© REUTERS/Costas Baltas

Late last week, German President Frank-Walter Steinmeier visited Kalamata, the southern city of Greece best known for its olives. He was invited by Greece’s President Prokopis Pavlopoulos, a proud Kalamatan himself; they toured the nearby archeological site of Messene, one of the best-preserved ancient cities in the world, and Steinmeier received Kalamata’s golden key from the mayor.

The city’s left wing parties, however, are strongly against such niceties toward German officials, and they made their voices heard ahead of Steinmeier’s arrival. They are calling for Germany to pay Greece World War II reparations, and it’s a demand the Greek government has taken up as well, again.

On the first day of Steinmeier’s visit to Greece, both Pavlopoulos and Prime Minister Alexis Tsipras told the press—in front of Steinmeier—that Germany must pay reparations to Greece for WWII atrocities.

Tsipras said that the differences between the two countries shouldn’t be swept under the rug but resolved, according to international law.

Under the Nazi occupation of Greece, some 300,000 people perished–around 10 percent of the population at the time. Greek Jews were eradicated. The country’s infrastructure was destroyed and archeological treasures stolen. In Kalamata itself, Nazis rounded up some 520 men on February 8, 1944 and killed them, secretly burying their bodies on the outskirts of the city; families only found out about the mass grave days later. The World War was later followed by a civil war and it took decades for the country to recover.

For all these reasons, there has been a long-simmering debate in Greece on whether the country should take Germany to court.

Steinmeier, blinking in front of the press, apologized for the Nazi atrocities but didn’t comment on the reparations. An answer had already been given by Angela Merkel the previous week, when she denied that any discussions would commence.

Old Resentments and Politics

The awkward dance is nothing new for these two governments. In 2015, when Tsipras’ left-wing Syriza was first elected, a reparations committee was set up in parliament. The committee produced a report in 2016 with Greek claims totaling more than 270 billion euros, including reparations for victims’ family members, for the destruction of the country’s infrastructure, and for the 476-million-Reichsmark loan that the Nazi regime forced the Greek Central Bank to hand over.

Since he started the negotiations on the third bailout, Tsipras hadn’t brought up the reparations issue –until now, that is, and for an important reason: Greece exited the eurozone’s final bailout program in August. Yet the country is still crippled after nearly nine years of a debt crisis that saw the economy contract by more than 40 percent.

Athens might also be taking advantage of deep-seated resentment towards Berlin, a chief driver of stringent austerity measures during the crisis; many Greeks believe that policy has prolonged the crisis and sent thousands of people tumbling below the poverty line.

The Germans are fixed in their position, however. Berlin claims that after the Two-plus-Four agreement struck between East and West Germany and co-signed by France, the Soviet Union, the United Kingdom, and the United States, no further war reparations would be made against Berlin. The Greeks, on the other hand, say they never signed such an agreement.

If Greece’s government wanted to push the matter now, however, a decision by the country’s Supreme Court would give Athens a bargaining chip. According to the decision, any German government property in Greece should be confiscated and given to the survivors of the Distomo massacre, where the SS killed more than 214 people in the village of Distomo, in retaliation for an attack by the resistance movement. If the justice minister were to sign the court’s decision, it would become binding. But no minister until now has dared to do so.

Whether the Greek government is earnestly trying to take advantage of the country’s momentum after exiting the bailouts, or if it’s just trying to cash in votes for next year’s national elections, is not yet clear. Europe, and in turn Germany, still holds immense political and economic power over Greece, even post-bailout: Athens is still paying back its massive debt, and whatever the government does has to be approved by its creditors.  If Greece stays on a hardline course to seek reparations, the situation could escalate.

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© REUTERS/Alkis Konstantinidis

For a cash-strapped country like Greece, an additional €66 million in the state coffers should be welcome news. The country’s economy has made only faltering progress, still reeling from the 2008 eurozone debt crisis. Unemployment remains above 20 percent – youth unemployment about 50 percent – and the economy has contracted by a quarter since the crisis began. Pensions have been slashed and Greeks are bracing for more austerity, with new, highly unpopular cost-cutting measures set to continue through 2020 at least.

So Greece’s €66 million deal to sell missiles and munitions to Saudi Arabia was considered a much-needed boost for Athens. However, it has sparked a heated political debate and created yet another headache for Prime Minister Alexis Tsipras’ government.

