Obama in Berlin for landmark church assembly

Former US President Barack Obama addressed the church congress saying “we can not hide behind a wall.” This year, the 500th anniversary of the Reformation is the featured topic, with many big names making an appearance.

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Merkel, Obama debate faith and politics

Former US President Barack Obama and German Chancellor Angela Merkel spoke in front of tens of thousands of people before the Brandenburg Gate in Berlin on Thursday to discuss God, faith and the state of the world.

Speaking on a panel on the first day of Germany’s Protestant Church Assembly, Obama praised Merkel’s “outstanding work” and described her as one of his “favorite partners” during his eight years in office. He lauded Merkel’s handling of the refugee crisis, while at the same time reflected that he “didn’t always have the tools” to end the war in Syria.

“Despite our best efforts, there is a vicious war,” Obama said.

The former US president warned of succumbing to nationalism and a closed world – an apparent reference to US President Donald Trump.

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Obama makes first public speech since leaving office

“In this new world we live in, we can’t isolate ourselves, we can’t hide behind a wall,” he said before the gate that once separated East and West Berlin.

Obama has made few appearances since leaving office. He said he spent time with his family, working on his foundation for youth and catching up on lost sleep.

Obama is the most famous guest among the approximately 140,000 expected participants at the four-day “Kirchentag.”

It is a star-studded occasion: 2,500 events, 30,000 contributors and guests from all over the world celebrating the 500th anniversary of the Reformation and the Protestant culture of debate.

More than 100,000 worshippers attended three open-air services on Wednesday evening in central Berlin to mark the start of the Protestant gathering.

Those attending include Archbishop of Cape Town Thabo Makgoba, Grand Imam of Cairo’s Al-Azhar Mosque Sheik Ahmed el-Tayyib, philanthropist Melinda Gates, German singer and songwriter Max Giesinger, German climate change researcher Ottmar Edenhofer, UN envoy Staffan de Mistura and Israeli author Amos Oz.

A new movement

The German Protestant Church Assembly, or “Kirchentag,” which has been held every two years since 1949, is an international and yet typically German event at the same time. It was founded by the East Prussian politician Reinold von Thadden, a member of the Confessing Church, which opposed the Nazi regime. Von Thadden was active in the resistance during the Nazi era and later acted as president of Kirchentag until 1964.

“Apart from the Confessing Church branch, the Protestant Church did not play a laudable role in National Socialism,” says Protestant Church Assembly spokesperson Sirkka Jendis. “That is why dedicated lay people said, ‘We need to create a forum to help ensure that something like that cannot happen again.'”

From the “Protestant Week” in Hanover in 1949 emerged a Protestant lay movement that deliberately set itself apart from the official church and held regular congresses. “The broad scope and public relevance is unique,” says Jendis. In view of the numerous panels on subjects including the flight of refugees, migration, war, tolerance and integration, she says it is clear to her that, “this Church Assembly may become political.”

Reinold von Thadden-Trieglaff (picture-alliance/dpa)Von Thadden launched ‘Kirchentag’ in post-war Germany

Controversial guests

Current Protestant government leaders in Germany will participate in this year’s congress: German Finance Minister Wolfgang Schäuble will discuss what is holding Europe together, the Social Democratic Party’s (SPD) chancellor candidate Martin Schulz will talk about credibility and German President Frank-Walter Steinmeier will take part in the holiday church service in Wittenberg.

German Interior Minister Thomas de Maiziere’s whirlwind participation will see him make seven Kirchentag appearances, including one together with Al-Azhar’s Sheik Ahmed el-Tayyib. “I think it is great that he is coming to join the discussion,” de Maiziere told the German weekly newspaper Die Zeit. “Controversial guests like him are a gain for the Church Assembly.”

But Protestant debate culture also has its limits. There was great opposition to the invitation of 43-year-old Anette Schultner, the national spokesperson of “Christians in the AfD,” a Christian organization of the Alternative for Germany (AfD), a right-wing populist political party. She wants to explain to visitors why their faith and their membership in the AfD are compatible with each other.

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DW exclusive with Heinrich Bedford-Strohm, Head of the Protestant Church in Germany

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The fight for Germany begins here

Germany’s rust belt was once SPD heartland. But their poll numbers are tumbling ahead of regional elections, thwarting hopes to unseat Chancellor Merkel in September. DW’s Elizabeth Schumacher reports from Oberhausen.

