A tangled web in Berlin, Brussels, Athens and Washington as the Surgeons take on the Physicians
Spanish auction costs rise dramatically as cash withdrawals hit Iberia as well as Greece
I try as much as possible in writing The Slog to stick to the commonsense ‘PAC’ principle of listening to sources in the light of events taking place. The acronym stands for Provenance (Who are these people and can they be trusted?) Agenda (Why are they telling me this and what are their aims?) and Corroboration (Who else agrees and do events confirm the allegation?)
The Greek crisis within the eurozone is a brain-hurting nightmare at the moment for anyone trying to stick to this approach.
First off it isn’t a crisis within the eurozone, it’s a cultural question mark against the entire EU project, with potentially disastrous consequences for the West as a whole. And
Second, most of the national players directly involved have their own serious splits on the issue.
And finally, powerful influences outside government – ranging from Hedge Funds to global sovereign credit players – are exerting what is at times a bewildering array of influences to get this, that or the other result.
So when first told by my Bankfurt Maulwurf yesterday that “Merkel has decided to go all out for her Fiscal Pakt and keep France on board by bribing Greece to vote yes to the eurozone and the Troika”, I was both knocked out (it’s a potentially huge story) and sceptical (he would like to get Merkel out of the Chancellery, and Germany out of its increasingly alarming debt obligations in the eurozone).
However, first indications from usually reliable sources in Paris were that the subject had indeed been frankly discussed by Hollande and Merkel at their first meeting earlier in the week. One informant specifically suggested that Merkel (who is inflexible, but not stupid) tried to take the wind completely out of Hollande’s sails “by appraising him of her Grand Plan to keep Greece in the eurozone FiskalPakt group come what may”. Another said, “I get the impression that she more or less told him ‘In the end we will save face but give the Greeks what they want’ because to do otherwise would be a bad idea from every possible angle.”
Much as I find it difficult to put any praise at all in the German Chancellor’s direction, to be fair she has stuck firmly to precisely the public position (Greece stays) right from the start. The question is, does she really mean it?
When it comes to Greece, Angela Merkel is a sort of deranged physician: she hopes that administering pills to create Germanist ways in Greece can solve the problems there in the medium term. As usual with the Fuhrerin, none of the cultural realities support her view: the Hellenic economic ministry observes that the annual cost of graft in Greece exceeds the measures adopted for 2012 for cuts in pensions and salaries, according to recent official figures and reports. The total illegal economy (tax evasion and bribes) is worth €65 billion, and a further €4-7 billion is involved in kickbacks demanded by everyone from councillors and lawyers to ministers and bankers to any private business trying to expand or start up.
Set against this Alchemy approach is that of the Surgeons: that Greece must be amputated, and thus help keep any and all actual or perceived contagion away from the eurozone. Those holding this view have thus far included Washington, Holland and the northern members, Frankfurt’s private banking community, the Bundesbank, and some (although not all) elements within the German Finance Ministry.
So we see, for example, Andreas Schmitz telling Reuters yesterday, “More than two years after the first aid package for Greece it is hard to imagine how the country will escape its unfortunate situation. It is therefore right to think about alternatives and particularly whether Greece would not be better able to solve its problems using its own currency, supported by a ‘Marshall Plan’ from the European Union.” (Schmitz represents the Bankfurt view also held by the Slog’s Maulwurf there.)
Schmitz’s remarks also take note in turn of the growing view among the Surgeons that Greece could be just as dangerous outside the tent as in it, and thus is still going to need help as an EU member. This line was also planted in Der Spiegel yesterday, which not only expects and supports a Greek exit from the eurozone, but also sticks to the Party line that Greece would continue to get aid just like every other member state.
The vast majority of German newspapers and websites now take the view that June’s Election II in Greece will really be a referendum on whether the country should remain in the euro zone. This too, I suspect, is orchestrated by those with an interest in kicking out the Hellenic Republic, because such a conclusion flies in the face of the facts: there is an overwhelming anti-Troika majority among the Greeks, but even Alexis Tsipras the leader of Syriza has made it clear that the goal remains to stay in the eurozone. The objective of German media spin, by contrast, is to equate a win for Syriza (now very much on the cards) as the Greeks giving Berlin-am-Brussels ‘permission’ to boot them back to the drachma.
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