Tusk: Europe was ‘close to catastrophe’ over Greece

Tusk: Europe was ‘close to catastrophe’ over Greece

European Council President Donald Tusk returned this week with a group of journalists from seven leading European newspapers, including Kathimerini, to the same room where on Sunday he held marathon talks with Greek Prime Minister Alexis Tsipras, French President Francois Hollande and German Chancellor Angela Merkel on Sunday and Monday to agree a new bailout deal.

In his interview, Tusk talks about how at 7 a.m. on Monday Greece's eurozone membership was hanging by a thread. He also gives his view on the role of German Finance Minister Wolfgang Schaeuble in the negotiations and the little-known part played by Dutch Prime Minister Mark Rutte.

Speaking of the eventual agreement, Tusk says it was necessary to avoid the real risk of chaos and possible bankruptcy. “This is the first step in a long process,” he says.

Some states are concerned over Germany's power in the EU. Do you believe that Berlin's reputation was damaged over the weekend of negotiations?

I think that Germany has emerged neither weakened nor strengthened from these negotiations. It was one of my main aims during these negotiations to avoid someone being a loser or a winner. If you followed the talks, they were also about dignity, humiliation and trust. History shows we cannot ignore such values.

I am quite sure that the resulting agreement between eurozone members states is actually a draw, meaning there are no winners or losers. There is a lack of enthusiasm, nobody is satisfied 100 percent. At the end of the day Germany had to sacrifice much more than other countries in terms of numbers and money – this was the main issue of the whole process.

What is your opinion of German Finance Minister Wolfgang Schauble's idea of a temporary Greek exit from the euro area?

I’m quite sure that this thinking represented by Schaeuble, but not only by Schaeuble. This possible controlled and prepared Grexit, intellectually, it’s legitimate. It’s nothing extravagant. For sure, this was a possible alternative in this process.

It’s just my intuition, but I think it’s also what Wolfgang Schaeuble believes. I think he sent this message very openly and clearly that for Europe and for Greece it would be better that Greece is out. But I’m absolutely sure that for Chancellor Merkel, it was only a useful tool in the negotiation, but for sure not her political aim. I have no doubt that for all of them, the leaders and Chancellor Merkel, the only political target was to avoid this risk of Grexit. For sure, this role of Schaeuble was useful as an argument which showed to Tsipras that the dramatic solution is quite realistic and achievable.

French President Francois Hollande had made clear that he was ready to do everything to avoid a Grexit. Do you think the Franco-German partnership is at risk?

President Hollande was more neutral and objective, but I think it was his presumption from the very beginning that he’s dedicated to this process for a solution, not tough negotiation. The division of roles was very natural. It was for all of us absolutely clear that, at the end of this process, we have to agree between Greece and Germany. For many reasons, not only because of money. This was a chance for President Hollande not to be in charge or be an arbiter, but a very active person and very helpful when it comes to moderating or calming down the emotions. He was really helpful in this context, because of his temperament.

Is it possible that European leaders wanted to prevent a Grexit at that moment, but set the process in motion to take place in, say, six months?

This agreement is not a guarantee for years. It was something we needed to avoid, this real risk of chaos and possible Greek bankruptcy – and, as a political result, also Grexit. But this is [not even] the first half in a football match, but the first step in a long-perspective work. For now, it works.

The voting in the Greek parliament was full of emotions and, for me, also a controversial message from [Prime Minister Alexis] Tsipras that he’s ready to support an agreement that he doesn’t believe in. That’s, in fact, very original. But I think it’s also very honest and authentic, because when I observed his face during the negotiations it was absolutely visible and tangible that he was not satisfied, and for him this is a really tough test. But it’s shows how difficult this process is and will be, for sure. But it shows also that, for now, it works.

How close did we come to Grexit?

The first sign that Grexit was possible was, of course, the result of the Eurogroup on Saturday. Not only because of the lack of a result, but because of this new mood and new words – this last sentence in the document about a possible Grexit. But also because of the irritation of almost all of them.

After the referendum, this irritation was very tangible. It meant the position of Tsipras was weaker, in fact, after the referendum than before – here, maybe not in Athens, but for sure here. This privatization fund was, for sure, very provocative for Tsipras.

The first signal that something like that could be accepted was a text message from Dutch PM [Mark] Rutte. When I showed them Rutte's proposal that 12.5 billion of the fund could be used to pay back the debt and 12.5 in investments, no one seemed particularly impressed but from that moment it was on the table.

In the [summit] negotiations, there was just one time when I felt the risk was really close, really possible or probable. It was about 7 o’clock in the morning, when both of them – Chancellor [Merkel] and Prime Minister Tsipras – they wanted a pause.

For me, it was absolutely clear this was the end of the negotiation. In fact, they wanted to stop this summit, but they were not ready to say "this is the end," and it was an excuse. But it was very spontaneous. It’s also why it was so dangerous, because it was an authentic reaction, fatigue, also irritation. Both of them were absolutely sure they compromised too much.

