The Greeks Buy Time While Germany Repositions Within Europe


2015-03-06 By Harald Malmgren

An historic February confrontation between the newly elected Syriza-led Greek government and the EU Commission, ECB, and IMF was averted by an ambiguous agreement to sort out differences over the period March to June.

Initially, it appeared that Eurozone governments, led by German Finance Minister Schauble, had yielded nothing significant to the new Greek leadership except to permit delay in the Greek decision whether its government would confirm continuity of the terms of the previous Eurozone bailout package, or refuse, and face a potential exit from the Eurozone.

Considering all possible options, the Greeks even prepared for exit by printing adequate Greek currency for distribution as might be needed.

Press and media have thus far concluded that Syriza won nothing except time.

However, while the media were distracted by the Greek tragedy, the political future of Continental Europe was shifting.

Chancellor Merkel’s aides are recently leaking to press and media the development of a new, more intimate and collaborative relationship of Merkel with French President Hollande. The public relations spin is that Merkel and Hollande became closer in their lengthy, arduous negotiations with Putin over the Minsk agreement to suspend armed conflict in the Ukraine.

This unlikely new show of mutual respect and affection between the two masked more fundamental worries in Paris and Berlin about the uncertain fate of Europe.

In Germany, Vice Chancellor Sigmar Gabriel, who is also leader of the SDP coalition partner, broke with the hard stance of the CDU/CSU on treatment of Greece. In parallel, Merkel’s party suffered losses in regional elections, and the anti-EU and anti-EMU Alliance for Deutschland (AfD) secured seats in Hamburg’s parliament.

In Late February under Gabriel’s guidance the SDP began rethinking the faltering architecture of European security, potential breakup of the EU or the Eurozone, and Germany’s wavering foreign relations.

In Spain, the anti-EU political sentiment grew louder as Popodemus Party seemed to be gathering broad popular support, and movement to force a referendum on Catalonian secession from Spain seemed to gain momentum. In Italy, always stressed by intra-party conflicts, coherent political leadership seemed to be waning.

In the UK, anti-European sentiment remained strong and threatened to tip the Conservative Party into a more UK-Exit stance.

In France, Marine Le Pen’s popularity continued to grow, and with it her anti-EU followership.

Across many EU countries localism and rising anti-austerity sentiment seemed to be bringing into question Germany’s dominant role in Eurozone economic policy.

All of this internal political turbulence was taking place at the same time that European leaders, in particular Merkel and Hollande, were confronted with an increasingly aggressive Russia, both politically and militarily.

It became evident that Putin had raised his ambitions from rendering Ukraine economically and politically dysfunctional to a bigger objective of resumption of Russian assertion of influence and even power over the entire former Soviet Bloc neighborhood.

With the exception of the UK, France and Estonia, most of the European members of NATO had allowed defense spending to fall below agreed targets of defense spending in support of common security. Germany had not only permitted its military to fall into unreadiness, but had dramatically shrunk military personnel.

German leadership made a strong shift in foreign policy with its pivot East under Chancellors Schroeder and Merkel.

That pivot was geoeconomic in design, aimed at prioritizing future German economic growth towards Russia, China, and Eurasia more broadly.

Putin’s recent challenges to NATO, to the US, and now to France and Germany put that entire pivot in jeopardy.

Germany is again threatened by dependence on energy from the East.

At this moment, European confidence in Washington has diminished greatly, as the present US Administration is perceived as more concerned with Asia, Iran, and most important, US domestic issues.

The US President is viewed as indifferent and disrespectful of Europe, and US willingness to assure security stability for Western Europe is seen as weak.

For the moment, Merkel and Hollande are talking about a potential European military-strategic alternative, but Western Europe is simply not able to put together and fund a meaningful military response to Russia.

In this context, it appears that Merkel is being forced by her coalition, particularly the SPD side, to rethink the future of Western Europe, and Germany’s position in it.

Most likely this will require Merkel to reinvite UK involvement in a future of Europe discussion, as only the UK and France have meaningful military capabilities among the larger European economies. Moreover, the Finns, Norwegians, Swedes and Danes are all independently adopting a harder stance on Russia which Berlin cannot ignore.

In other words, while Greece is pivoting, Europe itself is changing and evolving.

The financial battle between Greece and its European and IMF creditors is taking place at a time when the entire political and security shape of Europe is in flux.

The critical geographic and strategic position of Greece in the bigger European picture is likely to come into play in the next few months as the bigger question is posed whether either the EU or the Eurozone of today may be the Europe of tomorrow.

Greece may soon find the EU/ECB/IMF Troika, dominated by Germany’s Finance Minister and German Constitutional law, may no longer be its wrestling partner, as Europe metamorphoses politically into something fundamentally different.

In this context of rethinking Europe’s future, and Germany’s role in Europe, the postponement time achieved by Greece may result in a different, more geosecurity and geopolitical response of Germany to Greece’s debt predicament.

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