Greek Debt Talks Are Tested by Fraying Ties With Germany
Comment of the Day

March 13 2015

Commentary by David Fuller

Greek Debt Talks Are Tested by Fraying Ties With Germany

BRUSSELS — Growing Greek antagonism toward Germany is coming at a bad time for Athens as it seeks a better debt deal with its European partners.

A demand on Tuesday night by the Greek prime minister, Alexis Tsipras, for wartime reparations from Germany cast a pall over negotiations for more rescue money for Athens that began in Brussels on Wednesday.

Germany, the biggest European lender toGreece, immediately issued a cool response to Mr. Tsipras’s comments, which were made in an address to the Greek Parliament.

Steffen Seibert, the spokesman for Chancellor Angela Merkel, said Wednesday that the issue of compensation linked to the Nazi occupation of Greece during World War II had been legally and politically resolved. “We should concentrate on current issues,” he said.

The rancor between Athens and Berlin, the two most important players in the Greek debt negotiations, seemed to emphasize the gulf between them. Without more loan money in the coming weeks, Greece could default on debt payments. That would raise the chances, still seen as remote, of the country’s becoming the first member to drop out of the euro currency union.

The debt talks in Brussels, involving officials from Greece and representatives of lenders from the so-called troika — the European Central Bank, the European Commission and the International Monetary Fund — are expected to be highly technical for now, with no immediate outcome.

But the discussions, along with plans for parallel talks involving creditor emissaries to Athens, are politically sensitive for Mr. Tsipras, whose Syriza party campaigned on a vow to not be bullied by the troika. That might be a reason he is feeling the need to take a hard line on German reparations — an issue that resonates deeply with Greeks.

It was not the first time that Mr. Tsipras has raised the issue of compensation from Germany. His proposal on Tuesday, to set up a committee to pursue the matter, may also be aimed more at buoying domestic support than at shaming Germany into easier terms on its loan program.

But the clamor could prove counterproductive, some experts say.

“Mr. Tsipras may have primarily had a domestic audience in mind,” said Guntram B. Wolff, the director of Bruegel, a research organization in Brussels. “However, in today’s world such a message gets discussed everywhere,” he added. “I am worried that these statements decrease German popular support for aid to Greece even further.”

Adding heat to the issue, the Greek justice minister, Nikos Paraskevopoulos, said on Wednesday that he was ready to enact a court ruling from 2000 allowing the seizure of German property in Greece as compensation for victims of a Nazi massacre in the village of Distomo. Mr. Paraskevopoulos suggested the timing of any such action would depend on the domestic debate over war reparations, rather than on Greece’s talks with creditors.

David Fuller's view

This is disturbing.  A long-term concern of mine, mentioned several times over the years, is that the single currency without a Federal EU was reviving rather than reducing some historic European enmities.  Fortunately, this risk appears to have lessened, with the help of Mario Draghi’s leadership of the ECB. 

However, Greece is an obvious flash point and the problem is compounded by Putin’s aggression. 

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