http://www.theguardian.com/world/2015/oct/22/three-days-to-save-the-euro-greece
With Greece on the brink of expulsion from the euro, there was one final chance to
avoid catastrophe. Ian Traynor tells the inside story of a dramatic showdown
Ian Traynor
Thursday 22 October 2015 06.00 BST
2,202 289
Shares Comments
Save for later
L
ate on the afternoon of Friday 10 July, as European finance ministers
were packing their bags for Brussels to attend yet another meeting on the
Greek debt crisis, a shocking email from Berlin landed in the inboxes of a
very small number of top officials. Earlier that week, the Greek prime
minister, Alexis Tsipras, had been given an ultimatum by his fellow
European leaders: deliver a radical new blueprint for economic reform and spending
cuts – or face bankruptcy.
Tsipras had delivered a new set of proposals, but before officials could meet in Brussels
to discuss them, the German finance minister, Wolfgang Schäuble, delivered a
preemptive strike: if the Greek government would not undertake more drastic reforms,
the German email said, “Greece should be offered swift negotiations on a timeout from
the eurozone.” There had been speculative talk that Greece might have to quit the
single currency – and sentiment among other euro members had hardened against
Athens in the six months since Syriza, Tspiras’s leftwing movement, came to power –
but until now, no one had formally proposed pushing the country out.
“It was clear,” one recipient said. “It was written
down. It was harsh. It was brutal.” Schäuble, the
most experienced politician in power in Europe, had
gone for the jugular – and the email sent alarm bells
ringing in Paris, Rome, Frankfurt and Brussels.
“It was never officially distributed – only to core
people,” said a senior official involved in the
meetings, who saw the email on the Friday evening.
“It showed a tough stance. It was clear that Grexit
was an option. It meant that on Monday we would
start the preparations.”
Schäuble’s demands gave shape to the weekend of tense negotiations that followed –
the most fateful days in the history of the beleaguered single currency, culminating in
17 hours of talks that dragged out until 8.30 on Monday morning. After five years of
Sign up to the long read
email
Read more
22.10.2015 Three days that saved the euro | Ian Traynor | World news | The Guardian
data:text/html;charset=utf8,%3Cheader%20class%3D%22content__head%20content__headdesktop%20tonal__head%20tonal__headtonefeature%0A… 2/18
crisis that had seen Greece bailed out twice – and the rescue of four other eurozone
countries – the question was whether Greece could remain in the euro, or become the
first country to be kicked out. In order to stay, and secure another bailout, Athens
would need to capitulate to German demands on austerity, overhaul its welfare,
pension and tax systems, and surrender sovereignty over large parts of policymaking.
Schäuble’s proposal popped up on screens in the upper reaches of the European
Commission at around 6pm that Friday. It took the form of a onepage memo – what
Eurocrats call a “nonpaper” – sent by Thomas Steffen, one of Schäuble’s deputies in
the German finance ministry. As well as calling for Greece’s suspension from the single
currency for at least five years, it also proposed that Athens would transfer assets worth
€50bn – a quarter of the national wealth – into a trust fund located in Luxembourg and
controlled by the European Stability Mechanism, the eurozone’s bailout fund. It would
be a massive assetstripping enterprise, modelled on West Germany’s privatisation of
East German state property after the fall of the Berlin Wall in 1989: gradually, the
assets would be sold off, and the proceeds used to pay off Greek debt.
It seemed like a proposal designed to ensure a Greek departure from the euro: one
official from a country participating in the talks recalled that he texted a colleague to
say that there was now a “60% chance of Grexit” – for the first time, he said, he thought
this was not only possible, but likely.
“A lot of people were really scandalised,” a senior diplomat in Brussels said. “It was
incredible. No country could have accepted this.” For Matteo Renzi, the Italian prime
minister, the Schäuble ultimatum was an untenable exercise in German humiliation of
Greece. It had to be stopped.
A lot of people were scandalised by Schäuble's
proposal. It was incredible. No country could
Advertisement
22.10.2015 Three days that saved the euro | Ian Traynor | World news | The Guardian
data:text/html;charset=utf8,%3Cheader%20class%3D%22content__head%20content__headdesktop%20tonal__head%20tonal__headtonefeature%0A… 3/18
There were those among the leaders, central bankers, and 19 eurozone finance
ministers who wondered whether Schäuble was serious. But senior figures at
the European Central Bank, the European Commission and the Luxembourgbased
euro bailout fund, who had been involved in negotiations all along, realised he was not
bluffing – in fact, they had known about Schäuble’s plans for a long time. They believe
that Schäuble made his mind up at the beginning of the year – even before Tsipras was
elected as prime minister – that the Eurozone had to be protected from weaklings:
Greece was a liability and had to go.
