greece, lift up your nutsack and cough...,

stratfor |  Several nations supported the German position from the beginning — particularly the Eastern European nations that, in addition to opposing Greece soaking up European money, do not trust Greece's relationship with Russia. Germany had allies. But it also had major powers as opponents, and these were brushed aside.  

These powerful opponents were brushed aside particularly on two issues. One was any temporary infusion of cash into Greek banks. The other was the German demand, in a more extreme way than ever before, that the Greeks cede fundamental sovereignty over their national economy and, in effect, over Greece itself. Germany demanded that Greece place itself under the supervision of a foreign EU monitoring force that, as Germany demonstrated in these negotiations, ultimately would be under German control.

The Germans did not want to do this, but what a nation wants to do and what it will do are two different things. What Germany wanted was Greek submission to greater austerity in return for support for its banking system. It was not the government's position that troubled Germany the most, but the Greek referendum. If Germany forced the Greek government to capitulate, it was a conventional international negotiation.  If it forced the government to capitulate in the face of the electoral mandate of the Greek public, it was in many ways an attack on national sovereignty, forcing a settlement not in opposition to the government but a direct confrontation with the electorate. The Germans could not accommodate the vote. They had to respond by demanding concessions on Greek sovereignty.

This is not over, of course. It is now up to the Greek government to implement its agreements, and it does so in the face of the Greek referendum. The situation in Greece is desperate because of the condition of the banking system. It was the pressure point that the Germans used to force Greek capitulation. But Greece is now facing not only austerity, but also foreign governance. The Germans' position is they do not trust the Greeks. They do not mean the government now, but the Greek electorate. Therefore, they want monitoring and controls. This is reasonable from the German point of view, but it will be explosive to the Greeks.

The Potential for Continental Unease

In World War II, the Germans occupied Greece. As in much of the rest of Europe, the memory of that occupation is now in the country's DNA. This will be seen as the return of German occupation, and opponents of the deal will certainly use that argument. The manner in which the deal was made and extended by the Germans to provide outside control will resurrect historical memories of German occupation. It has already started. The aggressive inflexibility of the Germans can be understood as an attitude motivated by German fears, but then Germany has always been a frightened country responding with bravado and self-confidence.

The point of the matter is not going away, and not only because the Greek response is unpredictable; poverty versus sovereignty is a heady issue, especially when the Greeks will both remain poor and lose some sovereignty. The Germans made an example of Cyprus and now Greece. The leading power of Europe will not underwrite defaulting debtors. It will demand political submission for what help is given. This is not a message that will be lost in Europe, whatever the anti-Greek feeling is now.