German Chancellor confides in intimates: ‘Tsipras and I will settle this one way or the other’

Fury in ECB, German finance ministry and eurogroupe, Juncker triumphant

Varoufakis out but not down

Although the news media are largely ignoring a major new development in the Greek debt crisis – and most of the Greek media are playing it straight as a demotion for Varoufakis – the truth is that Angela Merkel has played a bold power-stroke. She has affirmed that she alone will finalise whatever deal emerges from the Troika/Athens negotiations direct with Alexis Tsipras….in much the same way as she moved to direct talks with Vladimir Putin over the Ukraine debacle.

Ekathimerini wrote this morning of anger in the Syriza camp at Varoufakis’s return from Riga empty-handed, but the truth is as usual more complicated. At Riga, Wolfgang Schäuble openly orchestrated concerted attacks upon Varoufakis….who is, in my view, a self-important man prone to monologues – but more of an economist than any of the soi-disant ‘finmins’ who were in the room with him. At the same time, they wanted his total capitulation, and Yanis simply did not (quite rightly) have either the mandate or the desire to do any such thing.

The reality is that Alexis Tsipras has pulled off a major coup in getting Merkel’s undivided attention, whereas Wolfgang Schäuble is now politically isolated from real power in Merkel’s Chancellery circle.

The German leader has been giving the eurogroupe a hard time about its obdurate stance for several weeks – see Slogpost of March 31st last – but it seems that two events convinced her to have the final say: first, advice from senior media and CDU intimates that Schäuble was storing up bitterness for the future sufficient to kill the whole European project; and second, his plotting in Riga…which gave the finmins their day in the sun, but disgusted some of the diplomats involved.

The geopolitical ripples outwards from this move were being felt everywhere from Luxembourg via Paris to Washington this afternoon. Jean-Claude Juncker (whose EC power-base had been threatened by the naked power-plays of Jeroan Dijesselbleom) has always counted Frau Merkel as an ally, and he now seems to have been vindicated in that view. He too favours a more conciliatory tone towards Greece, having demonstrated public solidarity with Tsipras. So this is a victory for the Commission, but it is also a severe poke in the eye for Mario Draghi and the ECB.

It’s important to remember who the late February bushwhackers were that ambushed Yanis Varoufakis on Fateful Friday: Wolfgang Schäuble, Mario Draghi, Jeroan Dijesselbleom – and a somewhat discomfited Pierre Muscovici of France. The Slog has posted in the past about Merkel’s profound distrust of Draghi’s motives, whom she (and I, and many others) suspect answers to masters 7,000 miles away: certainly, he has insinuated himself into a position of having no masters at all in Europe.

It is also, let’s be real here, a major victory for the Bankfurters in general – few of whom wanted QE – and Jens Weidmann in particular, who has been Draghi’s implacable enemy at the ECB since the Italian took over. The power of the Frankfurt banking community has been a line of mine since the far-off days of the Bankfurt Maulwurf (now vanished without trace). The Maulwurf and his mates were without doubt a catalyst for Merkel’s fears about what exactly a Draghi-run ECB might be up to.

There is also dismay, among the French Parti Socialiste led by Francois Hollande, about the outcome for Muscovici. Having shown initial courage in backing the shuttle-supremo Varoufakis during his honeymoon, France’s finance minister bottled out when he could have scored many brownie points by sticking to his guns. Many heads were shaking in Paris this morning.

Last but not least, there remains the vexed question of missing German gold, and the increasingly bonkers behaviour of the US State Department. By so obviously snubbing Draghi’s Unconditional Surrender approach to Greek debt, Angela Merkel is also challenging the Wall Street/State version of events that led to the crisis. Merkel developed an excellent rapport with President Obama over the Ukraine question, but she knows only too well that his most likely successor at the moment is Hillary Clinton – a Secretary of State who took the hardest of hegemonous lines when in charge of US foreign policy. They do not get on.

In that same context, of course, Merkel is not exactly giving Christine Lagarde a vote of confidence. Neither she nor Schäuble wanted the IMF involved in eurozone bailouts in the first place (Geli knows perfectly well that Lagarde is a closet American); by taking this bold step now – having snubbed all the key players over the initial Tsipras visit to Berlin – she is basically saying, “You’re on your own, lady”.


Something agreed among all the sources I contacted today was that while Yanis Varoufakis is a Premier Division economist, Alexis Tsipras has shown himself to be a wily politician. I don’t know for anywhere near certain, but something in my gut tells me that he sensed a desire for a sensible, civilised solution during his meetings with Merkel to date…and has backed that hunch.

