While Greece’s political leaders come together to ponder Alexis Tsipras’ next steps, a growing French-German split could buy Tsipras and his advisers some time.
All eyes are focused now on Paris, where French President Francois Hollande is due to receive German Chancellor Angela Merkel for talks about Europe’s next steps with Greece. Neither leader has commented publicly yet, but there are clear rifts between the Eurozone’s two largest and most powerful states at lower levels, with German politicians pushing vociferously for Greece to leave the Eurozone, while French ones were more keen to resume talks and keep Greece in.
Even before the referendum, France emerged as the only friendly voice in the currency bloc where others were taking an increasingly hard line.
“I think we still need to look for an agreement, negotiation, reason, and some still need to be convinced of this,” Hollande said before the referendum, sending a message to his European partners not to rush to judgement.
French Finance Minister Michel Sapin told Europe 1 radio station that a Greek exit from the currency union “isn’t automatic”, and that the Greek government should make new proposals to break the deadlock.
However, Siegmar Gabriel, Germany’s vice-chancellor, said Sunday it was “hard to imagine” any new offer being made. Germany’s finance ministers and many senior lawmakers have urged Greece to leave the Eurozone.
The split between France and Germany is most evident in the pressure their politicians are putting on the European Central Bank, which received a request from the Greek central bank to increase the emergency lending assistance to four large banks, according to Reuters. The Germans are dead set against (many would like to see the ECB pull the plug immediately), but Sapin warned Monday that the lifeline mustn’t be cut.
Germany has a key ally in Spain, which doesn’t want to give its own radical left party, Podemos, any encouragement ahead of elections later this year. However, Italy, the Eurozone’s third-largest economy, is more sympathetic towards the Greeks, having more to lose from a fresh bout of market volatility.
What could explain the French solidarity with Greece? It could be longtime historical ties between the two countries.
French and Greek officials say historical ties partly explain the close relationship between the two nations. They hark back nearly 200 years to France’s role in driving the Ottoman Empire out of the Peloponnese peninsula and founding the modern Greek nation.
Many in Greece say the narrative continues with the overthrow of the Greek military junta in 1974, when France supported Greece’s return to democracy. France’s support gave birth to the slogan “Grèce-France-Alliance,” which is still used by the French foreign office to promote diplomatic initiatives.
The French position by numerous academics and economists, including the well-known French economist Thomas Piketty who came out in full force against Germany’s position in the debt relief conversation in an interview with a German magazine.
French domestic politics are also at work— just like they are at work in Germany. Mr. Hollande, a Socialist, faces a rebellion from members of his parliamentary majority who argue he’s signed up to German-inspired fiscal austerity and abandoned his 2012 election pledge to push for pro-growth policies in Europe. “Hollande is trying to appear conciliatory and understanding toward Greece to cater to the left wing of his own Socialist Party,” said Famke Krumbmuller, an analyst at the Eurasia Group, a political risk consultancy.
French voters aren’t likely to punish Mr. Hollande for handing concessions to Greece. The French public is more sympathetic to the country’s plight than people elsewhere in the eurozone, pollsters say. German Chancellor Angela Merkel faces significant opposition within her own party to striking another deal, while many Germans would prefer to let Greece leave the euro.
France could have a significant impact on the debate, according to Shahin Vallée, an economist at the Bruegel think tank who was recently an aide to French economy minister Emmanuel Macron. If Mr. Hollande decides to push for debt relief for Greece, easing the path to an overall deal, Vallée said “It would help Chancellor Merkel” because she would take less heat from her own party and voters.