“Oh very well then….if I must“
Frankfurt, Obama pressure tells at last
As the union representing drivers of touring buses starts a four-day strike at the height of the season, public hospitals begin running out of medicine after pharmcos demanded cash to deal with the Greek State, and power for lighting and cooking stands under threat because Athens hasn’t paid the bills, Angela Merkel has (at three minutes past metaphorical midnight) began to budge on the issue of common responsibility eurobonds.
It bears repeating before we go any further on this piece that these shortages are the direct responsibility of the Troika, not Greek civil servants or politicians. The Troika now takes the overwhelming majority of all decisions on who gets paid with bailout money; and in every case, bankers come before cancer patients and old people in need of food and warmth.
The Slog’s favourite source in the Frankfurt banking sector suggested to me late last night that much of the pressure came from Mario Draghi (whose European Central Bank is based there) and some pretty serious jumping up and down by private Bankfurters. But the Bundesbank is – not surprisingly – solidly against the idea until all 16 eurozoners have signed in blood to a deal that severely limits Germany’s responsibility – see the German Finance Ministry leak published in a Slogpost of last week.
But contacts in both Paris and Washington disagree on whose was the most telling influence, saying that – at Geithner’s near-desperate behest – Barack Obama threatened Berlin with dropping Germany’s share of US trade far down the list of Favoured Nation States. That’s a fascinating development, because Forbes only last week wrote this in relation to what Obama should do about Spain:
“An American President would know how to say to Angela Merkel – if you do not compromise, if you do not resolve this, then we will begin sidelining your companies from our high speed rail projects; we will make it tough for you to sell luxury cars; we will review procurement procedures to eliminate your companies from our public tenders. We will not relent until you do.”
There is no way the electioneering Obama could be seen to be weak on euro-contagion, and so he has acted. Good for his campaign, bad for the Pentagon and the oil business who had other plans for Greece…and if the truth be known, still do.
As always with Berlin, however, there’s a catch: the Chancellery signalled that it may be open to euro-zone bonds or further support for the region’s banking sector, but that would depend on other countries agreeing to transfer more power to Brussels.
A late adman friend of mine, when asked what the ultimate advertising claim was, told the questioner, “Buy this thing or you’ll die”. This is indeed the deal that’s on the table here. But my God, how much time and taxpayer money all this hubris-fuelled denailism has cost. It would be nice to think that some day those responsible will be brought to book for it. But inhaling without further action is not recommended.
So: Obama blackmails Berlin, and Berlin blackmails its eurozone partners. They used to call this diplomacy.
The Slog wishes to recognise the enormous value added to this piece by Sloggers in four different countries.
Related: How a currency zone we’re not in wiped out 80% of Osborne’s austerity drive
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