Will Greece Collapse?

Louisa Gouliamaki/AFP/Getty Images

Will Greece Collapse?

The decision could rest with lawmakers in Germany.

Famed billionaire investor George Soros warned last week that Greece, the eurozone and even the European Union were “on the brink” of disintegration. He warned that unless Germany came to the rescue in a “matter of days,” Europe as we know it would disappear.

Apparently his appeal worked. On Sunday, Greek authorities breathed a sigh of relief when details began trickling out about a much ballyhooed bailout from fellow eurozone states. After weeks of dithering, largely because Berlin simply refused to wire money to Athens, the 16-member eurozone appears to have settled on a €30 billion loan program for Greece. The hope is that this boost of confidence (and cash) will help the crisis dissipate.

Don’t count on it.

Perhaps Merkel is reconciling herself to the idea of using the hard-earned money of German taxpayers to rescue Athens. (Berlin’s contribution to the bailout package amounts to €8.4 billion.) But the German populace, which polls show to be overwhelmingly against a bailout for Athens, is not. Moreover, many German politicians and the bulk of the media side with the people. Across Germany, observed Ambrose Evans-Pritchard in the wake of Sunday’s announcement, headlines have “switched from Iron Chancellor to Frau Mouse.”

Even Merkel’s coalition partners, the Free Democratic Party and the Christian Democratic Union, are furious. “We would be standing on very thin ice, legally, economically,” said Frank Schäffler, deputy finance spokesman for the Free Democrats. “Germany buckled under the pressure,” he lamented. Clearly Merkel’s apparent capitulation to European demands is not sitting well with Germans. Question is, what can they do to thwart any attempt by Berlin to toss Athens a lifeline?

Enter the German Federal Constitutional Court.

Before Berlin ratified the EU’s Lisbon Treaty last fall, Germany’s Federal Constitutional Court made a watershed ruling that effectively established the German parliament as the adjudicator of EU law and ultimately equipped the Bundestag with the means of bending the EU to its will. Under this new law, which the Trumpetreported on thoroughly, the German parliament must now approve any changes to the Lisbon Treaty, or any major decision by the EU, before it can be imposed on Germany.

Needless to say, the decision to lend Greece billions of euros is a major EU initiative. It’s not just the precedent of giving Greece a massive amount of cash that is significant. It is a fact that, within EU treaties—specifically the 1992 Maastricht Treaty—there are explicit “no bailout” clauses. These clauses make it illegal, barring a few explicit and extreme circumstances, for an EU member state—or coalition of states (such as the eurozone)—to contribute funds to bail out a fellow member. The case is strong that any attempt by Berlin to use German money to bail out Athens would be a breach of EU law, as well as German constitutional law.

What does all this mean? It means that according to German law, this decision to illegally bail out Greece must be debated and approved by the German parliament.

This reality didn’t garner much attention until yesterday, when the German Finance Ministry admitted that if Greece activates the loan, the Bundestag will indeed debate the issue. The Finance Ministry did not indicate how long this could take, but as the Wall Street Journalnoted, legislative approval in Germany “usually … takes months,” and would likely “drastically slow down any aid to Greece.” As long as the case sits before the Bundestag, the eurozone will be prevented from actually sending the money to Greece. And if lawmakers in the Bundestag reject Germany’s participation in the eurozone bailout—which for many would be the politically expedient option—Berlin could be forced to renege on its promise altogether.

Without the participation of Europe’s largest economy, the bailout package enthusiastically announced by eurozone finance ministers last Sunday will be toast! Greece would once again be on the precipice without a safety net, and the entire eurozone and even the European Union would face what George Soros warned last week would be a “process of disintegration.”

All because of German law and a decision made by German lawmakers!

Last summer, when the German high court made its watershed decision empowering the Bundestag vis-à-vis the EU, the Trumpet wrote, “This new law will not make the EU more democratic. Germany will be the only member with a greater voice. It’s a stealthy ambush of Brussels that will only make the European Union even more German-centric, German-dependent and German-dominated. This legal decision will equip Berlin with far-reaching leverage over EU law and policy, and will ultimately advance Germany’s prophetic march to become the unchecked leader of a united European empire.”

It is vital that we continue to watch the economic (and subsequent political) crises hitting Greece, the eurozone and the European Union. As you monitor these crises, pay special attention to Berlin’s reaction and conduct. It is now certain: The pace of Germany’s prophetic march to become the unchecked leader of Europe is quickening!