Russia seeks to 'sow division in EU' by inviting Greece to BRICS bank

Russia has invited Greece to become the sixth member of the BRICS New Development Bank (NDB) in an attempt to sow further division between EU members as the country struggles to make its debt repayments to the International Monetary Fund (IMF), say analysts.

The invitation to join the $100 billion (€89.6 billion) bank, set up last July to compete with the mainstream financial bodies of the IMF and the World Bank, was offered to the Greek prime minister Alexis Tsipras yesterday by the Russian deputy finance minister Sergey Storchak in a telephone conversation.

The Syriza party, in a report published on its website, confirmed that Tsipras was interested in the offer and would consider it thoroughly before discussing the proposal at the 2015 International Economic Forum in St. Petersburg on 18th June, with the leaders of the BRICS bloc of emerging nations.

"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 leader during the 2015 International Economic Forum in St. Petersburg," the report read.

The bank, which was established with the signing of an agreement in Brazil and is headquartered in the Chinese city of Shanghai, is to see the BRICS nations - Brazil, Russia, India, China and South Africa - pool $100 billion (€88.86 billion) to fund infrastructure projects in emerging markets, beginning at the end of 2015.

China is expected to contribute the biggest share of the pool at $41 billion (€36.43 billion), with Russia, India and Brazil each donating $18 billion (€15.99 billion) and South Africa $5 billion (€4.44 billion). It remains unclear how much Greece would have to pay to join the BRICS bank.

Raoul Ruparel, head of economic research at European-focused thinktank Open Europe, says that while Greece would face significant obstacles if it were to join the BRICs bank, it could provide Greece a way of moving closer to Russia and China without having to deal with the EU.

"In the longer term, it would offer a new source of funding and a new way to inject money into the economy," he says. "But, in the short term, it does seem to be negated by the costs of helping set it up."

"Maybe it's also a broader political play of tying itself more closely in with these countries and helping to build relationships," he adds. "It can't strike any direct trade deals with Russia or China because that all has to be done through the EU. So, what it could do, is to consider and take up this invitation, so maybe it is another way for them to build bridges given their limited policy options."

Ruparel adds that Russia's approach to Greece and Europe more broadly is one of "divide and conquer", hoping to "sow divisions" between EU members.

Tsipras visited Moscow last month in order to agree a number of deals with Russian president Vladimir Putin, such as the Turkish Steam project which will see Europe import Russian gas via Greece. It has been speculated that Greece's financial problems have forced it to pivot towards powers outside of the bloc.

It emerged today that Athens had to dip into an emergency fund to make a €750 million ($844 million) payment to the IMF one day ahead of the deadline, in the hope of the financial body releasing the final €7.2 billion ($8.1 billion) bailout installment of the total EU/IMF payment of €240 billion ($270 billion).

The low level of its finances have heightened concerns that the country will default on its debt and be forced to leave the eurozone. A reform deal must be reached with its international creditors before the end of June if it is to avoid the default, with finance minister Yanis Varoufakis yesterday describing the country's financial plight as "terribly urgent".