Credit: @YanniKouts

Time for Greece and Germany to kiss and make up?

It's all smiles and handshakes in Berlin as Merkel and Tsipras meet, but that doesn't mean an end to their Euro-threatening standoff over Greek fiscal reforms.

by Adam Gale
Last Updated: 22 Jun 2015

Greek PM Alexis Tsipras borrowed a trick from Pope Francis when he travelled to Berlin to meet German chancellor Angela Merkel on Monday - he flew economy. The message was clear - we don't have any money, so you'd better relax that hard line on austerity, eh Angela.

Merkel, of course, was ready with a subtle gesture of her own, greeting her debtor with full military honours. There's nothing quite like a welcome from the Wehrmacht in pristine formation to make you feel all warm and toasty inside.

The talks were intended to improve relations, which have soured in recent weeks. On February 20, the Eurogroup (a committee of 19 finance ministers, not a 70s supergroup a la Cream, sadly) agreed with Greece's anti-austerity Syriza regime that it would extend the country's €240bn (£180bn) bailout until June. In exchange, Greece promised to present a series of fiscal reforms that preclude a complete rollback of austerity.

These reforms have yet to materialise in any concrete form, which has caused increasing frustration among the nation's creditors, especially Germany. Matters haven't been helped by a video doing the rounds, apparently showing everyone's favourite economics lecturer turned finance minister Yanis Varoufakis giving Germany the finger.

A German comedian later admitted faking the gesture on the video and taking the words out of context. Apparently Varoufakis, who was talking in 2013, only wanted to stick the finger up in 2010, not now, which of course makes it okay.

While Greek talk of reforms has been distinctly vague, German talk of compromise has been distinctly absent. Greece reportedly needs the bailout funds to be released before some point in April if it's to meet its debt obligations and avoid a default. Tsipras met Merkel and other EU leaders at a summit last week, and yesterday's trip was clearly an attempt to make further progress on a deal.

What did it achieve?

The most important thing to come out of the Greco-German meeting was the tone. They may bash each other in their native presses, but face-to-face they were all smiles and conciliation. 

'We want Greece to be strong economically, we want Greece to grow and above all we want Greece to to overcome its high unemployment,' said Merkel. 'We both have a vested interest in building cooperation based on trust.' Aw, how nice.

Tsipras was just as sweet. 'It must be our priority to break the stereotypes that have been created over the past few years. Neither are the Greeks lazy, nor are the Germans responsible for all the ills that take place in Greece,' he said.

There was one hairy moment - a journalist asked Tsipras about the issue of Nazi war reparations, which Syriza has repeatedly demanded, much to German ire. With Merkel right next to him, Tsipras refused to back down, saying it was 'a moral issue' rather than a material one, but he did make pains to say that Germany now has nothing to do with Germany then. He also said attempts to draw comparisons with the Third Reich 'angered' him.

Despite this moment of tension, the meeting did seem to represent an improvement in relations, or at least the mutual intention to present such an improvement. There was, however, no sign of movement on the issue of fiscal reforms. Tsipras continued to be vague on them, and Merkel continued to insist, albeit less vigorously, that there would be no more money without them.

Don't neglect the value of a kind word, however. When Greek reform proposals are unveiled, they will probably resemble fudge as much as concrete. Whether they will be accepted by Germany and the others largely depends on how Merkel chooses to spin it. It will be a lot easier to claim that the two have come to a mutually satisfactory agreement (but with Greece of course agreeing to pay its way, of course) if they've softened the tone a bit beforehand.

Even if this is a precursor to the current Grexit crisis being averted, it doesn't rescue Greece or Europe from their fundamental predicament. Barring a miraculous economic recovery -  which will in any case be impossible under a programme of austerity and repayment - Greece simply doesn't have the money to pay its creditors back.

Come to think of it, perhaps Tsipras' choice of transport wasn't a gesture after all. 

Tsipras (left) in swine class, courtesy of @ProfessorDrou

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