The First Defeat

German-Foreign-Policy.com:

ATHENS/BERLIN/PARIS (Own report) - Germany’s imposition of its austerity policy suffered a first serious defeat in yesterday’s Greek referendum. Over 61 percent of the Greek voters rejected an agreement with the creditors that would have provided for a continuation of the German austerity measures. This defeat is all the more serious for Berlin, because German politicians had massively interfered in the Greek referendum debate. The decision whether there will be new negotiations - and if so, under what conditions - must now be taken. Whereas many Greeks celebrated the rejection of the austerity dictate yesterday evening, German politicians declared that it is "difficult to imagine" new negotiations with the government of Prime Minister Tsipras (the German Minister of the Economy, Sigmar Gabriel). Greece is heading toward a Grexit and a "humanitarian catastrophe" (Martin Schulz, President of the European Parliament). Paris however is risking conflict with Berlin. Yesterday evening, the governing Parti Socialiste (PS) took a clear stand "against the austerity measures," which has "shriveled Greece's Gross Domestic Product and driven a large number of Greeks into poverty." Today’s meeting between the German chancellor and the French president may produce the first decisions.

The "No"
Germany's imposition of an austerity policy suffered a first serious defeat with yesterday's "No" in the Greek referendum. Aided by the EU, the ECB and the IMF, Germany has been able to impose its austerity dictate on Greece for the past five years, ruining the country's economy and causing social devastation of appalling dimensions.[1] A clear majority of the Greek population has now clearly rejected that austerity dictate: Yesterday, more than 61 percent voted against the proposed agreement with Greece's creditors, which would have prolonged the austerity policy, despite its catastrophic consequences. This clear rejection is all the more remarkable, due to the fact that not only had the Greek conservative establishment put its full weight behind a "Yes", but even Germany and substantial parts of the EU had interfered in an unprecedented manner in the Greek referendum debate and had massively increased their pressure on the Greek population - up until yesterday.

Under Berlin's Pressure
Over the past few days, German Finance Minister, Wolfgang Schäuble, was not the only one warning of a Grexit, if "No" wins. Obviously speculating that a clear majority of the Greek population would like to maintain the Euro, he was threatening Greece's exclusion from the Euro to incite the population to vote "Yes." Martin Schulz (SPD), President of the European Parliament, accused Prime Minister Alexis Tsipras of being "unpredictable and of manipulating the Greek people." Already on Friday, Schulz decreed that, in the case of a "Yes," Tsipras would logically have to resign and a cabinet made of technocrats (non-elected) would have to find "a reasonable agreement with the donors," until new elections are held.[2] A few years ago, Berlin and Brussels had used a cabinet of technocrats not only in Greece but also in Italy respectively to impose the German austerity policy.[3] The German foreign minister finally chimed in on the attacks against the democratically elected Greek government. In a "mixture of inexperience, ideology and radial rhetoric," Athens "has driven the negotiations to a dead end" while "ignoring the consequences of this course on the people in Greece," Frank-Walter Steinmeier (SPD) claimed.[4] He advised Athens to seek a path that will not "encumber the EU and the members of the Euro zone." Pressure on the Greek population had already been drastically increased by freezing the ECB emergency loans - imposed by Berlin [5] - and by mandatory capital controls.

Tricks Hardly Possible
This German defeat in the Greek referendum is all the more painful, because - unlike earlier cases - its results cannot be nullified with simple tricks. When the peoples of France and the Netherlands rejected the EU Constitution in 2005, the EU presented the nearly identically worded legislation under the name "Treaty of Lisbon" in 2007, albeit this time without presenting it to the populations to be affected for their approbation. Only in Ireland, because of national laws, was a referendum unavoidable. After the Irish citizens rejected the "Treaty of Lisbon" in 2008, the referendum - preceded by a massive PR campaign - was simply repeated in 2009, providing this time, the EU with the results it had been seeking. That procedure had already been field-tested. In 2001, when in a referendum, the Irish people rejected the "Treaty of Nice," Berlin and Brussels simply demanded that the country's government have the referendum repeated in 2002 - accompanied by a heavy barrage of propaganda, disguised as an "information campaign," which furnished the results Berlin and Brussels wanted. However, it is hardly possible to make a comparable maneuver in the case of the Greek "No."

