Greek Election Reflects a Deep Divide in Europe

http://www.nytimes.com/2015/01/27/world/europe/greek-election-reflects-a-deep-divide-in-europe.html

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BRUSSELS — The Greek election not only strengthened opponents of austerity, it also highlighted a fundamental tension at the heart of Europe’s six-decade-long push to forge a closer union of democratic states: what to do when voters in different countries have different, even opposite, demands.

The victory of Syriza, a left-wing party that has vowed to renegotiate Greece’s debt, was cheered by anti-establishment politicians left and right across Europe as proof that Brussels, at the urging of Germany, has gone too far in pushing spending cuts that impoverish citizens.

But beneath the arguments over austerity is a deeper conflict of democratic wills, between the verdict of voters in Greece, who are desperate for some relief, and those in Germany, Finland and the Netherlands, who do not want their taxes used to underwrite a blank check for countries that get into financial trouble.

“Ultimately, this is a clash of democracies, rather than a clash of ideas,” said Mats Persson, director of Open Europe, a research organization in London. “Voters in Germany and Greece want very different things.”

More than that, he added: “Germans and Greeks have fundamentally different views on how to run an economy. The Greek vote will force a rethink to some extent in northern Europe, and Germany may agree to some loosening of terms, but it won’t fundamentally change its approach.”

Indeed, while Greece’s newly sworn-in prime minister, Alexis Tsipras, declared Syriza’s victory the death knell for austerity, Peter Altmaier, chief of staff of Angela Merkel’s chancellery, ruled out any sharp shift in policy.

“We have pursued a policy which works in many European countries, and we will stick to it in the future,” he told reporters on Monday in Berlin.

In a first test of how the European Union will deal with the political earthquake in Athens, finance ministers of the eurozone, the 19-nation bloc that uses Europe’s common currency, gathered in Brussels late on Monday for a previously scheduled meeting.

They made no concrete decisions on Greece but pledged to begin negotiations with the new government in Athens, whose dominant party, Syriza, made a softening of terms imposed by creditors a central part of its election campaign.

“We are democracies,” Pierre Moscovici, the bloc’s economic policy chief, said at a news conference after the finance ministers’ meeting. “When the people vote, we can’t ignore that vote. There shouldn’t be a division, either a geographical or ideological one.”

Jeroen Dijsselbloem, the head of the group of finance ministers from countries using the euro, said he did “not believe in this north-south divide,” noting that “there are a lot of countries in the north, think of the Baltics; in the south, think of Spain; and Ireland” in the west, and they “have done major reforms, and they are all back on the growth track.”

He added that negotiation with Greece on the terms of a bailout, extended to the end of February under an agreement with the defeated previous government, “may be simple and quick, and it may be slow and difficult, but we don’t know yet.”

But in a sign of just how divided opinion is between Germany and Greece, the biggest-selling German newspaper, Bild, responded to the Greek election by asking how many extra billions the Greeks would cost German taxpayers.

(Not mentioned by the newspaper was the fact that so far all of the bailout money provided to Greece, to which Germany has been a major contributor, has come in the form of loans that have not yet fallen due.)

Angela Merkel, the German chancellor and Europe’s most powerful voice in economic policy, has bristled at her image as an unbending pro-austerity scold, asking the World Economic Forum in Davos last week “not to conduct discussions in black- and-white terms.”

“Often, so-called austerity is pitted against the model of growth and investment,” she said. “I think that is completely false.”

All the same, Ms. Merkel has been unswerving in demanding from European neighbors steps that will cut public spending and introduce budgetary discipline. In Berlin’s view, injecting more cash into Europe’s economy without first securing tighter budgets risks allowing debtor nations to avoid or postpone financial steps they will eventually have to make.

This stern approach enjoys wide support among German voters, even those who vote for her rivals. The center-left Social Democratic party, with which the center-right Ms. Merkel governs in a “grand coalition,” for example, has shown no inclination to cut its political allies governing in Italy or France any slack in meeting European Union budget limits or missing other targets.

“The Greeks have the right to elect whoever they want; we have the right to no longer finance Greek debt,” Hans-Peter Friedrich, a senior member of Ms. Merkel’s conservative bloc, said Monday, according to Bild. “The Greeks must now pay the consequences and cannot saddle German taxpayers with them.”

The outcome of the Greek election provided a second blow to Ms. Merkel’s economic prescriptions, coming on the heels of an announcement last week by the European Central Bank that it would buy up 60 billion euros worth of government bonds, or about $67 billion, starting in March in the hopes of spurring growth.

Mario Draghi, the president of the bank, had been slowly building support for this policy since a meeting of bankers in August in Jackson Hole, Wyo., and he visited Ms. Merkel in Berlin eight days before last Thursday’s announcement, apparently for consultations.

But Ms. Merkel had long opposed a loosening of monetary policy and government spending for stimulus, and her opponents nonetheless regarded the bank’s announcement as a defeat for her tough line on debt.

Tasked with adjudicating between the irreconcilable positions of voters in Greece and those in northern Europe is the European Commission, the Brussels-based executive arm of the European Union and a frequent target of attack by Syriza and anti-establishment parties across Europe on both the left and the right.

Even before the successive blows to the German position, the commission months ago throttled back its demands for spending cuts and other austerity measures.

The bloc’s new economic policy chief, Mr. Moscovici, a former French finance minister, warned in an interview last month that Europe’s post-World War II push for greater integration was “really in danger” because too many citizens now believe “that European policies are only about austerity.”

But Brussels, under pressure from Germany and like-minded northern European countries, has still resisted calls for a retreat from budget targets that critics say have only strangled growth.

Before the Greek election, Jean-Claude Juncker, the president of the European Commission, spoke against the dangers of a “wrong result” and seemed to endorse the incumbent prime minister, Antonis Samaras, saying he would like to see “familiar faces” win.

His spokesman, Margaritis Schinas, on Monday sought to repair the damage. Asked at a news conference in Brussels whether Mr. Juncker would apologize to the winner, Mr. Tsipras, the spokesman noted that Mr. Juncker had known Mr. Tsipras for some time and said “there is ample room for interpretation of what a familiar face is.”

In its only formal response to the Greek election, the commission on Monday issued a wooden statement, declaring that it “fully respects the sovereign and democratic choice of the Greek people,” but offering no words of congratulation to Syriza.

At the same time, it heaped praise on the “remarkable progress” made by Greece “in recent years,” a period of center-right leadership that put in place many of the measures demanded by Brussels but which voters firmly rejected on Sunday.

The commission also indicated that it expected the new Greek government led by Syriza to continue with “reforms,” often a euphemism for cost-cutting austerity measures as well as broader structural changes favored by Berlin. “We stand ready to continue assisting Greece in addressing the remaining reform challenges,” the statement said.

Brussels, said Mr. Persson of Open Europe, “is in a tricky position. The commission is the technocratic expression of austerity,” but “it is not really calling the shots” in a debate dominated by individual countries, notably Germany. “Whenever there is a big debate about money, power migrates to national capitals and the commission becomes a bystander.”