Special to WorldTribune.com
The Greek government, in last-minute talks with its European creditors (predominantly Germany) achieved a breathing space on July 13, to start to manage its new economic framework.
However, largely ignored by the Greek and international commentary, has been the contextual impact of the Greek economic crisis with the regional security framework, particularly with regard to Turkey, Iran, and the Syrian conflict.
In the short term, the Greek national security sector will come under significant additional pressure from budget cuts, even as its responsibilities increase to counter the flood of illegal immigrants being pushed across, largely from Turkey, as a result of the Syrian conflict. It is probable that small portion of this could be offset by increased aid, specifically supporting the work of the Hellenic Armed Forces and other border agencies in coping with the crisis, but, nonetheless, a continuing impact should be expected across the national security spectrum.
This will then prompt a recalibration of the threat environment facing Greece in the Aegean Sea, where Turkey — economically and militarily embattled in its own right — continues to prosecute major aerial and maritime interventions to press Greek sovereignty over the Sea.
Maintaining a credible deterrence against Turkish opportunism at a time of Greek weakness would be an overriding challenge for the Hellenic General Staff as well as for NATO. However, there was no evidence at present that NATO was focused on this issue, and specifically, there was no evidence that the U.S. was taking steps to guarantee the status quo in the Aegean during a period of intense volatility in the region. Washington was, by July 13, locked into a strategic preoccupation with negotiations with Iran to curtail that country’s nuclear weapons program.
What is significant in this matrix, however, is the reality that an agreement by the P5+1 states (the United Nations Security Council permanent members plus Germany) negotiations with Iran could significantly restore viability to the Iranian economy.
One of the underlying side-effects of such an accord, then, would be to bolster Iranian strategic strength at the expense of Turkey.
There was little doubt that the keen Turkish interest in the continuing weakness of Greece was being offset by Turkish concerns that a resurgent Iran would materially challenge Turkey and would also substantially aid the maintenance of Tehran’s ally, the Syrian Government of President Bashar al-Assad. The situation would also transform, to some degree, Russian influence in the region, possibly causing Moscow to have to bolster its relations — discreetly antagonistic as they historically have been — with Turkey, perhaps (although not necessarily) at the expense of relations with Greece, Cyprus, Israel, and Egypt.
Within this larger framework, Greek Prime Minister Alexis Tsipras returned to Athens on July 13, with a deal agreed with European creditors which would inject €86-billion ($96-billion) into the Greek financial institutions, and also ease repayment terms on some of the existing debt of €300-billion. A short-term economic stimulus plan was also part of the package.
The deal initiated by Prime Minister Tsipras and agreed by the European creditors, however, was more punitive than the earlier proposal which the Tsipras Government had put to a national referendum on July 5, and rejected by Greek voters. Tsipras’ next task was to sell the reform package to the Greek Parliament at least in part by July 15, with further aspects to be agreed by July 21.
The deal, however, would, for the short-term, keep Greece in the eurozone, the principal goal of the German government (and the Greek government), but did not eliminate the prospect in the near-term that Greece may have to opt for a return to some kind of domestic currency, possibly a “new drachma” pegged to the euro.
By the afternoon of July 13, the European Central Bank had indicated that it would maintain its credit line to Greek banks at their current level, leaving the banks, which had been closed for two weeks, in straightened circumstances, but still essentially solvent.
Reforms to be agreed included raising the consumption tax to 23 percent for a range of goods and services, increasing the retirement age to 67 years, and further reducing pension benefits.
Significantly, the Greek defense budget would also be reduced, and the scope of the privatization program significantly expanded.