Merkel’s G-7 With Deadline Confluence on Greece to Russia

Merkel Hosts G-7 in Germany
World leaders outside during the G7 summit near Garmisch-Partenkirchen, Germany. Photographer: Michael Kappeler/AFP via Getty Images

In June 2007, the last time Chancellor Angela Merkel hosted a Group of Eight summit, she was unaware that the world’s leaders stood on the edge of a global financial precipice.

Now down one member after Russia’s exclusion last year after it annexed Ukraine’s Crimea peninsula, Merkel’s G-7 faces a series of existential crises that are in large part hers to solve.

Greece’s five-year battle to stay solvent runs the almost daily risk of failure, the European Union is struggling to maintain unanimity on sanctions against Russia, and nuclear talks with Iran are touch-and-go. Those are challenges that President Barack Obama will press European leaders to heed to ensure unity among the world’s leading advanced economies.

“It’s very important coming out of these G-7 meetings that the world is seen as speaking with one voice,” Deputy National Security Adviser Ben Rhodes said in a conference call on Thursday.

U.S. pleas for more European self-reliance date to the end of the Cold War and remain unfinished business. Merkel, as the leader of Europe’s biggest economy and Forbes magazine’s most powerful woman in the world for the fifth straight year, can claim progress in fighting multiple crises, from rescuing the euro to defending the continent’s eastern and southern borders.

‘More Introverted’

Yet even her sway is hobbled by European distractions ranging from a substandard economic recovery and breakthroughs by nationalist political parties to the growing peril of home-grown jihadism and constitutional dilemmas like the U.K.’s potential secession from the 28-nation EU.

You Can’t be Safe if You’re Broke: Rasmussen

“I’m concerned that we will see a more introverted Europe in the coming years, obsessed by resolving the euro crisis, addressing the Greek economic problems and eventually also dealing with the U.K.,” Anders Fogh Rasmussen, a former prime minister of Denmark and head of NATO, told Bloomberg Television in London this week. “What we need is a more outward-looking Europe with a global perspective.”

Outward-focused promises on free trade, global development, disease prevention and climate change make up the official agenda for the G-7, composed of the U.S., Japan and Canada in addition to EU members Germany, Britain, France and Italy. The summit at Schloss Elmau castle south of Munich runs from midday Sunday to late Monday afternoon.

Cannes Showdown

Merkel’s worst case would be for her showcase event to turn into a rerun of a Group of 20 summit hosted by France in Cannes in November 2011 that was hijacked by Europe’s economic disarray. As a sovereign debt crisis followed in the wake of the financial turmoil, Germany and France made the precedent-setting threat to boot Greece out of the euro, while Silvio Berlusconi’s inability to stop the contagion from lapping at Italy’s shore led to his ouster as prime minister days later.

Obama labeled Cannes a “crash course” in European politics, and Merkel was reduced to tears, according to a book by French author Arnaud Leparmentier. Merkel has never confirmed that version of events.

Europe’s economy has since righted itself and Ireland, Spain and Portugal have been weaned off financial assistance. A fourth country, Cyprus, continues to execute its aid program. Greece, representing 1.8 percent of the euro area’s $11.5 trillion economy, smoldered on, erupting again in January when newly elected Prime Minister Alexis Tsipras said no to more budget cuts.

Greek Deal

After the public hectoring of the early stages of the European fiscal crisis, the Obama administration is treading more discreetly. One risk to the American economy “would be if you don’t get a deal on Greece,” Jason Furman, chairman of White House Council of Economic Advisers, told Bloomberg Television this week. “That’s why we all want to see it happen. It matters most for the Greeks, it matters a lot for the Europeans, but it does potentially affect the whole global economy.”

Greece’s latest endgame comes on June 30, when its current bailout program ends. That’s coincidentally the same deadline set for a deal with Iran in talks now taking place in Vienna.

Tsipras won’t be at Schloss Elmau because Greece isn’t in the top tier of trading nations. Russian President Vladimir Putin won’t be there because the Kremlin’s seizure of Crimea and backing for the eastern Ukraine rebellion last year made him persona non grata, turning what had been the G-8 since 1998 back into the G-7.

Rebel Fighting

Sporadic fighting intensified this week along the line of contact between Ukrainian and rebel troops, putting a four-month cease-fire at risk. Those trembles plus the disclosure that Russia has blacklisted 89 European politicians and security officials upped the pressure on the EU to prolong its own sanctions on Russian trade and financing, which expire in late July.

EU President Donald Tusk is pushing for a six-month extension, a Brussels official said, a stance backed by Merkel. Tusk didn’t get the required EU-wide unanimity for that at a summit in March, settling for a declaration of intentions. Russia is hoping that sympathetic countries such as Hungary, the Czech Republic or Greece will spoil a decision at the next EU summit, on June 25-26.

“Moscow has been very clever in terms of trying to play off particular EU states against each other, and picking particular countries off with a combination of carrots and sticks,” said Aleks Szczerbiak, a politics professor at the University of Sussex.

From Russian sanctions to Iran, the U.S. wants to make sure it is “in lock-step with our key allies,” according to Rhodes.

A bilateral meeting with the German chancellor on Sunday morning before the G-7 will give Obama “an ability to forge a meeting of the minds,” Charles Kupchan, the administration’s Senior Director for European Affairs, told the same briefing.

For more, read this QuickTake: Who Is Angela Merkel?

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