Greece's Euro-Area Ties Risk More Strain Amid Refugee Crisis

By Ian Wishart Nikos Chrysoloras

Bloomberg

First overwhelmed by debt and now overwhelmed by refugees, Greece offers a tempting target for European leaders left to handle the fallout.

With wounds only just healing after the euro area agreed to throw Greece another financial lifeline, the country’s inability to process tens of thousands of refugees turning up at its doorstep threatens to reopen them all over again. Local Greek authorities are inundated by some 3,000 arrivals a day, most of whom are allowed to head north through the Balkans toward Germany and Scandinavia, sewing political tensions as they go.

Patience is already thin after years subsidizing the Greek economy and months of chaotic bailout talks this year, so European Union leaders haven’t had far to look to find a scapegoat for their latest emergency. The risk is that by vilifying the Greek authorities, EU officials may jeopardize the fragile political settlement that is the foundation for the country’s economic recovery and continued membership in the euro.

“There are very low levels of trust and a lot of baggage,” said Mark Leonard, director of the European Council on Foreign Relations in London. “It’s inevitable that when you have so many major crises going on at the same time with the same cast of characters you will get read-across from one crisis to the other.”

Finance ministers of the euro area’s 19 economies gather in Luxembourg on Monday for the first time since Alexis Tsipras’s September election victory, and are due to pick over the 48 milestones Greece needs to meet to qualify for its next bailout payouts.

For all his railing against the European establishment, Tsipras is the first Greek leader to win re-election after signing a bailout deal. With all eyes on his Syriza-led government’s efforts to stick to the reform path, the unprecedented refugee crisis adds another layer of uncertainty.

Greece finds itself the first EU port of call for people fleeing war and civil strife from countries such as Syria, many of whom pay traffickers to take them across the short sea passage from the Turkish coast to one of the Greek islands sprinkled throughout the Aegean Sea. Greece, which also shares a land border with Turkey, has seen almost 400,000 migrants arrive by sea in 2015 compared to 43,500 in the whole of 2014, the Office of the United Nations High Commissioner for Refugees said on Friday.

The Syriza government’s inability to cope with the sheer numbers involved “will only provide further fodder to its critics, as well as increase the pressure for the government to deliver on reforms or die,” said Dimitrios Triantaphyllou, chairman of the department of international relations at Kadir Has University in Istanbul. “Greece’s image as a functioning state has already hit rock bottom.”

Greece, Again

Two months after leaders stayed up all night in a bad-tempered last-ditch attempt to keep Greece in the euro, they trudged back to Brussels in September for an emergency summit on refugees -- with some pointing the finger at Tsipras again.

“If the Greeks are not able to defend their own border, we should ask kindly -- because Greece is a sovereign country -- let the other countries of the European Union defend the Greek border,” said Hungarian Prime Minister Viktor Orban.

Any anti-Greek sentiment that spills over to finance ministers or to national parliaments such as the German Bundestag that must agree to the disbursement of bailout funds could hamper Tsipras’s attempts to pay salaries and re-capitalize banks as he tries to rebuild the economy. Greece needs the support of some parliaments for bank recapitalization funds to be released by the bailout program’s Nov. 15 deadline.

German Support

So far, Europe isn’t laying the blame entirely at Tsipras’s door. German Chancellor Angela Merkel reiterated on Saturday that the region needs to cooperate more with countries like Turkey to stop migrants reaching Greece in the first place. Turkey, which borders Syria and Iraq, is both a core recipient of refugees and a key transit country for those traveling to Europe.

The EU’s decision last month to share the burden by relocating 50,400 refugees who have arrived in Greece may signal some acceptance that Greece has acted properly in the face of unprecedented pressure.

“It’s in Europe’s collective interest to ensure Greece is a strong and stable state, not only in terms of economy but also in terms of asylum,” said Alexander Betts, director of the Refugee Studies Centre at Oxford University.