Defense Minister Panos Kammenos, who inked the deal, is under pressure to resign after revelations that he had allegedly used an illegal intermediary to negotiate the terms of a deal between two governments, breaking Greece’s anti-corruption laws. The Saudi-Greek pact collapsed last week in parliament after the Committee on Military Equipment revoked its original vote allowing the pact to go through. The opposition said it had lost its trust in the defense minister, and would vote against any other arms deal brought to the committee.

Kammenos, who is the leader of the right-wing Independent Greeks party, Tsipras’ junior coalition partner, continues to deny the accusations. He says the middle man in question is an official advisor to the Saudi government. But an anti-corruption prosecutor has opened an investigation into the possible wrongdoing.

Alexis Tsipras was only able to build his frail majority – 153 of 300 seats – with the help of the Independent Greeks, who have nine MPs in parliament. So the left-wing prime minister has been left with little choice but to back Kammenos.

A History of Bribes

Greece is no stranger to multibillion-euro arms deals. It is, after all, one of only five NATO members already spending 2 percent of its GDP on defense. But some of Greece’s biggest bribery scandals have been linked to weapons contracts. Just last month, one of the country’s leading defense ministers in the 1990s was sent to jail for 20 years for receiving bribes tied to big arms deals with Russia and Germany.

Even so, the latest agreement has proven especially controversial. Opposition politicians and critics question the legality and ethics behind selling 300,000 105-millimeter shells to Riyadh as the government their continues its bombing campaign against Iran-backed Houthi rebels in Yemen, trapping more and more civilians in the ceasefire.

According to a United Nations report, the Yemen war has sparked the worst humanitarian crisis since 1945. The organization’s humanitarian affairs office reports more than 10,000 people have died, half of them civilians.

Greece’s attempt to sell arms to Riyadh came despite the European Parliament’s vote to impose a European embargo against Saudi Arabia. The overwhelming majority of the parliament voted to institute an EU-wide ban on selling arms to the Saudis due to “serious allegations of breaches of international humanitarian law by Saudi Arabia in Yemen.” EU member states are not compelled to adhere to the parliament’s vote, but the pressure on Brussels to pass a binding decree is mounting.

Despite strong condemnation of the humanitarian situation in Yemen, Greece is certainly not the only one trying to score big in weapons deals with Riyadh. Since the war began three years ago, British companies have sold 5.2 billion euros in arms to the Saudis, waved through by the UK government. Germany, one of the world’s largest arms exporters, has also come under fire for selling tanks and heavy military machinery to Saudi Arabia, and for sealing a deal earlier this year with the United Arab Emirates, part of the Saudi-led coalition in Yemen.

An Uncomfortable Situation

In Greece, even if the anti-corruption prosecutor finds no evidence of a misdeed, Alexis Tsipras is facing an uncomfortable situation: after participating in dozens of anti-war rallies in the past, he may well have to abandon the moral high ground to the opposition.

It is not the first time Kammenos has put Tsipras in a difficult position. In a bid to cling to power, the prime minister has been forced to back his government ally through several scandals. Last summer, telephone conversations between Kammenos and a convicted drug dealer were leaked. Kammenos did not deny talking to the convict. The opposition accused Kammenos of meddling in the affairs of the justice system, but the minister said he was trying to convince the man to cooperate with the prosecutors.

Still, Tsipras has stood behind his defense minister. But as support for the government continues to slide and the opposition climbs in the polls, the prime minister’s handling of this latest flare-up could be an important factor in deciding his future.

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© REUTERS/Alkis Konstantinidis

When Alexis Tsipras burst into the spotlight in early 2015, he was seen by most in Europe as too young, too radical, and too left. At just 40, he was fresh-faced and irreverent, and already head of Greece’s Syriza party – a motley crew of radical left-wing groups, from ecologists to Trotskyists.

Across Europe, the prospect of a Tsipras win raised the specter of chaos in Athens and a Grexit, with a domino effect in Spain, Portugal, and Italy looming on the horizon. An earlier article in Germany’s Der Spiegel had included Tsipras in a list of the twenty most dangerous politicians for Europe’s unity, along with France’s far-right Marine Le Pen and Italy’s flamboyant Silvio Berlusconi.

