Merkel's crown tarnished as critics accuse her of coup in Greece

German Chancellor Angela Merkel speaks during a meeting on the role of women in leadership in Berlin, Germany, on July 13, 2015.
German Chancellor Angela Merkel speaks during a meeting on the role of women in leadership in Berlin, Germany, on July 13, 2015.PHOTO: REUTERS

BRUSSELS (BLOOMBERG) - Europe's deal with Greece was variously denounced as blackmail, an attack on national sovereignty and an end to the European dream. The accord's detractors could at least agree on one thing: the chief culprit was Angela Merkel.

Having held sway in the unequal struggle with Alexis Tsipras over the terms of a third bailout, Ms Merkel has ensured that the 19-nation euro area remains a club whose members abide by the rules or are shown the door.

The question is what toll that stance has taken on her reputation and the extent of the damage to the international standing of Germany and Europe.

"This is, to all intents and purposes, a German-led economic coup d'etat," said Nicholas Spiro, the managing director of Spiro Sovereign Strategy, an advisory firm in London. The "ultimatum to Greece is a reminder, if any were needed, that there's no appetite whatsoever for the kind of large-scale integration required to shore up Europe's shaky single-currency area."

Ms Merkel and her finance minister, Wolfgang Schaeuble, were the chief protagonists in a weekend of negotiations that left Mr Tsipras holding Greece's continued membership of the euro as the main prize. Simply to open talks on as much as 86 billion euros (S$130 billion) in aid, he had to capitulate on positions including pensions, taxes, the involvement of the International Monetary Fund and surrendering control of Greek state assets.

EU Acrimony Shada Islam, director of policy at the Friends of Europe advisory group in Brussels, said that months of EU acrimony since Mr Tsipras's election in January as Greek premier at the head of an anti-austerity coalition has tarnished the bloc in the eyes of both its own citizens and globally.

"They reached a deal on Greece but at a huge cost," Islam said by phone. "Merkel tried to play the middle ground but Schaeuble will be seen by some critics as the true villain of this piece."

Both Ms Merkel and Mr Schaeuble have become hate figures in Greece, where comparisons with the World War II occupation by Nazi forces have become commonplace. In Germany, members of Ms Merkel's coalition have competed for outrage against a backdrop of the constant drumbeat of calls by the best-selling Bild newspaper for Greece to be ejected from the euro.

Germany is "tearing Europe apart" for the third time in the past century, Nikos Filis, the parliamentary spokesman for the ruling Coalition of the Radical Left, or Syriza, said on ANT1 TV on Monday. Greece is being "waterboarded" by euro-area leaders, he said.