Henning Meyer writes: Following the formation of the new Greek government we are entering a period of negotiation. This is good news, and overdue given the scale of the social and economic crisis in Greece. The new prime minister, Alexis Tsipras, has announced that he will not unilaterally walk away from Greek obligations but seek dialogue with creditor countries. He has a clear mandate for change, but it is also important to bear in mind the constraints on the other side of the negotiation table.

Angela Merkel’s coalition government in Germany also operates within clear political limits, partly because a faulty narrative about the origins of the eurozone crisis has been circulating in Germany for half a decade. This is very unfortunate but makes a full U-turn on Greece unlikely. The anti-euro AfD – Alternative for Germany – has been gaining political support since the European elections last May, and is now trying to use the anti-Islam Pegida protests in some parts of the country to further draw disaffected citizens into its orbit. These are new phenomena in German politics and help to explain – though not excuse – the stubbornness with which misguided policies have been pursued. As in other countries, the German political elites are afraid of losing traction in society and have become excessively cautious as a result.

But there is light at the end of tunnel. The opposing parties might be at loggerheads at the moment but there is scope for a political deal that would allow both sides to keep their integrity. Here are the three things that need to come together. [Continue reading…]