Greece crisis: No mercy for Greece in Angela Merkel's Europe

We, of course, were naïve. We the public, but also the Greeks and their leaders, along with the French and Italian leaders.

All through the long and sorry crisis about Greece's place in the eurozone we thought it was about money — the money the Greeks owed, the debts they built up, the crushing austerity they were obliged to endure as their economy shrank.

All in the quest to cling to the big money, the common currency, the euro.

But no, it wasn't about that at all. Like a stern school mistress, German Chancellor Angela Merkel arrived in Brussels on Sunday to set the silly pupils straight.

"The most important currency has gone missing, and that's trust," she said. "There can be no agreement at any cost."

• Complete CBC coverage of the Greece crisis
• ANALYSIS | Whether Greece stays or goes, the unstitching of Europe has begun

Keep that in mind, class. Trust, not the euro, is what we're talking about.

And this from the woman who said, as the Greek crisis was in its early stages, "if the euro fails, Europe fails."

But on the so-called last-chance weekend, the Germans showed themselves to be masters of the political curveball.

The Greek government of Alexis Tsipras had, in fact, grovelled at the last minute, presenting a brutal new austerity package late Thursday night to Europe's leaders in the hope of getting a new three-year bailout in return.

The French president, François Hollande, whose officials had helped draw up the Greek package, called the proposals "credible and serious." The Italian prime minister, Matteo Renzi, pleaded for political boldness.

"If we stand still, prisoners of rules, regulations and bureaucracy, Europe is over," he said.

Nonsense, said Germany's grim finance minister, Wolfgang Schäuble, when he arrived for the first round of negotiations on Saturday. It is all about rules and regulations when it comes to the euro, and Greece has broken most of them.

'Temporary' Grexit

Just to keep everyone else off balance, as Schäuble arrived at the negotiations, Germany leaked a position paper calling for a "temporary" five-year Grexit.

In other words, kick Greece out of the euro for five years and see if Tsipras and his government — or perhaps another, more centrist regime — can clean up the country's act.

The Germans didn't even put the idea up for discussion. It was enough just to let on they were thinking about it.

In fact, Schäuble has been thinking about  booting out the Greeks for years. This weekend, he hoped, might be the moment.  

The moment clearly wasn't for agreement on anything on Saturday.

So great was the disarray that the proposed all-European Union summit, bringing together all 28 leaders of countries both inside and outside the euro, was abruptly cancelled.  Only the eurozone leaders would meet on Sunday.

This sort of brinkmanship led megastar economist Thomas Piketty, whose book Capital in the 21st Century has sold millions of copies, to dismiss Europe's leaders as "sorcerers' apprentices."

He and several other well-known economists published an open letter calling for an end to the brutal austerity being forced on Greece. They pointed out that Germany's "economic miracle" was given liftoff in 1953 when half of its debts were forgiven by its former war-time enemies.

'Mental waterboarding'

But German leaders this weekend were in no mood for forgiveness, and still less for lessons from a French economist.

The demands, quickly leaked, piled up: a complete overhaul of Greece's tax and pension system, the ceding of $70 billion of Greek assets to eurozone authorities for privatization, and an agreement to allow Greece to become a ward in all but name of the International Monetary Fund and the European Central Bank.

And all of this to be passed by the Greek parliament by Wednesday, according to Finland's finance minister.

The Greek prime minister, Alexis Tsipras, was given this to-do list in a meeting with Merkel, Hollande and European President Donald Tusk. One European official described the encounter as "extensive mental waterboarding."

And if Tsipras couldn't swallow that, there was an alternative: Schauble's temporary Grexit, no longer a leaked position paper but a semi-official European fallback position for the beleaguered Greeks.

The Germans, with their East European allies, tired of paying the bills for a country richer than they were, along with Finland, with a coalition government beholden to a right-wing rump, were driving the show.

The Greeks would stay in the euro only on German terms, and the terms were draconian, fittingly a word of Greek derivation, referring to an ancient Greek lawgiver who punished all offences severely.

The Greeks, not surprisingly, said much of the deal was unacceptable. And so the stage was set for Euripidean drama, a family tearing itself apart, blood on the floor and the walls.

They fought through the night. In the morning they were still wrangling. One major bone offered to the Greeks was the removal of the threat of a "temporary Grexit," but almost everything else the Greek parliament would have to swallow, and fast.

"The rest is okay but not very okay," a Greek official said. "With a gun to your head, you would say okay too."

The gun could still go off. Only when the Greek parliament has accepted the entire bitter package will the German parliament begin to consider the bailout terms. 

Tsipras had little choice — without some sort of deal, Greece's banks and then the country's economy would implode.

So much for the grand European vision of solidarity. So much for the Franco-German alliance that had led Europe for 50 years. 

Merkel had made her choice; Hollande, in this encounter, was little more than decoration in the room.

In the words of the German chancellor, it was all about trust, a word that, when translated into Greek, sounds very much like humiliation.