At the age of 73, Schäuble exudes authority and gravitas. The Christian Democrat, who
uses a wheelchair after an assassination attempt in 1990 left him paralysed from the
waist down, is the longestserving MP in postwar Germany, and has been at the heart
of government since 1989. He ran the negotiations over German reunification, and he
was there at the birth of the euro at Maastricht in 1992. Schäuble was the man who
translated and articulated Chancellor Helmut Kohl’s shrewd but illformed ideas for
more than a decade, and Kohl’s handpicked successor. But the two men fell out over a
funding scandal that led to a criminal investigation of the former chancellor and forced
Schäuble’s resignation as party leader in 2000. Angela Merkel emerged as the main
beneficiary, and the new party leader. Schäuble felt betrayed by Kohl, and has not
spoken to him since, but his relationship with Merkel is marked by similar tensions.
After a decade in which Schäuble has essentially been the number two in Merkel’s
governments, they still address one another with the formal Sie rather than the
familiar du in German.
proposal. It was incredible. No country could
have accepted this
A senior Brussels diplomat
Advertisement
22.10.2015 Three days that saved the euro | Ian Traynor | World news | The Guardian
data:text/html;charset=utf8,%3Cheader%20class%3D%22content__head%20content__headdesktop%20tonal__head%20tonal__headtonefeature%0A… 4/18
Schäuble’s manoeuvre on Friday 10 July was breathtaking because it broke a taboo:
membership of the euro is supposed to be irrevocable, and Schäuble demonstrated for
the first time that Germany believed that the single currency was not forever – and that
it was willing to push another country out. The revelation scared politicians across
Europe. Someone like Renzi, watching the defenestration of Tsipras, could be forgiven
for thinking: “Am I next?”
Amid the endless arguments about what to do about Greece’s unsustainable debt levels,
the Schäuble paper stated baldly that under the rules governing the euro, there could
be no debt “haircut”. If Greece “temporarily” left the euro, however, there could be
much more generous action to reduce Greek debt. It sounded almost like bribery:
“We’ll pay you to leave.”
JeanClaude Juncker, the president of the European Commission, and his chief of staff,
Martin Selmayr, were taken aback by Schäuble’s email, and they immediately
summoned the two members of the European Commission responsible for the single
currency, Valdis Dombrovskis of Latvia and Pierre Moscovici of France. Juncker also
called President François Hollande in Paris: both men were determined to keep Greece
in the euro, but they worried that if Merkel shared Schäuble’s resolve to eject the
Greeks, they would be powerless to stop her. “Juncker and Hollande agreed this was
dramatic and must not be carried,” said a Brussels source. “But no one was sure if this
was just Schäuble or whether it had been agreed with Merkel.”
Juncker and his top aides only learned of the Schäuble move on Friday evening. Others
who received the email at the same time included the president of the European
Council Donald Tusk, and his main aide, the French leadership, the European Central
Bank chief Mario Draghi, the Dutch finance minister Jeroen Dijsselbloem – who chairs
German finance minister Wolfgang Schäuble on a poster in Athens that calls for a no vote in Greece’s austerity
referendum. Photograph: Michael Debets/Demotix/Corbis
22.10.2015 Three days that saved the euro | Ian Traynor | World news | The Guardian
data:text/html;charset=utf8,%3Cheader%20class%3D%22content__head%20content__headdesktop%20tonal__head%20tonal__headtonefeature%0A… 5/18
the socalled Eurogroup meeting of the 19 finance ministers in the single currency –
and Thomas Weiser, an Austrian economist and senior Eurocrat who heads the
working group of senior officials that prepares the monthly Eurogroup meetings.
Even Merkel was only informed of Schäuble’s bombshell a few hours before his deputy
clicked send. “The position was always carefully agreed within the federal government,”
Schäuble said later, in an interview for a documentary about his career broadcast on
German public television in August. “It was written on a piece of paper in the finance
ministry, that’s right. I discussed this wordforword with the chancellor on the Friday
and I also informed the vicechancellor by telephone. And then we went to Brussels.”
While Schäuble and his fellow finance ministers made their way to Brussels on
Saturday morning, Weiser convened his working group of senior officials – but it had
effectively been hijacked by Schäuble’s proposal. Although the proposal was not
formally discussed, participants said it hovered silently over the session. The meeting
was tense and sombre. But it was nowhere near as badtempered as what was to come.
The three days that followed Schäuble’s shock announcement would see finance
ministers and central bankers locked in negotiations until midnight on Saturday before
giving up in failure. They resumed their discussions on Sunday morning, before
passing the baton to the national leaders – whose summit began at 4pm and ran
through the night for 17 hours.
