Monday

27th May 2019

'Provocative' Germany pushed Greece talks to the edge

  • Signs of fatigue after all-night, sometimes bitter talks (Photo: bru)

After 16 hours of negotiations, talks between euro leaders on Greece are still ongoing with Germany's tough stance throughout the weekend making the negotiations difficult and sometimes highly contentious.

"Humiliating a European partner after Greece has given up on just about everything is unthinkable”, Italy's prime minister Matteo Renzi was quoted as saying Sunday.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

"To Germany I say: enough is enough”.

On Sunday (12 July), it was Germany who insisted that the line "Greece should be offered a time-out from the euro area" be introduced into the draft statement which finance ministers prepared for eurozone leaders meeting later in the day.

Unless the Greek prime minister Alexis Tsipras complied with Germany’s requests for a bailout deal, a temporary Grexit would occur.

It was the first time the exclusion of a eurozone member was officially considered. It came from a founding member state, and currently the most powerful one.

It was only a theoretical threat, but a very symbolic one.


Broken taboo

It was very unlikely that such a decision could be taken by the euro summit, where unanimity is needed - France and Italy, in any case said they would not allow it.

"There is no temporary Grexit. It's either Greece in the euro or Greece outside the euro, but then it would be a Europe that goes backward”, French president Francois Hollande said before the summit began.

There is also no legal basis for a "time-out".

By introducing Grexit into the negotiations, Germany broke the taboo of the "irreversibility" of the euro membership, three years, almost, to the day since European Central Bank chief Mario Draghi said he would do "whatever it takes" to avoid a country leaving the eurozone.

Officials said that at Saturday's Eurogroup meeting, Draghi warned German finance minister Wolfgang Schaeuble of the consequences for Greece and the eurozone of his inflexibility.

Schaeuble reportedly replied: "I'm not stupid!", leading to the suspension of the meeting around midnight on Saturday evening.

The meeting "was extremely hard, even violent," a member state official said. He added that, at one point, the Greek finance minister, Euclid Tsakalotos, was witness to heated exchanges between pro- and anti-Grexit colleagues.

The "time-out" threat was just part of Germany's tactics, however.

The alternative to a temporary Grexit is a raft of conditions to restore "trust" between Greece and its eurozone partners.

€50 billion fund

Supported by other member states such as Finland, Slovakia, the Netherlands and Latvia, Germany insisted on measures designed to tighten control on Greek reforms and economic policies.

The Eurogroup draft for example, introduced "automatic spending cuts in case of deviations from ambitious primary surplus targets after seeking advice from the [Greek] Fiscal Council and subject to prior approval of the institutions".

The negotiating document also said that "to improve programme implementation and monitoring", the Greek government would have "to consult and agree with the institutions on all draft legislation in relevant areas with adequate time before submitting it for public consultation or to parliament".

The most controversial measure required from Greece was the creation of a €50 billion fund where "valuable Greek assets shall be transferred … to be privatised over time and decrease debt."

"Such a fund would be managed by the Greek authorities under the supervision of the relevant European institutions”, the draft said.

This measure came directly from a paper prepared by the German finance ministry on 10 July.

Germany, followed by the Eurogroup, suggested the "external and independent fund" where Greek assets would be transferred be the Institution for Growth, based in Luxembourg.


Diplomatic and EU sources said this fund is Greek-owned.

But the Institution for Growth, established in 2014, is partly owned by KfW, a German government-owned bank specialised in public investment and development projects.

KfW's board of supervisory directors is chaired by the German finance minister and is comprised of federal and states ministers and MPs.

Greece and KfW each provided €100 million to finance the creation of the Institution for Growth.

The assets fund proposal was "an issue of sovereignty," admitted a eurozone member state official.

By putting forward demands that were never talked about in five months of negotiations, Germany was "being provocative," an EU official said.

#ThisIsACoup

In media and on social networks, Germany's demands for more control and the Grexit threat were seen as an attempt to punish Greece as well as an infringement of democracy.

This culminated Sunday evening when the hashtag #ThisIsACoup was the second top hashtag worldwide on Twitter, and the first in Germany and Greece.

