Ralph Orlowski / Reuters The dismantled euro sign sculpture stand in front of the headquarters of the former European Central Bank (ECB) in Frankfurt, July 8, 2015. The large blue and yellow sculpture was made by German artist Ottmar Hoerl in 2001.

The Merkel Method

Germany and the Greek Crisis

“If the euro fails, Europe fails.” This dictum must be the most frequently quoted sentence from Europe’s most powerful politician, a figure otherwise hardly known for making straightforward statements or clear commitments. German Chancellor Angela Merkel’s success over the past ten years (she is already the longest-serving German chancellor after Konrad Adenauer and Helmut Kohl) is often attributed to her uncanny ability to let political developments and debates take their course—and only to stake out a position when she can be sure that her position will be on the winning side. However, in the eyes of her German critics, her apparent commitment to saving the euro no matter what has made her vulnerable to blackmail. Greek Prime Minister Alexis Tsipras in particular has been betting that, for all German elites’ moralizing, the country will not, in the end, want a Grexit. And so, as is so frequent in the EU, a great policy fudge will be found that will allow all concerned to somehow save face. But Tsipras should not be so sure. A number of developments—not least profound transformations within German political culture that Germany’s partners have barely begun to understand—make it risky to bank on Germany keeping Greece in.

German Chancellor Angela Merkel and Greek Prime Minister Alexis Tsipras leave after addressing a news conference following talks at the Chancellery in Berlin, March 23, 2015.

German Chancellor Angela Merkel and Greek Prime Minister Alexis Tsipras leave after addressing a news conference following talks at the Chancellery in Berlin, March 23, 2015.

As with all EU leaders, Merkel’s primary concern is her domestic electorate—and, ultimately, her own party. The Christian Democrats were once the main force for European economic and political integration; Kohl risked his political life for it. But today, there is little idealism left. The only major figure who still openly advocates for a “United States of Europe” (without ever spelling out what that would mean in practice) is Germany’s defense minister, Ursula von der Leyen. And arguably, she is doing so mainly to sharpen her profile as a major rival to Merkel, who has remained conspicuously silent on Europe’s final shape.

Peripheral Europe would be made up of states that are sometimes genuinely unwilling and sometimes simply unable to follow certain common rules. Wolfgang Schäuble, Germany’s finance minister and a kind of political son of Kohl, remains a European by conviction, but even he has been lobbying for Grexit inside the government. Like a number of other CDU politicians and intellectuals, he no longer accepts the notion that integration is a one-way path. Long taboo, the “reversibility” of eurozone membership (or even EU membership) is now less controversial. Some point to the lack of state capacity in Greece; others mention that Hungary, where the government seems bent on creating an illiberal state, no longer subscribes to the fundamental EU values codified in the European treaties. An increasing number of voices advocate a return to a position that Schäuble himself held in the early 1990s. They argue that there needs to be a “core Europe,” what Germans call Kerneuropa, and, by definition, a peripheral Europe—states that are only partially integrated into the EU. In core Europe, there would be monetary, fiscal, and political union (with the last hardly ever clearly defined). Peripheral Europe would be made up of states that, so the unspoken assumption goes, are sometimes genuinely unwilling and sometimes simply unable to follow certain common rules. In other words, for dysfunctional states like Greece, there is no place in Kerneuropa.

Germans are mistaken, though, if they believe that such a core Europe, which appears to come down to Northern Europe plus France, could exist. They don’t seem to understand that France is far from rushing to share sovereignty in general or enter a fiscal union with other countries in particular. German politicians and intellectuals treat the current French government with more or less open contempt; likewise, they (and much of the rest of Europe) do not take particularly seriously ongoing French efforts to mediate between Europe's north and south with a view toward keeping Greece in the euro. They can argue, of course, that an overwhelming number of French citizens themselves, or so polls suggest, trust Merkel more than French President François Hollande to solve the crisis. And it is true that France would not really be a constraint if Germany wanted to push hard for Grexit. But that doesn’t mean that France would willingly be a part of core Europe, especially, as only Schäuble (with his memory of what Franco-German friendship felt like in the 1980s) seems to intuit, if it doesn’t feel like an equal partner.

A chalk drawing depicting German Chancellor Angela Merkel saying

A chalk drawing depicting German Chancellor Angela Merkel saying "No" in Greek is pictured during a demonstration at the new European Central Bank (ECB) headquarters in Frankfurt, Germany, June 30, 2015.

Something similar is true of potential German domestic opposition to Grexit. Merkel’s junior partners in government, the Social Democrats, have used all their negotiating power to get a better deal for workers at home; they have effectively abandoned Europe and trans-continental solidarity. There is no more talk of “eurobonds” or other means to help economically and socially weaker countries. Instead, Sigmar Gabriel, the chairman of the Social Democrats, has tried to be more Merkelian than Merkel. After the recent Greek referendum, he attacked Tsipras personally in a way that the chancellor did not. He is clearly worried that letting Merkel manage the eurocrisis unchallenged will cost him votes in the next federal election in 2017. And he is responding to public opinion (or at least published opinion) according to which the government needs to be tough (and Merkel an “Iron Chancellor”—Bild, the country’s largest tabloid, depicted her with a helmet à la Bismarck this past Tuesday).

Letting Greece go, in other words, might be the best way for Merkel to get what she wants. There is yet another factor that makes Grexit more plausible than ever from Merkel’s point of view: the anti-euro party “Alternative for Germany” (AfD)—which narrowly failed to enter the parliament in the last federal elections in 2013 but is a strong presence in a number of state assemblies—has been consumed with infighting. The AfD has also drifted to the right. Its leaders are seemingly more concerned about asylum seekers and refugees than economic policy. Previously, Grexit would have played into the hands of this party, which used to be run by professors and industrialists who sought to offer a conservative alternative to Merkel's and the CDU’s drift toward a more mushy middle. Now, the professors are leaving the AfD in droves, and a drastic decision on Greece would not necessarily benefit the party, which, like many previous right-wing populist parties in Germany, could end up completely marginalized.

None of this is to say that the German chancellor’s horizon is fully obscured by petty domestic party politics. It is likely that she has started thinking about what the history books will say and that her primary ambition for this term in office, and potentially one more, will be to leave behind a stable and prosperous EU. So far, she has pursued the goal of a highly competitive continent (her vision never seems to go much beyond economics) by making common rules tighter and effectively tasking courts with enforcing limits on debts. However, as the political scientist R. Daniel Kelemen has pointed out, in comparison with nineteenth-century United States, there is little reason to think that a German legalistic approach will succeed in constraining governments in a quasi-federation like the EU. Only by letting some states go bankrupt can the eurozone eventually ensure discipline in a way that constitutional structures, no matter how well-crafted in Berlin, might not. Letting Greece go, in other words, might be the best way for Merkel to get what she wants. 

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