Apr 10, 2014 | 23:33 GMT

4 mins read

Greece Greets Merkel With Skepticism

It can be difficult to separate the important from unimportant on any given day. Reflections mean to do exactly that — by thinking about what happened today, we can consider what might happen tomorrow.

When German Chancellor Angela Merkel lands in Athens on April 11, she will arrive in a country where all the defining traits of the European crisis are most pronounced. Greece is at the epicenter of the crisis, where the problems of the common currency first exploded and where their effects have been strongest. Some Greeks will receive the chancellor with hatred and a few will feel hopeful, but most will remain skeptical that another visit from another northern European politician can offer any real chance of change in the short to medium term.

This week has offered a clear picture of what Greece looks like five years into the crisis. On April 9, Greek unions held the first general strike of the year, a reminder that many people are still suffering from record-high unemployment, massive debt, spending cuts and tax hikes. Then on April 10, a car bomb exploded outside Greece's central bank, hurting no one but scaring many. This served as yet another reminder: political violence remains a constant threat in the country. Small-scale terrorist attacks have historically plagued Greece, but the crisis has created fertile ground for groups targeting banks, public buildings and political parties.

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Any visitor walking the streets of downtown Athens would quickly notice two things: the large number of closed and abandoned shops as a result of the crisis, and the expanded presence of police officers, a testament to how seriously the Greek government takes protests and terrorist attacks. Widespread anger at traditional politicians is so strong that the country's two traditional parties, the center-right New Democracy and the center-left PASOK, which only a decade ago would jointly net more than 80 percent of the vote, are now fighting to survive in a fragile coalition. At the same time, support for formerly fringe parties has gone up, with opinion polls often putting left-wing SYRIZA and far-right Golden Dawn in first and third place, respectively.

And yet the Greek government achieved a symbolic victory Thursday, when the country returned to debt markets for the first time in four years. Athens, whose debt represents more than 170 percent of its gross domestic product, raised 3 billion euros in a five-year bond deal at relatively low interest rates. Considering that only a few months ago Greece went through one of the largest defaults in modern economic history — and Athens very nearly left the eurozone — this was a significant event for the troubled Greek leadership.

Athens' financial optimism needs to be tempered, though. The current environment was created by the promise of intervention in debt markets by the European Central Bank, which reduced market pressure on the weaker members of the common currency. Countries in the eurozone periphery are certainly dealing with a friendlier environment in financial markets, allowing some of them, most notably Ireland and Portugal, to timidly resume issuing debt. But liquidity is not the same as solvency, and Greece is still far from getting its economy back on track. More important, there is a gap between the situation in financial markets and the reality on the ground in this austerity-hit nation.

Merkel will therefore arrive in a country marked by contradictions. After receiving two bailouts and applying painful cuts in public spending, Greece hopes to be able to negotiate with its lenders for softer economic policies. More important, Athens will try to avoid a third bailout as it secures a renegotiation of its debt, probably to delay its repayment. Merkel, on the other hand, will be presented with her perennial dilemma: finding a balance between demanding strict reform in Greece, which works very well for her domestic audience, and accepting some flexibility to prevent an escalation of the crisis in the eurozone.

This image of a foreign leader arriving in Athens to negotiate the future of the country is not a new feature of Greek politics. Between the 16th and the 18th centuries, the population of Athens would have been excited by the arrival of an emissary from Istanbul. In the 19th century, the emissary would have arrived from London. In the 21st century, the emissary comes from Berlin. The Greeks largely understand that the future of the common currency (and Greece's role in it) will not be decided in Athens, but in Berlin, Paris and Rome.

Ironically, Greek tragedians in the Classical period invented the concept of deus ex machina, the unexpected intervention of some divine character or event that would, often implausibly, move the story forward or solve a problem that had previously seemed impossible to solve. This time around, the Greeks are very skeptical that Merkel will actually lead their story to a happy ending.

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