Berlin’s toughening stance

Many have been surprised by the tough stance that has been adopted by the troika toward the Greek government even though the lenders had made it clear that this was going to be the final and toughest round of negotiations. Yet there still seems to be a piece of the puzzle missing, something to explain Berlin’s about-turn in regard to Greece. Observers wonder, for example, whether anything has happened to alter the once-close relationship between Prime Minister Antonis Samaras and German Chancellor Angela Merkel. People close to German decision-making say that Germany’s biggest concern is France, not Greece, and whether it will be able to stay the course before it bursts and drags the rest of Europe down with it, starting with Italy.

French President Francois Hollande is looking to Merkel to help relax fiscal regulations, threatening that the government will collapse, opening the way for a victory by Marine Le Pen’s Front National. The Italian prime minister is playing the same card, warning against Beppe Grillo, while in Spain, Podemos is being cast as the ogre.

The Greek prime minister was the first to adopt this argument, saying that if the lenders did not ease up on the pressure, SYRIZA would sweep into power.

So what have the people close to the German decision-makers concluded? Basically that Finance Minister Wolfgang Schaeuble is starting to realize that Germany may be forced sooner or later to ease up on its demands for austerity and fiscal discipline because of developments in France and Italy, which are, to use that old chestnut, too big to fail. Greece however is a different case, and by taking a tough stance toward Athens, Germany is telling the rest of the countries of Europe that it won’t make their problems its own. Schaeuble is also preparing the ground for the next government that may emerge from possible early elections. He appears to believe that, by maintaining a hard line, he will ensure that similar scenarios will not emerge in other European countries. “Either they compromise or they fall or Greece leaves the eurozone,” an official said.

If these suppositions are true, we need to brace ourselves for a very turbulent time, both in Greece and in Europe as a whole. However much Greece is at fault for failing to fulfil certain commitments, nothing justifies Berlin’s current attitude. Who could turn the tide? Merkel, who so far seems to be staying out of the limelight. After all, to date, she has always stepped in at the last minute when the Greek predicament becomes of concern to the international markets. We shouldn’t forget that in 2012 she opposed the idea of a Greek eurozone exit, despite the pressure. Hopefully the chancellor will step up once again as the leader of a powerful country to the Greek challenge.