Greece and Germany’s game of chicken

“We are both heading for the cliff. Who jumps first is the chicken” were the famous last words of James Dean’s opponent in the classic movie “Rebel Without A Cause”

The game of chicken is a standard model of conflict for two players in game theory. While game theorist and sometime finance minister Yanis Varoufakis has drawn all the attention for his ‘chicken’ negotiating approach, the real champion of this game of chicken has turned out to be Germany’s finance minister Wolfgang Schäuble. Many observers of the Greek crisis agree that it was Schäuble’s detailed Grexit proposal that forced Alexis Tsipras, who took over in this game from his co-pilot Varoufakis, to finally surrender and jump.

Although many observers expected that Angela Merkel and Wolfgang Schäuble would have been feted for their victory upon their return to Berlin, the exact opposite has been the case. The tersest reaction came from Thomas Strobl, vice chairman of the Christian Democrats (CDU) and Schäuble’s son-in-law. Prior to the CDU’s steering committee meeting after the euro summit last Monday he said: “The Greek has now annoyed long enough.” While Strobl has since been heavily criticised for this remark, this chauvinistic attitude does reflect strongly the sentiment of many people in Germany and in Strobl’s party in particular.

Although many observers expected that Angela Merkel and Wolfgang Schäuble would have been feted for their victory upon their return to Berlin, the exact opposite has been the case

This ‘friend or foe’ thinking is back in vogue in Europe and it dominates the public debate in Germany. For weeks major German media outlets, including Bild-Zeitung and Die Welt have promoted this perception. This week Der Spiegel ran a story headlined “Our Greeks – Getting closer to a strange people” together with a political cartoon of a Greek man dancing with a glass of Ouzo and a bunch of Euros next to a betrayed looking German tourist.

The polarisation of the debate since the last crisis summit on Sunday has divided the rhetorical battlefield in Germany into two major camps. In this bizarre zero-sum contest you can either be “for Greece and against Germany” or “for Germany and against Greece”. The antagonistic attitude has been internalised by the government, the political parties, and public opinion, too. The most depressing aspect of this debate has been the combination on each side of a startlingly narrow-minded perspective on the political problems and a puzzling resistance to acknowledging the plains fact that Greece’s problems are inextricably part of the Eurozone’s own longstanding troubles.

During today’s debate in the German Bundestag, all members of the government were eager to calm the situation and to call for support of the upcoming negotiations. Angela Merkel recast her key dictum – “If the Euro collapses, Europe will collapse” – into “Germany is only well-off if Europe is at the same time” and in doing so indicated that Schäuble’s Grexit-proposal outlined in Brussels was not and is not a realistic option. She went so far as to characterise the EU not only as a “community of fate”, but also a “community of responsibility”. In the end 65 members of her own party voted against her.

Slowly but steadily, Merkel is being forced out of her political comfort zone. And the problems aren’t limited to her own party. Her coalition partner and chairman of the Social Democrats (SPD), Sigmar Gabriel, has adopted a much more confrontational tone of late regarding Schäuble’s and Merkel’s Greek crisis management. Gabriel has called for less austerity and more (real) investment policy in order to rebuild Greek economy, a political initiative which might cause more serious confrontation within Merkel’s coalition in the upcoming weeks.

Once all Eurozone member states have agreed to the new negotiations it would be wise for Merkel to demonstrate her political commitment to the Greek people by a speech in front of the Greek parliament

These elements – plus the broadening criticism of German hegemony in Europe- may well bring her to the point where she has to demonstrate political leadership in a way Mario Draghi did when he announced that the ECB will “do whatever it takes to preserve the euro”. Once all Eurozone member states have agreed to the new negotiations it would be wise for Merkel to demonstrate her political commitment to the Greek people with a speech in front of the Greek parliament or a public place in Greece in order to reinforce what she has been best at: getting conflicting parties back to the table and finding a compromise. In her speech today, she paid special attention to the importance of the French-German cooperation. If she is really interested in achieving a reliable solution for the current crisis, she and Francois Hollande must include Alexis Tsipras in finding a political agreement which gives him and the Greek people real, not forced, ownership of such a deal.

The constantly repeated line in today’s Bundestag debate has been “Everybody has to follow the rules.” The constantly repeated line in Wednesday evening’s debate in the Greek parliament was “We need help and not principles!” How these two conflicting perceptions can be merged into a single solution package that ensures both Greek and German ownership will be the next big challenge for Angela Merkel.

In “Rebel Without a Cause” James Dean’s character wins his deadly game, not through an act of bravery, but due to an accident. Neither participant in Europe’s game of chicken can hope for a fortuitous accident to save them, both sides must show the bravery to walk away from the game altogether.