Deutschland, Straße in Oberhausen (Imago/Ralph Peters)

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It’s not the Germany one usually sees or hears about – rusted, out-of-use factories, streets so full of potholes they are barely passable, high unemployment and poverty. But the Ruhr valley, the country’s former coal and steel country, has a significant role to play in Sunday’s regional elections in the most populous state of North Rhine-Westphalia (NRW).

The significance of the regional vote is twofold: First, this is the last major litmus test and chance for parties to gain momentum before federal elections in September. Secondly, Chancellor Angela Merkel’s center-right Christian Democrats (CDU) are polling neck and neck (at about 30 percent) in what for decades has been the heart and soul of the center-left Social Democrats (SPD).

After the SPD suffered humiliating defeats in recent regional elections in Saarland and Schleswig-Holstein, this election is a major opportunity if they want the chancellorship back after twelve years of Merkel.

“As NRW goes, so goes the country,” Simone-Tatjana Stehr told DW. Stehr is hoping to represent the CDU from the Ruhr city of Oberhausen, a town of some 200,000 that has seen more than its fair share of lost perspectives, as factory jobs dried up over the decades.

CDU Wahlplakate - NRW Wahlkampf (DW/E. Schumacher)CDU candidate Simone-Tatjana Stehr: “People feel their concerns have not been addressed.”

Shades of Clinton, Brexit

For decades, the SPD could count on its reputation as the party of the working class to be certain of a clear majority in NRW. But last year, Oberhausen gained its first CDU mayor in 56 years, and many voters are tired of what they see as the SPD losing its soul.

“I am, very reluctantly, voting for the SPD,” voter Christopher, a native of Oberhausen, told DW one day before the election. “More for what they stood for in the past than anything else. Their campaign this year is without any real content. People here are interested in more jobs, better roads, better integration for refugees. Not social justice.”

According to Christopher, the SPD had “ruined a sure thing” by not taking clearer positions and by being overly confident, which he saw as eerily reminiscent of the Remain camp during the Brexit referendum and the US presidential campaign of Hillary Clinton.

party member Ori says “belongs to the SPD and should stay in the hands of the SPD.”

CDU ‘extremely optimistic’ despite voter apathy

Indeed, although downtown Oberhausen was filled with cheerful, though mostly elderly, faces – some voter apathy was also palpable. “None of the parties stand for anything distinctive anymore,” one retiree walking by said, as her husband nodded. Many said they still hadn’t chosen who to vote for.

Simone-Tatjana Stehr acknowledged this. “I’ve never heard of so many undecided voters around here. Some 30 or 40 percent at last count…but, they are at least interested. Asking questions, engaging.”

Stehr dismissed the idea that four years of the CDU-SPD “grand coalition” in Berlin has made the parties indistinguishable.

“We’ve jumped in the polls because we have a more concrete platform about what we want to change…education, unemployment, security, infrastructure,” the conservative politician said.

CDU Wahlplakate - NRW Wahlkampf (DW/E. Schumacher)The Ruhr valley has relatively high crime rates for western Germany. The CDU has made security a cornerstone of its platform.

As Stehr made her way through Oberhausen on Saturday, she and her team seemed positively giddy at their recent success. “Just a few weeks ago, we were ten points behind where we are now,” a member of the CDU youth wing said. The candidate herself said she was “extremely optimistic” about her chances.

As one self-described “lifelong CDU voter” put it to DW, “Five years of [SPD] Minister-President Hannelore Kraft’s government in this state and nothing here is better. No less unemployment. Teachers overwhelmed with 30 kids in a class. We need a change.”

SPD: Mistakes were made

The Oberhausen SPD was determined, however, not to be alarmed by slipping poll numbers. Candidate Sonja Bongers admitted to DW that “mistakes were made,” but that things would be different this time around.

Bongers conceded that the center-left had not focused, as it should have, on the unemployment and lack of perspective that plagues Oberhausen. “Three or four years ago, people were yelling at us in the streets, saying that the SPD was responsible for all their problems.”

“But now,” she added optimistically, “we have a new generation in power,” who will take back the city, the state and, hopefully, Berlin in September, by returning the party to its roots in the working class.

NRW Landtagswahl Broschuren, Postkarten und Stifte (DW/R. Staudenmaier )Bongers called the loss of city hall “a catastrophe”

The SPD does, however, have a powerful selling point in leader Hannelore Kraft, who remains more popular as a personality than perhaps her party in Oberhausen. One voter told DW she was voting SPD “just to help Kraft,” and many echoed her sentiment.