"This Eurogroup list of demands is madness," wrote economy Nobel-prize winner Paul Krugman on his New York Times blog.

"The trending hashtag #ThisIsACoup is exactly right. This goes beyond harsh into pure vindictiveness, complete destruction of national sovereignty, and no hope of relief. It is, presumably, meant to be an offer Greece can’t accept; but even so, it’s a grotesque betrayal of everything the European project was supposed to stand for," wrote Krugman, a long-time critic of eurozone policies towards Greece.

Meanwhile, the English version of Germany's Der Spiegel Online retweeted an article published in April under the title: "The Fourth Reich, What Some Europeans See When They Look at Germany".

Moment of truth for Merkel on Greece

Merkel will make the ultimate decision on Greece on Sunday, at a summit whose outcome will have major implications for the future of Europe.

German MPs vote on Greece amid misgivings

German MPs will today vote on whether to open talks on a new €86bn Greek bailout, amid growing misgivings in the governing party and in public opinion.

Greek deal: details and next steps

Monday’s deal is just the first step in a long process to unlock €86bn of new aid, as well as €12bn in "bridge-financing".

News in Brief

  1. Russia-critical banker elected president of Lithuania
  2. Timmermans calls for 'progressive alliance'
  3. Catalonia's Puigdemont wins MEP seat
  4. Weber opens door to alliance with greens and liberals
  5. Tsipras calls snap Greek election after EP defeat
  6. Polish ruling party PiS takes lion's share of EU vote
  7. Romanian voters punish ruling PSD party
  8. First official EP projection: EPP remain top, Greens fourth

Stakeholders' Highlights

  1. Vote for the EU Sutainable Energy AwardsCast your vote for your favourite EUSEW Award finalist. You choose the winner of 2019 Citizen’s Award.
  2. Nordic Council of MinistersEducation gets refugees into work
  3. Counter BalanceSign the petition to help reform the EU’s Bank
  4. UNICEFChild rights organisations encourage candidates for EU elections to become Child Rights Champions
  5. UNESDAUNESDA Outlines 2019-2024 Aspirations: Sustainability, Responsibility, Competitiveness
  6. Counter BalanceRecord citizens’ input to EU bank’s consultation calls on EIB to abandon fossil fuels
  7. International Partnership for Human RightsAnnual EU-Turkmenistan Human Rights Dialogue takes place in Ashgabat
  8. Nordic Council of MinistersNew campaign: spot, capture and share Traces of North
  9. Nordic Council of MinistersLeading Nordic candidates go head-to-head in EU election debate
  10. Nordic Council of MinistersNew Secretary General: Nordic co-operation must benefit everybody
  11. Platform for Peace and JusticeMEP Kati Piri: “Our red line on Turkey has been crossed”
  12. UNICEF2018 deadliest year yet for children in Syria as war enters 9th year

Stakeholders' Highlights

  1. Nordic Council of MinistersNordic commitment to driving global gender equality
  2. International Partnership for Human RightsMeet your defender: Rasul Jafarov leading human rights defender from Azerbaijan
  3. UNICEFUNICEF Hosts MEPs in Jordan Ahead of Brussels Conference on the Future of Syria
  4. Nordic Council of MinistersNordic talks on parental leave at the UN
  5. International Partnership for Human RightsTrial of Chechen prisoner of conscience and human rights activist Oyub Titiev continues.
  6. Nordic Council of MinistersNordic food policy inspires India to be a sustainable superpower
  7. Nordic Council of MinistersMilestone for Nordic-Baltic e-ID
  8. Counter BalanceEU bank urged to free itself from fossil fuels and take climate leadership
  9. Intercultural Dialogue PlatformRoundtable: Muslim Heresy and the Politics of Human Rights, Dr. Matthew J. Nelson
  10. Platform for Peace and JusticeTurkey suffering from the lack of the rule of law
  11. UNESDASoft Drinks Europe welcomes Tim Brett as its new president
  12. Nordic Council of MinistersNordic ministers take the lead in combatting climate change

Join EUobserver

Support quality EU news

Join us