Mrs Merkel goes to Athens. Why?

Illustration by Manos Symeonakis

One of the first tasks young Otto von Wittelsbach and his regency council undertook shortly after the Great Powers appointed him king of Greece in 1833 was to try to subdue the people of Mani. Greece’s first head of state, Ioannis Capodistrias, had met his death two years earlier after attempting to bring some of the Maniots into line over their refusal to pay taxes. The newly-arrived Germans launched three military operations involving thousands of Bavarians soldiers marching into the southern Peloponnese. They all proved fruitless as the wily and determined Maniots made best use of their limited resources and inferior numbers.

Then, the council decided on a more nuanced approach. They dispatched a Bavarian diplomat called Max Feder to the area. Feder spoke Greek and had good knowledge of Mani. He travelled the region, sat in village squares and met with locals face to face. Rather than force the Maniots into submission, Weber convinced many of the local kapetans, or clan chiefs, to join a new military unit consisting just of locals that would be responsible for policing their own area. It proved a significant move in bridging the gap between the Maniots unruliness and the emerging establishment. “Kindness and tact succeeded where coercion had been powerless,” wrote Patrick Leigh Fermor in his magnificent book, “Mani”.

For the last three years, much of Europe – Germany, in particular – has looked upon Greeks as the continent’s Maniots, refusing to pay their share and follow the rules. There have been no military expeditions but a fiscal vice and a flurry of brickbats have been deployed in the attempt to get Greece to conform. Like the Bavarian’s forays, the European’s tactics have not had the desired effect. Today, many Europeans see Greeks as impetuous inhabitants of an outpost into which it is no longer worth venturing or pouring money. Many Greeks now believe Europeans are only intent on subjugating them, while having no interest in their history, culture or painful predicament.

Into this melee, steps Angela Merkel. Until recently, the instigator of several verbal assaults on Greece, the German chancellor now appears to be opting for a diplomatic route. Her surprise trip to Athens on Tuesday looks like an attempt to bridge differences, an effort to try a little kindness and tact. Whether she shares Feder’s success is impossible to predict.

There are many reasons why Merkel’s visit seems too big a risk to take. The main one is that it will create a renewed sense of instability at a time when Greece’s society and political system is already being put through the wringer. The recent general strike, the daily protests, the clash involving protesting shipyard workers at the Defense Ministry, the ugly exchanges in Parliament, the slew of corruption and tax evasion scandals, the disintegration of PASOK and the ascendancy of Golden Dawn have all contributed to the sense that Greece is a country clinging on for dear life.

Tuesday will be an opportunity for some to voice their disapproval and anger about what has happened over the past three years. The country’s two largest unions, ADEDY and GSEE, have called a work stoppage and protest to which the main opposition party, SYRIZA, has given its full backing. It is not clear if Merkel would have followed protocol and met with the leftists but by advocating protest over dialogue, SYRIZA chief Alexis Tsipras blew his chance to put his argument about a Europe of equals to the leader he holds most responsible for undermining this vision. The right-wing Independent Greeks and its leader Panos Kammenos, whose raison d’etre is to criticize Merkel and Germany, have called for a human chain to be formed around the German embassy. Kammenos, the Foghorn Leghorn of Greek politics, surely cannot believe his luck: there is nothing that makes a cartoon character’s eyes spin more than a pantomime villain. Merkel’s visit provides an opportunity for Kammenos to revive his party’s flagging poll ratings.

A tense atmosphere and a heavy police presence on the streets of Athens on Tuesday are a given. Over the last couple of years, these two ingredients have caused dangerous side effects when mixed and shaken vigorously. The potential for Merkel’s trip to turn into a public relations disaster for both sides is real.

No matter how cordial discussions between the German chancellor and Prime Minister Antonis Samaras are behind closed doors, if there is mayhem on the streets, that’s the image that will be shown on TV sets around Europe. Those who feel that the unruly Greeks are not worth saving will have their minds made up by what they see, especially if this includes pictures of German or EU flags being burned or protesters waving placards of Merkel dressed as an SS officer – all of which have happened in isolated cases at previous demonstrations. Domestically, if police or protesters get out of hand and there are injuries or serious damage, greater stress will be placed on the fragile social and political balance.

