Stratfor: Germany Does an About-Face on Greece, hoping to save Europe

Summary: Mass immigration and the collapse of Greece’s economy have combined to bring the European Union to the breaking point. Now the two issues have merged as Greece becomes a gateway into Europe. Germany has loosened its grip on Greece, hoping to use it as a buffer state for the flow of migrants. It buys time for more drastic solutions, which so far they’re unwilling to take.

Germany’s Embrace of Migrants Spawns Rise of Far-Right Leader.
— False NYT headline. German’s leaders embraced mass immigration. It’s people were not consulted.

Stratfor

Germany’s Tactical About-Face on Greece

Stratfor, 3 March 2016

Germany and Greece were on opposing sides during last year’s negotiations over Athens’ third bailout program, but the European refugee crisis is forcing them to form a tactical alliance. The German government tried for months to treat the bailout program and the migration crisis as separate issues, but Berlin has now come to terms with the idea that Greece needs help on both. The Greek government, in turn, understands that cooperation with Germany is essential to prevent Greece’s isolation in the European Union and to receive the next tranche of bailout funds.

Berlin is still trying to push for a unified European response to the refugee crisis. From the German government’s perspective, Europe needs to cooperate with Turkey to reduce the influx of asylum seekers entering EU states and member states need to enforce the EU plan approved in late 2015 to apportion asylum seekers among member states. Greece is key to both goals. Germany needs Greece to become more efficient at receiving and identifying those eligible for asylum, so that redistribution efforts are more effective. Berlin also needs Athens to cooperate with Ankara on the plan to coordinate intelligence sharing by NATO vessels in the Aegean Sea on human trafficking organizations.

In addition, Germany is wary of the multiplication of unilateral and regional moves in Europe. The refugee crisis has only exacerbated Europe’s political fragmentation, and a growing number of countries, especially those along the Balkan migration route that connects Greece with Austria, are defending the reintroduction of border controls.

German Chancellor Angela Merkel fears that Berlin and Brussels are losing control of the political process in Europe. The end of free passage under the Schengen Agreement would hamper European economies by, among other things, increasing transportation costs. Closing borders would have serious political consequences, as countries could try to sever other aspects of the process of Continental integration in the future. Merkel is also worried that the current climate in Europe would have political repercussions at home, as anti-immigration groups gain traction.

Map of Schengen treaty membership
Click to enlarge.

This explains why the German government is supporting Greece on both issues. Some of Germany’s top officials, including Merkel, Finance Minister Wolfgang Schaeuble and Foreign Affairs Minister Frank-Walter Steinmeier have recently said that Greece needs assistance. Germany will help in two ways. First, it will oppose attempts to suspend Greece from Schengen; Italy will probably help in this regard. EU members are expected to decide in May whether Greece is failing to adequately protect its borders, and Rome knows that Italy could be under scrutiny next if Greece is suspended from Schengen.

Second, Germany is likely to politically support Greece in the negotiations over the bailout program. There is still a big disagreement among Greece, the International Monetary Fund and the European Union about the size of Greece’s fiscal shortfall. But while the union and the IMF have different assessments of the status of the Greek economy, they agree that Athens will have to introduce pension cuts. This is a sensitive topic for Greek Prime Minister Alexis Tsipras, who promised voters not to cut pension payments.

It is likely that Athens will eventually introduce some cuts, but it will fight to limit those to only the highest-paying pensions. (Recent rumors say Athens will cut those pensions above 1,200 euros; most pensioners receive a monthly stipend of 700 to 1,000 euros). Unlike in previous bailout negotiations, Germany will be more accommodating of Athens’ small concessions rather than trying to force the larger reforms it desires. The negotiations will continue for a few more weeks because Greece is not yet desperate for money, but there will be an agreement, and Athens will receive its next tranche of the bailout. This will once more delay the possibility of a Greek default or exit from the eurozone.

The problem with tactical alliances is that they tend to be short lived. Plans to introduce an EU-wide relocation scheme will fail, and Germany will have to rely on a “coalition of the willing” when it comes to accepting asylum seekers. Some countries, including Portugal and Ireland, have indicated a willingness to accept refugees. However, these are thought to be symbolic gestures, encompassing a limited number of people. Turkey’s cooperation in severing the flow of people to the European Union will be limited, and migrants will continue to try to enter the bloc, even if it means traveling alternate routes.

As a result, Merkel will remain under domestic pressure to take a tougher stance on migration, and Berlin’s incipient flexibility with Athens is likely to fade away once the Greek government again drags its feet on economic reforms. The tactical alliance between Greece and Germany, therefore, will only have a limited effect on the broader problems affecting both countries.

Germany’s Tactical About-Face on Greece
is republished with permission of Stratfor.

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