It was the most intense, most fractious, and most heated debate ever held by those
responsible for the European economy – retold here through interviews with more
than a dozen of the policymakers, negotiators, and witnesses at the marathon meetings
in Brussels. Nobody knew which way it would go until the final hour.
The stakes could not have been higher. Financial markets were waiting to pounce on
any signals of weakness when they opened on Monday morning. Kicking out the Greeks
would have sent a terrifying signal to the weaker countries of the eurozone, a warning
Advertisement
22.10.2015 Three days that saved the euro | Ian Traynor | World news | The Guardian
data:text/html;charset=utf8,%3Cheader%20class%3D%22content__head%20content__headdesktop%20tonal__head%20tonal__headtonefeature%0A… 6/18
T
that they must observe Germanled instructions on sound budgets, austerity, public
expenditure cuts, structural reforms. In short, if they did not become more German,
they might become the new Greece.
But keeping Greece in the euro would be difficult: after five years of the largest bailout
in history, European confidence in Athens had sunk to an alltime low. In Greece,
collapsing standards of living, soaring poverty, endless austerity, and the diminishment
of national sovereignty had culminated in the election of the eurozone’s first
government of radical leftists, who had pledged to defy Berlin and Brussels by rejecting
austerity and yet remain part of the Euro.
In the end, it would come down to an unexpected last‑minute compromise between
Merkel and Tsipras, after 10 gruelling hours of overnight negotiations.
he previous six months of negotiations with the government of Alexis
Tsipras had moved in only one direction – from bad to worse. Since
coming into office in January, Tsipras had shown little inclination to
strike a deal on the creditors’ terms, and both sides were growing
increasingly frustrated.
For the Europeans, the main obstacle was the brash Greek finance minister, Yanis
Varoufakis, whose sex appeal and radical rhetoric had grabbed headlines. Varoufakis’s
opponents had quickly become irritated by what they regarded as his grandstanding in
his monthly appearances before the Eurogroup committee of finance ministers. In his
efforts to split the other finance ministers against one another, Varoufakis succeeded
only in uniting them against himself. At one meeting in February, Varoufakis and
Dijsselbloem had nearly come to blows. Moscovici, the former French finance minister
and European Commission member, had to step in to prevent a fight. “There was a
moment of physical tension between Dijsselbloem and Varoufakis,” Moscovici revealed
in an interview for a documentary that aired on French television earlier this week.
“They accused each other of being liars. I had to intervene,” he said. “It took me a
moment to separate them.” From that moment on, Varoufakis and Dijsselbloem never
spoke again.
It was the most intense, most fractious, and most
heated debate ever held by those responsible for
the European economy
Advertisement
22.10.2015 Three days that saved the euro | Ian Traynor | World news | The Guardian
data:text/html;charset=utf8,%3Cheader%20class%3D%22content__head%20content__headdesktop%20tonal__head%20tonal__headtonefeature%0A… 7/18
By June, the negotiations with Team Tsipras were not just stalemated, they had
resulted in a complete breakdown of trust between the two sides. Negotiations were
going nowhere. The existing €130bn bailout – Greece’s second – was to expire on 30
June. If the Greeks would not act, the creditors would.
On 1 June, with the deadline fast approaching, Merkel sidestepped Schäuble and
Dijsselbloem and called a sudden meeting of key European leaders at her gleaming
chancellery in Berlin: Hollande and Juncker attended, along with Mario Draghi
and Christine Lagarde, the director of the International Monetary Fund.
Merkel’s minisummit began late in the evening and lasted until 2am, resulting in a
fivepage “aidememoire” that outlined what the Greeks would have to do to salvage
the situation. It was the beginning of the endgame.
Merkel’s main aim was to resolve any remaining differences between European leaders
and the IMF and ensure they were all on the same page. “Everyone had different
interests, but this set out the minimum conditions for a deal with Tsipras,” one person
who was present at the meeting said. “We left with the basis for a third bailout.”The
next morning Lagarde phoned Merkel to reaffirm what had been agreed and to stress
that the IMF wanted no more negotiation. It was takeitorleaveit for the Greeks. But
what followed was a frantic month of shifting deadlines, multiple “last chances”,
several ultimatums, four summits and four meetings of the eurozone finance ministers
in Brussels and Luxembourg.
After all this, there was still no deal – and on Friday, 26 June, Tsipras quietly left a
summit negotiation in Brussels at lunchtime after having private talks with Merkel.
