As a Greek exit looms, France may offer a last hope

Germany will be the final decision-maker in the standoff with Greece - but, writes Stephen Blackwell, France still has a role to play

A protester holds a sheet with the Greek word for 'No' while German Chancellor Angela Merkel speaks in the background. (AFP PHOTO / CLEMENS BILAN)

Following Tuesday’s summit in Brussels, Greece has been left with a clear choice over its membership of the single currency. If the government fails to offer a convincing new plan then the leaders of all the EU states will meet next Sunday to plot a path towards “Grexit”.

In essence, the dispute boils down to an irreconcilable conflict between Germany and Greece. Angela Merkel’s government has been the driver behind the fiscal rigour demanded by finance ministers, the European Central Bank and the International Monetary Fund. The Greeks insist their economy can only return to health if their €320 billion debt can be reduced.

The question now is whether or not decision-makers in Brussels can still be swayed by the political risks posed by a Greek economic collapse and the potential damage to the eurozone. Although some European governments – notably those led by Francois Hollande in France and Matteo Renzi in Italy – have called for renewed negotiations, Berlin says Greece should abide by its terms.

Mrs Merkel’s stance is supported across the German political spectrum. While her initial response to the Greek vote was restrained, other German politicians were happy to denounce the leaders of Athens. Sigmar Gabriel, leader of the Social Democratic Party, accused the Tsipras government of having “torn down the last bridges on which Greece and Europe could have moved towards a compromise”.

Mrs Merkel has insisted that all Eurozone members must play by the rules. This has meant varying degrees of austerity as individual states have struggled to enforce fiscal rules imposed by the European Commission. However, there is resentment against the euro as an obstacle to rather than an enabler of prosperity.

In addition, the evident willingness of some EU officials to intervene in Greek affairs illustrates a troubling relationship between the union and its members. Following the Greek referendum, Marine Le Pen, the leader of the French National Front, described the Greek vote as a “rebellion against European ‘diktats’ of those who want to impose the single currency at any price”.

Germany’s insistence on fiscal rectitude risks undermining support for European integration. The single currency was arguably sold on a misleading prospectus, in that it was offered as a further irreversible step towards shared prosperity. There is a growing realisation that the system is flawed and that only a real fiscal and political union can shore up the euro. Following Sunday’s referendum, French economy minister Emmanuel Macron alluded to the punitive reparations imposed on defeated Germany after the First World War, when he called for the EU “not [to] re-enact the Treaty of Versailles”.

Indications that the French are worried about the political consequences of “Grexit” offer perhaps a last hope that the abyss can be bridged. The impasse does offer French president Francois Hollande the opportunity to mediate a solution that reconciles balancing the books with an appreciation of the consequences of an exit. Faced with the threat posed by far-right politicians such as Ms Le Pen and anti-establishment movements such as Spain’s Podemos, many mainstream European parties would welcome an initiative that waters down austerity measures and keeps Greece in the union.

As Europe’s largest economy, Germany will be the final arbiter of Greece’s fate. As Helmut Kohl, former German chancellor and Mrs Merkel’s political mentor, once observed, “the visionaries of yesterday are the realists of today”. The outcome of the crisis threatens to thwart the ambitions of the EU statesmen of the past.

With Mr Kohl’s legacy as the overseer of German reunification and co-architect of monetary union secure, Mrs Merkel may not wish to be remembered as the leader who permitted a Greek collapse and the shrinking of the Eurozone. If Europe turns its back on an impoverished and isolated Greece, then the image of a secure continent will be irreparably damaged.

Stephen Blackwell is an international politics and security - analyst