Germany’s Failure of Vision

http://www.nytimes.com/2015/07/09/opinion/germanys-failure-of-vision.html

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BERLIN — THE Greek crisis represents the first real test of German leadership since World War II. Chancellor Angela Merkel of Germany has thus far flunked it, with tragic consequences for Europe.

After the fall of the Berlin Wall, leadership of Europe was firmly in French hands. With Germany preoccupied by reunification, Jacques Delors, then the president of the European Commission, was the moving force behind the Maastricht Treaty, which transformed the common market into a more powerful European Union. With the dawning of the new century, the former French president Valéry Giscard d’Estaing, inspired by the Philadelphia convention of 1787, was chairman of a convention in Brussels that proposed a constitution to enhance the power and legitimacy of the European Union. But French voters (of all people) rejected this initiative in 2005. Since then, European elites have been enhancing their power through treaties and agreements that did not require popular ratification.

Ms. Merkel once joined with President Nicolas Sarkozy of France in leading the European project. But France’s economic decline, and the political weakness of Mr. Sarkozy’s successor, François Hollande, has propelled her onto center stage.

Even a decade in, her inexperience shows. For starters, she has treated the debt crisis narrowly, as an economic problem, failing to consider Greece’s role in defending Eastern Europe against a resurgent Russia. This failure is remarkable, since it was only last February that she went to Minsk, Belarus, to negotiate with President Vladimir V. Putin of Russia on a Ukraine cease-fire. America was largely on the sidelines, astonishing for a matter of war and peace on the Continent.

It is hardly surprising that President Obama called on Ms. Merkel to show flexibility in the debt crisis, given Greece’s critical geostrategic role in NATO. The issue goes far beyond the leftist Syriza party’s flirtation with Mr. Putin as a counterweight to European technocrats in Brussels, Strasbourg and Frankfurt. It is in Germany’s paramount interest to keep the eastern frontier of Europe as far east as possible. The United States is already overextended in the Middle East and in East Asia. If Germany is to deter Russia effectively, it must gain the continuing cooperation of Greece and other NATO allies, like the Baltic countries, that because of proximity are potentially in the line of fire. But instead of heeding Mr. Obama, Ms. Merkel chose the path of humiliation.

Syriza’s bargaining tactics have been erratic, but there was nothing inappropriate about its call for a referendum. If Prime Minister Alexis Tsipras was considering backtracking from key campaign promises, it was only right for him to consult voters at this crucial turning point. To encourage sober deliberation, Ms. Merkel should have urged the European Central Bank to keep Greek banks open during the run-up to the referendum. But the Eurocrats did the opposite, using brute force — choking off the flow of cash — to impress Greece’s vulnerability on its voters. Moreover, the bailout offer expired, so confused voters weren’t even sure what, exactly, they were deciding.

At this point, the International Monetary Fund intervened in a way that could have decisively transformed debate. Last Thursday, it offered the first serious long-range plan for a Greek recovery. In exchange for serious reforms from the Tsipras government, the I.M.F. dangled the possibility of substantial debt forgiveness and emergency loans.

The I.M.F. shift was headline news, since the I.M.F. had been a driving force behind the austerity program for five years. With Mr. Tsipras himself cheering the I.M.F.’s agonizing reappraisal, a positive response from Ms. Merkel might have served to rally the “yes” vote.

But Ms. Merkel instead gave the I.M.F. the silent treatment, allowing Syriza to convince Greeks that a “no” vote was the only way to break out of the austerity trap. They rejected Europe’s bullying.

Ms. Merkel is by no means an innocent bystander to this mess, but it’s not too late for the chancellor to undo her mistake. As negotiations move into the do-or-die phase, she should encourage the I.M.F. to mediate the increasingly bitter dispute. The fund is the only institution that has earned credibility from both sides. Its long-term plan provides the only serious framework that promises to minimize creditor losses and maximize Greek prospects. Ms. Merkel should also urge the European Central Bank to renew emergency funds so that normal financial and banking operations may resume.

This strategy promises something more than an economic breakthrough. It represents Germany’s last, best hope for avoiding a catastrophic re-entry as the unquestioned power on the Continent. Preventing the consolidation of such power in a single country (and in a single leader) was one aim of the European Union’s architects. Will Ms. Merkel have the courage and wisdom to defend their vision?