Without telling the Europeans, he returned to Athens and, at midnight, called a
national referendum on the terms of a hypothetical agreement with the eurozone,
which he described in a speech as “blackmail” and “humiliating”. Merkel was really
shocked, according to people familiar with her views. Tsipras hoped that the
referendum, which was set to take place on 5 July, would send a powerful message to
22.10.2015 Three days that saved the euro | Ian Traynor | World news | The Guardian
data:text/html;charset=utf8,%3Cheader%20class%3D%22content__head%20content__headdesktop%20tonal__head%20tonal__headtonefeature%0A… 8/18
the other eurozone countries. As the Greek energy minister Panagiotis Lafazanis put it:
“If the Greek people say a big no, it is going to be impossible for those who wield power
not to take note unless democracy no longer exists.”
Tsipras insisted that the plebiscite was not about quitting the euro. For the furious
leaders of the eurozone, that was exactly what it was about: Merkel, and even Hollande
– who had been most sympathetic to the Greeks – declared that a no vote would be a
vote to leave the single currency. On 29 June, Juncker, in the most impassioned press
conference he has ever given, laboured the point against a backdrop of the Greek flag,
sounding as if the Europe to which he has devoted his adult life was dissolving.
But the 30 June deadline lapsed without a semblance of a deal, meaning that Greece
had no bailout and was broke. In the referendum on 5 July, the Greek electorate
listened to Tsipras, rather than the eurozone leaders, backing the prime minister with
61.3% of the vote and delivering a resounding OXI to austerity and the Europeans.
The no vote destroyed what little trust remained between the parties, and Greece’s
departure from the euro moved up the agenda. The European Central Bank froze its
liquidity support for Greek banks and capital controls were imposed. In Greece, this
had an immediate impact, as banks closed and long lines of people formed in front of
the few cashpoints that still had notes left to dispense. The brinkmanship on both sides
had surpassed all expectations.
But there is nothing Europe’s leaders envy and admire more than success at the ballot
box. Tsipras’s 61% mandate told Merkel that the young prime minister was a force to be
reckoned with. “They were impressed by how well he won the referendum,” one senior
official involved in the negotiations said. “They didn’t like the outcome, but they
realised how formidable he is.”
Euclid Tsakalotos replaced Yanis Varoufakis as Greek finance minister a few days before the showdown in
Brussels. Photograph: Angelos Tzortzinis/AFP/Getty Images
22.10.2015 Three days that saved the euro | Ian Traynor | World news | The Guardian
data:text/html;charset=utf8,%3Cheader%20class%3D%22content__head%20content__headdesktop%20tonal__head%20tonal__headtonefeature%0A… 9/18
E
This was the unpromising backdrop to the critical weekend of negotiations. Still, in the
days before the finance ministers were to meet on Saturday 11 July, there seemed to be
a few glimmers of hope. On 7 July, Varoufakis, who had done nothing but exasperate
his fellow finance ministers, offered his resignation. The arrival of his
replacement, Euclid Tsakalotos, a softspoken leftist educated at St Paul’s and Oxford,
eased tensions immediately. “The new finance minister had a completely different
attitude,” said a senior EU official who dealt directly with Tsakalotos. “They started
seeing us as human beings and not as robots. It made things so much easier.”
Tsipras had drastically changed his position on the terms of the bailout. Just days after
the Greek people had rejected Europe’s austerity terms, Tsipras performed a uturn. In
order to secure a third bailout, he produced a new set of tough reform proposals very
similar to those he had just campaigned against. In a dramatic debate that ended in a
vote several hours after midnight on the night of Friday 10 July, the Greek parliament
gave Tsipras an overwhelming majority in support of his proposals. Unfortunately,
these were the proposals that Schäuble had torn to shreds in his own memo – sent only
a few hours before the Greek parliament sat down to vote.
uropean Union summits take place in a large, charmless pink granite
building in Brussels, looking out on a fourlane road that is continuously
clogged with traffic headed into the city centre, two kilometres away.
Known as the Justus Lipsius building, this is the headquarters of the
European Council, representing the 28 member states – and home to
the office of Donald Tusk, the council president, who convenes and chairs the summits.
Around here, they are always “building Europe” – and not just metaphorically; the
entire quarter is a permanent building site. A little way down a pitted and muddy
street, just past a recently demolished Sheraton hotel, sits the glass and steel Lex
Advertisement
22.10.2015 Three days that saved the euro | Ian Traynor | World news | The Guardian
data:text/html;charset=utf8,%3Cheader%20class%3D%22content__head%20content__headdesktop%20tonal__head%20tonal__headtonefeature%0… 10/18
building. It was here, at 3.30pm on Saturday 11 July, that the Eurogroup of finance
ministers sat down with the top officials from the “troika” of Greece’s creditors: the
European Commission, European Central Bank and the International Monetary Fund.
The officials from the European Commission and the European Central Bank
responded positively to the new Greek proposals: they gave the ministers an initial
assessment of the Greek offer, which was viewed as Tsipras’s first serious attempt at
compromise, and a decent starting point for that weekend’s negotiations.
