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Can Greece Cash In On Russian Pipeline Transit Fees?

Greece needs cash desperately and Russia wants to maintain its lucrative European gas market by running a pipeline through Turkey and Greece. So it didn’t seem odd that, as a sweetener, Moscow might be willing to prepay up to 5 billion euros (nearly $5.4 billion) in transit fees to Athens.

That’s just what one of Europe’s largest weekly news magazines, Germany’s Der Spiegel, reported April 17, saying advance payment to Athens for the deal would go a long way to helping Greece avoid default on its debts and keep it in the eurozone. It said the deal was struck during Greek Prime Minister Alexis Tsipras’ visit to Moscow last week.

But as plausible as it was, and as much as it would benefit both sides, Moscow says it isn’t so. Officials from both countries said the two sides did agree to sign papers soon under which the Turkish Stream pipeline would cross Greece, but no date or specific terms were disclosed.

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“No, there wasn’t [any agreement],” Russian President Vladimir Putin’s spokesman, Dmitry Peskov, said April 18 on the Russian radio station Business FM.

“Putin said himself during the media conference [with Tsipras in Moscow] that nobody asked for our help,” Peskov said. “Naturally energy cooperation was discussed. Naturally, the parties of the high level talks agreed to work out all details of these issues at an expert level,” Peskov said. “Russia didn’t offer financial help because it was not asked.”

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Der Spiegel had reported that Russia would pay Greece in advance based on anticipated profits generated by the pipeline. Last week Greek Energy Minister Panagiotis Lafazanis said any advance payments from Moscow would be repaid after 2019, when the conduit is expected to begin carrying gas west from Russia.

The story in Der Spiegel was so credible that even German Finance Minister Wolfgang Schäuble appeared to believe it was sound. He was asked about it April 18 in Washington, where he was attending the annual spring meetings of the World Bank and the International Monetary Fund (IMF), and said he would be pleased if such a deal would help Athens.

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Still, Schäuble cautioned, “I do not think that this would solve the problems Greece has in fulfilling the commitments of the memorandum of understanding [with its fellow European countries in the eurozone].”

Tsipras’ new Syriza party government in Athens, which came to power less than three months ago, has since been negotiating with its eurozone partners and the IMF to find a way to siphon aid to Greece, helping it avoid default on its debts stemming from the world financial crisis of 2008. A default would mean Greece would be expelled from the eurozone.

These talks have been fruitless so far, in part because of the demands of many governments, particularly Germany, that Greece impose economic reforms that Tsipras says are too strict for his people.

By Andy Tully of Oilprice.com

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