This begs the question of why Samaras and Merkel think the visit might be a good idea. From Samaras’s side it appears an opportunity to increase his legitimacy both at home and abroad. Presumably there is little the Greek premier can tell his counterpart that he didn’t already say in Berlin a few weeks ago or will have the chance to at the EU leaders’ summit in less than two weeks. Rather, for the New Democracy chief this is the moment that he can truly claim to have completed his political rehabilitation. Ostracized by many European leaders, including those on the center right, due to his opposition to the austerity measures adopted in the first two years of the EU-IMF program, Samaras has been winning over his peers since being elected in June. “He’s the best port we have in this storm,” a European Commission official told the Wall Street Journal last week. The newspaper adds that Merkel’s opinion of Samaras has changed substantially and that she was impressed by the Greek delegation that visited Berlin in August. There was no way Samaras could pass up the opportunity to host Merkel in Athens and prove to his critics at home and abroad that he has travelled the road to redemption.

For Merkel, the purpose of Tuesday’s visit seem a little more practical. All the indications are that over the last few weeks she has ditched her equivocal position on Greek euro membership for a clear line in favour of keeping Greece in. This position is at odds with the views of some members of her party and government.

It was impossible to miss, for instance, the contrast between statements on Greece last week by Merkel’s spokesperson Steffen Seibert and her Finance Minister Wolfgang Schaeuble, who is much more sceptical about supporting Greece. “All of the countries which are in a program, except Greece, which is in a particularly difficult situation… have made remarkable progress,” said Schaueble on Thursday. A day later, Seibert told the press: “We see that the reform efforts have increased under the Samaras government and we want to support that.” By visiting Greece, Merkel is sending a clear message to her colleagues that backing its continued membership of the eurozone is now the party and government line. It is an invitation to doubters to back her or keep quiet.

With the countdown to next year’s federal elections underway, Merkel is also hoping for a piece of one-upmanship on the Christian Democratic Union’s main rivals, the Social Democratic Party, which has been highly critical of the way the chancellor has handled the Greek problem and has maintained a much clearer position throughout the crisis in favour of Greece remaining in the eurozone. It is probably not a coincidence that Merkel’s visit comes only days after the SPD, which trails the CDU by almost 10 percentage points in the polls, named former finance minister Peer Steinbrueck as its candidate to run against the chancellor. In one of his first interviews after winning the nomination, Steinbrueck told Die Welt newspaper that Greece should be given more time to complete its fiscal consolidation. “We cannot tighten the screws any further,” he said. “And the chancellor must finally tell the German people the truth: Greece will not be able to borrow money on the capital markets in the coming seven or eight years. We will have to help it until then,” he added.

The prospect of Germany having to help Greece for many more years is another reason behind Merkel’s visit. It has become increasingly clear over the last few weeks that a potentially unbridgeable gap is developing between the International Monetary Fund and the eurozone over how to proceed with the Greek crisis. The IMF is insisting that an official sector debt restructuring be incorporated into the Greek program but many of the Europeans do not want to contemplate such a move at this stage. For Germany’s politicians in particular, the prospect of having to explain to a domestic audience which has largely negative view of Greece that there is a need to write off part of what it owes to its eurozone partners and the European Central Bank is anathema, especially now the election jostling has started.

This means the eurozone is nearing a make-or-break moment with respect to Greece. A failure to put restructuring on the table now will lead to the IMF extracting itself from the Greek program. Although it contributes a relatively small part of the bailout, its withdrawal would change the dynamics of the process and put extra pressure on the Europeans. As the main paymaster, the onus would be on Germany to assume a decisive role. This means having a clear idea of what it wants to achieve and what needs to be done to achieve it. Settling the Greek issue is the first step in this process.

Decisions about an extension to Greece’s fiscal adjustment period, a second restructuring, the role of the European Stability Mechanism in tackling Greece’s runway debt and how a possible Greek financing gap might be bridged are among those that must be taken in the coming months. As has been the case throughout the past three years, Germany’s leanings on these issues will act as the eurozone’s metronome. Somewhere in this process, Greece and its partners have to arrive at a formula that gives it a chance of economic survival. The current path does not, instead it has led to both sides straying dangerously far from the common interest they have to embrace in order to make things work. Merkel and Samaras need to walk away from Tuesday’s meeting and subsequent ones over the next few weeks having abandoned the impression that either side is being forced into an unacceptable compromise. Coercion simply won’t work. Just ask the Maniots.

Nick Malkoutzis

20 responses to “Mrs Merkel goes to Athens. Why?

  1. Pingback: Mrs Merkel goes to Athens. Why? | ForexLive

  2. Pingback: Mrs Merkel goes to Athens. Why? | Technically Business

  3. I think chances are high that, after the visit, one will ask “Why did Mrs, Merkel come to Greece?” Hopefully, the visit will serve to relax (and/or improve) personal chemistry between these two countries. That by itself would already be a major accomplishment. But I doubt that we will have on Wednesday much more clarity about the future of Greece’s debt problem than we have today.

