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Region: Balkans, Europe
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Fyodor Lukyanov

Editor-in-Chief of Russia in Global Affairs magazine, Chairman of the Presidium of the Council for Foreign and Defense Policy, RIAC Member.

“Having chosen a hard line, Finance Minister Wolfgang Schäuble led us to believe that we would benefit without Greece in the Eurozone, that this would cost us less. I believe that this is a distorted view. It is not right morally, as this would be the beginning of decline. No one will know what would happen next. Germany has taken a leading role in Europe, but it’s not at all a positive role in this case,” Austrian Chancellor Werner Faymann told the Austrian national daily Der Standard.

Austria is Germany’s closest and most reliable ally in the European Union. The Austrian economy is closely connected to Germany and is based on the same model. Like the other donor countries, Austria is critical of the Greek economic policy, but the recent events have shocked it, along with other countries.

Prime Minister of France Manuel Valls said, trying to convince the divided French parliament to approve a new bailout package for Athens: “We have reached a crucial moment. First and foremost for Greece and the Greek people, but also for ourselves and European integration. [...] Keeping Greece in the euro[zone] and therefore in the heart of Europe and the EU is [...] of the utmost geostrategic and geopolitical importance.”

France was first, even ahead of Greece, to ratify the agreements reached at the Brussels summit, by an overwhelming majority.

What is the root of this call for solidarity in France – which has always loved to give orders and hated to pay – and of its sympathy for Greece, which has been sharply and justifiably criticized for its irresponsible approach? The root cause is the feeling of self-preservation. The bulk of comments made in Europe indicate that the EU has changed, following a record-long summit in Brussels, primarily because Europeans have seen that Germany, for the first time in modern history, is not trying to persuade, but is dictating conditions.

In fairness, it should be said that Berlin has been rejecting the role forced on it for a long time. Since the mid-20th century, the European policy was based on the principle that Germany should have no political ambitions. It was allowed to develop economically and to support the policy of its older comrades, primarily financially. The victors, and primarily France, have learned the lesson of the Treaty of Versailles, when the desire to humiliate Germany after WWI resulted in WWII.

It was France that proposed the wonderful idea of European integration, as it combined a clear economic and a far-reaching political perspective.

The balance grew stronger with time. Germany’s economic potential grew alongside France’s political influence, with the two nations propping each other up. In fact, the idea of a common currency was a revolutionary breakthrough towards a new quality of integration and actual federalization of Europe.

Simply put, Paris’s vision of the EU when urging the introduction of a common currency was as follows. Respected for its fiscal ethics, Germany would oversee the EU’s finances by propping up the euro with the stability of the Deutschemark, while France would be the political master of the growing European structure. Unfortunately, Paris did not foresee the difficulties of managing a structure that was becoming increasingly more complicated, or that the external environment would worsen dramatically. In this situation, a healthy economy is a much better element of authority than political ambition.

It should be said that Germany did not accept France’s vision immediately, as it was wary of giving up its national currency, which was a kind of talisman symbolizing the country’s rise from the ruins left by Nazi rule.

The 28th issue of Der Spiegel carried a telling cover image: Angela Merkel sitting on broken Greek columns and the title, Die Trümmerfrau (The Woman of Ruins). Trümmerfrauen, literally translated as ruins women or rubble women, were women who helped clear and reconstruct the bombed cities of Germany and Austria after World War II.

The magazine was referring to the possible ruination of the euro: If the euro fails, Merkel fails. To be fair, it should be said that Angela Merkel cannot be held responsible for the fatal flaws in the foundation of the common European currency. But she will be held accountable, because she initiated a bailout program for Greece in 2010.

The results of the bailout are undeniably negative, but the point at issue is not Greece or the euro. The situation in and around the EU has changed beyond recognition over the past five years, turning Germany from a European political province into the indisputable leader and the only effective EU country.

It is logical that responsibility for the euro project shifted towards Germany as the strongest EU economy and the largest beneficiary of the Eurozone. But Germany’s recent history has taught it not to claim leadership, especially when even the slightest movement in that direction immediately provokes fear among its European neighbors.

Berlin has been caught between a rock and a hard place. On the one hand, it needs to preserve and strengthen the EU because its legal framework, along with its economic benefits, is evidence that Germany is not seeking undivided diktat. On the other hand, it has to take action intervening against its partners to ensure the normal operation of the Eurozone. But its attempts to pressure its partners provoke fear, and increased pressure boosts their resistance.

Berlin tried to avoid unnecessary audacity, instead resorting to insistent and repeated arguments. But Alexis Tsipras’s decision to go for broke and announce a referendum against the creditors sent Germany into a rage. Merkel and Schäuble abandoned covenants and directed the EU’s political and economic might against the Greek prime minister, forcing him to resume negotiations with what he viewed as a license for resistance. But Germany made short shrift of Greece, just to show all the others that unwarranted improvisations are punishable.

It went too far this time, frightening not only, and not so much, Greece, as all its other partners, primarily France and Italy. Francois Hollande, who used to do as Merkel did, demanded that the issue of the Grexit be put on hold. Italian Prime Minister Matteo Renzi, who once criticized Greece for one-legged reforms, spoke up against Berlin too.

The so-called compromise that was reached in Brussels left an impression of impending doom. No one believes that the approved measures can help Greece. Even the IMF, which has shown no mercy for debtors, has called for a more humane approach to Greece. The Eurozone governments are forced to ask their parliaments, which are becoming increasingly anti-bailout, for permission to save Greece. As The Guardian has written, “the euro ‘family’ has shown it is capable of real cruelty.”

And it would be bad taste to talk about democracy after the European bureaucrats denounced the results of the Greek referendum for which Tsipras fought tooth and nail.

Greece has been as good as stripped of its sovereignty and its future. It is being told not only what to do, but also how fast: immediately.

The main result for Berlin is that it has found itself in a moral vacuum, which is very bad for Germany. Considering its dramatic 20th century history, it needs its actions to be considered morally justified and without reproach more than any other country. The recent accusations of mercantilism and proclaimed shock at its alleged cruelty have sent the nascent German leadership reeling.

And now a few words about the possible consequences of this course.

Southern Europe, frightened by the specter of “German order,” is rallying around France, the only EU country capable of balancing Germany.

But Paris itself is frantically groping for footing that can push it towards the United States. Washington is mightily displeased with the EU antics and tends to blame Berlin for inflexibility and unwillingness to consider all the circumstances, including the geopolitical importance of Greece. Meanwhile, the German-US relationship has again soured over a new scandal with the NSA tapping German chancellors’ cell phones.

These developments have also affected the UK, where an “in-out” referendum on Britain’s EU membership is to be held a year and a half. David Cameron has promised his electorate to wrench major concessions from Brussels and Berlin so that Britons would be able to vote for the EU with a clear conscience. But considering the recent developments, London is unlikely to be allowed to review some of the European rules to better protect the British. Germany stands sentinel to protect the status quo.

Taken together, this increases the probability of a US-European Transatlantic Trade and Investment Partnership, which would reunite the West on a new foundation under US auspices.

The deeper the split in the EU, the stronger the desire to lean on the shoulder of the US, like in the good old days. For example, Germany could become wary of its new sovereign responsibility.

The July passions have not resolved the Greek crisis and the related euro debacle. Harsh and resolute measures are needed to transform the Eurozone and the EU, and Germany is the only country that can take them. But doing this will be much more difficult in light of the recent developments.

Source: Valdai International Discussion Club

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