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The European’s Response to Greek? Merkel and Hollande Determine it

THE LEVANT NEWS — By Brian Parkin* – Angela Merkel, German Chancellor, will be travelling today to Paris for talks with French President Francois Hollande to map out the way forward for Greece after voters upended more than five years of crisis-fighting by rejecting creditors’ terms for rescue aid.

The trip, announced yesterday, Sunday 5th of July 2015, shortly after polls closed in Greece, is “to jointly assess the situation after the Greek referendum and to address the continuation of Franco-German close cooperation in this matter,” the chancellery in Berlin and the Elysee in Paris said in separate e-mails. They will meet at 6.30 p.m. followed by a working dinner.

Merkel and Hollande held a call late on Sunday after projections showed Greeks had resoundingly sided with Prime Minister Alexis Tsipras and answered “No’ to creditors. They agreed that the decision of the Greek people is ‘‘to be respected,’’ and called for a summit of the euro-area’s 19 leaders to be held on Tuesday.

The leaders of Europe’s two biggest economies will help determine the euro-region’s response to one of the greatest challenges to face the common currency are. The other pillar, the European Central Bank, is also due to hold a meeting on that same day with a decision pending on what to do about Greek lenders that are dependent on its emergency credit.

What about the European Consequences?

The ‘‘unequivocal” referendum result “carries consequences not only for Greece, but also for the people in creditor countries and for the whole European project,” Maltese Prime Minister Joseph Muscat said in a statement. “The Greek government has sought to protect its people’s interest using the method it deemed best. People in creditor countries now expect their representatives to protect their interest and the European interest too.”

The euro dropped in early trading on Monday on the result. If confirmed, it will strengthen Tsipras and repudiate leaders such as Jean-Claude Juncker, the European Commission chief who urged Greeks to vote “Yes” or risk tumbling out of the euro.

By unraveling more than five years of crisis fighting, the referendum result poses an existential dilemma for Merkel and fellow leaders over how to resolve an increasingly acrimonious standoff with Greece’s Syriza-led government without alienating domestic voters in Germany and elsewhere.

Helping Greece

Ingrid Arndt-Brauer, who chairs the finance committee in Germany’s lower house, said that she had expected the committee to be summoned Tuesday to begin the process of helping Greece with a new bailout package. The “No” vote rules out any such move.

“Nobody wanted to torture the Greeks — we’re not terrorists — but to help them,” said Arndt-Brauer, a lawmaker with Merkel’s Social Democratic coalition partner. “A ‘Yes’ vote would have signaled a readiness to cooperate — some reforms at least for fresh help. I see no credible basis to help Greece right now, none at all.”

Xavier Bettel, the prime minister of Luxembourg and holder of the European Union’s six-month rotating presidency, said in an interview with Deutsche Presse-Agentur that it is up to the Greek government to make concrete proposals on the way forward.

“Europe is strong and I’m sure that we will also find solutions,” he was cited as saying.

Source: Bloomberg

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