But for many of the region’s undecided, apathetic voters – who feel ignored by Berlin-centric politicians and fear that the country’s two major parties have become nearly identical by trying to please everyone – those concerns may indeed come to fruition. State premier Kraft has vowed that she would not rule in a coalition with the Left party. The Greens, who might not even make the five percent hurdle necessary to stay in parliament, have said they will refuse to govern with the libertarian Free Democrats (FDP), crushing any hope the CDU may have had of working with both of those parties to form a majority.

As for the far-right anti-immigrant AfD, they are polling at a reasonable 9 percent and recently held their national convention in NRW’s biggest city, Cologne. However, whoever those voters are, they seemed reluctant to admit their affiliation publicly:

Nobody in buying what right-wing is selling.”We’re attacked by left-wing fascists as radicals. People are scared to come near us.”

This means that, come Sunday, the SPD and CDU might have no choice but to follow Berlin’s lead and rule NRW in tandem, a crushing blow to any hope the Social Democrats may have of finally extricating the deeply ensconced Merkel from the chancellor’s seat.

Additional reporting by Rebecca Staudenmaier.

Macron wants a New Deal for Europe

Emmanuel Macron has big plans for Europe. In order overcome the current crisis, he wants more community, more solidarity and more investment. And Germany is worried that it will have to foot the bill.

Frankreich Wahl Emmanuel Macron Rede in Paris (Reuters/P. Wojazer)

The original New Deal can be traced back to Democratic US President Franklin D. Roosevelt. In the 1930s, during a severe economic crisis, Roosevelt fought unemployment and stabilized America’s spiraling financial and political situation in part by undertaking an enormous investment program and extensive social and economic reforms. The attempt to find a cure to society’s ills in political extremism existed even back then.

The current situation is hardly comparable to things at that time. And yet, France has been stuck in a long-term crisis: unemployment levels are, for example, twice as high as in Germany. France is falling behind in terms of international competition. Its levels of growth have been low for years, although they have recently picked up a bit. And finally, France has, for the last decade, failed to meet the European deficit criteria, while Germany has been generating surpluses. What this means politically, is that in the first round of the presidential election, almost half of the French constituency voted for candidates who had goals that supported globalization but were critical of the EU. Many of the second round votes were not for the eventual winner, centrist Emmanuel Macron, but rather, against the right-winger Marine Le Pen.

Suppenküche in Chicago nach Weltwirtschaftskrise 1931 (picture-alliance / akg)The New Deal was passed while the US was in the midst of economic depression in the 1930s

Macron now wants to reduce corporate taxes and the ratio of government expenditures to gross national product. He also wants to liberalize the labor market. This has nothing to do with a New Deal. He will be tackling this as his second major project, which is an investment program for the whole of the Eurozone. This should be financed out of the EU’s collective budget.

Schäuble insist on regulations

The term “New Deal for Europe” was mentioned during Macron’s visit to Germany in March, only weeks before the election. But what Macron has in mind, he already set out in a paper two years ago as economics ministers, together with his then-counterpart, Social Democrat and current German foreign minister, Sigmar Gabriel. This includes strengthening the Eurozone through a common budget, as well as introducing “new executive powers” in the euro region, a “Euro chamber” and a “Euro commissioner.” The goal is to create economic and social unity. Macron has repeatedly brought into play the idea of introducing common bond issues for the European states, with joint liability.

Südafrika Weltwirtschaftsforum in Durban Wofgang Schäuble (Reuters/R. Ward)Schäuble: France must abide by the rules

But for the conservative faction in Berlin’s Grand Coalition, this is going too far. Combined budget and joint debts sounds to these Christian Democrat (CDU) politicians too much like shifting the responsibility from France to the German taxpayer. Chancellor Angela Merkel immediately reacted coolly: “German support cannot, of course, replace French politics.” She rejected the idea of Eurobonds. Finance Minister Wolfgang Schäuble, is indeed behind strengthening the Eurozone. But for him it is more about enforcing the lacking budgetary discipline. In an interview in the Italian newspaper, “La Repubblica” he said, with a view to France, “It is a simple concept: If we create rules, then we also have to apply them.” He also recently said, at the Viadrina European University in Frankfurt Oder, “France is so big and strong that it doesn’t consider foreign help to be necessary.” In other words, yes to providing support, as long as it does not cost anything.

