The German government is blocking a Greek bailout in fear of being democratically replaced by the populist, Eurosceptic Alternative for Germany (AfD) Party.
In “AfD is the major hurdle in the Greek bailout”, Die Welt’s deputy economics editor, Jan Dams, has revealed that although it is “increasingly apparent that Greece cannot afford its debts”, the real reason the German government is blocking a bailout is fear of the Eurosceptic Alternative for Germany (AfD) party.
The International Monetary Fund (IMF) is commanding that the European Central Bank, which grants money for Eurozone bailouts, agrees to help Greece on the basis of more lenient reform requirements.
Both Greece and Germany are under enormous pressure, the former economic and the latter political.
Many members of the Christian Democratic Union (CDU) sister parties are not convinced by any of the arguments in favour of aid to Greece. Driven by concern about being democratically replaced by AfD politicians, they would not agree in parliament to softer conditions for the payment of billions of euros in aid.
The article notes the irony in the fact that the IMF, as a result of Angela Merkel’s insistence on the organisation’s centrality to the Eurozone’s economic affairs, has become one of the biggest obstacles to “every form of political compromise” involving the economic zone’s bailouts.
When the IMF calls for “more realism” in Greek plans for reform, Dams urges Europeans to “finally look facts in the face” and “realise the Greeks are neither socially, nor politically and economically, in a position to implement” agreed reforms.
Based on the mathematical logic of the IMF, Greece is unlikely to achieve, as agreed, a debt level of 120 per cent of GDP by the end of the decade. According to the IMF’s statutes this means Greece cannot carry its debts by itself, and as a consequence the IMF is not allowed to provide any further financial assistance.
Noting that if Germany agrees to the IMF’s request for softer conditions for a Greek bailout there will likely be a huge backbench rebellion as a result of pressure from the AfD.
Dams concludes that fear of the right wing, populist party has risen to be almost as big an obstacle to Germany as the “inability to reform Greek politics”.