Greece’s debt issues may be turning into a full blown power tussle and regional political drama. According to a report on RT.com, Russia has invited Greece to become the sixth member of New Development Bank (NDB). The bank is the brainchild of the BRICS nations (Brazil, Russia, India, China, South Africa) which has been established to compete with Western dominance.
An official invitation was made to Europe’s most indebted nation on Monday by Russian Deputy Finance Minister, who is also a representative of the BRICS Bank: Mr. Sergey Storchak. According to a statement on Greece's Syriza party website, during a phone conversation with Greek Prime Minister Alexis Tsipras, the Greece PM thanked Mr. Sergey Storchak, while stated that Greece is interested in the offer. The statement read:"The Prime Minister thanked Storchak and said he was pleasantly surprised by the invitation for Greece to be the sixth member of the BRICS Development Bank. Tsipras said Greece is interested in the offer, and promised to thoroughly examine it. He will have a chance to discuss the invitation with the other BRICS leaders during the 2015 International Economic Forum in St. Petersburg,"
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The New Development Bank has plans of setting up a reserve currency pool worth over another $100 billion. This is in line with plans to forge ahead with the $100 billion NDB, as agreed by the member states during the 6th BRICS summit in Fortaleza back in June 2014. Greece’s recent long battle with its Eurozone creditors over reform plans will help the indebted nation unlock more tranche of aid. The country is struggling to repay its multibillion euro debt to the troika of international lenders – the IMF, the ECB and the European Commission. Russia on the other hand is stuck in a so-called ‘sanctions war’ with the EU and the US, which has led to a hit on its economy.
On Monday, Greece made a 750 million euro payment to the International Monetary Fund, coming a day early, which calmed some fears of a default. However, Greece's finance minister Yanis Varoufakis said the liquidity situation was “terribly urgent”, creating more urgency to reach a deal for more funds release in the next few weeks. The country is trying to reach a compromise with its creditors to have a further €7.2 billion bailout unlocked.
After Alexis Tsipras’ visit to Russia last month, it was rumoured that Russia was ready to help the country, but President Putin said Greece hasn’t formally asked Moscow for help. The president clarified back in April that the aid could involve the purchase of Greek state assets in privatisation sales or in other investment projects, instead of direct financial assistance. As events unfold, will Greece allies with Russia?