Eurozone crisis: Could Russia afford to bail out Greece and what would that mean?

There are deep cultural and historical ties between Greece and Russia.

In terms of religion, the majority faith in both countries is Eastern Orthodox. And Russia has a track record of standing up for Greece, like it did during the Greek War of Independence from the Ottoman Empire. The countries enjoy strong diplomatic relations and share common political views about the Balkans, among other things.

In 2014 Russia became involved in an eye-poking contest with the West over Ukraine. Things have clearly moved on since then: the latest from President Vladimir Putin was that politics should not get in the way of Greece's economic recovery.

Moscow said it would not directly pay off Greece's debt and that Athens has made no such request. But Russia's president did discuss making large specific investments in infrastructure and energy with Greek Prime Minister Alexis Tsipras.

Putin is in talks with Greece about the Turkish Stream, a gas pipeline that will flow through Greece and bring Russian gas to places like Italy. Greece will become a "transit hub", said Putin and that helping out Athens was a win-win situation.

Pushing his pieces with the steely assurance of chess grandmaster, Putin knows Europe has no choice but to welcome Russian help to fulfil trading possibilities that can also help Greece.

Tsipras said there is a "springtime" thanks to Greek-Russian relations, alluding to a thaw following the sanctions held out against Russia by the West. Greece has said it does not like the policy of sanctions, calling it "economic warfare".

No single EU state is allowed to unilaterally break sanctions. However, Tsipras said: "Greece is a sovereign state. It has an indisputable right to have a multi-faceted foreign policy."

Russia could also become active in the privatisation of Greece's state-owned assets; the privatisation plan will raise some €1.5bn (£1.1bn), the Greek government hopes.

In the past Russia has eyed investment strategies involving Greece. For instance, Russia's state-owned Gazprom unsuccessfully tried to buy a controlling stake in Greece's Public Gas Corporation (DEPA) for €900m in 2013.

However, Russian trade has fell by as much as 40% due to the sanctions invoked after Ukraine, the rouble has taken a hammering and the slump in global oil prices has hit Russian companies, which raises the question of whether Russia could afford to really assist Greece.

Tom Elliott, deVere Group's international investment strategist, told IBTimes UK: "Against a backdrop of wider political issues, courting Greece is a logical step for Moscow. The problem is that Russia does not have the funds needed to bail out Greece, and Putin would be extremely unpopular if he did so only to find in a year's time that he is having to impose austerity at home because of the weak Russian economy."

That said, earlier this year Russian Finance Minister Anton Siluanov announced that if asked, Moscow was ready to provide financial help to Greece, a comment made just after the new Syriza government won the election on the promise of ending austerity and getting better conditions on its EU debt.

Brenda Kelly, head analyst at London Capital Group, told IBTimes UK: "Greece and Russia have signed a deal for a gas pipeline through Greek territory but I'm not sure there will be any formal state aid from Moscow. Tsipras is more likely using the prospect of a Russian bailout as a bargaining chip. Greece would need $5bn to $6bn, and Russia can't spare that given their own economic issues.

"So I'm afraid it's the Troika or devoika for Greece unless Mario Draghi steps up to the plate. If the European Central Bank [ECB] doesn't, there's a strong chance that the banks will close on Monday. Greek banks are now haemorrhaging cash to the tune of around €1bn per day. I suspect there will be a bit more can kicking and then we'll have a clear picture by 3pm Monday [22 June]."

Any potential loan from Russia would be a drop in the ocean for Greece. A potential $5bn that has been mentioned in the past is nothing compared to Greece's €266bn in gross external government debt. Russia is also hampered by a lack of access to international markets and the need to rebuild FX reserves.

Despite statements from Russian Deputy Prime Minister Arkady Dvorkovych that Russia is ready to discuss financial assistance to Greece, this was followed by Putin's press secretary Dmitry Peskov saying that Greece has not actually asked for any loan and it's too early to talk about it, and respected Russian economists Alexey Ulyukaev (MinEcon) and Anton Siluanov (MinFin) have followed up by saying that Russia is not planning to buy any Greek bonds and has no resources for it.

Evghenia Sleptsova, analyst with Oxford Economics told IBTimes: "So the whole game is about putting any kind of pressure on the EU.

"And at the moment the chosen pressure point is gas and the signing of a memorandum on the continuation of the Turkish stream pipeline into Greece, signed today in St Petersburg, in a bid to build an alternative to the South Stream to bypass Ukraine.

According to very preliminary details, Russia will essentially pay for it by providing a $2bn loan through VEB. However, there are numerous problems with this strategy:

First of all, there are no pipelines that could carry gas from Greece into Europe. The projected pipeline into Italy, planned as part of the Trans-Adriatic pipeline, if the project goes ahead, would carry Caspian gas into Italy, and therefore could not be used for Russian gas

Brussels, which was reluctant to let the South Stream go ahead, will be as reluctant to give green light to the Turkish stream and let other EU member states build the remainder of the Turkish stream into Europe.

Russia is bound by long-term contracts that extend beyond 2019-2020 (the proposed date for the launch of the Turkish Stream), and reneging on these contracts or renegotiating them is not an option.

Sleptsova added: "This unfolding gas saga is aimed rather at putting geopolitical pressure on the EU, rather than about offering any alternatives to the Troika funding. It is also more likely to play out in the medium- to long-term, rather than immediately.

"This geopolitical pressure, however, is not something Brussels can ignore – Greece's geographic position between Europe and the Middle East has been of utmost strategic importance since WWII, and remains important to this day, and has only grown with the latest Isis-driven and other instability in the Middle East.

"In this respect, the agreement between Greece and Russia allowing Russia to use Cypriot ports for its ships, is one of the pieces in this bigger puzzle," she said.

Meanwhile,Tsipras's overtures towards Russia are as much targeted at Brussels as at his own voters, to show his resistance against the EU pressure.

Complicating any prospective bailout is Greece's membership of NATO and sanctions placed on Russia linked to the Ukraine crisis. While a bailout would not violate sanctions or result in Greece being expelled from NATO, it would at the very least cause major geo-political ruptures and add another layer of complexity to international diplomacy.

In any case, a failure to pay the €1.5bn owed to the IMF by the end of June means Greece will be "in arrears" but not defaulted. This is because S&P and other rating agencies only consider default on private sector debt a default. The same applies to the €3.5bn owed to the ECB by 20 July.

But the country's default status or otherwise becomes academic when the ECB pulls the plug on emergency lending, Greece leaves the Euro, runs on banks can be expected along with IOUs for wages and a new drachma is born.