“Enough is enough”: The Greek Crisis and the German Question

by Dr. Maximilian Mayer

Originally, German Vice-chancellor Sigmar Gabriel wanted to stay a week in China. Yet, the evolving drama of the financial crisis in Greece has forced his delegation to shorten the trip. In these days, rescheduling is nothing special for European top politicians. For the ongoing negotiations in Brussels are essential for the future of the European Union. The mounting debts and the pending default of Greece that has astronomically high unemployment rates, while loosing roughly 30% of its state budget and GDP, dragged Europe into its biggest political crisis since decades.

The unfolding crisis is not only about Athens’s financial calamities. At its core, there lies the “German question”. Historian Hans-Peter Schwarzonce described Germany as Europe’s central power. Due to its geographical position and its expansionist history, the country has to live with the delicate responsibility to bring together all the peoples of Europe; to help them see the advantage of teamwork despite all diversity and difference. If German politicians were to give in to hegemonic ambitions, not only has German foreign policy inevitably failed, but the European peace project itself would be in deep trouble. Now, many observers agree that precisely such a historical moment has arrived.

Chancellor Merkel moved beyond her long-time conviction that “leading from the middle” would fit best both Germany’s and Europe’s interests. For months, German politicians from both parties of the ruling coalition and the media have not shied away from humiliating Greece, fueling the increasing Anti-Greek sentiment among the German population. Last night, German officials took the lead in forcing Greek government to accept conditions for a third bailout (up to €86bn) that can only be described as “madness”. It is, as Paul Krugman argues, „a grotesque betrayal of everything the European project was supposed to stand for“. Even EU officials say that Greece’s Prime Minister Tsipras has been treated with an “exercise in extensive mental waterboarding”.

However, Berlin’s unveiled exercise of power may have strong boomerang effects. The mistrust of Germany’s intentions and motifs grows daily, especially in France and South European countries. Yanis Varoufakis, Greece’s late finance minister claimed that the Merkel government wanted the “Grexit” all along, in order to cement predominance of the austerity policy formula preferred by Berlin. The hashtag ThisIsACoup, which became trending during the last night, reflects the widespread opposition against the most recent Eurogroup list of demands Greece needs to implement in turn for a further financial lifeline.

Germany’s categorical “no” to any debt restructuring or haircuts is oddly coupled to arguments of moral superiority. Leading conservatives and socialists voices in Germany tend to occupy the high ground, fully convinced of austerity measures while lamenting Athens’s repeated lies. They have campaigned that Greece should be pushed out of the Euro-zone for its own good. Only by getting back its own currency and reducing debts that mount to 177% of GDP, austeritists believe there will be hope.

This unbridled stance has drawn fierce criticism from many economists, who point out that Germany itself was the beneficiary of a massive hair cut after World War II. The latter argue, that Germany’s growth miracle was in fact enabled by, among others, Greece’s willingness to forgive debts and reparations.

Against this backdrop, it becomes apparent that not just Prime Minister Tsipras faces a trust problem, but also Chancellor Merkel. Gambling with Anti-Greek emotions and stubbornly sticking to self-righteous economic policies, the coalition of Christian Democratic Union (CDU) and Social Democratic Party ofGermany (SPD) have breath-takingly fallen short of accomplishing the difficult balancing tasks required from a central power.

At stake is the legitimacy of basic economic principles which used to underwrit European economic and social policies since the financial crisis in 2008. Fighting against Brussel’s austerity measures, many left-wing movements and parties have arisen across European countries. The political landscape is shifting against Berlin’s favor as Syriza in Greece and Pademos in Spain have won landslide election victories. That finance minister Schäuble would dare to openly push Greece out the Euro-zone immeditaly evoked angry responses in Italy, Austria, Spain, and even France. French Socialist President François Hollande made clear that he would do everything possible to keep Greece in the Euro.

The Social Democratic Party of Vice-Chancellor Gabriel also became internally split over the “Grexit” question. In his party, Gabriel was attacked for in effect overtaking the conservative position. Resistance in the SPD is quickly growing. And its poised to weaken the coalition in Berlin as well as Chancellor Merkel’s own negotiation position on the European level. 

That Germany has failed its role is also evident from the leadership vacuum in Europe. Ever since the first Greek bailout in April 2010, neither Eurocrats nor leading national politicians were able to find a human and economically sound solution for the debts problem. Austerity is no longer an accepted policy and its disastrous effects are felt not only in Greece, but also in Portugal, Spain, and Ireland.

In Washington, the inability to solve a relative minor issue is seen with impatience – after all, the controversy is just about an unimpressive 80 Billion Euro rescue package. The New York Times recently took issue with Chancellor Merkel personally. An oped, aggressively pinpointing her failures, blamed her for the refusal to play a constructive role in this situation. Merkel, who had previously earned the reputation of a strong and all-European leader, was accused merely concentrating on Germany’s own narrowly defined interests. Finance minister Schäuble, then, reacted to intensified US backroom interventions. He suggested that he would prefer to exchange Greece with Puerto Rico, another state that is on the brink of bankruptcy.

Now, even Italy and Luxemburg openly attack the German Government. Jean Asselborn, Luxembourg’s foreign minister, said “It would be fateful for Germany’s reputation in the EU and the world.“ He continued that, “If Germany goes for Grexit, it will trigger a deep conflict with France. That would be a catastrophe for Europe.” The fact that Donald Tusk, the president of the European Council, has cancelled a special summit of all European leaders planned for Sunday, further shows how the German position, and in particular the Grexit proposal, have attracted much more pushback than anticipated – not at least due to the growing opposition within the ranks of Merkel’s socialist coalition partner.

Meanwhile, the SPD leadership faces an intensifying dilemma. It could become one of the defining factors in the crisis. The German socialists were in recent weeks often reminded of their bedrock slogans about solidarity and social justice. Indeed, the SPD has supported a conservative position to a degree that the party is indistinguishable from Merkel’s Christian Democratic Union (CDU). Party chief Gabriel supported an economic policy that rendered the SPD into a mere “satellite” of conservative policies. While Gabriel has effectively lost the support of his party basis, he bears full responsibility for Germany’s hegemonic drive and the related hubris brewing in the German public sphere.

Finally, Greece’s strategic significance for the EU and NATO needs to be taken into account. Especially, what counts for the US as important is the geostrategic situation in South East Europe and the Mediterranean. Here, Greece is in a crucial position. From Washington’s point of view, it would be absolutely careless, if Brussels guided by the German leadership would administer social and political destabilization – a military coup cannot be ruled out given Greek historical experiences – and accept a potential rapprochement between Athens and Moscow.

American strategists have ruled out the ideas to include 400 Mio Euro cuts in the defense budget as an austerity measure. In contrast, NATO interests are the most powerful argument for a Greek bailout. Surprisingly, such concerns are neither shared by Brussels, nor by the Finance ministry in Berlin. Although Germany experiences a lively debate about its own more prominent role on the world stage, her elites avoided integrating Greece into the strategic picture too.

The China visit of Vice-Chancellor Sigmar Gabriel should be seen against this dramatic background. Notwithstanding the enormous economic impact that China exerts on Germany as well as the common industrial challenges (such as industry 4.0), his heartfelt concerns might rest with Greece. As there will be, except Grexit is decided earlier, a highly contentious vote in the German Bundestag about the financial bailout for Greece, Gabriel has to rush back to Berlin on Thursday.

Finding a way to avoid the immediate financial collapse of the cradle of democracy proofs to be the ultimate test for the Merkel administration and, as it were, the ugly return of the German question.

Dr. Maximilian Mayer is Research Professor at German Studies Center of Tongji University.