Sunday, June 28, 2015

Merkel - Time to Step Up

USA Defense Secretary Ashton Carter travelled Europe to urge Germany start 'punching', if not necessary above her belt, but at least commensurate with her heavy weight group she belongs to. Chancellor Angela Merkel tried her best and led Western response in constructing the Minsk Accord. But neither the accord nor the peace are holding there while Czar Putin wanders around the globe with impunity.

Question Chancellor Merkel needs to ask herself is given the unchecked aggressiveness of bully Putin, does she want to give one more chance by letting Tsipras's Greece elope with Russia? Though the earlier attempt of Tsipras schmoozing with the Czar did not yield him any bounty, the danger of Putin drawing couple of Billions from his treasury to lend Greece is there. What that can do is, move Greece decisively in the Russian column as buying sympathy of Greek folks in their current dire state is very cheap. What such a scenario can do is it will embolden Greek people to vote 'no' in the referendum, get out of Euro, throw away Western debt obligations, access Russian & Chinese monies (1) as stop gap, bring back Drachma, devalue it substantially and slowly start climbing the economic hole it has got itself into. During the process Tsipras would nationalize Greek Banks, halt any privatization of existing public sector and embark upon massive Socialistic experimentation to collect pieces of broken Greek Economy. Sure, in the end Greek economy cannot be on the sustainable footing unless IMF and ECB prescribed reforms are undertaken. But what Putin style economy management would buy for Tsipras is to show to the world how a communist economic policy brings miracles in the short term. After all like Putin, Tsipras is a politician and faking 'some results' is nothing new in Greece. 

What Angela Merkel needs to evaluate is when Iran Deal is at the critical juncture, does she want to strengthen Putin's hands making the job harder for Kerry and Obama as Russia (followed by China) is the most sympathetic to Ayatollah regime in Tehran. No wonder Obama Administration continues to pressurize Chancellor Merkel.

From American point of view, European NATO partners continue to shortchange on their fair share of defense spending. Ok if that is the case, then at least spend money in keeping Greece in the fold to avoid any strategic realignment strengthening already expansionist Putin's Russia. That is the real charter Chancellor Merkel has - avoid Greece slip in Putin embrace. Ideologically and with his instincts of waging high stake gambles, Tsipras is predisposed to undertake such a path.

Imagine, if Chancellor Merkel says she will allow ECB to spend few billions in back stopping Greek banks until the referendum is done. Idea is regardless intransigence of Tsipras, EU to stretch her hand of help to Greek people. Agreed, the instinct is to punish Greek people who cheated while entering EU and then refuse ever after to accept that they cannot afford 'their style' of public spending on a credit card. Agreed, instinct is to stamp down one up showmanship of Greece politicians who refuse to tell 'truth' to their own people; least it embolden Podemos of Europe. But the strategic goal of West must be that - regardless whether Greek goes out of Euro and adopts new Drachma or decides to stay within Euro; Greece remains firmly aligned with Western economies and interests.

One would say, it is a very cynical way of describing the current situation given that question of 'lives of Greek' people is involved. But it is hard for rest of the world to apportion blame in this case - both Europe and Greek equally seem to be at fault; though one would expect in the end 'proud and prudent people' always want to live within their own means rather on borrowed lagressee. The job for Chancellor Merkel was to 'negotiate' Greece in accepting ECB and IMF terms. For variety of reasons, she and Europe have not been able to do that. As usual, Europe's deeply intertwined History, past grudges, tendency to sustain endless 'talk shop' rather than close the deal to move on and essentially inability of European political system to overcome these divisionary tendencies; all that might be contributing to make the EU-Greece Agreement elusive. Someone needs to tell Greek people that whether they remain in Euro or they chart their own course; running to a 'sugar daddy' is hardly a lasting solution. When Greek politicians are not doing that job, Chancellor Merkel need to don that mantle. It will be effective only when she shuns 'more angrier and bitter' voices in her own country, rises to the occasion and takes the first step of 'help' for Greece people.

Think of it this way - as and when Greece comes out of Euro and charts her own course (and worse, takes help from Putin); the human suffering in Greece will not go away. It will exasperate and all Western Capitals and Parliaments will be clogged with 'humanitarian aid' bills to Greece. That will be inevitable. So why not do it before hand? The urge to 'punish' reckless Greek Politicians should neither make Europe loose the strategic objectives nor make it ignore the magnitude of human suffering involved in all this Greek Drama. There will be 'time' and 'place' to put 'little politicians' like Tsipras in their place; but true leaders do not allow such petty considerations make them loose the eye on larger goals. The world is waiting for such statesmanship from Chancellor Merkel. She and today's Germany are certainly capable of such a feat and that will be one remarkable way for Germany to fulfill her global responsibility. Chancellor Merkel has the reservoir of global goodwill. One like it or not; politically she is among the top in the world and it is still not late for her to spend that political capital to achieve some tangible resolution to the Greek problem which has been tearing apart what is cherished in the grand Euro Project.(2)

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(1) Would China managed AIIB make it's first trench of loan to Greece when it would have come out of the shackles of IMF and ECB?

(2) There is a danger of Greece blackmailing West to get money without undertaking reform by threatening to join Russia. But we are not there yet. All along Greece has been trying to work out it's economic mess with in parameters of ECB and IMF. So there can be an argument other way, but Greece is not blackmailing West for its geopolitical vulnerabilities.

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