Cyprus will crumble as well. As the Financial Times explains:
The damage to Cyprus’s financial system, heavily exposed to Greek debt, would be devastating. Cyprus last year received a cheap €2.5bn loan from Russia in a gesture that reflected the Kremlin’s interest in protecting wealthy Russian depositors with billions parked in Cypriot banks. It may soon need more aid.
And if Europe cuts Greece loose, Russia may fill the void there as well. There are close cultural ties between these Orthodox countries, and both are like to join in a feeling of bitterness and exclusion vis-à-vis the West.Americans often don’t “get” the Russia-Greek connection. In Ottoman times, Orthodox Russia was the protector of Orthodox Christians in the great Islamic empire and frequently used its diplomatic clout to defend the rights of its co-religionists. Greece looked to Russia as a reliable ally during much of the troubled period after modern Greece gained independence from the Turks.The feeling is reciprocal. Russia received the gospel from Greek Christians. The Russian tsars married into the Byzantine royal house; the word tsar (or czar) is the Russian form of Caesar, indicating the strong Russian sense that Orthodox Moscow, after the fall of Constantinople, was the “Third Rome.” Much of modern Russian identity and sense of a unique place in the world is wrapped up in its civilizational connection with Byzantine culture and religion.Mount Athos, the center of Orthodox monasticism and the spiritual heart of Greece, looms large in Russia. No less a person than President Vladimir Putin has made pilgrimages to this site.There are other connections as well. Much of the Russian oligarchy’s money has been moved through Greek Cyprus, where the banking system has long been very close to post-Communist Moscow.Israeli interests are also involved. As Turkish-Israeli relations have cooled, Greco-Israeli ties have warmed. The discovery of vast natural gas deposits in Cypriot and Israeli waters have pushed those countries closer together; indeed, the gas reserves may be large enough to make Cyprus self-sufficient in energy and turn Israel into a major gas exporter for the next several decades. Turkey doesn’t like this.Meanwhile, the very large wave of immigration from post-Communist Russia to Israel has created new networks of business, investment, and trade between Russian-speaking Israelis and their families and friends in the old country.The European Union is in retreat in the eastern Mediterranean. Turkey no longer sees its destiny in EU membership; if Greece and Cyprus either jump or are pushed from the euro, they will remain members of the EU, but that membership will mean something much less than it formerly did.By reaching out to Cyprus and Greece in their hour of need, Russia may build some important new relationships to help compensate for their lost contracts and connections in Iraq, Libya, and perhaps now Syria. If Greece is floundering with a weak drachma and an economic meltdown, a relatively small amount of Russian aid and trade could go a long way.The creation of the euro was a political as well as an economic event. Its break up will be a political event as well.