BERLIN — Her critics call her the villain of the Greek drama, a taskmaster forcing a bankrupt nation to its knees. But even as the Greeks reach their breaking point, the leaders of Europe are lining up behind German Chancellor Angela Merkel.
In exchange for a German-led rescue, Merkel has demanded years of harsh budget cuts and painful restructuring in Greece. But after a five-year economic depression in Greece and demands for fresh cuts to extend its bailout, the country’s new leftist prime minister, Alexis Tsipras, has gone on the offensive. He called a surprise referendum for Sunday, asking citizens to finally reject German-backed austerity — with a “no” vote possibly crashing Greece out of the euro zone and slamming global markets.
So firm is Merkel’s line on austerity that on Tuesday she appeared to turn down a last-minute counterproposal by Tsipras for a whole new bailout, arguing that it was no use discussing a fresh deal until after the results of Sunday’s vote. Her tough response came as European finance ministers also rejected a Hail Mary request by Greece to extend its existing bailout, and as Athens missed a 1.5 billion euro ($1.67 billion) payment to the International Monetary Fund — officially becoming the first developed country in the history of the institution to default on a rescue loan.
Greece was set to continue talking on Wednesday with offi cials from the 18 other nations that use the euro, in what seemed like an uphill battle to secure a new lifeline. Tsipras, meanwhile, has been scrambling to win the support of Europe’s leaders. Together, he argues, they can ignite a revolution against Merkel’s fiscal tyranny, which is also crimping spending from Lisbon to Rome, Paris to Dublin.
But Europe needs the deep pockets of its economic powerhouse, Germany, in case a broader financial crisis erupts from a Greek exit from the euro zone. And if there’s a revolt brewing so far, it’s against Tsipras, while Merkel is enjoying a surprising level of support.
Italy’s Prime Minister Matteo Renzi, for instance, has been a long-standing critic of Merkel’s tight fiscal line for Europe. But on Tuesday, he defended her, saying any effort to blame Berlin for a pending Greek tragedy is “a convenient alibi that doesn’t correspond to reality.”
“Mrs. Merkel really tried to find a solution,” he told reporters in Rome, saying a proposal blessed by Merkel and offered to the Greeks last week had amounted to a real compromise.
A day earlier, Renzi dismissed Tsipras’s claim that Greeks could say no to austerity on Sunday and still remain in the elite club of 19 countries that share the euro currency. To make his point, he raised the specter of the drachma — the fragile currency Greece used before adopting the euro.
“The point is, a Greek referendum won’t be the European Commission vs. Tsipras, but the euro vs. the drachma. This is the choice,” Renzi tweeted.
French President François Hollande, who is, like Tsipras, a leftist, has nevertheless backed Merkel’s conservative stance. While calling for continued dialogue, he echoed the German consensus that Athens cannot dump austerity and keep the euro.
And some of the harshest criticism of Tsipras is not coming from the Germans at all, but from nations such as Spain and Portugal that endured painful cuts and have begun to emerge from their financial black holes. Their leaders, not coincidentally, also have strong opponents on the left who would be empowered if Tsipras is seen to be a success.
Referencing the emergency closures and ATM limits enacted by Greece on Monday to prevent a run on banks, Spanish Prime Minister Mariano Rajoy on Tuesday had a message for his Greek counterpart: “Hey, you’re wrong. Extreme positions lead nowhere. So far, all it has led to is that people cannot get their money out of the bank.”
But Rajoy, speaking to Spanish radio Cope, also sounded a note of fear about a possible financial contagion rippling through Europe. “What would happen if Greece came out of the euro? There’s a message that isn’t good, that the euro isn’t irreversible,” he said.
Equally frustrated with Greece are poorer nations within the euro currency union that wonder why Athens should be allowed to give its citizens more generous pensions and sidestep higher taxes when they cannot. Slovakian Prime Minister Robert Fico, for instance, said this week that he would like to see Greece stay in the euro zone, “but not at all costs.”
The leaders of Europe are stepping up for Merkel even as others are pointing a finger of blame — albeit not always directly. Nobel Prize-winning American economist Joseph Stiglitz this week noted that so far, most bailout money to Greece has gone to save the German and French banks that, back in 2010, owned billions of dollars of Greek debt. Now, that debt is largely in the hands of European Union institutions and the International Monetary Fund — bodies, he argued, that were now lending Greece more money so Athens could pay them back.
“But, again, it’s not about the money,” Stiglitz wrote in the Guardian. “It’s about using ‘deadlines’ to force Greece to knuckle under, and to accept the unacceptable — not only austerity measures, but other regressive and punitive policies.”
In terms of legacy, Merkel has perhaps as much on the line as Tsipras does.
As steward of Germany, Europe’s economic powerhouse, the frugal physicist rode to new prominence during the Greek debt crisis, with her methodical, fiscally dogmatic and cautious style dictating the pace of drawn-out talks over how to save Greece and the euro. She leveraged her newfound power, bringing Germany to the zenith of its post-World World II influence in Europe. She became the continent’s decider on a range of issues, including how to respond to Russian aggression in Ukraine.
But her power has been predicated on one important assumption: that her leadership works. A messy exit by Greece from the euro zone, some argue, would prove otherwise.
“A Greek exit from the euro zone would mean that the European Union’s policy of the past years, which Germany shaped to a significant extent, has failed,” said Julian Rappold, an E.U. expert at the German Council on Foreign Relations.
Yet her defenders say Merkel will not be to blame if Greece crashes out of the euro zone; Tsipras and others in Greece should carry that guilt, they say. It is also not likely to hurt the wildly popular chancellor too much at home. One recent poll by Germany’s ZDF TV showed that only 41 percent of respondents wanted Greece to remain in the euro zone, compared with 51 percent who wanted the country out.
But without question, a Greek collapse would put a chink in the Iron Chancellor’s armor, sparking uncertainty about the project to bind Europe ever closer together in an economic and political alliance that she ferociously backs. Fears are especially growing that Greece’s woes may force it out of not only the euro zone but also the 28-nation European Union. For wholly other reasons, Britain is set to vote on whether to stay in the union before the end of 2017 — something that could add a “Brexit” to a “Grexit” on Merkel’s watch.
The European project “is very important to Merkel,” said Tanja Börzel, a political scientist at Free University Berlin. “She does not want to go down in history as the one responsible for its failure.”
Stephanie Kirchner contributed to this report.