'Merkel Has lost' - How the Greece Referendum Vote Split Europe
Greece's rejection of a cash-for-austerity package in its referendum on Sunday has opened old rifts between European rivals
By Gordon Rayner,
Chief Reporter, Telegraph, UK
8:10PM BST 06 Jul 2015
“Merkel has lost. Germany has lost.” Not the reaction from a rabidly left-wing Greek tabloid to the country’s referendum vote, but from Benoit Hamon, the former French education minister and ally of Francois Hollande.
For Mr Hamon, the resounding “no” vote was “an opportunity for Francois Hollande to resume leadership” in Europe. Old divisions run deep across the continent, and the Greek crisis brought them right back to the surface as Europe’s financial superpowers squabbled like children at playtime.
Watching gleefully from the wings was the Russian President Vladimir Putin, who took the opportunity to stir the pot by ringing the Greek Prime Minister Alexis Tsipras and offering to strengthen “Russian-Greek co-operation”.
With Greece’s membership of the euro now hanging by a thread, it became increasingly clear as the day wore on that Greece’s present will decide the whole continent’s future.
Major banks now rate a Greek exit from the euro as a probability. The man installed as Greece’s new finance minister believes a Grexit would lead to the “break-up” of the Eurozone. Elsewhere there was talk of humanitarian aid, rather than cash, for the Greek people. Doom-laden language was easy to come by. Answers were not.
Even before the no voters had slept off the hangover from their street celebrations of the night before, the day began with a surprise announcement by Yanis Varoufakis, the shaven-headed Greek finance minister. He told his Twitter followers at 6.31 that he had resigned.
Greece’s rejection of further austerity measures by an unexpectedly high 61 per cent had vindicated his hard line with European creditors, but Mr Tsipras saw him, ultimately, as an obstacle in the road to a new deal with Eurozone countries over Greece's 330 billion euro debt mountain.
Mr Varoufakis said in a typically bullish blog that: “I shall wear the creditors’ loathing with pride.”
In the rest of Europe, the referendum result had gone down like a rotten oyster, but Greece had won praise from such dubious admirers as the former Cuban president Fidel Castro, who said Greece "has won admiration across Latin America" and Bolivia’s president Evo Morales, who called the referendum a defeat against “European imperialism”.
Predictions of a collapse in share prices on European stock exchanges did not materialise; the FTSE opened 1.07 per cent down, but major banks rated the chances of a Grexit at 70 per cent, and Stephanie Flanders, the former BBC economics editor who now works for JP Morgan, said: “A messy Greek exit is now more likely than not.”
The Greek people had spoken, now it was time to hear from for the most powerful woman in the world (and the least popular woman in Greece).
Angela Merkel, a woman constantly trying to reconcile her own passion for European union with German taxpayers’ exasperation at propping up Greece’s corrupt economy, stood firm. She said she would wait to see what proposals the Greek government came up with, but saw no reason to enter negotiations on a new bailout program as things stood. She said as much in a lunchtime phone call to Mr Tsipras, who said he would be presenting a Greek proposal for a deal at Tuesday’s crucial Eurozone summit.
Germany’s economics minister Sigmar Gabriel was rather less measured. He made it clear that unless Mr Tsipras compromised, Greece would only be offered food and medicine.
"For the Greek population, life will get even more difficult in the coming days and weeks,” he said.
“The definitive insolvency of the country now is an imminent threat. We must now cover their needs very quickly, the people there need help and we should not refuse it just because we're unhappy with the result of the referendum.” This meant “humanitarian aid”, not more cash, raising the image of food parcels being handed out on the streets of Athens.
“We can not endanger the stability of the monetary union by Greece enforcing their own national interests unconditionally against 18 other [countries],” he went on. Debt relief would not be offered.
It was a flat contradiction of Alexis Tsipras’s position after the referendum. He had said: “This is not a mandate of rupture with Europe, but a mandate that bolsters our negotiating strength to achieve a viable deal.
"This time, the debt will be on the negotiating table. It is now up to European prime ministers,
meeting tomorrow, to propose any new bailout deal including on debt.”
Meanwhile the European Commission president Valdis Dombrovskis dismissed the referendum as illegal and warned the Greeks that “there is no easy way out of this crisis”. He refused to say whether he expected Greece to stay in the euro.
The European Central Bank had even harsher words for Greece. Ewald Nowotny, a member of the ECB’s governing council, said Greece’s suggestion of a deal within two days was “illusory” and that the no vote had “not made it easier for the ECB to act”.
And the Council of Europe – which is independent of the European Union – warned that the referendum did not meet international standards as it was called with one week’s notice and the lengthy question on the proposed bailout was unclear.
France, it seemed, was Greece's last ally. Mr Hamon’s claims that “Merkel has lost” reflected a desire in the country to capitalise on Greece’s woes by tilting the balance of power between the two main architects of the European Union towards Paris.