From the start of all this pointless nonsense in 2009, The Slog has tried repeatedly to stress that the main media commentariat was sitting an inch away from the canvas, and thus seeing little beyond blurred daubings. I’m a political historian and media persuasion analyst by training, and it has always seemed clear to me that three things were in play: first, the flawed social anthropology and non-sovereignty of the euro concept; second, the endemic corruption within a European Union dominated by its unelected Commission; and third, the Berlin/Frankfurt desire for (respectively) political and fiscal domination of Europe…free from the ever-present claws reaching out from the other side of the Atlantic.

The belief of myself and many others is that – gradually, sometimes painfully slowly – these elements are becoming ever more apparent. But more rapidly now, it’s equally clear that any one of these factors carry with them, on the journey into the future, enormous geopolitical dangers – and the distinct possibility of a Europe descending into bitter anarchy.

Angela Merkel will use her access to Alexis Tsipras as a means of assessing whether this is a bloke with whom she can do business….as she has with Barack Obama and Vladimir Putin. Such will, one suspects, inform her decision about which horse to ride in the radically new world we’re approaching. Her choices are stark: stay in the euro and take the hit from a ClubMed area in deep doodoo, an unreformed France, and a recalcitrant Britain. Or break free from US influence and side with those who would much prefer to have a currency and socio-economic model free from American commercial colonialism…and an inflexible currency union.

My money still says Germany will leave the eurozone before Greece does. On verra. In the meantime, I remain a communitarian mutualist sort of chap: make of that what you will.

The Slog would like to pay grateful tribute to those supporters in Washington, New York, Paris, Brussels, Berlin, Greece and Madrid who both inspired and informed this piece. Also to Skype – without whose invention I would now be bankrupt.

Earlier at The Slog: The scandalous electoral behaviour of UK media owners


  1. if germany leaves, what then for the rest – or is it all finished? i do not think it would be so hard to return to individual nation states again, although the economic shortfalls being papered over now would be magnified. still, they can all print fiat money to their hearts content as we all float down the river styx in a handbasket…..


  2. From the fact that we know just how the Germans ‘model’ every possible scenario and outcome, I would suggest Merkel and Wolfie are working it between them, they are far too cunning a pair to think that they might be adversaries, after all, they are German, why would they pit their wits against each other, better to pit their wits together against what they perceive to be the common enemy surely? The Germans are very methodical.


  3. “Abroad, an operation is in process by the system, and especially by the German side, to throw Yanis Varoufakis from his position as Finance Minister, probably because he is considered another barrier to Merkel’s plans to implement a Treuhand type operation in Europe, starting from Greece. Apart from the humoristic side, the war by the media is targeting Varoufakis’ reliability.”


  4. I think Merkel’s seeing the rise of the Shanghai Co-operation and how weak Europe and America will become. Interesting that this move by Merkel comes so soon after Tsipras Easter break in Moscow. Funny that!


  5. A very interesting take on this development JW. I don’t know what Merkel can pull-off without something major from Tsipras, who himself risks a fracturing of his government if he agrees to anything ‘reasonable’ from the Creditor Groups.


  6. I don’t know how other readers feel but I would benefit from a list of events and dates that lead to this crisis. There were bogus figures produced by somebody which allowed Greece to join the EU, once in a huge order of military hardware (150 Billion?). Further loans to Greece (not sure which bank did the lending) and then a Greek bailout where I have read that 90% of bailout funds did not reach Greece but went to creditors. Anyway such a list with specifics would help me fully understand what happened to the Greeks. Obviously there is a lot of detail and dates. The US conducting surveys in the seas around Greece….Do the Chinese have a stake in PIreus now?

    It’s a fantastic blog…..thanks.


  7. To get things into perspective, Greece has less than half the population of Nepal, and Zerohedge is not commenting on the UK general election.


  8. What utter bollox. Fantasy supposition and innuendo without a shred of evidence. Anyone taking it seriously needs their head looking at.


  9. I still feel that it will be shown that Varoufakis and Draghi will be shown to be different sides of the same US challenge coin.


  10. Fantasy supposition and innuendo without a shred of evidence is what i read everyday in the MSN so i come hear to read a different opinion…… just troll.


