Refugees and migrants on a rubber boat arrive at the Greek island of Lesbos
© Getty

At the start of the year, the EU was paralysed by the prospect of three simultaneous, potentially destructive threats: Grexit, Brexit and the refugee crisis. Since then, one has receded but not disappeared; one remains undecided; and another is in danger of blowing up.

The receding crisis is Greece. The agreement last week removed the risk of a Greek exit from the eurozone in the immediate future. The deal characteristically leaves a number of open ends, which is troubling but not necessarily disastrous.

In a significant concession the International Monetary Fund accepted that an agreement on debt relief for Athens is postponed for another two years. This suits Wolfgang Schäuble, German finance minister, because his party opposes debt relief. But the deal also requires him and other European finance ministers to come clean before the end of this year on what debt relief measures they intend to propose. The numbers will have to add up — an unheard of event in eurozone crisis resolution politics. There is enormous pressure on eurozone officials to deliver a set of figures that the IMF can accept.

The European finance ministers have also conceded that Greece’s gross financing needs should not exceed 15 per cent of economic output. The GFN is the IMF’s preferred metric. It is the money a country needs to fund interest rates and debt repayment. The acceptance of a GFN ceiling is a big step forward as it is the mechanism that forces debt relief. The problem with this latest accord is that the creditors might not keep their word. The irony is that the Bundestag could approve Greek debt relief today but may no longer be able to do so after the federal election next year.

The Alternative für Deutschland, a populist anti-immigrant and anti-euro party, and the liberal Free Democrats, are both in favour of Greece leaving the bloc. Neither party holds a seat in the Bundestag but both are expected next year to meet the threshold requirements for representation. Add them to the sceptics among the governing Christian Democrats and there may be no majority for debt relief. Mr Schäuble’s commitment this week to debt relief in 2018 is simply not credible.

The second of the potential shocks is Brexit. Opinion polls suggest that the chances of the Remain campaign have improved though it is not in the bag yet — a lot can happen before the June 23 vote. The European Commission’s attacks on Boris Johnson, the former mayor of London and Brexit campaigner, or the suggestions that the EU would penalise the UK should it vote to leave are not helpful. This stuff plays into the hands of the Leave campaign.

While the prospects for Britain in the EU may look marginally brighter than a month ago, Angela Merkel’s refugee deal with President Recep Tayyip Erdogan of Turkey is going in the opposite direction. At first it looked as though the German chancellor would extricate herself from the mess of her migration policy by co-opting Ankara into a refugee swap agreement. The deal foresees that Turkey sends one legal refugee to the EU for each illegal migrant Turkish patrol boats pick up in the Aegean Sea. The main tangible effect is not the swap but the signal that it sends to the refugees. Fewer have since chosen the sea routes. Mr Erdogan last week threatened not to ratify the agreement. He rejects the EU’s demand to modify his country’s antiterrorism laws, which allow him to persecute political dissidents, including journalists.

The EU’s promise to allow Turks visa-free travel to the borderless Schengen zone is officially conditional on the protection of civil rights in Turkey. Mr Erdogan now insists that the EU liberalises the visa regime unconditionally or else he will repudiate the refugee deal. The EU cannot accept this — though watch out for a fudge. Mr Erdogan certainly gives the impression he needs the deal less than Ms Merkel. She visited him last week, and diplomatically avoided meeting Kurdish MPs, whose immunity had just been lifted by the Turkish parliament, or local journalists, who face criminal charges merely for doing their job.

If the deal collapses and Ankara relaxes the patrols, the refugee crisis will flare up again. More important, the deal violates European values. It can only work if the EU turns a blind eye to Turkish human rights violations. Of all the arguments for leaving the EU, this one has some substance: in its negotiations with Turkey the EU has lost the moral high ground.

By the end of the year, we may find that the EU narrowly escaped all three. Officials will congratulate each other. But soon after, they will realise that the Greek debt crisis remains unresolved, that Britain’s new rules of engagement with the EU are hideously difficult, and that the only winner of the deal with Turkey is Ms Merkel, as always.

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