But the eurozone’s fiscal hawks were never going to have it: they would author the
programme, not the Greeks.
This much became clear when Schäuble and Dijsselbloem arrived, and any early
optimism quickly dissipated. “How can we expect this [Greek] government to
implement what it is now promising?” Dijsselbloem said to reporters. Schäuble was
grimfaced, bristling with contempt. As the media scrum clustered at the entrance to
the building for the “doorsteps” that are a curious ritual in the life of a reporter in
Brussels, the German predicted “extraordinarily difficult negotiations”.
The Schäuble paper, by now known to most of the participants, had shredded Tsipras’s
latest offer. It read: “These proposals lack a number of paramount important reform
areas to modernise the country. Labour market reform, reform of public sector,
privatisation, banking sector, structural reforms are not sufficient. This is why these
proposals cannot build the basis for a completely new, threeyear programme.”
Hardliners in the finance ministers’ meeting did not even want to discuss a new
bailout, preferring to move straight to talk of how to handle the fallout from ejecting
the Greeks. Alexander Stubb and Peter Kažimir, the Finnish and Slovak finance
ministers, led the calls for the shift to the socalled Plan B scenario: Greece’s expulsion
from the euro. (It later transpired that Stubb had come to the session with instructions
not to discuss or endorse a new bailout.)
The prevailing mood at the meeting was aggressively antiGreek, with the exception of
the French, the Italians, and Cyprus. Schäuble was measured, but others, one minister
reported, were “unpleasant and nasty” towards Greece.
The only one who directly challenged Schäuble on the fundamental point of ejecting
Over the course of the meeting – described as
'manly' – momentum seemed to be gathering to
kick the Greeks out
22.10.2015 Three days that saved the euro | Ian Traynor | World news | The Guardian
data:text/html;charset=utf8,%3Cheader%20class%3D%22content__head%20content__headdesktop%20tonal__head%20tonal__headtonefeature%0… 11/18
Greece from the currency was Michel Sapin, his French counterpart. Publicly, Sapin
would later dismiss the Schäuble paper as “playing to the gallery”. Privately, he told the
conference there was no legal provision for a country to leave the currency, temporarily
or otherwise. Grexit was not an option. He was right, but this was a legalistic argument:
Greece could not be formally ejected, but things could be made so difficult for Athens
that it had no choice but to quit.
Over the course of the meeting – which one participant described as “manly” –
momentum seemed to be gathering to kick the Greeks out. Schäuble did not say much,
but after a few hours, he came up with another intervention calculated to shock. He
proposed that all the Greek functionaries working in EU institutions should be ordered
back home to Athens to rebuild their own country – on the grounds that they were
precisely the kind of people the Greek state needed to overhaul its notoriously
dysfunctional public administration. As protesting voices were raised, Schäuble,
unrepentant, said: “I’m the only one being creative here.”
The most substantial challenge to Schäuble came from Mario Draghi. He insisted that
€25bn in the bailout package had to go to recapitalising Greece’s four main banks;
Schäuble complained that €37bn had already been poured into these same banks in
2012, and there was no point repeating the exercise. If the banks were to be shored up,
Schäuble insisted, their own investors, shareholders and depositors should be bear the
costs of recapitalisation. But Draghi, supported by the commission, argued that such a
“bailin” would trigger a mass exodus of funds from Greece, where capital controls and
withdrawal limits had already been imposed to limit a run on the banks.
Mario Draghi, who had declared three years earlier that he would do “whatever it takes
to preserve the euro”, would not countenance a Greek exit, while Schäuble remained
the most articulate proponent of ejection. The French and the Italians were surprised
by how serious most of the other countries were about kicking Greece out. But
Dijsselbloem skilfully steered the discussion away from a direct recommendation and,
with his team, drew up a statement in the early evening. It was rejected by the
hardliners – including the Germans, Slovaks, Finns and Dutch.
22.10.2015 Three days that saved the euro | Ian Traynor | World news | The Guardian
data:text/html;charset=utf8,%3Cheader%20class%3D%22content__head%20content__headdesktop%20tonal__head%20tonal__headtonefeature%0… 12/18
At 7pm, realising that things were going nowhere, Dijsselbloem called a break. As the
meeting of finance ministers shuddered to a stalemate, the media went into overdrive.
Schäuble’s kickouttheGreeks proposal had been leaked – and published on the
website of Germany’s leading conservative paper, the Frankfurter Allgemeine Zeitung
(FAZ). Officials and spokespeople were deluged with questions about the German
ultimatum, but they insisted uneasily that there had been no discussion of Schäuble’s
proposed fiveyear “timeout” for Greece. Witnesses to exchanges between the
ministers occasionally surfaced looking panicked. When accosted by reporters they
were lost for words.
