France Seen as Crucial Pacifier in Progress Made Toward Greek Deal



France's President Francois Hollande walks past a French national flag as he leaves the Place de la Concorde after the traditional Bastille Day military parade in Paris July 14, 2012. REUTERS/Charles Platiau (FRANCE - Tags: POLITICS MILITARY ANNIVERSARY) ORG XMIT: CHP05
REUTERS/Charles Platiau

The progress in the Greek deal, despite the fact that Germany was preparing for a Grexit, is seen by analysts as a triumph for France, said an AFP report.

France was the country that called for solidarity and the need for resuming talks with Greece as Germany appeared indifferent to the possibility of the crisis-stricken country sliding off the Eurozone.

Analysts say that after last week’s referendum and the resounding “No” result, Eurozone partners were ready to write off Greece and start preparing for handling a Grexit. Germany said that since Greeks decided to leave the euro – by voting “No” in the referendum – then Europe’s doors would shut for the country. Yet, France’s role as a mediator and Greece’s comprehensive and palatable package of proposals changed the tide.

French President Francois Hollande and Prime Minister Manuel Valls were the ones to insistently ring the warning bells against Greece leaving the euro and the geopolitical implications of that, said Hans Stark, an analyst with the French Institute of International Relations.

“Hollande’s role is not trifling in the creation of a much more negative atmosphere since the day after the referendum, when some were saying: ‘There you go, the Grexit is nearly here,” said Stark. “It is undeniably a success for him [Hollande],” he added.

While France publicly pushed maintaining communication with Athens, French officials said diplomats and senior figures in the treasury had also been working behind the scenes to mediate between Greece and its international creditors, said the AFP report.

When Greek Prime Minister Alexis Tsipras decided to resort to a generous Greek proposal full of tax and pension reforms, Hollande was the first to publicly welcome the proposal: “The Greeks have shown a determination to want to stay in the Eurozone because the program they are presenting is serious and credible.”

“If the deal happens, it will confirm the relevance of the French position. France’s position that ‘there must absolutely be a deal’ has been decisive,” said Xavier Ragot, president of the French economic think-tank OFCE.

The Greek side has acknowledged France’s show of solidarity. “This week, in recent days, France has played a real role,” Greek Administrative Reform Minister Giorgos Katrougalos told the AFP.

Germany retains its hard stance on Greece by ruling out a debt haircut, yet Finance Minister Wolfgang Schaeuble acknowledged that International Monetary Fund (IMF) chief Christine Lagarde was correct in saying Greece needed debt restructuring.

“There is a change of tone on the German side that recognises the inevitable,” said Ragot, adding that while Germany is conscious of the need for debt restructuring “it wants a firm commitment from Greece [on reforms].”