Worsening Situation
Therefore, Berlin and Brussels must now show how they will respond to the Greek government's new proposals, which, in accordance with the results of the referendum, will demand that the German austerity policy be set aside. Yesterday, prominent German politicians have made clear declarations, refusing the slightest slackening of the austerity dictate. After the "No," it is "hard to imagine negotiations on programs costing billions," said German Minister of the Economy, Sigmar Gabriel (SPD). Prime Minister Tsipras has "torn down the last bridges, over which Europe and Greece can cross to reach a compromise."[6] European Parliament President Martin Schulz already claims to see a humanitarian catastrophe in Greece. "I believe that already tomorrow and the day after we will be forced to discuss humanitarian emergency measures." Schulz spoke of soup kitchens in schools and that "we" - meaning the EU - "will surely have to see to it that pensioners have something to eat."[7] Nicolas Heinen, the Deutsche Bank's analyst for Europe, exposed the objective of this type of prognosis, explaining, "it is not out of the question that the economic situation in Greece will worsen further, so that popular opinion will turn and the Tsipras government will come under pressure." A new "bailout" can be negotiated with a new government.[8]

Unacceptable Rigidity
However in several EU member countries, opponents of Berlin's austerity policy are taking a starkly different position. In France, for example, the Chair of the ruling Parti Socialiste (PS), Jean-Christophe Cambadélis, declared that yesterday's "No" was not directed "against Europe," but rather "against the austerity, that has shriveled Greece's GDP and driven a large number of Greeks into poverty."[9] Greece must "remain in the Euro zone." Therefore, talks must be initiated immediately. Athens should "receive the time and the means" necessary for its economic revival. The Italian, Gianni Pittella, Chair of the Social Democratic Group of the European Parliament, demanded that negotiations with Athens be immediately renewed "in a new atmosphere of solidarity and cooperation." It is about "time that some of the member nations and cabinet ministers give up this unacceptable rigidity, selfishness and their domestic policy concerns."[10]

EU's Dominating Power
A renewed battle over Germany's austerity dictate is in the offing. Chancellor Merkel is traveling to Paris Monday to discuss the consequences of the Greek referendum with President François Hollande. The other EU member countries will hardly be able to elude the expected agreement between Merkel and Hollande at the EU special summit announced for Tuesday. In spite of the serious German defeat in yesterday's Greek referendum, the German Chancellor can go into negotiations conscious of the fact that Germany is dominating the EU, as never before.

[1] See Die Folgen des Spardiktats, Impoverishment made in Germany, Todesursache: Euro-Krise and Die Bilanz des Spardiktats.
[2] EU-Kommission erhöht den Druck. www.tagesspiegel.de 03.07.2015.
[3] See Europa auf deutsche Art (III).
[4] Hans Monath, Stephan Haselberger: "Signal eines Grexit wäre verheerend". www.tagesspiegel.de 04.07.2015.
[5] See Zum Teufel gejagt.
[6] Ingrid Müller, Stephan Haselberger: Nein-Wähler liegen vorn - Samaras tritt zurück. www.tagesspiegel.de 05.07.2015.
[7] "Nein" vorne: 60 Prozent der Griechen gegen Sparpläne der Geldgeber. www.focus.de 05.07.2015.
[8] Erste Reaktionen auf das Referendum. www.wiwo.de 05.07.2015.
[9] Référendum en Grèce: Réaction de Jean-Christophe Cambadélis. www.parti-socialiste.fr 05.07.2015.
[10] EU-Sozialisten wollen verhandeln, Gabriel wehrt ab. www.handelsblatt.com 05.07.2015.