Through the entirety of the euro crisis, Schäuble’s finance ministry in Berlin has been
the most promiscuous leaker of documents on Greece – so it was widely assumed that
Schäuble’s office had leaked the paper to Thomas Gutschker, a reporter with the
Sunday edition of the FAZ, to step up the pressure on Greece. When asked, Gutschker
declined to reveal who had leaked the paper – but three other sources, all of them
German, pointed the finger at Juncker’s German chief of staff, Martin Selmayr.
According to these sources, Selmayr had hoped to discredit Schauble’s hardline
proposal by revealing it publicly.
When the finance ministers reassembled at midday on Sunday, before each of them
was a fourpage paper that Dijsselbloem and his team had put together after the
ministers had gone to bed the night before. “Dijsselbloem and Wieser decided to throw
everything into the document,” one of the participants said, “including everything that
was not agreed.” The document included the terms of the Schäuble memo, including its
two key demands – the five year timeout and the Luxembourg trust fund to sell off
Greek state assets – in spite of the fact that several officials protested that it had not
The Bank of Greece in Athens on 7 July. Photograph: Angelos Tzortzinis/AFP/Getty Images
Advertisement
22.10.2015 Three days that saved the euro | Ian Traynor | World news | The Guardian
data:text/html;charset=utf8,%3Cheader%20class%3D%22content__head%20content__headdesktop%20tonal__head%20tonal__headtonefeature%0… 13/18
been formally discussed the day before. The contentious points were put in square
brackets, meaning they had not been agreed. Nonetheless, their inclusion strongly
suggested that Schäuble had insisted they remain – and that he still had broad support.
In fact, that morning, before Merkel departed for Brussels, Schäuble held a
teleconference with her and Gabriel, the vicechancellor; he was sufficiently confident
of their backing to insist that the timeout clause remain an option.
At 4pm on Sunday 12 July, Merkel, Tsipras, and the other 17 Eurozone national leaders
arrived for their summit meeting – along with the heads of the European Commision,
the European Council, the European Central Bank and the IMF. The mood was already
foul. The finance ministers’ meeting the day before had failed to break the impasse, and
the arriving politicians were tense and grimfaced.
As late as Sunday morning, it wasn’t even clear who was attending. Earlier in the week,
Tusk had declared Sunday could see a “lastchance” gathering of the full European
Union – including noneuro members such as the UK – which would have signalled the
end for Greece, with a meeting devoted to preparations for the aftermath of the
country’s departure. But the Saturday finance ministers’ meeting had been so
cantankerous and emotional that Tusk decided at the last minute to assemble only the
eurozone leaders, in one last attempt to iron out their disagreements. He was very
worried: acutely aware that the Saturday sessions were tantamount to failure, and
determined to avoid a complete collapse. The national ambassadors of all the EU
countries had also been scheduled to meet for a session devoted solely to dealing with
what would come after Greece left the euro. Tusk cancelled it.
The leaders’ summit took place on Level 80, the secure top floor of the dreary council
building – a large space with wood panelled walls, where delegates sat around a big
oval table or wandered off to confer or make calls – and in Tusk’s smaller office, three
floors below. Though there were more than two dozen people in attendance, the
meeting essentially revolved around a negotiation between Merkel and Tsipras,
mediated by Tusk and François Hollande. The first of their sessions came about three
hours into the meeting, when Tusk called a break and summoned the other three into a
smaller discussion.
22.10.2015 Three days that saved the euro | Ian Traynor | World news | The Guardian
data:text/html;charset=utf8,%3Cheader%20class%3D%22content__head%20content__headdesktop%20tonal__head%20tonal__headtonefeature%0… 14/18
“It’s like extensive mental waterboarding,” said a senior official at the time. “They
[Merkel and Hollande] need to see if he [Tsipras] is really going to do it.”
Most of the leaders of Europe were mere bystanders to history in the making. They
dined. They sipped white wine, made small talk, and napped, while their aides waited
in the delegates’ rooms on other floors. The two Italians, Renzi and Draghi – prime
minister and central banker – had time to get to know one another better. Juncker,
when not sleeping, sat with Draghi to study the complex arithmetic for a bridging loan
to forestall a Greek default on its debt repayments. Lagarde and Mark Rutte, the Dutch
prime minister, were occasionally engaged by Tusk. The rest idled. The president of
Lithuania and the prime minister of Slovenia got fed up and left early.
“We’d never seen anything like this,” one person said. “Three or four people meeting
separately and making decisions, and everyone else with nothing to do, some of them
dozing. People don’t like that. It left scars.”
