"Yanis, have this nourishment for the nerves. You're going to need it,” German FinMin Wolfgang Schaeuble told his Greek counterpart last week, presenting Varoufakis with a box of chocolate euros at a meeting in Berlin.
That’s what counts as humor for Schaeuble who, as Speigel puts it, has become the embodiment of the despicable German to the Greek populace over the course of fraught negotiations with Athens and who now faces a rift with Chancellor Angela Merkel over how far Germany should be willing to go to keep the Greeks in the single currency.
Although Merkel enjoys widespread popularity, Schaeuble is a veteran of the German government and lawmakers’ reverence for the FinMin is increasingly manifesting itself in the growing parliamentary opposition to what some view as an unacceptably soft stance towards Athens on the part of the Chancellor. Speigel has more on Merkel, Schaeuble, and politics in Berlin.
Via Speigel:
Schäuble is extremely good at shrugging off conflict with gallows humor -- a gift that has served him well throughout his lengthy career. He is well aware that a handful of Social Democrats aren't the only ones talking about the widening rift in the government. Insiders who know Merkel well are saying the same. The chancellor has to answer one of the hardest questions she's had to face since assuming office, namely, should Greece be allowed to remain in the euro, or should the whole drama be brought to a spectacular close with a Grexit.Merkel would like Greece to remain in the euro. Not necessarily at any cost, but she's prepared to pay a high price. Schäuble is not. He is of the opinion that a Greek withdrawal from the euro zone is in Europe's best interests..Schäuble is something of an éminence grise in the German government: He became a member of parliament in 1972, when Merkel was preparing to graduate from high school in Templin. In 1998, as head of the CDU/CSU parliamentary group in the Bundestag, he made Merkel his secretary general, but then became enmeshed in the CDU donations scandal. Merkel succeeded him in 2000.Although she's the one in charge, he intermittently makes it clear that he remains his own man; that he doesn't kowtow to anyone. Appointed finance minister in 2009, Schäuble remarked that Merkel likes to surround herself with people who were uncomplicated, but that he himself was not uncomplicated. He tends to be a little derisory about Merkel, admiring her hunger for power but deeming her too hesitant when the chips are down.The euro crisis first drove a wedge between them in 2010, when they disagreed on the International Monetary Fund's contribution to the Greek rescue fund. Schäuble was against it, on the grounds that Europe should sort out its problems by itself. Merkel, however, was keen to enlist the help of a body that has clear criteria when it comes to offering aid, and which would therefore prevent the Europeans from making one concession after another. Merkel prevailed.But they've now traded positions. Schäuble believes that enough concessions have been made to Greece and he's bolstered by the frustration currently rife in his parliamentary group over Merkel's strategy. It will be hard for Merkel to secure majority support if he opposes her, so her fate is effectively in his hands..The conflict is not about differences in their respective assessments of the situation.. Where they differ is when it comes to the consequences..Officially, the differences between Schäuble and Merkel are explained away as a reflection of their respective tasks. It's Schäuble's job to hold the purse strings and Merkel's to keep an eye on what's happening on the international stage. Will Putin be getting a foot in the door if the euro zone cuts the rope on Greece? Will the country turn into a failed state in the middle of Europe if it no longer has the euro?This isn't just a matter of good cop, bad cop. Unlike Merkel, Schäuble doesn't need to worry about looking as though he doesn't care enough about Europe. He wrote the book on the EU, penning papers on how to intensify the union when Merkel was still only a freshly-minted member of the cabinet. She, by contrast, has often been confronted by accusations that her EU policy is austerity-driven and nothing else. In terms of Europe, she lacks Schäuble's street cred..Merkel has never been overly bothered about going down in the history books. But if she does end up hounding Greece out of the euro, the development will certainly be more than a footnote. Which is one possible reason for her hesitancy. She, not Schäuble, will be the one who has to deal with the inevitable criticism and attacks.
Speigel goes on to say that Schaeuble could "easily" stage a rebellion against Merkel if he chose but, at least for now, that doesn't seem likely and indeed may not be necessary if Greece's creditors can remain resolute in their insistence on pension cuts and VAT hikes for another week or two.
It still remains to be seen how Tsipras will respond once Greece's back is truly against the wall. So far, the Greek PM has remained defiant, but that may be because pensions have still been paid (albeit hours late on at least one occasion), there's still money in the ATMs (even if the lines are getting longer), and Greece has managed to pay creditors (even if the payments have been made using creditors' own money). All of that changes at the end of the month and that is when Tsipras' resolve will truly be tested.
In other words, unless Greece decides to chance a default and a euro exit, a showdown between Merkel and Schaeuble will likely be averted, but should Tsipras decide to go down with the ship, there may come a time in July when Merkel is called upon to intervene and pull Greece back from the brink in order to avoid what she views as unacceptable geopolitical consequences. If it comes to that, she may have to go through Schaeuble which, as the above makes clear, could prove politically challenging.
In the mean time, Schaeuble is said to be drawing up plans for a Greek default. Here's Bloomberg, citing Spiegel, with more:
German Finance Minister Wolfgang Schaeuble has asked his staff to conceive a mechanism by which a euro-area state in the future could default on its debt in an orderly way that would ensure the continuity of currency union, Der Spiegel reported, without saying how it obtained the information.Schaeuble also looking at ways to limit aid from member states and put the brunt of the burden on bondholders of the country in question: SpiegelRoadmap is intended to prevent countries in healthy financial state being held to ransom by states unable to repay their debt: SpiegelAcademics also participating in the discussions: Spiegel
Once again we see that in the final analysis, this is all about being careful to send a strong message to Europe: the troika will not be held hostage by debtor countries seeking to win austerity concessions by threatening to shatter the idea of euro indissolubility. This is essentially the negotiating tactic Syriza has employed as Athens attempts to preserve Greeks' right to decide for themselves how they want to be governed. We will see, in a matter of weeks, whether Tsipras was bluffing or is in fact all-in.
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