10 July 2015
- From the sectionEurope
So, will a deal be reached this weekend?
Will Greece take a breather from being headline news. For a while at least?
The truth is, no-one knows. Not even the leaders of the European Union.
They know what they would like to happen: that they could close their eyes on some sunny European beach this July and the problem would just disappear.
Failing that, for most decision-makers – including the Greek Prime Minister, who has driven this drama to unimagined extremes – the favoured outcome is to sign up to the least distasteful option out of an unappetising range.
No-one, no entity involved in this crisis will escape unscathed: the Greek economy; its people; the credibility of the creditor institutions (the ECB, IMF and European Commission); the eurozone as a whole; individual European governments (notably Germany’s); and even the unity of the European Union – all have been damaged by the Greek crisis and the misguided handling of it.
In or out of the eurozone, Greece’s banking system is in terrible trouble and in a far worse state than before the Tsipras government arrived on the scene promising an end to national misery and humiliation.
The country is groaning under a huge debt burden and there is no suggestion of anyone slashing that debt significantly any time soon. Continuing austerity is inevitable.
The Greek Prime Minister, on an incredible high last Sunday after receiving an overwhelming vote of confidence in the country’s referendum, can now only disappoint the Greek people.
Either Mr Tsipras agrees to the details of a third bailout deal similar to the one rejected by his electorate last weekend (and at the time of writing this seems to be the more probable scenario), or he walks away again, refusing to accept the punitive conditions attached, and triggers Greece’s slide out of the eurozone – something the vast majority of Greeks say they don’t want.
Germany, portrayed as Greece’s arch nemesis on posters across the nation, is also hugely affected by the crisis.
As the eurozone’s largest economy, Germany holds the largest amount of Greek debt of any nation and contributes the most to Greek bailouts.
Greece was always a huge favourite amongst Germans as a holiday destination, and while this crisis won’t put Germans off Greece’s magical beaches or mouth-watering cuisine, there is a deep sense of hurt at the “Nazi” slurs some Greeks have hurled at their government.
And then there’s their chancellor, Angela Merkel. Known as Iron Angie, Ms Merkel was seen as politically untouchable, riding consistently high in opinion polls regardless of the fortunes of her CDU Party. But the Greek crisis has put quite a dent in her armour.
Normally extremely risk-averse, Chancellor Merkel openly pushed for a deal with Greece despite going against German public opinion polls and many in her normally fiercely loyal party.
She did not want the eurozone – politically such an important project for Germany, seen as a key part of its post-World War Two European reintegration – to break apart on her watch.
But Alexis Tsipras refused to play ball, to follow the cowed dance of indebted eurozone governments. That put Ms Merkel under pressure to harden her position, which in turn caused rifts with her most important European ally, France.
The assertion by the President of the European Council, Donald Tusk, this week, that the Greek crisis is the most critical moment in the history of the EU, should sound like a wild exaggeration but it isn’t.
The unity of the EU, its governance and its single currency are under strain and under scrutiny. It has been an unedifying episode in the history of the union.
The only immediate winners are the populist extremes across the continent, claiming to be anti-establishment and to be the only true and trustworthy representatives of the people.