08:31 GMT25 January 2020
Listen Live
    Get short URL
    Financial crisis in Greece (197)

    German Chancellor Angela Merkel was adamant she would not be the German leader that presided over a Greek exit from the Euro that would plunge the European dream into crisis. She may not yet have failed, but she is damaged.

    After the Greeks voted against accepting the latest demands from its creditors, Merkel is facing her worst nightmare: a possible Greek exit from the euro, a possible exit from the EU completely and loss of confidence in the currency itself. 

    For months, Merkel has been anguishing over how to tackle the Greek problem. After five years of bailouts, the problem is nowhere near fixed and – if anything – worse. Yet she may have herself to blame for vacillating over the issue. 

    When the Greek crisis hit in 2010, Merkel insisted on bringing in the International Monetary Fund (IMF) as part of the troika that included the Eurozone states and the European Central Bank (ECB). There was no clear lead authority. Merkel did this against the advice of her finance minister Wolfgang Schäuble, who has long argued that the EU should solve its own problems. This was the first mistake. 

    As a result, the three institutions put together a scratch package of bailouts and demands that have created chaos. Traditionally, in previous country bailouts, the IMF would have been the lead agency. The troika have pursued a series of mini bailouts with conflicting demands, when – many argue – a managed exit from the euro would have been the better course of action. 

    Clash of Cultures 

    Merkel’s next mistake was a cultural one. When she came to power, Germany was in the grip of economic crisis: high unemployment and a tax and welfare regime that was in need of reform. She set about doing this and her austerity package worked. 


    Do you think Greece should exit the Eurozone?
    • Nai (Yes). Exiting the Euro would help the Greek economy
      88.1% (1544)
    • Oxi (No). It would be an economic disaster
      11.7% (204)
    Voted: 1750
    When Greece began to collapse, due to its appallingly low rate of tax collection and its totally unsustainable welfare and pensions system, Merkel pronounced that her German reform methods be inflicted on the rather laid back Greeks, who had been enjoying the largesse of Euro membership during the good times. Culturally, to try and turn round the Greek tax and pensions system within five years was to hard a hill to climb. 

    One the one hand, she was demanding a stricter package of reforms, based on her own Germanic experience, which would inevitably cripple Greece. While on the other hand, she was determined not to let Greece leave the euro and damage the great European dream. 

    Half of her was Merkel — the pragmatic economist, the other was Merkel — the great European. She has now discovered, in her vacillation, she has not shown the leadership expected of the most powerful woman in the European Union.

    Financial crisis in Greece (197)


    Merkel, Hollande Agree That Results of Greek Referendum Should Be Respected
    Hollande, Merkel to Discuss Greek Bailout Referendum Results on Monday
    Half of Germans Dissatisfied With Merkel's Greek Crisis Policy - Poll
    Holding Referendum on State Debt Greece's Legitimate Right - Merkel
    welfare, economic crisis, austerity measures, economy, Angela Merkel, Germany, Europe, Greece
    Community standardsDiscussion
    Comment via FacebookComment via Sputnik