Merkel and Tsipras spent more than 10 hours cloistered away from the summit, locked
in their own psychodrama, which would make or break the euro. Tsipras,
uncomfortable with economic detail, asked if he could bring in his finance minister,
Euclid Tsakalotos. No problem, Merkel said – but then, of course, she would need
Schäuble. Faces dropped, then lightened. She was only kidding.
The Greek prime minister Alexis Tsipras talks to European Commission president JeanClaude Juncker, French
president François Hollande and Belgian prime minister Charles Michel on 12 July, 2015. Photograph: Geert
Vanden Wijngaert/AP
Advertisement
22.10.2015 Three days that saved the euro | Ian Traynor | World news | The Guardian
data:text/html;charset=utf8,%3Cheader%20class%3D%22content__head%20content__headdesktop%20tonal__head%20tonal__headtonefeature%0… 15/18
Schäuble’s timeout was quickly deleted from the paperwork as gratuitous. If there was
going to be a deal, there would be no Greek exit from the euro. If the summit failed, this
would be the outcome in any case: there was no need to spell it out.
Tsipras’s own red lines quickly became clear: first, he did not want the IMF involved in
another bailout – or at least wished to be spared the embarrassment of requesting IMF
assistance. Second, he did not want to submit to the creditors’ insistence that he roll
back some of the legislation passed by Syriza – to reverse some pension cuts, halt
privatisation, and reinstate some publicsector workers – on the grounds that it had
not been approved by the eurozone. Third, and most significantly, he could not accede
to Schäuble’s Luxembourg trust fund, which he saw as an outrageous European
attempt to pilfer the Greek family silver.
At one point late on Sunday night, Tusk summoned Rutte, the Dutch prime minister,
into a smaller meeting with Merkel, Hollande and Tsipras, who an observer described
as “very unhappy”. Rutte had a particularly tough position on the demand that Tsipras
roll back the legislation the eurozone had not approved; Tusk saw him as a
representative of the eurozone’s northern and eastern fiscal hardliners, along with the
Finns, Slovaks, and Baltic states. It was Lagarde who helped fix a formula to defuse the
legislation issue, according to participants in the negotiation: brought in by Tusk to
discuss the matter with Tsipras, she proposed that while some of the laws would have
to be undone, others could survive on “humanitarian grounds” – to cushion the impact
of austerity for the poorest Greeks.
By three in the morning, things looked bleak. The Greeks and the Germans were
immovable. The French and the Italians were alarmed. And the rest of the eurozone
countries – including Portugal, Ireland, and Spain, which had suffered through the
austerity conditions imposed by their own bailouts – were increasingly unwilling to
make concessions to Greece. The willingness to do Athens any favours had melted
away.
At this point, Hollande left the meeting and took 10 of his aides, including Sapin, to the
office of the Italian delegation. The French president knocked on the window: “Is
Matteo there?” He went in and asked Renzi: “What should we do about Greece?” After
half an hour of conversation, Hollande and Renzi resolved that Greece had to stay in
the euro at all costs. Renzi then went to Merkel and Tsipras, and implored them to
strike a deal. “Angela,” he told Merkel, “now you have to decide.”
Half an hour later, at 4am, Tusk was confident enough that an agreement was near that
he reconvened the entire summit. A breakthrough appeared to be at hand, although the
Greeks were still muttering about the IMF and the Luxembourg trust fund. But then
Tsipras disappeared for half an hour to make phone calls to Athens. When he returned
at 5am, he was pale and intransigent. No deal. Merkel was similarly stonyfaced. But
22.10.2015 Three days that saved the euro | Ian Traynor | World news | The Guardian
data:text/html;charset=utf8,%3Cheader%20class%3D%22content__head%20content__headdesktop%20tonal__head%20tonal__headtonefeature%0… 16/18
A
Hollande and Tusk would not countenance failure. Tsipras told them the trust fund was
“impossible and unacceptable”.
Tusk again broke up the summit and ordered the Greek, German and French leaders
into another session. It was the most brutal of the entire weekend – and came
perilously close to forcing Greece’s expulsion from the euro. For three hours, the
leaders debated Schäuble’s €50bn Luxembourg trust fund – but none of those present
could agree on the figures or the structure. Tusk feared he was presiding over a historic
failure. By 6.30am, he was resigned to defeat: he had concluded that Merkel and
Tsipras were more concerned about not returning home looking like losers – they were
actively seeking ways not to agree.
lmost everyone except Merkel and Tsiprasregarded the final sticking
point – the trust fund – as faintly ridiculous. The €50bn sum was seen
by the others present as an irrelevance: nobody could imagine where
Greece was going to find €50bn in assets to privatise, and the idea of
surrendering them to a trust fund in Luxembourg was an insult to which
no government could possibly agree. “It is not possible to generate this €50bn,” one
senior official involved in the negotiations said. “Everyone knew this.” Both Lagarde
and Juncker regarded the idea as “symbolic, but ridiculous,”. Other participants
recalled that they were astounded to see the trust fund become the ultimate obstacle to
an agreement after five years of crisis, describing it as “stupid”, “nonsensical” and
“senseless”.
