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Greek Talks Create Strain in Athens and Berlin

5 MINS READMar 31, 2015 | 21:37 GMT
Greek Talks Create Strain in Athens and Berlin
(ADAM BERRY/Getty Images)
Demonstrators protest between the German Federal Chancellery and the Bundestag prior to a meeting between Greek Prime Minister Alexis Tsipras and German Chancellor Angela Merkel in Berlin.
Summary

The Greek economic crisis is starting to generate political friction in Germany as Berlin struggles to find a balance between its interest in keeping Greece in the eurozone and its pledge to protect taxpayer money. On March 31, the resignation of a prominent conservative German lawmaker highlighted the extent to which any deal between Greece and Germany will be hard for Berlin to sell at home.

Domestic resistance to EU integration is not new in Germany. But six years into the crisis, opposition to spending taxpayer money on the European periphery is growing among German institutions and political leaders. Greece and its lenders will reach an agreement in April, but the tension in Germany will complicate negotiations after June, when Greece's temporary bailout extension ends and Athens and its lenders will have to return to the negotiating table, this time to discuss a more comprehensive and politically costly deal. Meanwhile, Athens will experience its own divisions because a new bailout program would also face resistance in Greece. 

The Greek crisis has started having political repercussions in Germany, where conservative lawmakers are against providing financial assistance to Athens. On March 31, Peter Gauweiler, the vice chairman of the Christian Social Union (the Bavarian sister party of Angela Merkel's Christian Democratic Union) and a member of the German parliament, announced his resignation from both positions to protest Germany's policy on Greece. Gauweiler was one of the lawmakers who voted against the four-month extension of Greece's bailout program in late February. From Gauweiler's point of view, Athens is not serious about its promises to enact economic reform.

On Feb. 27, German lawmakers voted to continue Greece's aid program until late June, with 542 of the 630 members of parliament voting in favor of the agreement. However, 29 members of the Christian Democratic Union-Christian Social Union political group opposed the deal in a rare show of dissent within Merkel's supporters.

Germany is currently ruled by a grand coalition that controls 504 seats in the Bundestag. This means that Merkel's position is not nearly as precarious as that of Greek Prime Minister Alexis Tsipras. However, Gauweiler represents a group of conservative forces that resists the process of European integration, especially if it involves spending German money on the EU periphery. This resistance is not new, as Gauweiler's political biography shows. He opposed the Maastricht Treaty in 1992 and the Lisbon Treaty in 2008, voted against Greece's two bailout packages and challenged the European Central Bank's Outright Monetary Transactions bond-purchasing program.

The difference this time is that Germany is trying to reach a compromise six years into the European economic crisis while resistance to the European project is on the rise at home and abroad. To different degrees and with different arguments, institutions such as the Bundesbank and political parties such as Alternative for Germany show that large parts of Germany's intellectual elite oppose the idea of Berlin using taxpayer money for assistance packages in Mediterranean Europe.

Syriza Looks for an Internal Compromise

Athens is working on an updated list of proposals to the Eurogroup (the finance ministers of the eurozone) in hopes of receiving at least a part of the final tranche of its bailout money in April. Early drafts of the proposals show that Greece is willing to go ahead with some privatizations (including parts of the Piraeus port and regional airports) while preserving some controversial taxes (such as a tax on real estate) and introducing new ones.

Greece's goal is to secure an agreement with the Eurogroup before April 9, when it must make a 450 million-euro ($483 million) payment on its debt to the International Monetary Fund. Tsipras wanted the Eurogroup to meet before Easter, but this seems unlikely. Greece's lenders will probably seek to prolong the negotiations for a few more days to exact additional concessions from Athens.

In the meantime, Tsipras will have to sell his proposals at home, especially to his own party. On March 30, Tsipras failed to win support for his program from the opposition, which accuses the government of lacking transparency when negotiating with Greece's lenders. On March 31, Greek media reported that the ruling Syriza party will hold an internal meeting on April 4 to find a consensus on the upcoming measures.

This is not the first time Syriza has struggled to find consensus on sensitive issues. The party is a coalition of several left-wing forces that have different views on economic and political issues. For example, some members of Syriza believe Greece should leave the eurozone. It took a party summit in 2013 to decide that the party's official policy line would be to keep Greece in the currency union. But internal friction continues to plague Syriza, and around one-third of the party's lawmakers oppose the European Union's demands for economic reform, especially the sale of state-owned companies.

The Greek government (a coalition of Syriza and the nationalist Independent Greeks party) controls only 162 of the 300 seats in the Greek parliament, which means that Tsipras cannot afford a rebellion within his own forces. The June 4 meeting will probably have two goals: to seek consensus on the immediate reforms the Greek parliament will have to pass to receive money from its bailout program and, most notably, to come up with a coherent strategy for negotiations after June.

More Problems After June

The German government is interested in keeping Greece in the eurozone, primarily for political reasons. Berlin sees the currency union as its main destination for exports and its primary sphere of influence. Germany fears that if Greece leaves the eurozone, others will follow suit. This makes a compromise with Greece in April likely. Members of the German government are already working with the Bundestag to secure political support for whatever deal it reaches with Athens.

But the problem is that the Greek and German governments have contradictory agendas. Tsipras promised to end austerity measures, renegotiate Greece's debt and keep the country in the eurozone, but he is unlikely to honor all these promises at the same time. Merkel campaigned on the platform of preserving the currency union while also protecting taxpayer money, a balance Berlin is finding increasingly hard to maintain.

Greece and Germany will reach a deal, but both governments will face the difficult task of selling it at home. This highlights a defining feature of the European Union: Agreements reached at the international level have to be approved by national parliaments. To further complicate the situation, Berlin and Athens are only discussing a four-month deal, meaning that the current round of talks is only the prelude to a larger crisis in the second half of the year.

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