Fear of Le Pen used as leverage

There is divided opinion between politicians and political commentators. Some accuse the federal government of being stingy, which they will later come to regret, while others see Macron’s plan as a brazen redistribution of costs, at Germany’s expense. According to Gregory Claes, from the Brussels think tank Bruegel, for tactical reasons Macron will at least comply with doing things in the right order. “He should firstly concentrate on internal reforms in France and try to show that he wants to conform with stability regulations,” Claes said. “This will win him back credibility with Germany and other northern European countries.” He will hardly dare to come forward with European reform ideas before the German federal election.

Frankreich Whirlpool Streik Marine Le Pen (picture alliance/AP Photo)Le Pen, the self-declared candidate of the workers seen here at a factory, was soundly defeated by Macron

On the other hand, Berlin-based political scientist Ulrike Guerot believes that Macron has political leverage over Germany. “He can hold Great Britain up as an example,” he told news agency DPA. “Germany has a lot to lose when one country goes haywire. Macron could say: ‘If you don’t help me you will have to deal with Marine Le Pen next time.'” But blackmailing could also backfire. Especially now, during the German national election campaign, EU skeptics could get a fresh boost if the German federal government gives the impression of being under pressure from France.

Many believe that, politically, there is much more at stake than economics. The New Deal in the US helped democracy prevail, despite the severe economic crisis. In Germany and other countries, things were different. Elmar Brok, a European Parliamentarian for the CDU who has been following the development of the EU over several decades, says: “Europe is falling apart. Emmanuel Macron is the last chance. We have to do something.” Opinions on what needs to be done, however, differ greatly.

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The state of the French economy

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Netanyahu accuses German Foreign Minister Gabriel of ‘tactlessness’

Israeli PM Netanyahu has urged Germany’s foreign minister to avoid meeting with “radical fringe groups.” Earlier this week, Netanyahu canceled a meeting with Sigmar Gabriel just after Holocaust Remembrance Day in Israel.

Israel Benjamin Netanjahu (picture-alliance/dpa/A. Sultan)

Israeli Prime Minister Benjamin Netanyahu accused Germany’s foreign minister of meeting with “radical fringe groups,” days after the right-wing leader snubbed Sigmar Gabriel for meeting with human rights organizations.

In an interview with the German daily “Bild,” Netanyahu called Gabriel’s meeting with two human rights groups critical of the Israeli military’s treatment of Palestinians and occupation of the West Bank “tactless.”

“I find it extremely tactless for such a meeting (with “Breaking the Silence” and B’Tselem) to take place at this time,” Netanyahu, who is also foreign minister, he said. “On this day we mourn the murdered members of our people and our fallen soldiers.”

Gabriel’s visit with groups “Breaking the Silence” and B’Tselem came a day after Israel commemorated Holocaust Remembrance Day, when Gabriel attended a wreath-laying ceremony at the Yad Vashem memorial alongside Netanyahu.

B’Tselem is a prominent NGO that records human rights abuses and Jewish settlement building in Palestinian territories. “Breaking the Silence” documents testimony from ex-Israeli soldiers about abuses committed against Palestinians.

The Israeli prime minster added that he had attempted to explain his actions to Gabriel, “but he refused a telephone call,” said Netanyahu. The German foreign ministry refutes the claim.

Sigmar Gabriel in JerusalemGerman Foreign Minister Sigmar Gabriel (left) on Mount Zion in Jerusalem this week

Netanyahu, who overseas the most right-wing coalition in Israel’s history, has roiled relations with Germany over continued illegal settlement building in the West Bank and a crackdown on critical civil society groups. Berlin is concerned Israeli policies are veering away from a two-state solution. 

The prime minister’s decision to cancel a scheduled meeting Gabriel was criticized by Israel’s liberal opposition, but backed by the right-wing and Netanyahu’s allies.

Analysts suggested that Netanyahu’s decision was in part a move to gain political points among the right-wing on the domestic front, something Gabriel also noted when he commented that Germany cannot become “a political football for Israeli domestic politics.” Notably, Gabriel’s visit with Israeli President Reuven Rivlin went ahead.

German Chancellor Angela Merkel’s spokesperson defended the foreign minister.

“In a democracy it should be possible for foreign visitors to speak without problems to critical representatives of civil society,” Merkel spokesman Steffen Seibert said earlier this week.

Both sides have sought to downplay the row’s impact on long-term relations.

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Merkel warns against British ‘illusions’ as Brexit negotiations begin

In an address to the Bundestag, German Chancellor Angela Merkel talked tough ahead of Saturday’s EU-27 summit on Brexit. The UK, she said, would not be as well positioned as EU member states.