It was a really interesting moment, because the difference at this very moment was so small. At this moment it was about 2.5 billion euros. In the end, the discussion was about how much money – virtual money – from this privatization fund would go to investment and how much to debt. The position of the chancellor was 10 billion for investment, and for Tsipras it was 15 billion. And the proposal was 12.5 billion for investment. For both of them, it was about 2.5 billion. At the same moment, they felt it was enough.

I told them, "If you stop this negotiation, I’m ready to say publicly: Europe is close to catastrophe because of 2.5 billion."

[Finance Minister Euclid] Tsakalotos and his team analyzed the proposal outside the room and then came back with the whole group with Tsirpas and Tsakalotos and some advisors saying they were ready to accept this with some changes, but it was nothing important. This Greek draft was actually acceptable to all of us.

You say that at 7 a.m. Grexit was the most possible scenario while the two sides were separated by 2.5 bln. What do you think made them change their mind?

I think it would be an exaggeration to say it was a sort of illumination but we were too close to leave this room. And when they realized that we have an agreement [with the exception of] one detail, I think that is very difficult to decide because it is my impression and then we needed in fact 10 minutes to draft last draft.

Did you feel that the Council was split into two, some supporting Greece and some being against it?

At about 11 p.m., it was clear that Germany was not the toughest country. Maybe not Germany, but for sure Chancellor Merkel was ready to compromise and some countries were afraid this compromise might be unacceptable to them or their parliaments. Everything was informal.

I received a signal that for a group of five member states, Rutte would be the best representative. I was naive, of course, because I thought at midnight we would be ready with the compromise. I knew that I should be 100 percent sure it was not only a compromise between Greece and Germany. I wanted to avoid this trap that some countries might ignore or oppose this possible compromise.

What role did the smaller countries play?

Smaller countries and the newer eurozone members were very patient. They said that they did not want to disturb these negotiations and for them Grexit was unacceptable.

Ideas and geopolitics

How significant is the geopolitical dimension of this deal in your opinion?

I was quite sure that there was no risk of financial contagion even if Greece is out. It wasn’t a slogan, it wasn’t propaganda when [ECB president Mario] Draghi and other institutions confirmed the eurozone is relatively safe today and the risk of contagion doesn’t exist. But for sure, after a dramatic event like Grexit, we could predict some political, ideological and geopolitical consequences.

I am really afraid of this ideological or political contagion, not financial contagion, of this Greek crisis. Today’s situation in Greece, including the result of the referendum and the result of the last general election, but also this atmosphere, this mood in some comments – we have something like a new, huge public debate in Europe. Everything is about new ideologies. In fact, it’s nothing new. It’s something like an economic and ideological illusion, that we have a chance to build some alternative to this traditional European economic system. It’s not only a Greek phenomenon.

This new intellectual mood, my intuition is it’s risky for Europe. Especially this radical leftist illusion that you can build some alternative to this traditional European vision of the economy. I have no doubt frugality is an absolutely fundamental value and a reason why Europe is the most prosperous part of the world…. My fear is this ideological contagion is more risky than this financial one.

Do you see a difference between the radical left and the extreme right?

For me, the atmosphere is a little similar to the time after 1968 in Europe. I can feel, maybe not a revolutionary mood, but something like widespread impatience. When impatience becomes not an individual but a social experience, this is the introduction for revolutions. I think some circumstances are also similar to 1968.

The most impressive for me was this tactical alliance between radical leftists and radical rightists, and not only in the European Parliament… The discussion about Greece, it means a discussion against austerity, a discussion against European tradition, anti-German in some part. Everything was provoking enthusiasm on both sides. It was quite symbolic.

It was always the same game before the biggest tragedies in our European history, this tactical alliance between radicals from all sides. Today, for sure, we can observe the same political phenomenon.

The main melody today is anti-European. When I say anti-European I mean this traditional thinking about the EU and the common currency, and of course anti-market, anti-liberal – in fact, something revolutionary. From time to time, I feel for them it doesn’t matter what kind of ideology it is.

Samaras 'more cooperative'

Some critics say it was a big mistake not to show [former conservative leader Antonis] Samaras more flexibility, and that we are now paying the price for this. Do you share this view?

For sure, Samaras was more cooperative when it came to the substance of this cooperation on assistance and reforms. I think the process of negotiations on a possible third program would have been easier. I think that’s nothing controversial. But I’m not sure the result of the last general election in Greece would have been different than what happened. I don’t like discussion after the fact. You have to be responsible, cautious and wise beforehand. It’s absolutely useless to pretend you’re the wiseguy after something happens.

For me the argument that the euro is responsible for the Greek crisis is absurd. We know what is the reason of the crisis in Greece. I find it very interesting and spectacular that after the whole anti-European campaign in Greece, 82 percent of the Greeks are pro-euro. The common sense of the people on the street can be wiser than brilliant articles in newspapers.