UPDATE II July 12, 2015, 6:00 p.m. EDT)
The ghost of Versailles hangs over the Greek debt negotiations in Brussels this evening.
In 1919, with Germany defeated after World War I, the delegates to the Versailles Peace Conference in 1919 imposed draconian reparations requirements on a prostate Germany. This became known as the “Dolchstoss” or knife in the back which helped propel Adolf Hitler to power 14 years later, in 1933.
The hardline governments engaged in the final debt package negotiations with Greece, led by Germany, are seeking to impose humiliating conditions on Greece even after Alexis Tsipras met most of their previous demands on Thursday night.
In doing so, they are repeating the same mistake they made the week the negotiations broke down and Tsipras called a snap referendum on July 5, by imposing new and harsher conditions.
By their actions they are poisoning the future of Greek politics and Greece’s relations with the Euro Zone and even the EU itself.
There may still be time for the heads of state meeting tonight in Brussels to pull back from the edge, show magnaminity, and back off from the program of extreme humiliation which the finance ministers seem to support.
Foreign ministries should be involved in these decisions. Frank-Walter Steinmeier should be at Angela Merkel’s side, and not just Wolfgang Schäuble.
A constructive path forward must be found, putting aside any personal desires for vengeance or vindication, or to teach Tsipras a lesson.
If the EU leaders fail, Vladimir Putin and other extremists will reap the benefits of decisions that are disastrous for Europe and the West in geopolitical terms.
The Trenchant Observer
UPDATE (July 12, 2:30 p.m. EDT)
Hardliners and technocrats appear to have dominated the EU finance ministers’ discussions on whether to accept Tsipras’ Thursday night proposal as a basis for formal negotiations.
Now only the Eurozone heads of government and heads of state can save Greece from an exit from the Euro (“Grexit”).
(1) Kevin Hagen und Christina Hebel, “+++ Newsblog zur Krise +++: Euro-Minister erwägen Grexit (aber nur in Klammern); Die Eurofinanzminister schreiben in einem Dokument, es gebe die Möglichkeit einer griechischen Euro-Auszeit. Allerdings steht der Absatz nur in Klammern – denn die Gruppe ist sich nicht einig. Alle Entwicklungen im Newsblog, Der Spiegel, 12. Juli 2015.
(2) Draft(?) Statement of the EU finance ministers, July 12, 2015 (16:00 CET).
The conditions are so harsh they seem designed to cause Greece to choke, or have been designed in a matter utterly oblivious of the realities of Greek politics.
For example, to tell Greece it has to adopt a new Code of Civil Procedure within three days is utterly humiliating to Greece, and will generate the opposition of lawyers and others from all parties. No international group or organization can dictate such a measure to a sovereign country.
Unless the heads of government and heads of state intervene forcefully to reject these conditions, with a view to the geostrategic realities in Europe, they will hurl Greece — and themselves — into the abyss.
These decisions require the inputs of foreign ministers, who should be called to Brussels.
Statecraft of a high order is now required.
Bruce Ackerman, “Germany’s Failure of Vision,” New York Times, July 9, 2015 (Op-Ed).
Today the finance ministers of the Euro Zone met in Brussels to consider whether Greece’s debt proposal sumbitted Thursday evening forms a sufficient basis to permit the opening of formal negotiations for a third Greek bailout program. The meeting adjourned without any decicision, and is to reconvene on Sunday at 11:00 a,m. The leaders of the 19 Euro Zone countries are to meet in the afternoon, and then the heads of government of all 28 EU member states are to meet at 6:00 p.m. to decide on the Greek proposal, and on humanitarian assistance to Greece in the event it is rejected. Such a rejection would in all likelihood cause a de facto Greek exit (or”Grexit”) from the Euro Zone as early as Monday.
Late news reports suggest the finance ministers are split down the middle on whether to agree to the Greek proposal.
Following the European press for the last few weeks, one is struck by the absence of geopolitical and strategic considerations from the debates, which have proceeded as if the question of what to do with the Greek debt question were purely a matter for finance ministers and those involved in European economic matters.
Let us recall that EU sanctions against Russia will have to be renewed in January, 2016, that this can be achieved only with the affirmative vote or acquiescence of all 28 EU member states, and that a very large element of uncertainty as to the Greek vote will be introduced if Greece is forced to exit the Euro Zone leading to a further collapse of its economy.
Alexis Tsipras and SYRIZA have embarked on a disastrous course of playing a game of “chicken” with Greece’s creditors in Europe and the IMF. They have dstroyed the trust that is sessential for Europe and Greece to work together to resolve the debt crisis.
They have acted as untrustworthy partners in the Euro Zone. If other countries acted as Greece, neither the Euro Zone nor the EU could function or even continue to exist.
The Tsipras government, even with French technical help, presented a request that was wildly short of what the IMF estimates Greece will need to survive the current crisis.
The Greek government does not appear to be technically very competent.
So, what should Europe do?
First, they must ignore the personal insults, lack of trustworthiness, and incompetence of the Greek officials.
Second, they should follow France’s example of helping the Greeks on a technical level to develop realistic plans for resolving the crisis. This they were doing before the plebiscite. Now they should resume.
Third, they should seek to build a partnership with the Greek people and help the Tsipras government (or the one that follows it) to devise and implement necessary structural reforms, while creating scenarios that give hope to the Greek people that they will return to growth and emerge from the current crisis.
If the Greeks do not cooperate in implementing such an approach, Greece must then be allowed to exit from the Euro Zone, in an orderly fashion.
Right now, above all, Europe’s leaders and the IMF should look at the map of Europe, consider that Russian troops occupy the Crimea and are in the eastern Ukraine, and act decisively to defend the southern flank of Europe.
For they are engaged not only in financial and economic decisions, but also in geopolitical decisions of the highest order.
The Trenchant Observer