Want China Times, Wu Pei-shan 2015-07-18
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| Greek Prime Minister Alexis Tsipras casts his referendum vote on the bailout measures, July 5. (Photo/Xinuua) |
Greek
voters rejected the bailout measures proposed by European leaders in a referendum
on July 5, triggering a Grexit crisis as it appeared Greece might withdraw from
the eurozone.
But after
marathon negotiations on July 12 and 13, European leaders reached an initial
consensus on a debt plan that makes it possible for Greece to remain in the
currency zone.
Back in
2001, Greece saw its credit rating upgraded after it joined the eurozone, and
the Greek government was able to issue government bonds at low interest rates,
making it easy to raise debt.
When a
global financial crisis hit the world, the three major credit rating agencies
in the United States gave Greece's bonds junk-grade ratings.
Faced with
surging debts after years of credit expansion, Greece has relied on the
European Central Bank to raise the ceiling on emergency financing to make do
while failing to address its internal financial woes and has therefore often
been late in repaying the debts.
Greece
could become the first developed country to default on its debt payments, and
it still could eventually be forced to withdraw from the eurozone.
Though
facing economic woes, Greece remains strategically important. It is located at
the crossroads of Europe, Asia and Africa, and its largest port of Piraeus has
been described as Europe's southern gateway and the starting point of a
European sea lane proposed under China's Maritime Silk Road initiative.
Chinese
enterprises have obtained operating rights to Piraeus, making it convenient to
transport cargo into Europe, and the port could even overtake Rotterdam and
Hamburg as Europe's largest land transportation port.
Under
China's "Maritime Silk Road" initiative, Greece could serve as the
gateway for China's exports to the Mediterranean and northern African
countries.
For Russia,
after economic sanctions restricting its oil and natural gas exports were
imposed on Moscow in September 2014 for its annexation of the Crimean
penninsula in the Ukraine as well as allegations that it is funding and sending
troops to support insurgents in eastern parts of the Ukraine, it has had to
seek other outlets.
In the
past, Europe was the biggest export destination of Russian natural gas with
Eastern Europe relying on Moscow for over 50% of its natural gas needs. After
the economic sanctions though, Norway has replaced Russia as Western Europe's
biggest supplier of natural gas.
Russia
began to cooperate with Turkey late last year on a natural gas pipeline that
will carry natural gas to Southern Europe via Turkey and Greece.
This
ability to supply natural gas to Europe through Greece will give Russia a
bigger say in setting energy prices, and Greece will gain a strategic position
in the energy business in addition to an important political status.
The many
twists and turns in the Grexit crisis have clearly affected the international
strategies of China and Russia, something that the West did not foresee.
(Wu
Pei-shan is a researcher at the World Economics Society. Translated by Want
China Times.)
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