Germany’s big fat Greek angst

Angela Merkel looks out a rainy window.

For the last eighteen months or so, Berlin appeared to be the calm and resolute eye of a perfect storm brewing over Europe: persistent economic distress and mass youth unemployment in the southern EU states, an undeclared war between Ukraine and Russia, and conflict in North Africa and the Middle East driving record waves of refugees onto the shores of the continent. After the rancorous third Greek bailout last week—and torrents of recrimination heaped on Germany from around the world—the weather front hit the capital. It turned into what Germans call ein shitstorm.

A viral video clip of a young Palestinian refugee bursting into tears after hearing from Chancellor Angela Merkel that she might have to go back didn’t help. Stern magazine promptly depicted a steely-looking chancellor on its cover, with the caption “The Ice Queen.” It has not been a good week in Berlin.

Throwing stones

Reactions in Germany have run the gamut from anguished self-examination and hand-wringing to shrugs and righteous indignation. Still, polls show that large majorities in Germany want to keep Greece in the eurozone, but approve of Merkel too. An even larger number approves of her much-maligned finance minister, Wolfgang Schäuble. The government, no doubt, will feel encouraged. Some of the criticism from abroad—the Nazi references, skewed historical comparisons with Germany’s war debt, and calls for reparations—only reinforces the defensiveness of many Germans, because it is seen as unfair.

How much, in all these accusations, is accurate? And what is the thinking behind Germany’s stance?

By all accounts, Merkel’s negotiators were deeply angered: by the Prime Minister Alexis Tsipras’ referendum U-turn, by his government squandering the few green shoots of reform it had, and by being called “terrorists“ by Schäuble’s departed Greek counterpart, Yannis Varoufakis. Yet for Schäuble to demand that Greek assets be privatized by a European fund based in Luxembourg and managed by a German government bank came dangerously close to punishment rather than policy.

German leaders’ intransigent style in the negotiations has also been skewered—not least by the German opposition. (Reinhard Bütikofer, head of the Greens in the European Parliament, said: “the heartless, domineering, and ugly German has a face again, and it is the face of Schäuble.”) It’s true that there was an appalling failure to communicate: the finance minister presented a surprise Grexit paper, his officials took on a hectoring tone, a choir of conservative backbenchers expressed open anger, and heavy artillery fire came from Germany’s tabloid BILD. All this comes from a government that keeps talking about the need for “strategic communication.” Judging by the anger among the leaders of Merkel’s coalition party, the Social Democrats, the communication failure extended to her government partners.

Where does integration stop?

Beyond the sound and fury, however, lie complex debates: about economic policy, politics, the future of Europe. They also illuminate the need to adapt Europe’s architecture to its shifting strategic context.

Reconciliation with its neighbors and integration into Europe were essential to postwar Germany’s rehabilitation. The European Union and the euro have given today’s Germany prosperity, security, and power without parallel in its history. So its commitment to the survival of both is existential.

In this, Merkel and Schäuble are in absolute agreement. For both, the destiny of Europe is closely intertwined with their own: the current crisis puts at risk their lives’ work and their legacy. They disagree on how much European integration is necessary to preserve the euro and the Union. And their disagreement defines the crossroads at which Europe now finds itself.

Schäuble is an ardent European in the West German postwar tradition, a lawyer, and the architect of German reunification. Varoufakis has called him a “neoliberal,” but that is a misreading: Schäuble is a statist, who believes that strong rules and institutions are necessary as impartial arbiters of politics. His vision of Europe is neither federalist nor post-national, but that of a robust, resilient avant-garde held together by a common currency, and by genuine economic governance (which would also permit risk mutualization). A Grexit, in this logic, could have been—or could still be—the seismic shock that could tip a core group of like-minded EU member states into deeper integration.

Merkel, the East German, sees the European Union as a collective of nation-states who share sovereignty as much as necessary, rather than as much as possible—an approach also known as inter-governmentalism. Her cool physicists’ view of the continent acknowledges the reality of cultural and political difference, of tensions, of friction and breaking points. She recognizes the importance of political give-and-take, rather than rules, in bridging them. And she is also far more sensitive to public opinion. For her, a Grexit had to be avoided at all costs, because of the uncontrollable risk of economic and political ripple effects throughout the union.

When the Bundestag approved the third bailout last week (with 439 votes for, 119 against, and 40 abstentions), it meant that Schäuble bowed to the Chancellor, as he has done a number of times before. But it was an ugly win, with 65 members of Merkel’s own conservative party voting against or abstaining, double the number of dissenters in the last bailout in February. And a veiled threat of resignation by Schäuble did not go unnoticed. So Merkel has won a ferocious battle, but with no inconsiderable damage to her standing.

A changed Europe

Much—including Merkel’s reputation—now hinges on achieving a turnaround in the Greek economy. Judging by the Greek parliament’s two reform package votes and Greek opinion polls, which show overwhelming support for staying in the eurozone, Tsipras has managed to rally most of the political parties and public opinion behind him.

But even if Greece succeeds in avoiding economic disaster, the conflict over the bailout has exposed deep rifts in Europe, and the fundamental disagreements over its future remain unresolved. All this will be a severe test for Germany’s European leadership ambitions. The past week has shown just how severe the struggle is for Germany’s leaders.