The French Minister of the Economy, Emmanuel Macron, rather crassly delved into Germany’s troubled past by urging Europe to avoid another "Versailles moment" with Greece, referring to the humiliating post-war conditions imposed on a defeated Germany in 1919 that later allowed the Nazis to flourish.
With such dark rhetoric circulating, the intervention of Vladimir Putin was the last thing Angela Merkel would have been hoping for.
The Russian President would be all too happy to drive a wedge between European countries, and in a phone call with Mr Tsipras he “expressed support for the Greek people in overcoming the difficulties facing the country”, and discussed the "further development of Russian-Greek cooperation".
It was Mr Tsipras who had initiated the call to Putin, to crank up the pressure ahead of crucial Eurozone meetings, but it nevertheless led to talk among some analysts of Greece joining the Eurasian Union, the Moscow-led trade bloc that includes Belarus, Kazakhstan, and Armenia.
David Cameron, viewing events from outside the Eurozone, was distinctly non-committal. He spoke on the phone to Mrs Merkel and met George Osborne and the Bank of England Governor Mark Carney to discuss the crisis, but his spokesman said: "He thinks that clearly Greece and the Eurozone need to sit down and talk through the implications of the result. They need to find a sustainable solution. It is a matter for Greece and Eurozone partners."
By mid-afternoon Greece had a new finance minister, but it was not immediately obvious whether he would be any more amenable than his predecessor.
Euclid Tsakalotos, a 55-year-old Marxist who was educated at Oxford, was never a fan of joining the euro, and has predicted that a Grexit from the single currency would lead to the break-up of the Eurozone.
George Osborne’s take on the day’s developments as he addressed Parliament at 4pm was that “the prospects of a happy resolution of this crisis are sadly diminishing”. He urged British holidaymakers going to Greece to take plenty of cash and their own supplies of medicines.
The ECB announced that it had extended emergency liquidity assistance to keep Greece’s financial institutions ticking over, but Greece faces at least one more agonising day in limbo, and its banks will remain shut until Wednesday.
Angela Merkel and Francois Hollande sat down to dinner at the Elysee Palace in Paris, having issued a brief statement in which Mrs Merkel stressed the importance of Greece taking "responsibility" for reforming its economy and Mr Hollande told Europe to show "solidarity" with Greece.
Their brief statement distilled the divisions between the two countries in how to handle the Greek problem, and set the tone for a crucial series of talks on Tuesday.
They will begin with a Eurogroup meeting of finance ministers, and culminate tonight with a summit of the 19 leaders of the Eurozone countries.
If those talks fail, default on an ECB debt repayment due on July 20 could finally end Greece’s membership of the euro, and put the whole future of the single currency in doubt.
By Gordon Rayner,
Chief Reporter, Telegraph, UK
8:10PM BST 06 Jul 2015
“Merkel has lost. Germany has lost.” Not the reaction from a rabidly left-wing Greek tabloid to the country’s referendum vote, but from Benoit Hamon, the former French education minister and ally of Francois Hollande.
For Mr Hamon, the resounding “no” vote was “an opportunity for Francois Hollande to resume leadership” in Europe. Old divisions run deep across the continent, and the Greek crisis brought them right back to the surface as Europe’s financial superpowers squabbled like children at playtime.
Watching gleefully from the wings was the Russian President Vladimir Putin, who took the opportunity to stir the pot by ringing the Greek Prime Minister Alexis Tsipras and offering to strengthen “Russian-Greek co-operation”.
With Greece’s membership of the euro now hanging by a thread, it became increasingly clear as the day wore on that Greece’s present will decide the whole continent’s future.
Major banks now rate a Greek exit from the euro as a probability. The man installed as Greece’s new finance minister believes a Grexit would lead to the “break-up” of the Eurozone. Elsewhere there was talk of humanitarian aid, rather than cash, for the Greek people. Doom-laden language was easy to come by. Answers were not.
Even before the no voters had slept off the hangover from their street celebrations of the night before, the day began with a surprise announcement by Yanis Varoufakis, the shaven-headed Greek finance minister. He told his Twitter followers at 6.31 that he had resigned.
Greece’s rejection of further austerity measures by an unexpectedly high 61 per cent had vindicated his hard line with European creditors, but Mr Tsipras saw him, ultimately, as an obstacle in the road to a new deal with Eurozone countries over Greece's 330 billion euro debt mountain.
Mr Varoufakis said in a typically bullish blog that: “I shall wear the creditors’ loathing with pride.”
In the rest of Europe, the referendum result had gone down like a rotten oyster, but Greece had won praise from such dubious admirers as the former Cuban president Fidel Castro, who said Greece "has won admiration across Latin America" and Bolivia’s president Evo Morales, who called the referendum a defeat against “European imperialism”.
Predictions of a collapse in share prices on European stock exchanges did not materialise; the FTSE opened 1.07 per cent down, but major banks rated the chances of a Grexit at 70 per cent, and Stephanie Flanders, the former BBC economics editor who now works for JP Morgan, said: “A messy Greek exit is now more likely than not.”
