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Greek Bailout Leaves French Unruffled While Germany Seethes

France's Christine Lagarde and Germany's Wolfgang Schaeuble
Christine Lagarde, France's finance minister, speaks with her German counterpart Wolfgang Schaeuble. While Lagarde has ruled out any action that constitutes a “credit event,” Schaeuble said June 10 that Europe’s biggest economy “has to insist on the participation of the private sector” in Greece. Photographer: Jock Fistick/Bloomberg

June 17 (Bloomberg) -- Greece’s bailout, which has provoked popular anger in Germany, leaves neighboring France cold.

Europe’s two largest economies, which were on opposite sides of a deadlock on enrolling investors in a second Greek rescue without triggering a default, said today in Berlin that they’ve found common ground. German Chancellor Angela Merkel’s room for maneuver has been limited by opposition at home. French President Nicolas Sarkozy has faced no such pressure.

“France is a Latin country that feels closer to the Greeks; they also feel it could happen to them,” said Philippe Moreau-Defarge, a researcher at the French Institute of International Relations, or IFRI, in Paris. “In Germany, it’s the classic tale of the ant and the grasshopper, with the ant furious about having to pay for the grasshopper’s profligacy.”

In the face of turmoil in currency and credit markets, Merkel signaled willingness to compromise on German demands that bondholders shoulder a ‘substantial” share of a Greek rescue, saying she’ll work with the European Central Bank to resolve the crisis. France, like the ECB, had sought a “voluntary” rollover of Greek debt by investors, warning that a compulsory move might constitute the euro area’s first sovereign default.

“We would like to have a participation of private creditors on a voluntary basis,” Merkel told reporters at a joint press conference with Sarkozy in Berlin today. “This should be worked out jointly with the ECB.”

Sarkozy called the accord a “breakthrough.”


German politicians and media have voiced anger at having to come to the aid of what some of them say are profligate Greeks.

“The Germans digested unification and then went through an austerity cure,” said IFRI’s Moreau-Defarge. “They feel they’ve set a good example.”

In France, aiding Greece draws little angst in radio or television programs and in the press. In a poll in March last year by Greece’s Sunday newspaper Ethnos, before the first bailout plan, 69.6 percent said the southern European country had French support compared with 2.7 percent for Germany.

“Helping Greece is very unpopular among German public opinion, so Merkel has made many populist comments to assure the public that she’s looking after their tax money,” said Henrik Uterwedde, deputy director of the French German Institute, based in Ludwigsburg and Paris. “The comments are aimed at her base, but they get projected across Europe. The problem is the German government cries scandal, and then ends up helping the Greeks. So they’ve angered their own public and the rest of Europe.”

Taxpayer Protection

On May 18, Merkel was cited by news agency DPA as saying: “It’s not about whether people in Greece, Spain, Portugal can’t retire earlier than in Germany; it’s about everyone pulling their weight equally. We can’t have one currency, and one gets a lot of vacation and the other very little.”

France doesn’t have the same culture of defending tax payer interests as Germany, Maurice Levy, chief executive officer of advertising company Publicis SA, said in an interview.

“We don’t even have a word in French for ‘taxpayer’,” he said. “We call them ‘contributors,’ which has a nice positive sound. There’s a sense in France that we can always add to our obligations.”

Protests in Greece against austerity measures have drawn angry opinion pieces in Germany. Writer Dirk Hoeren noted in Bild Zeitung, Germany’s most-read newspaper, on May 18: “Germany’s economic boom didn’t fall from the sky. It was paid for through hard work and austerity. That’s why it cannot be that some people practice frugality and foot the bill, while others go easy on themselves and cash in.”

With Creditors

France, is “a country with a lot of protests, so they aren’t shocked or surprised to see the Greeks protest against the austerity measures,” said IFRI’s Moreau-Defarge.

When the euro was created, the Germans insisted on the need for continuing with the Deutsche Bundesbank’s culture of price stability, while French attention was on the potential of a common currency to boost economic growth, he said.

Coverage in France of the Greek crisis has focused more on process. In an editorial in Le Figaro yesterday, Gaetan de Capele wrote that “wisdom lies in finding an exit from the crisis with the creditors rather than against them.”

German lenders were the biggest foreign owners of Greek government bonds with $22.7 billion in holdings last year, according to data compiled by the Bank for International Settlements in Basel, Switzerland.

Debt Holders

French banks led the group of Greek creditors with overall claims amounting to $56.7 billion, trailing their German peers on sovereign debt with $15 billion, according to the June report from the BIS.

The figure for French banks was inflated by $39.6 billion in lending to companies and households, mainly because of Credit Agricole’s Greek unit, Emporiki Bank SA. German lenders have no major units in the country.

“The Germans are more worried about public accounts,” said Philippe Marini, secretary of the French Senate Finance Committee. “The French always think a solution will be found, that the money will come from somewhere. Public accounts aren’t something that keep the French up at night.”

Pressure on euro-area governments to craft a rescue plan intensified this week after Standard & Poor’s slapped Greece with the world’s lowest credit rating. Moody’s placed the ratings of BNP Paribas, France’s biggest bank, and local rivals Societe Generale SA and Credit Agricole under reviews that will focus on their holdings of Greek public and private debt.


The euro reversed a decline against the dollar after Merkel and Sarkozy announced their accord. The European currency had been sliding amid speculation the Greek crisis is deteriorating, damping demand for the region’s assets.

The euro was roiled by the impasse over the aid formula and speculation that a government shakeup in Greece will disrupt passage of 78 billion euros ($110 billion) in austerity measures needed for a new bailout from the European Union.

With agreement between Germany and France a prerequisite for forging a European Union consensus behind the second bailout of Greece, the two sides have needed to strike a balance between German principles and French pragmatism.

“Greece is in trouble, we have to help them because otherwise it would undermine the euro zone, so we just choose to overlook the background, which is that Greece cheated and previous Greek governments mismanaged the situation,” said Publicis’s Levy.

The German reaction has been more like a family “that instead of putting out the fire in their house, sits around and fusses about the terms of their insurance contract,” said Uterwedde at French German Institute.

To contact the reporter on this story: Gregory Viscusi in Paris at

To contact the editor responsible for this story: Vidya Root in Paris at

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