De­ci­sion time

Kathimerini English - - Front Page - BY ALEXIS PAPACHELAS

A veteran Ger­man politi­cian re­cently said that “it’s high time the chan­cel­lor made up her mind about Greece.” We cer­tainly are at a cross­roads, and An­gela Merkel’s de­ci­sion will weigh heav­ily on de­vel­op­ments sur­round­ing Greece. A key is­sue is whether the Ger­man leader will by­pass her stub­born fi­nance min­is­ter, Wolf­gang Schaeu­ble, and give the green light for a swift deal on medium-term debt re­lief and – ob­vi­ously – smaller bud­get sur­pluses much ear­lier than 2025. With­out such a deal, the holy grail of quan­ti­ta­tive eas­ing (QE) will likely re­main elu­sive, while Greek Prime Min­is­ter Alexis Tsipras will have very few in­cen­tives to put his sig­na­ture on pa­per. No one can pre­dict to what ex­tent Merkel will be able to get around Schaeu­ble and his min­istry, which in­sist that any dis­cus­sion on Greek debt re­lief must take place at the close of the bailout pro­gram in 2018. Of­fi­cials mon­i­tor­ing the Greek pro­gram in Brus­sels and Frankfurt say Merkel is keep­ing her hands firmly on the wheel. She wants to avoid a re­peat of the 2015 cri­sis for she be­lieves that such an even­tu­al­ity would strengthen fringe par­ties in Ger­many and other Euro­pean coun­tries. Merkel is said to ar­gue that Tsipras gets ev­ery­thing through with­out much re­sis­tance, while adding that op­po­si­tion leader Kyr­i­akos Mit­so­takis would be bet­ter off tak­ing over at a time when he would not have to jug­gle with too many hot pota­toes. For the above rea­sons, she claims that Greece could do with some car­rots so as to wrap up the bailout re­view by May. It’s a mine­field out there, and no safe pre­dic­tion can be made. An­a­lysts reckon that Merkel needs Schaeu­ble’s po­lit­i­cal back­ing in what is a tough elec­tion cam­paign. Mean­while, her min­is­ter’s par­ti­san loy­alty sug­gests he would never ques­tion her in pub­lic. “There are still many episodes ahead,” said a Euro­pean of­fi­cial with knowl­edge of the mat­ter. “It could be months be­fore we see the out­come of this tug of war.” All that pre­sup­poses break­ing the dead­lock of the on­go­ing ne­go­ti­a­tions and that the two sides will find a for­mula that will meet the de­mands of the In­ter­na­tional Mon­e­tary Fund with­out in­duc­ing SYRIZA’s po­lit­i­cal sui­cide. It’s by no means an easy task. There is no doubt that Greece would ben­e­fit from an agree­ment fore­see­ing smaller bud­get sur­pluses. The big prob­lem, as usual, is that for­eign of­fi­cials rarely in­sist on im­pos­ing the struc­tural re­forms that the coun­try sorely needs; mean­while, Greek politi­cians are keen to ease fis­cal dis­ci­pline so as to have an eas­ier time with their po­lit­i­cal ap­point­ments.

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