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.