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Debt talks may be defining moment for Greece, and for Merkel


BERLIN » With Greece embroiled in civil war and the shadow of Soviet domination looming over Europe in 1947, President Harry S. Truman called for "immediate and resolute action," putting up hundreds of millions of dollars to keep Greece in the Western camp.

A failure to aid Greece "in this fateful hour," Truman warned, would have repercussions "far-reaching to the West as well as to the East."

Almost 70 years later, the present bears echoes of the past. Its politics deeply divided, Greece is mired in a terrible depression, and President Vladimir Putin of Russia is doing his best to fan the embers of a new East-West standoff.

But this time, the critical player is Chancellor Angela Merkel of Germany. As the de facto leader of the European Union, she is a crucial voice in deciding whether, in 2015, Greece is worth the cost — 240 billion euros, or about $270 billion, and counting in bailout money — to keep it in the European fold.

The brinkmanship over Greece’s finances is now entering what officials on all sides say is a decisive phase, with a meeting late Wednesday of eurozone finance ministers in Brussels and a two-day summit meeting beginning on Thursday of European Union leaders, where Merkel will once again be first among equals.

Beyond finances, the outcome of those negotiations will have lasting ramifications for European unity and security, raising profound questions about Merkel’s leadership and about her legacy as a primary driver of five years of austerity policies that Greeks blame for pushing them to a precipice.

It is a signature moment that may well define Merkel’s nearly a decade in power, and reveal whether her vision for the bloc transcends Germany’s penchant for rules and its domestic politics, and even whether Berlin is prepared to play a leadership role on the global stage.

Some financial experts say that Europe could absorb a Greek exit from the eurozone, despite the many questions that would raise for creditor nations forced to write off hundreds of billions of euros.

But, political analysts warn, a Greek exit from the euro could set off a chaotic switch to a largely devalued currency. That could almost instantly create a disgruntled and impoverished Greece, run by a far-left government already friendly with Putin, providing the Russian leader with an even firmer handhold to divide Europe.

"Russia uses every opportunity to divide and weaken the European Union," Rosen Plevneliev, the president of Greece’s northern and poorer neighbor, Bulgaria, said in an interview on Wednesday.

"What is happening in Greece is geopolitical as well as economic," he added. "Of course we worry. We follow very closely what is happening."

Merkel is also no doubt worried. Germany "is being forced to widen the prism through which it looks at the crisis," said Mark Leonard, head of the London-based European Council on Foreign Relations. "It’s not just about the economic rules anymore."

Merkel finds herself confronted with at least three crises in Europe: a potential exit from the euro currency by Greece, the danger that Britain might leave the European Union, and a newly assertive Russia.

Often accused by critics of preferring tactics over strategy, or a cool approach over emotional commitment to Europe, Merkel is trying to bolster European unity in each case.

Keeping Greece in Europe has been a strategic consideration since 1947, when Truman declared his commitment — as NATO was being formed — to Greece and Turkey in what became known as the Truman Doctrine.

Greece went through a brutal three-year civil war that erupted after World War II. In the late 1960s and early ’70s, it was ruled by a military junta. In 1981, the country was readmitted into the European fold, joining what was then called the European Community.

In 2001, it entered the eurozone without European, German or other officials raising serious questions about what Athens acknowledged in 2009 were cooked figures.

At a conference last weekend in the Slovak capital, Bratislava, Greece found its way onto an agenda originally focused on threats to the post-Cold War order, like Russian muscle-flexing and the rise of the Islamic State.

Asked about the risk of Greece leaving the eurozone, and possibly even the European Union, Alexander R. Vershbow, the deputy secretary-general of NATO, said: "This could have repercussions for us. We are worried about this."

The United States and NATO, he added, "are not putting on blinders and seeing this as only an economic issue."

Since taking power in January, Greece’s leftist government has played up the wider stakes involved in the debt crisis, a move that some dismiss as a negotiating tactic but that others see as an indication of the readiness of Syriza, the party of Prime Minister Alexis Tsipras, to tilt away from the West.

"Nowadays the role of geopolitics is more important than before," the Greek foreign minister, Nikos Kotzias, said in a recent speech at the University of Oxford in England.

He accused the European Union of abandoning its "culture of compromise" and evolving "into an empire in which the bureaucracy in Brussels, the financial markets and Berlin — the so-called New Rome — play a special role."

The European bloc, he added, must look beyond narrow financial calculations and at the bigger geopolitical picture. "It needs to learn to see beyond the end of its nose, as we say in Greece," Kotzias said.

Frangois Lafond, the executive director of EuropaNova, a research group based in Paris, said that European countries were particularly concerned that failure to stabilize Greece could unleash a torrent of migrants, both Greeks and refugees from the Middle East who continue to flood into the country.

Germany has consistently said that Greece and others must abide by European Union rules, and that exceptions in themselves fray the bloc’s unity. But, seemingly to give herself some political cover, perhaps for a compromise, Merkel has left much of the haggling to her finance minister, Wolfgang Schauble.

She has also emphasized that Greece’s troika of creditors — the other eurozone countries, the International Monetary Fund and the European Central Bank — must sign off on any deal.

If Greece eventually tumbles out of the eurozone, however, Merkel would suffer the blow, not only to her legacy, but also potentially to a range of other policies aimed at preventing the unraveling of European unity, so painstakingly assembled since 1945.

Not least, without a fresh Greek deal, Merkel’s leadership on sanctions against Russia, and on keeping Britain in the European Union, could also wobble significantly.

Emmanuel Macron, the French economy minister, made clear in an interview this week that Merkel had an eye on the geopolitical landscape.

"The chancellor is completely aware of the situation and the consequences, both politically speaking and economically speaking of a Grexit," he said, referring to a Greek exit from the eurozone.

"I think the Germans now will push with us to find a compromise in the coming days if the Greeks decide to accelerate and work for a credible package," he added.

But there is still no certainty of a deal this week that would allow the Europeans to release 7.2 billion euros in credit to enable Greece to pay the International Monetary Fund the 1.6 billion euros it owes by June 30.

Even then, Merkel needs the German Parliament to approve a deal — just as Tsipras needs the Greek legislature to do the same. Approval is not certain in either case.

The stern line of Schauble, Merkel’s finance minister, reflects the skepticism of scores of deputies in the Christian Democratic bloc who will need to be brought on board for any deal.

German and other European politicians feel they have been treated brusquely by Athens, whose harsh rhetoric has forced European Union officials out of their usual mode of woolly compromise forged in closed-door debate.

Norbert Rottgen, head of the foreign affairs committee in Parliament and a deputy for Merkel’s Christian Democrats, said, "the whole way the Greek government has behaved has really damaged the mood" in Berlin.

Still, he expressed confidence that "a large majority" in the Bundestag would vote for a new Greek deal, if one could be reached, though amid much dissent.

The geopolitical worries could tip that balance.

Lafond, of EuropaNova, said such concerns had prodded even European leaders thoroughly fed up with what they see as the broken promises and histrionics of Greek negotiators to keep pushing for a deal to keep Greece in the eurozone.

"If it were not for the geopolitical context," Lafond said. "They would have let them leave long ago."

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