  11. Just keep on doing what you are doing John; enlightening and entertaining stuff.

    I still think Merkel is more comfortable with Russia than the US, especially with the way things are going in America.Germany has always had a sense of longing for some form of close relationship with Russia, recognising the economic opportunities there.


  12. H V Derci, having complete the Sistine Chapel to a much higher standard than Da Vinci ever could,has now taken his universal knowledge and multiple IP addresses elsewhere…with just a gentle shove from Signor Slogolini.


  13. “Germany has always had a sense of longing for some form of close relationship with Russia”

    Take the Second World War as an example.



  14. AK Lad quite possible with Frau Merkel’s background being East German I guess and Gazprom maybe a little bit harsh for our sensitivity but who is going to keep you warm at night.? .


  15. Pingback: John Ward – Greece Debt Exclusive: It’s Not Just Tsipras Who’s Taken Over From Varoufakis….Merkel Has Taken Over From The Finmins – 28 April 2015 | Lucas 2012 Infos

  16. Varoufakis – they thought he was a Marxist, were ready for that. They found out he’s a Georgist – there is no strategy against that, except censorship.


  17. Its a good point kfc and it undoubtedly worked throughout the earlier stages of the eurocrisis in which shoring up German & other northern banks by means of the Greek ‘loan’ was the main issue. Events have moved on however, fueled also by Germany’s huge financial gains by way of the Greek Debt/Eurocris.

    However, Scheuble and Merkel are implacable enemies within CDU: Scheuble was supposed to succeed Kohl until Merkel used the corruption findings against Scheuble to ascend to power. His position as Finmin is not so much indicative of mutual respect as containment of a strong enemy. Also they are radically different generations politically, with Scheuble 100% signed up to the European project (Germany re-united AND entered the euro under Scheuble) while Merkel the former Ossie Stasi is – IMO – a power agnostic: her agnosticism applies also to the German-American post-war arrangements / relationship.

    Meanwhile the most important lobby of CDU is the German Federation of Industry, appalled by, harmed by, the EU’s anti-Russian sanctions. And the small but dangerous AFC are Germany’s equivalent of UKIP; like the English conservatives it is a CDU offshoot and subtracting influential voters from her party. Finally, whereas Scheuble is at retirement age, Merkel is at the peak of her power.

    So I would suggest that there are issues at play here concerning Germany’s future in which Scheuble is Yesterday’s Man; that for Merkel, Germany’s choices for the future have widened beyond his allegiances.


  18. Henry George the man who wrote what is still the best selling work of political economy ever, the man they had to write out of economics, out of history.


  19. Have to disagree with you about the split being about the US verses Deutchland. In the first place with China acting like Musssolini did in Italy there is a whole new ball game going on. And if I hear right the Thorium Power pushers now have the Banksters nod because the old plan, seize control of all the oil, is not working and there is no way to cut down the power of the oil exporters except by bringing a large new source to the power market. Do you remember when the power brokers squeezed the Bio diesel people to virtual extinction by withdrawing the subsidies and the r&d money for large scale ops?? wel rithn now its th opposite and the thorium people have the nod. So I predict everyone will get in on the thorium energy boom and I predict the entire public transit fleet in the US will go to natural gas or electric soon followed by the Trains and Trucks. That will trump Putins and Suadis oil card and tend to make them want to play ball with the west.
    Next Merkle and Tsiparis are both EU lovers and they Both are smart enough to know that some group of Banksters has to take a beating. I do not think that Draghii is taking orders from anyone except all the debt holders who don’t want to get stuck with worthless paper. And the only possible deal I see that Merkel can make that does not involve writing off debt is to write off interest on the current debt and brow beat the banks into extending more credit. Of course in the long term absent any boom this cannot work either so what is left?? Tank the Euro?? and that will force Bankfurt to leave it.


  20. Germany has never had a longing for anyone especially Russia. Go to Leipzig and talk to any Kraut over 40 and they will tell you all about what they think of Russia. The Germans hate Russia as much as the Poles do and far worse than the Ukranians do. It’s about like the Serbs and the Croates, except not so intense because of the distance between the two.. Every time the Russians threaten the Germans the Germans swallow their pride and deal, but they never forget. The Germans might be pissed at the US because the Euro is going to tank but most of them are smart enough to know its not our fault. I think the average Kraut knows the difference between Americans and Banksters, even if some here do not.


  21. Varoufakis was politically assassinated (that’s a metaphor, mind you) because he was a threat. The man was the only piece on the chess board who could not be bribed — and who actually understood the game.

    We need more like him.


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