Greek Prime Minister Alexis Tsipras and German Chancellor Angela Merkel
Greek Prime Minister Alexis Tsipras and German Chancellor Angela Merkel

Alexis Tsipras stunned Greece’s creditors on Saturday by walking out of rescue talks and calling a national referendum on their last bailout offer. Now German Chancellor Angela Merkel is taking her revenge.

She does not speak it, at least not in public. But with quiet determination she is making the Greek premier squirm — by refusing his desperate efforts to return to the negotiating table.

As the situation in Athens has deteriorated and Greek exit from the euro has appeared ever more likely, the European Commission president, Jean-Claude Juncker, has again tried to reopen talks on a rescue package. Reflecting the desperation felt by some of Greece’s creditors, President François Hollande of France called on Wednesday for an “immediate accord”.

But Ms Merkel has stood apart, insisting that there can be no more talks until after Sunday’s referendum — a stance she calmly reiterated to the German parliament on Wednesday.

“She is squeezing Tsipras hard because he has tried to squeeze her [by calling the referendum], even if with limited effect,” said Josef Janning, a Berlin-based fellow at the European Council on Foreign Relations think-tank.

Mr Janning did not believe that vengeance was the sole motive of Europe’s most powerful leader.

“She has a reason,” he said. “If something like a negotiation restarted now it would have little chance of success. For negotiations to succeed, the EU needs to be taken seriously by the Greek government.”

Ms Merkel’s decision to hold firm is made possible by a conviction in Berlin that the eurozone as a whole can weather this financial turbulence — a view that the markets appear to share.

Although she has tried to hide her irritation with Greece’s leftwing government, the chancellor shares some of the anger of her finance minister, the tough-minded Wolfgang Schäuble, who has openly complained about “the loss of trust” during months of fruitless, often ill-tempered talks.

Ms Merkel’s calculations may also be influenced by the criticism she endured over a previous Greek referendum. Back in 2011, Greece’s then prime minister, George Papandreou, suggested putting the country’s first international bailout to a popular vote.

Ms Merkel and France’s Nicolas Sarkozy bullied him into scrapping the idea and were later criticised for trampling on European democracy.

While conditions in Athens have worsened in recent days — with banks shut and cash dispensers running short — German public opinion has remained firmly against a new bailout. Bild, the best-selling newspaper, is campaigning hard for an end to pouring German taxpayers’ money into a bottomless amphora, with the latest headline on Wednesday declaring that Germany’s €88bn contribution to the €240bn Greek bailout is already long gone.

In Ms Merkel’s CDU/CSU Bundestag bloc, a growing band of Greece-sceptics is openly calling for the chancellor to cut the financial lifelines and let “Grexit” (Greek exit from the euro) happen.

“The whole onus is on the Greek government,” said Gunther Krichbaum, CDU chairman of the Bundestag’s EU committee and a close Merkel ally. “They left the negotiating table.”

Even though Ms Merkel’s immediate authority is not in doubt, the Greece crisis still threatens her political legacy — as the Süddeutsche newspaper pointed out in a recent editorial. “The 30th of June 2015 is without doubt, in terms of finance politics, the lowest point, so far, in Merkel’s near 10 years long chancellorship,” the paper said, referring to the chaos surrounding Greece and its EU partners.

Throughout the crisis, Ms Merkel has repeated the mantra that she is determined to reach an agreement that keeps Greece in the eurozone. She is convinced that unity makes Europe stronger in the face of global challenges and does not want to be remembered for presiding over the bloc’s first rupture. She also worries that a Grexit has the potential to bring trouble to the EU’s doorstep by destabilising the Balkans.

But as the chancellor told the Bundestag on Wednesday: “A good European is not somebody who looks for an agreement at any price.”

A senior CDU MP says Ms Merkel will wait, as she has said, until after the referendum, then pick up a phone and resume efforts for an accord.

“She will use this as an opportunity,” he said. The hope in many eurozone capitals is that a Yes vote — in favour of a deal between Greece and its creditors — would put pressure on Mr Tsipras to give ground, or even resign, paving the way for a more conciliatory leader.

But there would have to be talks even after a No vote because Greece would still remain an EU and eurozone member and a country with a collapsing economy and rapidly escalating social distress.

“Merkel knows the EU must stay engaged even if there is a No vote,” said Mr Janning. “Europe cannot close the door on Greece. . . [It] is not a faraway failed Latin American state.”

Get alerts on European Union when a new story is published

Copyright The Financial Times Limited 2020. All rights reserved.
Reuse this content (opens in new window)

Follow the topics in this article