First Dr. Schäuble came for the Greeks and I did not speak up…


Russell Bruce considers the implications of the proposed Eurozone Greek settlement

Power and influence are what drives politicians. Money is never far behind, an easily created commodity today, the real issue being to whom it actually belongs.

The situation Greece finds itself in is the result of these preoccupations. What is senselessly ignored is the importance of social cohesion throughout Europe and the geopolitical implications the ostracisation of Greece could lead to. Austerity is a Europe-wide issue and we are not yet winning the arguments.

German finance minister Wolfgang Schäuble
German finance minister Wolfgang Schäuble

The events at Eurozone and EU meetings over a fraught weekend indicate that the bully in the room was the hard line German Finance Minister Wolfgang Schäuble.

No one should think the endless deadlines and fractious summits are at an end. A country that is in debt and needing further finance is at some disadvantage and has to agree to conditions for additional finance. The Greeks had accepted that.

Schäuble wanted more. Yanis Varoufakis on Monday posted on his blog a short summary of an article due to appear in Die Welt on Thursday. Varoufakis is asking the informed readership of this influential newspaper two simple questions – Dr Schäuble’s Plan for Europe: Is this a Plan that you approve of? Do you consider this Plan good for Europe?

Die Welt readers will probably be divided in their response. It is well reported that the public mood in Germany was against a further bailout. It is no secret Schäuble wants Greece out of the Eurozone and he made that quite clear to Varoufakis in earlier negotiations.

Unknown-1But has Schäuble overplayed his hand? Far from the excluded, former Greek Finance Minister, Varoufakis being a disruptive participator in earlier talks, this weekend’s events have placed that role firmly on Dr Schäuble’s shoulders.

The Financial Times reported: “The Eurogroup meeting on Saturday night was suspended after German finance minister Wolfgang Schäuble lashed out at Mario Draghi, the European Central Bank’s president, during a tense stand-off.”

Luxembourg Foreign Minister, Jean Asselborn, gave a stern warning to German politicians saying it would be a ‘catastrophe for Europe’ if it pushed for Greece to leave the Eurozone. His comments came after Schäuble floated the idea of a temporary five-year exit from the Eurozone. In an interview with Germany daily Sueddeutsche Zeitung, Asselborn did not mince his words: “It would be fatal for Germany’s reputation in the EU and the world if Berlin does not now seize the chance that there now is with the Greek reform offers.”

Angela Merkel - Europe's most powerful woman is playing a long game
Angela Merkel – Europe’s most powerful woman is playing a long game

Reuters reported ahead of publication Asselborn’s further concern: “If Germany pushes for a Grexit it will provoke a profound conflict with France.” EU stability relies heavily on broad agreement between Germany and France. This axis is at the core of all change of direction in Europe. The UK is little considered.

French President, François Hollande, is not happy with Schauble’s brutality. His intervention on Sunday helped give something back to Greece but the damage to Europe and intergovernmental relations is beyond strained. Asselborn’s warning was also pointedly aimed at Angela Merkel to beware the influence and ambitions of her finance minster. With Greek dignity ground into the dust she intervened to acknowledge Greek debt would have to be restructured.

The role of a joint programme between Greece and German bank KfW to promote enterprise in Greece through a 100 million Euro fund indicated a major conflict of interest for Finance Minister Schäuble as chairman of KfW. KfW is a wholly owned German government development bank. There is nothing wrong with that and it has laudable aims in promoting green energy and collaboration in Germany and abroad. That it might be used as a vehicle to take Greek state assets out of government control in the privatisation of €50 billion state holdings, indicates just how far Schãuble plans to control the future shape of the Eurozone.

Tsipras: rearguard action
Tsipras: rearguard action

The irony of a German state-owned bank attempting a takeover of the privatisation of Greek state assets is beyond absurdity. Greek Prime Minister Alexis Tsipras won that round and the independent privatisation unit will be based in Athens.

Over and over again Greek responsibility was called into question and the vital ingredient of any agreement – trust, or lack of it – was thrown at Greece. Greece has not been the most successful of states in dealing with reform but a serious partnership must exist with some oversight that enables Greece to be instrumental in driving a way back to sustainable growth. Schãuble would deny Greece even that.

A look at the values of KfW bank in relation to Schãuble’s agenda is instructive. The latest KfW annual report includes the following: “We take responsibility and support people who pioneer with their projects – for the environment, to protect the climate and to secure our energy supply. Their innovative achievements are an important driver for us all in Germany, in Europe and around the world. We know that change begins with responsibility.”

Trust must exist for responsibility to be present. What is growing, and a threat to Germany’s interests, is distrust of Schãuble’s agenda with implications for Merkel, as Asselborn has warned, and for German exports and her people.

KfW bank’s vision is encapsulated in six phrases (my interpretation in italics):

Taking responsibility means promoting new beginnings

Schãuble would deny Greece a new beginning

Taking responsibility means promoting pioneer spirit

Schãuble seems to favour the domineering spirit

Taking responsibility means promoting confidence

Schãuble has not learnt that you cannot promote confidence through brutal controls

Taking responsibility means promoting cohesion

Does Schãuble understand cohesion?

Taking responsibility means promoting drive

Only if Schãuble is driving

Dr Schãuble is probably the world’s most powerful finance minster. As such, he should show a more conciliatory approach in his dealings with other states. Europe is probably more divided today than at anytime in its post WW2 history. This does not augur well for the future of a currency with a flawed construction or a Europe that needs respect and cohesion to be binding articles of faith.

The readers of Die Welt will decide if Dr Schauble has over-played his hand. The ever patient Frau Doctor Merkel may just be waiting for the right opportunity to put her finance minster back in his box.