But most Greek voters didn’t agree. They saw Tsipras as the only hope to bring Greece out of its deep misery. He vowed to end austerity, stop further budget cuts, and lift the economy back on its feet. So they gave Tsipras the mandate he needed and Syriza swept to power in January 2015.

Nearly two years later, Tsipras hasn’t delivered on those promises. Instead, he and his government (including his coalition partners, the far-right Independent Greeks, or ANEL) are considered German Chancellor Angela Merkel’s darlings. It’s certainly been an abrupt about-face from the prime minister’s “Go back, Mrs. Merkel” speech on the campaign path to his cozy ties with Berlin today.

A Disappointing Record

Once in office, Tsipras compromised with Greece’s lenders and expanded upon the previous governments’ austerity policies. He privatized public assets, slashed pensions for the sixteenth time, and lifted a state-imposed ban on foreclosing family homes.

But those measures haven’t seemed to have much impact on the ailing economy. Unemployment is gradually falling, but almost a quarter of the population is still out of work. Highly-skilled young Greeks are migrating to Western Europe to find jobs, while businesses are either shutting down or fleeing to nearby Balkan countries with more attractive tax rates. State debt is at a record 179 percent of Greece’s GDP.

Tsipras never managed to win consensus for his austerity plans either. Greeks haven’t taken to the streets en masse, but disillusionment with the government is growing and Tsipras’ popularity plummeting.

According to an October poll by the Athens-based survey group Greek Public Issue, only 14 percent of Greeks would vote for the current union government. Less than a quarter of voters see Tsipras as the best possible prime minister among the country’s leading lawmakers.

Tsipras was dealt yet another blow in late October when Greece’s highest court struck down a new television licensing law. The government had championed the legislation as a way to crack down on Greek oligarchs owning television stations and broadcasting without licenses for nearly thirty years. Syriza claimed these media moguls were influencing elections. But critics argued the law was merely Syriza’s attempt to create its own group of media moguls.

And the prime minister’s cabinet reshuffle in early November has come under heavy criticism as well – his newly appointed ministers will only have three weeks to negotiate with the country’s lenders on important issues like privatizations, a new minimum wage, and collective redundancies.

Now, pressure is mounting and the prospect of early elections or a reshuffling of the government is looking ever more likely. Tsipras, however, continues to bat down the possibility. “We’ll have elections in autumn 2019. The people will judge [us] then, freely and unaffected,” he told a group of European reporters last month.

Voters seem to have a different opinion. An overwhelming majority – 85 percent in Public Issue’s latest poll – doesn’t agree with the government’s economic policies and 45 percent believe that neither of the two largest parties can lead the country out of crisis.

An Uphill Battle

From any angle, Tsipras is facing an uphill battle and it’s unclear if he’ll be able to turn around his fortunes. What’s more, a new round of taxes will go into effect in 2017. Everything from landlines and cellphones to heating oil will carry an additional tax. The effect on industry has already been startling. Tens of thousands of small and medium-sized businesses either shut down or moved to Bulgaria, where the corporate tax rate is a stable ten percent. That is a far cry from the sixty percent in taxes and social security contributions they face in Greece.

The country’s international lenders haven’t lightened the load, refusing to even discuss a debt write-off. The IMF has now acknowledged it made mistakes in its handling of the eurozone crisis, particularly in pushing Greece to follow certain austerity policies. According to an IMF report published last summer, the fund says it should have recognized the Greek economy’s deep dysfunction and pushed for debt restructuring far earlier.

In fact, Greece had been building an inflated economy on shaky foundations over four decades. The two ruling parties, PASOK and New Democracy, allowed a system of patronage to flourish in public and private sectors. Politicians promised jobs to their constituents in exchange for votes. Bribes were the norm for doing business with the government, and they often came from abroad. German companies were also involved.

Meanwhile, Athens kept borrowing to fund its growth while globalization was crippling the country’s manufacturing sector. When the housing bubble burst in the United States in 2008, it was as if a tsunami swept over Greece, drowning the country in its own debt. The sociopolitical landscape in Greece changed swiftly. Systematic cronyism fell apart: As part of the EU-IMF bailout agreement, hiring in the public sector was frozen.

A Blessing in Disguise?

With hindsight, Syriza might have been a blessing in disguise to Greece’s pro-austerity camp. The party can be credited with implementing tough austerity measures that previous governments couldn’t manage – the very same measures that spurred hundreds of thousands of people to take to the streets in 2010 and continue protesting all the way through 2015.
During those demonstrations, Syriza ended up absorbing most of Greece’s union leaders, grassroots movements, and historic left-wing figures. Along came dozens of former PASOK members who were scrambling to save their political future.

