Russia Playing Role in Greece Debt Crisis and Potential Departure from Eurozone

Vladimir Putin

Fear of Greece’s growing relationship with Russia and President Vladimir Putin could play a large role in negotiations over the Greek debt crisis between the International Monetary Fund (IMF) and its member countries.

German Chancellor Angela Merkel said she is convinced an accord with Greece on its crippling debt is "still possible."

"It remains the case that Germany’s efforts are aimed at keeping Greece in the Eurozone," Merkel said to the Bundestag lower house of parliament Wednesday. Germany remains the largest European contributor to Greece’s bailout programs.

Merkel could save Greece from "being alienated from Europe," according to Sebastian Mallaby, senior fellow for international economics for the Council on Foreign Relations.

"Geopolitically [it] would be a gift to the Russians," Mallaby told reporters on a CFR conference call Wednesday. "The problem is, [Merkel] would probably face [disagreement] from her own party … Her foreign policy side might wish to avoid giving Putin this gift, but her domestic policy might think she should not support Greece in this."

The concern comes in the wake of reports that Greek Prime Minister Alexis Tsipras participated in an impromptu telephone call with the Russian President after initial payments on debt to the IMF were delayed.

Mallaby says the time to start focusing on the Greek debt crisis negotiations is now.

"The moment of truth is approaching … the next three weeks are going to be critical," Mallaby said.

Unless Greece can secure new external aid from outside creditors, they do not have the cash to back what they owe. The largest concern, on an international level, would be a panic among depositors in Greek banks resulting in them descending upon their local branches to withdraw their money, similar to the 700 million euros ($896 million) in attempted withdraws at the onset of the 2012 debt crisis, Mallaby said.

"The money might not be refundable … You’re going to see capital flight," Mallaby said. "If you do get a banking collapse … it will be measures that amount to creating a separate currency."

An emergency summit of leaders from the 19-nation Eurogroup coalition convened Monday morning. Jeroen Dijsselbloem, chairman of the group, told a news conference: "We will work very hard in the next few days, the institutions with the Greek government, to get that deal this week."