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Fingers point at France in Whitehall's eurozone blame game on Greece



Nicolas Sarkozy chides Athens over referendum, prompting Britain to highlight French role in admitting Greece to EEC
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Valéry Giscard d'Estaing, who was instrumental in admitting Greece to the EEC in 1981, is being blamed for helping to lay the ground for the eurozone crisis. Photograph: DAMIEN MEYER/AFP


George Papandreou really must be on the EU naughty step.

Angela Merkel, who can barely stand the sight of Nicolas Sarkozy, is for once in full agreement with the French president. France and Germany believe that Papandreou's pledge to hold a referendum on the eurozone bailout was a unilateral move that offends the communautaire spirit of the EU. Sarkozy and Merkel believe that the Greeks were particularly ungracious towards German and French taxpayers who will have to fund most of the bailout.

In Whitehall, where ministers have been issued with strict instructions to display no sense of schadenfreude as the eurozone lurches from one crisis to another, there is a more sympathetic view towards Greece. Some sources fear that if the Greek prime minister – whoever that may be over the coming months – tried to force through the bailout without a clear mandate then Greece may become ungovernable.

This gloomy view was put into sharp relief on Tuesday when Panos Beglitis, the defence minister, summoned the chiefs of the army, navy and air force to tell them they were being replaced. There were fears that Papandreou had ordered the move to pre-empt a military coup in Greece which was, after all, run by a junta of colonels between 1967-74.

The advice from the British embassy in Athens to the foreign office in London was clear: the timing was cack-handed but the move did not signal an attempt by Papandreou to forestall a coup. This has allowed a joke to do the rounds in Whitehall:


It's not the generals you should worry about in Greece. It is the colonels.

Britain may feel some sympathy for the plight of Papandreou. But there are long memories in Whitehall where there is still amazement that Greece was allowed to join the EU in the first place and then to join the euro.

Sarkozy will not be pleased to learn that the finger of blame is being pointed at France even though he admitted last week that it had been an "error" to allow Greece to join the euro a decade ago. These are the two key interventions by France:

• Valéry Giscard d'Estaing, French president between 1974-81, was instrumental in persuading his fellow European leaders to allow Greece to join the EEC in the year he left the Élysée. Giscard had two reasons – one lofty and the other a little more selfish.

In the first place Giscard thought that the European project could not be complete until the seat of European democracy took its place among the modern democracies of Europe. The Greek parliament showed its gratitude by granting its highest award in 2009 to Giscard who was hugely supportive of Constantine Karamanlis, the former Greek prime minister summoned back from exile in France in July 1974 after the fall of the colonels.

In the second place Giscard thought that Greek membership would forestall Turkish attempts to join the EEC.

Giscard, who was in charge of drawing up the EU constitution nearly a decade ago, famously joked that its authors would be rewarded with statues of them on horseback. The constitution was junked by the people of France and the Netherlands. Perhaps Giscard will not repeat his horseback joke when it comes to his role in pushing for Greece to join the EEC.

• François Mitterrand, his successor as French president, is seen by some as the father of the euro. As I blogged recently, Mitterrand told Helmut Kohl, the German chancellor, that France would only agree to German unity in 1990 if Germany scrapped the Deutschmark. Mitterrand was so alarmed by Germany unity after the collapse of the Berlin Wall that he floated the idea of a Franco-Soviet military alliance.

Most of the German establishment was deeply concerned about the single currency for a simple reason: a single currency without the discipline of a fiscal union would be unsustainable.

Goldman Sachs does not escape blame. In his gripping book on the seeds of the eurozone crisis, Michael Lewis writes that Goldman Sachs was paid $300m for a "series of apparently legal but nonetheless repellent deals" to hide the Greek's government "true level of indebtedness".

In Whitehall there is a feeling that a full default in Greece does not in itself present a strategic threat to the EU. This is what one senior figure said of Greece which only has a population of 11m:


Greece is affordable. It only accounts for 2% of EU GDP.

The great fear is of contagion, according to my source who spoke almost as a classicist:


It is Rome that matters, not Athens. The fear is that a Greek collapse will lead to contagion to Italy. That is the fear that is gripping everyone.

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