The Greek people had spoken, now it was time to hear from for the most powerful woman in the world (and the least popular woman in Greece).
Angela Merkel, a woman constantly trying to reconcile her own passion for European union with German taxpayers’ exasperation at propping up Greece’s corrupt economy, stood firm. She said she would wait to see what proposals the Greek government came up with, but saw no reason to enter negotiations on a new bailout program as things stood. She said as much in a lunchtime phone call to Mr Tsipras, who said he would be presenting a Greek proposal for a deal at Tuesday’s crucial Eurozone summit.
Germany’s economics minister Sigmar Gabriel was rather less measured. He made it clear that unless Mr Tsipras compromised, Greece would only be offered food and medicine.
"For the Greek population, life will get even more difficult in the coming days and weeks,” he said.
“The definitive insolvency of the country now is an imminent threat. We must now cover their needs very quickly, the people there need help and we should not refuse it just because we're unhappy with the result of the referendum.” This meant “humanitarian aid”, not more cash, raising the image of food parcels being handed out on the streets of Athens.
“We can not endanger the stability of the monetary union by Greece enforcing their own national interests unconditionally against 18 other [countries],” he went on. Debt relief would not be offered.
It was a flat contradiction of Alexis Tsipras’s position after the referendum. He had said: “This is not a mandate of rupture with Europe, but a mandate that bolsters our negotiating strength to achieve a viable deal.
"This time, the debt will be on the negotiating table. It is now up to European prime ministers,
meeting tomorrow, to propose any new bailout deal including on debt.”
Meanwhile the European Commission president Valdis Dombrovskis dismissed the referendum as illegal and warned the Greeks that “there is no easy way out of this crisis”. He refused to say whether he expected Greece to stay in the euro.
The European Central Bank had even harsher words for Greece. Ewald Nowotny, a member of the ECB’s governing council, said Greece’s suggestion of a deal within two days was “illusory” and that the no vote had “not made it easier for the ECB to act”.
And the Council of Europe – which is independent of the European Union – warned that the referendum did not meet international standards as it was called with one week’s notice and the lengthy question on the proposed bailout was unclear.
France, it seemed, was Greece's last ally. Mr Hamon’s claims that “Merkel has lost” reflected a desire in the country to capitalise on Greece’s woes by tilting the balance of power between the two main architects of the European Union towards Paris.
The French Minister of the Economy, Emmanuel Macron, rather crassly delved into Germany’s troubled past by urging Europe to avoid another "Versailles moment" with Greece, referring to the humiliating post-war conditions imposed on a defeated Germany in 1919 that later allowed the Nazis to flourish.
With such dark rhetoric circulating, the intervention of Vladimir Putin was the last thing Angela Merkel would have been hoping for.
The Russian President would be all too happy to drive a wedge between European countries, and in a phone call with Mr Tsipras he “expressed support for the Greek people in overcoming the difficulties facing the country”, and discussed the "further development of Russian-Greek cooperation".
It was Mr Tsipras who had initiated the call to Putin, to crank up the pressure ahead of crucial Eurozone meetings, but it nevertheless led to talk among some analysts of Greece joining the Eurasian Union, the Moscow-led trade bloc that includes Belarus, Kazakhstan, and Armenia.
David Cameron, viewing events from outside the Eurozone, was distinctly non-committal. He spoke on the phone to Mrs Merkel and met George Osborne and the Bank of England Governor Mark Carney to discuss the crisis, but his spokesman said: "He thinks that clearly Greece and the Eurozone need to sit down and talk through the implications of the result. They need to find a sustainable solution. It is a matter for Greece and Eurozone partners."
By mid-afternoon Greece had a new finance minister, but it was not immediately obvious whether he would be any more amenable than his predecessor.
Euclid Tsakalotos, a 55-year-old Marxist who was educated at Oxford, was never a fan of joining the euro, and has predicted that a Grexit from the single currency would lead to the break-up of the Eurozone.
George Osborne’s take on the day’s developments as he addressed Parliament at 4pm was that “the prospects of a happy resolution of this crisis are sadly diminishing”. He urged British holidaymakers going to Greece to take plenty of cash and their own supplies of medicines.
The ECB announced that it had extended emergency liquidity assistance to keep Greece’s financial institutions ticking over, but Greece faces at least one more agonising day in limbo, and its banks will remain shut until Wednesday.
Angela Merkel and Francois Hollande sat down to dinner at the Elysee Palace in Paris, having issued a brief statement in which Mrs Merkel stressed the importance of Greece taking "responsibility" for reforming its economy and Mr Hollande told Europe to show "solidarity" with Greece.
Their brief statement distilled the divisions between the two countries in how to handle the Greek problem, and set the tone for a crucial series of talks on Tuesday.
They will begin with a Eurogroup meeting of finance ministers, and culminate tonight with a summit of the 19 leaders of the Eurozone countries.
If those talks fail, default on an ECB debt repayment due on July 20 could finally end Greece’s membership of the euro, and put the whole future of the single currency in doubt.
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