As prime minister, Tsipras has managed to tame his party and close ranks. He swept out Syriza’s far-left elements and kept only those that were true to him and his close circle of influence. Those who were forced out now hold Tsipras responsible for ruining the Greek left’s only real chance to steer the country’s politics. Historically, Greece’s left has only had limited political influence, if any.
Meanwhile, Tsipras and the party have undergone significant change, as was evident at the Syriza party convention last October. Athens was covered in banners proudly featuring Tsipras’ face. Some 2800 loyal party members showed up at the convention and clapped throughout the prime minister’s speech, backing all his policies with almost religious fervor.

Praying for an Obama Miracle

With Greek debt ballooning, Tsipras is desperately looking for EU partners to ensure his political survival. But he still hasn’t managed to build a coalition with Italy, Spain, and Portugal to oppose German-driven austerity in Europe.

So the government is now banking on US President Barack Obama’s visit in mid-November to help convince Greece’s lenders to write off some of the country’s colossal debt. Greek media are buzzing with hopes of a miracle from Obama – he has been the only Western leader speaking out against austerity. The US president will push the IMF and EU leaders to ease Greece’s debt load, they daydream. That would certainly help the prime minister pick up some points with his electorate.

Still, it might be too little too late for Tsipras. In a press conference back in 2015, he declared he would only start putting on a tie if he managed to come to an agreement with the country’s creditors and secure a debt write-off. He has stuck to the promise and never worn a tie.

But even if he does succeed in relieving Greece’s debt burden, he should be careful not to get too comfortable in his new clothes. Because the tie may come to symbolize just how much he has compromised – and that could spell political doom.

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© REUTERS/Alkis Konstantinidis

You can read about the European Union’s horrible setback anywhere. At fault is the obstinate and callous austerity policy of Angela Merkel and especially Wolfgang Schäuble. The EU has deteriorated from a warm community of peace and prosperity to the cold detachment of an accountant’s office. One editor-in-chief described the chancellor, in a southern German daily, saying, “Merkel is a phenomenon. Without any apparent talent, she has managed to get far in life by doing nothing at precisely the right moment.” That is clearly nonsense –recall the sheer number of German and EU decisions she has negotiated or imposed since the beginning of the financial crisis. Certainly, one can disagree with her, but one cannot fairly accuse her of inactivity.

Why is this prejudice so persistent? It is likely Merkel’s deliberate and inconspicuous political maneuvering that is so provocative. In fact, the criticism isn’t really directed at Merkel personally. Rather, its target seems to be the complexity and general dullness of political events. Endless summit meetings, always in the routine Brussels setting, with the same morose journalist reporting endless negotiation, bargaining, and further negotiation – the inevitable impression being that a lot of energy has produced very little. It goes without saying that EU politics are especially unattractive.

The giant consensus machine that is the EU is clearly not immune to individual states with a predilection for breaking rules. And that appears to be a strike against the EU. For six months two Greek politicians harangued the rest of Europe, forcing many busy politicians to take part in incessant meetings on the same problem. On the one side, the Goliath EU – and on the other, the tiny Greek David. Naturally, the giant failed to leave a good impression.

That is not an entirely incorrect summary, yet impertinence didn’t quite win outright either. With a surprising and steadfast patience, the EU displayed its greatest strength. From a historical perspective, it is not that long ago that a conflict like the one that pulled Greece out of line would have exposed serious faults and forced nations into bilateral alliances against one another, into military skirmishes, and perhaps even into war. There was not one moment in the past six months where anything of that nature was at stake. The Greek attempt to mix up the EU shattered on the stability of EU institutions. Never did it come to bilateral alliances; the EU remained a unified front. There was no recourse to archaic, 19th-century acts. And not only the governments, but also the peoples of Europe were unconvinced. They did not rise up against Greece’s hubris, but at least accepted (albeit unenthusiastically) the patience of their leaders. Here is the 21st century at its best!

