Merkel holds the door ajar

It was late in the evening of June 1 this year when IMF boss Christine Lagarde and ECB President Mario Draghi arrived at the chancellor's office, secretively and under the cover of darkness. The chancellor had invited them to Berlin to talk about - what else - Greece. Angela Merkel did not mention any of this to her finance minister. He was not amused, as the public later learnt. But he kept quiet. Wolfgang Schäuble is a loyal person.

On such an evening, Schäuble would have been an annoyance. In light of what the chancellor hoped to achieve at the meeting, Schäuble's view of the Greek disaster was far too pessimistic. Realistic, he would now emphatically say, and at this juncture one would have to agree with that assessment. For Merkel on the other hand, "Where there's a will, there's a way," still applied on June 1st. She wanted to be a good European, and as the leader of the EU's largest national economy, she wanted to hold the eurozone together. Just as everyone in Washington, Beijing and the Arab Gulf had urged her to do.

Merkel and the blame game

But above all, she didn't want to be the one to get the blame for the collapse of negotiations. Over the past several months the German government has ceaselessly stressed the fact that it would not be Germany, but rather the institutions of the International Monetary Fund, the European Central Bank and the European Commission that would decide whether Athens' reform pledges would be enough to secure new loans. Yet, no one really bought Merkel's promise to turn things completely over to the institutions, especially not in Athens. Quite the contrary. The concept of making financial support contingent upon tough reforms has been seen as a German approach from the beginning.

Merkel was thus forced to accept that she would be in the spotlight, and therefore had to be willing to take the heat. At home, as well as abroad. In parliament, the opposition Left party accused her of being too harsh in her approach, while her own parties grumbled that she was being too soft. Lately, the rift between the Christian Democratic Union (CDU) party boss and her own parliamentary faction has been impossible to overlook. In hindsight, it would have been interesting to see how the Union would have reacted if the Greek government had accepted a compromise. No doubt the concessions offered by creditors would have represented a lousy deal in the eyes of the CDU and its Bavarian sister party the Christian Social Union (CSU), and there surely would have been a fight over it. A big fight.

In tatters

From that standpoint, Merkel must have been relieved that the Greek government broke off negotiations at the last minute, thus saving the German parliament from having to make a decision on the matter. Now the buck stops in Athens. And that gives Merkel the opportunity to patch things up with her party. She will have realized just how important that is at the CDU's 70th birthday celebration held this past Monday. At the party, the Union lionized Federal Finance Minister Schäuble for his tough stance with Athens. And he made no bones about the fact that his relationship with Athens' current government is in tatters.

Now a lot will depend on how the Greek referendum goes on Sunday. If the Greeks heed their government and reject the - already ended - second aid package and its reform requirements, there will be no further negotiations on new loans. Thus alleviating Angela Merkel from having to straddle domestic policy constraints and foreign policy necessities. But then she will have to confront the economic damage that Greece's protracted bankruptcy will inflict upon Europe. Damage for which she is also partially responsible.

Back to square one?

If the Greeks say yes, then it will be crucial to see whether or not Alexis Tsipras and his government step down. Wolfgang Schäuble is not the only person that doesn't want to deal with them. If new partners arrive, a third financial aid package will have to be put together. A difficult task, because then the provisions of the permanent rescue fund known as the European Stability Mechanism (ESM) would apply. The ESM gives national governments - that means Germany's parliament too - a great deal of say in the matter. That would also mean that Angela Merkel would be much more dependent upon her party following her lead in the matter than she is today.

And she would have much less wiggle room than she has had thus far. The CDU boss knows that, that is why she has returned to her earlier harsh stance. She wants to make absolutely sure that the International Monetary Fund, known for its strictness, is on board when the next round of negotiations takes place. Further, Merkel is insisting that EU members must reflect upon the fact that they are a community of laws and responsibilities.

Nobody is talking anymore about the way that is to be found when there is a will. Instead, the euro and Europe are being evoked once again. But this time with a new twist. The euro itself is now the community of laws and responsibility. Ergo, when the euro falls, Europe falls. The Union parties will have been listening to that part very carefully. For it implies that Merkel can only hold the door for negotiations with Greece ajar for an Athens government that actually sticks to the rules. Otherwise, the chancellor will have to close the door.