  4. I’ve no doubts that protestors will be out in force on Tuesday and the ugly thugs of Golden Dawn will be making the most of the opportunity. It’s extremely unfortunate that Syntagma violence is all that some foreign media see fit to screen or publish. It’s a bit like the American flag-burning cliches regularly filmed. It’s only a small part of the story but it has the power to make up people’s minds.

    • Although foreign media like to publish this kind of news, well informed readers do not make wrong conclusions because of some loud protesters.

  5. Clearly, the answer to the “why?” question is the IMF. Because the IMF’ s insistence for the OSI and direct banking recapitalization through the ESM is a clear and present danger for the Merkel policies.

    And because the IMF position happens to be the best for the Greek interests, Merkel is coming to town to prevent Greece from the temptation of siding with the IMF (which BTW Greece ought to do without a doubt) and sell a softer side of her nonsense.

    Because in this obscure world of Greek politics there are still some who equate the IMF with 3rd world status and therefore have failed to notice that the IMF in this particular juncture happens to be Greece’s best friend while Merkel, as usual, Greece’s worst enemy.

    Try explaining that to a bunch of financially semi-illiterate people.

    One thing is for certain. The Merkel visit is ill-timed and anyone who falls for this “new Merkel friendship” is a real sucker and naive at the same time.

  6. Clearly, the answer to the “why?” question is the IMF. Because the IMF’ s insistence for the OSI and direct banking recapitalization through the ESM is a clear and present danger for the Merkel policies.

    And because the IMF position happens to be the best for the Greek interests, Merkel is coming to town to prevent Greece from the temptation of siding with the IMF (which BTW Greece ought to do without a doubt) and sell a softer side of her nonsense.

    Because in this obscure world of Greek politics there are still some who equate the IMF with 3rd world status and therefore have failed to notice that the IMF in this particular juncture happens to be Greece’s best friend while Merkel, as usual, Greece’s worst enemy.

    Try explaining that to a bunch of financially semi-illiterate people.

    One thing is for certain. The Merkel visit is ill-timed and anyone who falls for this “new Merkel friendship” is a real sucker and naive at the same time.

  7. Three simple answers:

    a) Because she has recently been invited and it might be used against her not to accept the invitation.

    b) Because it is a good possibility to repeat how and why her heart is bleeding, while maintaining that reforms of administration and economy are mandatory.

    c) She will bring along a SMALL gift (as political correctness will require), denying to give more😉

  8. Very interesting article. I hope Merkel will surprise with a significant gesture towards Greece – something that will stabilize Greece after Samaras questioned the stability of its democracy.

  9. I switched between the German Phoenix TV channel and Greek channels watching the affair. Interesting! Phoenix showed hardly any of the protests/demonstrations. They had a gentleman by the name of Antonios Beys-Kamnarokos (Greek-German whose title was mentioned as President of Greek Communities in Germany) as a sort of co-host. Mr. Beys made excellent comments about the situation in Greece. All in all, this was a dignified report to watch, from start to finish. Germans watching that report must have asked themselves why they ever expressed such nasty feelings about Greeks.

    On the Greek channels, on the other hand, I saw a lot of those things which may have motivated Germans to express nasty feelings about Greeks in the past. That was not dignified protest. Instead, that was simply primitive.

    And later in the day I watched reports on CNN (and other internationial media). Frankly, had I only watched those, I would have come away with the feeling that Greece is a powder keg where the brutes are about to knock each other out.

    • Now that the “Ich bin ein Athener” show is over, it’s worth noting that whoever made the political mistake of getting close to Merkel, therefore seen as a collaborator and sleeping with the enemy, had their Greek political career over in a matter of seconds.

      This is not prejudice, just a simple observation.

  10. I think that part of the answer to the ‘why’-question may be found here:http://www.nytimes.com/2012/08/30/business/global/by-request-merkel-is-returning-to-china-for-economic-talks.html?smid=pl-share

    China represents 20% of foreign investment in Germany and Germany represents 50% of the EU exports to China. Merkel wants China to buy up some of the EU government debts, but the Chinese want a stable eurozone, with Greece as their ‘arm’ in the EU. This may also explain why the trojka now insists on labour market measures that do not have a direct budgetary impact (easy layoffs, 6 days week, lower minimum wage), but rather represent Chinese conditions.

  11. Greek is an honest and proud nation with a rich history. Greeks will never tell a lie and will always honour their debts.

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