Although Grexit was avoided through last-minute compromise, Europe is not necessarily in a good place. EU representatives, who negotiate so devotedly, have made their bed and now must lie in it. There were many excellent arguments against monetary union and the common currency. The euro was born of will, not necessity – an excellent example of the sovereign power still possible in politics today. It was a half-cooperative, half-antagonistic German-French axis that ensured the euro’s existence. François Mitterrand wanted a common currency to both integrate and control the newly enlarged, economically strong German state. Helmut Kohl, chancellor of a country displaying humility despite an awareness of its resurgent power, agreed – in part because he wanted Europe’s blessing for German reunification.

Today, Greece is undergoing the terminal moraine of this decision’s fatal flaw – the compromises formed in the euro’s construction. Two economic and developmental philosophies were forcibly married, even though they were clearly not compatible: free market orientation and interventionist policy, liberalization and regulation. Much of the euro treaty was left intentionally vague in the hope that the dynamic of the euro would cause these contradictions to simply evaporate. This was only possible because the Germans holding the euro negotiation reins were not “Ordnungspolitiker” (politicians with a strong sense for order and procedural policy-making, such as then Finance Minister Gerhard Stoltenberg), but instead were European integrationists (Kohl and German Foreign Minister Hans-Dietrich Genscher). The Stability and Growth Pact from 1997, underpinning the euro, was an attempt to reconcile these two contradictory goals even in its very title, but has actually conjured dissent.

It has not been quite as Mitterrand had hoped. Germany’s economic strength did not decline; instead it continued to flourish despite turbulence surrounding reunification and the turn of the century. The cleft between north and south grew; in the latter, the introduction of the euro created a spending bubble that harmed economic strength. The EU, now more powerful given its eastern enlargement, today experiences exactly the north-south problem that philosophers and practitioners never envisioned, with folk psychology having been banished to the dustbin of history. These amicable EU agreements have contributed to “Olive Belt” states assuming giant debts they cannot shoulder themselves or even with EU aid. It must be a difficult pill for the Greeks to swallow that today, the leading German politician touting “more Europe” is also the leading Ordnungspolitiker, in contrast to 20 years ago. In trying to do the right thing, Wolfgang Schäuble worked out the central eurozone dilemma with relentless acuity.

It is in no way assured that Schäuble’s path is passable for every eurozone country, even those with the best intentions. In 2009 Germany’s Constitutional Court ruled on the constitutionality of the Lisbon Treaty and was scolded by many for answering maybe. Yes, it is constitutional, but only in a restricted sense: “Unifying Europe on the basis of a treaty between sovereign states cannot be realized in any way that does not allow each of the member states enough room for the political organization of its economic, cultural, and social living conditions,” the court pointed out. Greece chose to follow the eurozone path. While many in the north knew exactly what they were getting into (but held their tongues for the sake of peace), the Greeks clearly had no idea. They believed they had entered a community of guaranteed economic success. Now they are realizing that their desire for the euro has likely cost them any room for the political organization of their economic, cultural, and social living conditions. Neither the EU nor Schäuble should take this condition lightly.

There is little to suggest that Greece, as it lives and breathes, has either the will or the power to rebuild its state. Prime Minister Alexis Tsipras faces a Herculean project in which there will be a strong desire to let the situation degrade further, to delay land registry reform and taxation of the rich, and to rely on both the forgetfulness and the clemency of the EU. Tsipras may wield a lot of power, but any attempts to reform Greece will have to contend with ingrained traditions and mentalities that have stymied progress so far.

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© REUTERS/Pawel Kopczynski

Act I: From March 16th – Looking for Something to Build on

It is March 16, 2015. A long silence between the far-left-far-right coalition in Athens and the German government breaks as Angela Merkel and Alexis Tspiras finally talk on the phone. German politicians and top officials had watched – at first amazed, then irritated – as the new Greek leaders systematically avoided Berlin for weeks. In place of introductory phone calls or visits there had been silence. Tsipras’ team had intentionally sought symbolic gestures to show they were following a new European policy. The German leadership was left waiting.

Initially, there was some understanding for Tsipras’ behavior in Berlin. He and Merkel are considered opposites, at least in Athens. He, the left-wing, 40-year-old elected to pull politics not only in Greece but across the EU to the left. And she, the 60-year-old conservative who has ruled for nearly a decade. Although she is seen in northern Europe as the guarantor of thrifty budgetary policy, in Greece she is the symbol of cold-hearted austerity.

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Read the complete article in the Berlin Policy Journal App – July/August 2015 issue.

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