But for Merkel it was a bottom line, an achievement to take home to an increasingly
sceptical parliament. For Tsipras, the fund was damaging, but if he had to swallow it,
he insisted that it be based in Greece rather than Luxembourg, so he could at least
claim some kind of sovereignty over the arrangement. Merkel conceded the point, but
she would not agree to Tsipras’s request that half the fund be earmarked for investment
in Greece; she would only allow €10bn to be diverted for that purpose, while the other
€40bn would pay off Greek debt and aid its ailing banks. There was still no deal.
Tsipras faced returning home to a calamity. Merkel wanted to give up, and suggested
holding yet another summit two days later.
Tusk told Merkel he could not believe the
eurozone was flirting with catastrophe because of
a paltry €2.5bn
22.10.2015 Three days that saved the euro | Ian Traynor | World news | The Guardian
data:text/html;charset=utf8,%3Cheader%20class%3D%22content__head%20content__headdesktop%20tonal__head%20tonal__headtonefeature%0… 17/18
And then Tusk’s phone pinged. It was a text from Rutte, the Dutch prime minister. He
and several other leaders who had been sidelined in the negotiation but were carefully
following its progress had assembled a proposal they thought could break the deadlock
– Rutte’s text to Tusk suggested that Merkel’s €10bn pot for investment in Greece be
increased to €12.5bn. Hollande tried to talk her into it, but she balked. Tusk and
Tsipras agreed to the new formula, said to have been devised by the Portuguese prime
minister, Pedro Passos Coelho.
Tusk appealed to Merkel’s sense of history, of her legacy. He told her he could not
believe that the eurozone was flirting with catastrophe because of a paltry €2.5bn. The
European Union was on the brink of political suicide. Merkel agreed to talk about it, to
run through the figures and look at different templates for structuring the fund.
A deal was nearly at hand. At 6.30am, Tsipras asked if another member of his team
could join the final session to help draft the compromise deal. Heads turned to see
Glenn Kim, a Californian investment banker of South Korean heritage, walk into the
room – the only one of the Greek negotiators wearing a tie. “It was such a strange
thing,” one senior official recalled. “He came straight into the leaders’ meeting. People
were surprised – but by that time it was just so late, people were so tired, and it was
just one more strange thing.” Kim, a 20year veteran of Lehman Brothers, who had
been sent to London to wind down the bank’s European operations after its collapse,
had a sure grasp of the arcane detail of financial catastrophe – which is why he had
been hired by Varoufakis, earlier in the year, to beef up an inexperienced Greek team in
their negotiations with European creditors.
Journalists covering the at 1am on 13 July. They ended at 8.30am that day. Photograph: xh/Xinhua Press/Corbis
Advertisement
22.10.2015 Three days that saved the euro | Ian Traynor | World news | The Guardian
data:text/html;charset=utf8,%3Cheader%20class%3D%22content__head%20content__headdesktop%20tonal__head%20tonal__headtonefeature%0… 18/18
Now he had joined the negotiation, along with Merkel, Tsipras, Tusk, Hollande and
Tsakalotos, for the decisive final steps. After 17 hours shut up together in the European
Council headquarters, the eurozone leaders had finally struck a deal. At 8.39 on
Monday morning, the Belgian prime minister, Charles Michel – the first leader to grab
his phone – sent a oneword tweet: “Agreement”.
In the end, Tsipras had capitulated to a script written in Berlin – reneging on his
election pledges and splitting his own party, which did not prevent him from winning
the snap election he called in September. But the bigger question may be what the
chastening experience of that tense weekend did to Germany and Europe. Schäuble’s
bid to banish Greece from the eurozone had not succeeded, but it had resurrected the
spectre of German bullying – the outcome of the summit, Munich’s Süddeutsche
Zeitung wrote, amounted to a demonstration of German power at the expense of
German leadership.
Merkel had listened to Schäuble, opted not to stop him, and then in the end, overruled
him – perhaps less for the sake of saving Greece and the euro and more to avoid being
blamed for the unforeseeable consequences. When it was all over on Monday morning,
her reflections on the deal were typically pragmatic: “The advantages,” she reasoned,
“outweigh the disadvantages.”
Additional reporting by Alberto Nardelli
Illustration by Ellie ForemanPeck
Follow the Long Read on Twitter at @gdnlongread, or sign up to the long read weekly
email here
Keine Kommentare:
Kommentar veröffentlichen