Thursday, February 12, 2015

Greek-German negotations move forward

The EU had a summit on Thursday to talk about Ukraine. But the Greek depression was also a theme very much on the minds of the gathered heads of state. Those included Greek Prime Minister Alexis Tsipras in his first meeting with Angela Merkel since his election.

There is a lot of jockeying and posturing going on in public. Merkel played "good cop" on Thursday, making nice sounds about compromise.

But so far, there is no real compromise from Germany on the table. From various comments and news reports, it looks like Merkel is so far suggesting more of the same - austerity, no debt relief, neoliberal anti-labor "reforms" - with some cosmetic concessions like small amounts of infrastructure spending or replacing the "troika" (ECB, EU, IMF) as the formal administrator of austerity with just the EU itself, or maybe some other "front" arrangement.

There also seems to be an assumption among the European version of the Very Serious People that Greece will soon capitulate to some such phony compromise.

If the Greeks want substantive concessions on debt and austerity, they are going to have to be willing to run the risk that Merkel will force them out of the eurozone.

As long as Greece sticks to its position, Merkel faces a clear decision: makes big concessions, or push Greece out of the eurozone. Then we'll see which she values more: Germany nationalist power or the "European project" (the EU).

But we can expect a lot of flaps in the press between now and whenever that resolution of the situation may be over an eminent "Grexit," or Greek exit from the eurozone.

Spiegel Online provides a set of capsule summaries of the major players in this standoff, Florian Diekmann und Chris Kurt, Verhandler in der Euro-Krise: Sie entscheiden über Griechenlands Zukunft 12.02.2015.

Renee Maltezou and Ingrid Melander report for Reuters, Greece agrees to talk to creditors in EU debt progress 02/12/2015:

Chancellor Angela Merkel, vilified by the Greek left as Europe's "austerity queen", said Germany was prepared for a compromise and finance ministers had a few more days to consider Greece's proposals before next Monday's meeting.

"Europe always aims to find a compromise, and that is the success of Europe," she said on arrival in Brussels. "Germany is ready for that. However, it must also be said that Europe's credibility naturally depends on us respecting rules and being reliable with each other."

The two leaders came face-to-face for the first time in the EU Council chamber. According to Greek aides, a smiling Merkel congratulated Tsipras on his election and said: "I hope we will have good cooperation despite the difficulties." Tsipras smiled back and replied: "I hope so."

Greek officials said no private meeting was planned between the two during the one-day EU summit. They insisted to Greek reporters that Tsipras had not agreed to deal with the "troika" but with a body called the Eurogroup Working Group.
Although they will be dealing with all three members of the Troika. But it's more than symbolic that Greece refuses to recognize the legitimacy of the Troika as such in managing Greece's economy.

Dirk Kurbjuweit is a Spiegel journalist. But his admiration for Merkel is so obvious in his writing that I tend to assume that his perspectives are at least broadly reflective of Merkel's. In It's Time To Compromise on Greece Spiegel International 02/02/2015, he describes a version of what a Merkel-backed cosmetic pseudo-compromise might look like:

This means that Germany must display forbearance. Germans have been forgiven for so much in their own history that they should also be capable of forgiving others. Despite mistakes made by the Greeks, solidarity remains the correct course. That's not to suggest that the Tsipras administration can ignore the treaties Greece has with the EU. Nor should there be a debt haircut, because Spain and Portugal would demand equal treatment and that would place an unbearable strain on the euro zone. However, deferments and interest rate discounts are possible. No one should be too proud to talk about the possibility of concessions.

If Tsipras has an ounce of political understanding, then he knows that he can't demand too much from Merkel because she's obviously still accountable to German voters. And because the right-wing Alternative for Germany (AfD) party is waiting in the wings. Nothing would be worse than increasing the power of populists. If that is what Tsipras wants, then Europe has no chance.

Exactly 200 years ago, Europe's rulers succeeded at the Vienna Congress in balancing their interests, creating a halfway stable situation that lasted for decades, even though the temptation was great at the time to solve problems with weapons. The situation is much easier for European democrats today. Now they must show that they understand the concepts of diplomacy and compromise.
But there's nothing in Kurbjuweit's piece that suggests getting rid of the neoliberal "reforms" that are condemning Greece to depression without end would be part of the sweet European compromise he's describing.

Keep Talking Greece reports of the Greece/EuroGroup negotiations coming up Bridge-Program? Tsipras – Dijsselbloem agree to work out “common ground for solution” 02/12/215):

The Greek technical team will stay in Brussels over the weekend where the two sides will work out the details. The talks start tomorrow, Friday.

“It is a positive step,” the Greek government commented, adding “The transition from the loan agreement to the new Greek program is now the object of negotiations as well as of the next Eurogroup. Greece has clear positions, it defends them and persuade the others. It does not blackmail and does not get blackmailed,”

The news has been hailed by the Greek media with titles like “Greece – Eurogroup agreed on a ‘bridge program’,” and “A sudden turn for a bridge – program after Wednesday’s impasse”.

Some also note that the International Monetary Fund “will exit the program.”

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