Angela Merkel stands firm on finding resolution to Greece crisis

Angela Merkel at WEF

While the German chancellor, Angela Merkel, is publicly insistent on reaching a compromise deal that ensures Greece is saved from insolvency, expectation is rising – in Germany and elsewhere – of a Greek exit from the eurozone.

With just two weeks to go for Athens to find a solution to creditors’ cash-for-reforms demands for a 1.6 bn euro repayment to the International Monetary Fund, a Greek default – and a Grexit with it – are viewed in Berlin as ever more likely.

But the geo-political fallout from such a scenario is considered so potentially catastrophic that many believe the German government, under Merkel’s guidance, will do anything to try to avoid it.

“Merkel is facing one of the most difficult decisions of her chancellorship,” according to the latest edition of German news magazine Der Spiegel. “The question is whether Greece is allowed to stay in the euro or whether Merkel will end the drama with a nasty surprise – a Grexit. She wants to keep Greece in the euro, albeit not unconditionally, but she is prepared to pay a high price for it.”

Merkel’s commitment to save Greece was expressed last week in her insistent phrase: “Where there’s a will, there’s a way”. It would appear to be her one-size-fits-all idiom for the crisis – she also uttered it when discussing Brexit during David Cameron’s Berlin visit two weeks ago.

But with signs of a deal with Greece being further out of reach than ever, of a growing rift between her and her finance minister, Wolfgang Schäuble, (he is said to believe a Grexit is the lesser of two evils), and of deep divisions within her own CDU/CSU, Merkel could find herself increasingly isolated on the issue.

With his repeated declarations that Germany, above any other country, carries responsibility for ensuring Europe stays whole, Greece’s finance minister, Yanis Varoufakis, knows he is touching a nerve with most Germans, including Merkel, who feel their responsibility towards Europe only too keenly as a result of the country’s Nazi past.

Merkel also fears that, due to the current instability in the Balkans and Ukraine, and with Russia’s Vladimir Putin – and even China – seeming to have a foot in the door in case of a Greek default, turning away from Greece now is not an option.

While opinion is divided over how to deal with the Greek government, editorials in Germany’s papers on Tuesday all agreed that the drama has run on for far too long.

“If the German debt row was a theatre production, the audience would have long since made a frustrated escape from the auditorium,” wrote the leftwing Tageszeitung. “The constant repetition of supposed dramatic high points, in which the talk is regularly of a ‘last chance’, appear unrealistic and staged. But this is not a piece of theatre. It’s about the future of millions of people ... about whether the Greeks will have any money left to buy medicine, whether unemployment rises in Germany as a result, and whether Europe stays intact or falls apart.”

The Frankfurter Allgemeine Zeitung, while bemoaning the manner in which the Greek government of Alexis Tsipras has approached the negotiations, argued that democracy in the whole of Europe was at stake over the crisis.

“Although their readiness to adhere to a reform plan is extremely low and although their cold grinning self-righteousness is unbearable, there’s no way this can continue. This is not about humiliating a people and its government. It’s far more to do with their ideologically motivated denial of reality,” said the conservative daily.

While some economists are convinced that, as in past crises, a last-minute deal will be found to avoid insolvency, increasing numbers of politicians in Merkel’s own ranks are more determined than ever before to make Greece stick to the creditors’ demands.

“It won’t work that Greece sets the terms and says ‘everyone has to dance to our tune’. Greece needs to get back to reality,” Volker Kauder, the parliamentary floor leader of Merkel’s CDU told German television.

But Claudia Roth, vice-president of the Bundestag, and a leading member of the Greens, said while she was exasperated by the failure of negotiations so far, it was the fate of the people of Greece and the future of Europe that were most at stake if Greece were allowed to default.

“Of course one has the feeling that the Greek government is playing about, but this is about the people of Greece. It’s about the further impoverishment of Greece, and about Project Europe, and this the negotiating sides need to have in their sights,” she told German radio.

Roth added that a Grexit would have incalculable consequences for other strained economies. “For Italy and Spain it would prompt a downward spiral, it would unleash speculations about the euro, it would have unclear consequences for the global financial system, an incalculable risk for the world economy and as well as that, a Grexit would be far more expensive for Germany at the end than rescuing Greece now,” she said.

At the same time others, have accused Tsipras of causing huge tensions in Europe by failing to see that Greece’s main critics are beyond Germany. “His mistake is to have declared Germany to be his main opponent, even though the biggest critics are elsewhere,” wrote Michael Sauga in Der Spiegel, “such as Portugal, which dealt with similarly serious reforms without huge protest. Or in Slovakia, a country in which the average income is lower than that of Greece.”

Merkel has never yet been pinned down on what she eventually wants the legacy of her chancellorship to be. But the woman who back in 2010 first used the phrase “if the euro fails, Europe fails” knows that a Grexit under her watch would form more than just a footnote in any summary of her leadership. That is likely something she would wish to avoid.

“The Greek prime minister is certainly playing with fire,” said Thorsten Müller , a political studies student selling tickets for entry to a park in Potsdam, a city 22 miles to the south-west of Berlin. “In the end it will be the Greek government and a bunch of bankers who decides how this ends, depending on how they behave. Does that scare me? Yes, it does. I’d like to see a bit more political leadership, rather than have the feeling that the future of Europe is in the hands of a bunch of creditors, bankers and leftwing chancers.”

Powered by article was written by Kate Connolly in Berlin, for The Guardian on Tuesday 16th June 2015 16.32 Europe/London © Guardian News and Media Limited 2010


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