A Kinder, Gentler Merkel Comes Calling in Athens

The German Chancellor hasn’t given up on her austerity push, but she isn’t about to show Greece the E.U. door

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Hannibal Hanschke / DPA / ZUMA PRESS

German Chancellor Angela Merkel and Greek Prime Minister Antonis Samaras hold a press conference in Athens on Oct. 9, 2012

The reception for Angela Merkel during her visit to Athens on Tuesday was best viewed on a split-screen TV.

On one screen would be the smiling photo ops. When the German Chancellor arrived at the airport, Prime Minister Antonis Samaras of Greece greeted her with a red carpet and a marching band playing the Greek national anthem. At a packed press conference later, Samaras called Merkel a friend, and she said the words he wanted to hear: “I hope and wish that Greece remains a member of the euro zone. As partners, we are working hard to achieve that.”

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On the other screen, however, would be the unsmiling protests. Tens of thousands of Greeks demonstrated across the street from Parliament at Syntagma, the iconic square of the antiausterity movement. A column of army reservists marched and chanted, “Go home, Nazis!” Others, like writer Giorgos Ierodiakonos, declared, “What we’re suffering through now is an occupation. Foreign powers are running our country.”

Merkel didn’t meet the protesters. That’s the way it was meant to be, since more than 7,000 police had been deployed to lock down most of central Athens. The protests were mostly peaceful, aside from the usual clashes between small bands of masked youth and riot police. Tear-gas and stun grenades were also launced when a few protesters tried to break through police barricades.

Merkel’s visit in Athens, her first since the debt crisis began nearly three years ago, symbolizes her new attitude about Greece. Just a few months ago, she was a taskmaster who wanted the country to move faster on austerity reforms in exchange for billions in bailout loans. The loans are saving Greece from bankruptcy and a possible euro-zone exit even as Germany is the biggest euro-zone contributor to those loans. Merkel’s Finance Minister Wolfgang Schäuble not too long ago said Germany was throwing money into a black hole with those contributions. But a few weeks ago, Merkel, who faces elections next year, broke with Schäuble and others and joined a growing chorus of euro-zone leaders who said a Greek exit would irrevocably damage the currency zone.

“She doesn’t want to go down in history as the German who didn’t show leadership and allowed the euro to collapse,” says Gikas Hardouvelis, an economist who served as an adviser to Lucas Papademos, the technocrat Greek Prime Minister who stepped down earlier this spring to make way for early parliamentary elections. “So she is going to do everything she can to make sure that does not happen.”

(PHOTOS: Protests in Athens)

And so is Samaras, a 61-year-old economist from a patrician family, who has been Prime Minister for barely three months. “Those of you who bet that Greece would collapse and the E.U. would be seriously damaged are going to lose your bet,” Samaras said during his press conference with Merkel. However, Merkel did not publicly back giving Greece two extra years, until the end of 2016, to meet deficit targets, something Samaras is campaigning hard to secure from Greece’s lenders, which include the euro zone and the International Monetary Fund.

Samaras adamantly opposed Greece’s first bailout loan package in 2010, angering Merkel and other euro-zone leaders. But after two early elections upended Greece, destroying a corrupt political system but fueling the rise of antibailout parties, including the violent, neofascist Golden Dawn party, euro-zone leaders have decided that Samaras is their last chance. His government has also received a tremendous boost from its energetic Finance Minister, Yannis Stournaras, an Oxford-educated economist widely respected in Europe. With the help of the two other parties in the coalition government — the socialist PASOK and the smaller euro-progressive Democratic Left party — Stournaras is trying to negotiate another $15 billion in austerity measures. However, the new expedients are expected to drag the recession into a sixth year. That’s terrible news in a country where the unemployment rate is at nearly 25% and rising, and incomes have dropped by up to 50%. “Austerity is barbarous,” declared Alexis Tsipras, the leader of Syriza, the main opposition party and a strident opponent of the bailout.

Though Merkel isn’t backing away from austerity, at least her visit will dampen talk, at least for now, of Greece defaulting on its debt and exiting the euro zone, says Yiannis Tsarmougelis, an economist at the University of the Aegean. “At this point, any reassurance helps,” he says.

But it remains to be seen how Greece, even with Germany’s newfound empathy, will be able to bolster itself as its economy degenerates. Merkel insists that Greece is well on its road to salvation and that the sacrifices already made should not be wasted. But many Greeks squeezed by austerity are wracked with doubts. “We’ve been hearing about a light at the end of the tunnels for two years now,” says Stella Mouroutsou, a 25-year-old waitress. “But is it for real this time?”

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