Angela Merkel Regierungserklärung Berlin (Reuters/H.Hanschke)

Ahead of a meeting of the 27 remaining European Union nations in Brussels on Saturday, Chancellor Angela Merkel briefed the German parliament, the Bundestag, about Germany’s strategy vis-a-vis Brexit. But at least in part her message was aimed across the English Channel.

The chancellor warned London not to expect a deal that would privilege the UK.

“A third-party state cannot enjoy the same advantages or be better positioned than an EU member state,” Merkel said. “I have the feeling that some people in Britain maintain illusions in this regard. They’re wasting their time.”

That line drew applause from members of the Bundestag. Merkel reiterated that negotiators would have to resolve the details of Britain’s exit from the EU, including financial obligations that could extend beyond Britain’s departure, before any deals could be struck about a future English-EU relationship.

as third country ‘can and will not have the same rights’ as -member, says on . ‘No illusions’ but fair negotiations.

“These steps must happen in that order,” Merkel said. “Our goal is to get the best deal for Europe and its citizens.”

Merkel added that negotiations could only commence in earnest after the United Kingdom’s parliamentary election on June 8.

Expats high on the agenda 

Not all of Merkel’s remarks focused on the potential conflicts of interest between the EU and the UK. The chancellor also said that Germany and the EU had an interest in a strong and prosperous Britain.

She said one of her priorities was to clear up the future status of the approximately 100,000 German citizens permanently living in Britain. In return, Germany and the EU were prepared to offer British expatriates in the bloc a “fair deal.”

London Imbiss deutsche Würstchen (picture-alliance/dpa/F. Gentsch)It’s unclear how the EU will trade with a post-Brexit UK

Merkel also expressed confidence that the EU and post-Brexit Britain shared interests in businesses being able to sell their products to the other and fighting against terrorism and organized crime.

At the same time, the EU showed a high degree of solidarity in the wake of the British referendum in June 2016, in which a slight majority of UK voters supported the Brexit, Merkel added. Specifically naming Ireland, she said that it was a sign of European strength that none of the individual EU-27 states had engaged in “preliminary negotiations” with London.

A disintegrating EU?

Speaking for the Social Democrats (SPD), the junior partners with Merkel’s conservatives in the government, Thomas Oppermann said: “I’m glad that within the coalition we have consensus on this issue.”

 Sahra Wagenknecht Berlin Bundestag (Reuters/H.Hanschke)The Left Party’s Wagenknecht said Merkel was trying to strong-arm the UK

But Sahra Wagenknecht of the opposition Left Party accused Merkel’s government of trying to “punish” the UK and of ignoring the social concerns she said had led many people in Britain to vote for the Brexit.

“The EU is threatening to fall apart,” Wagenknecht said. “Anyone who thinks he needs intimidation to ensure European solidarity has already long given up on Europe.”

Merkel’s CDU-CSU, the SPD and the opposition Green Party rejected that assessment. The Greens, represented by Katrin Göring-Eckardt, called upon Merkel to reassure expats of their status by this summer.

Criticism of Erdogan, conflict over Le Pen

Significantly, Merkel began her address with statements critical of Turkish president Recep Tayyip Erdogan and irregularities in Turkey’s constitutional referendum, which gave him what some say, are quasi-autocratic powers. She also called for the release of a German journalist currently detained in Turkey.

“To be unmistakably clear, it’s not compatible with the rule of law if the Turkish executive judges people in advance, as has obviously happened with Deniz Yücel,” Merkel stated.

But Merkel said it would be a mistake for the EU to “turn its back” on Turkey, which is still, nominally, a candidate for potential membership in the bloc.

Frankreich Präsidentschaftswahl EU Flagge (picture alliance/Pacific Press/M. Debets)The outcome of the French election in early May is another major EU concern

Spokespeople for the parliamentary party groups joined in the criticism of Erdogan. They also took the opportunity to comment on the results of the first round of the French election, which left centrist investment banker Emmanuel Macron to face right-wing, anti-EU populist Marine Le Pen in a run-off vote on May 7.

Wagenknecht criticized the fact that the poll had left voters with a choice between a “neo-liberal” and Le Pen. That wasn’t a popular view with her parliamentary peers.

Göring-Eckardt said all German parties had a responsibility to support “democracy,” in the form of Macron, against the “hate mongering” of Le Pen. SPD General Secretary Katarina Barley said Wagenknecht’s remarks showed that she had “no clue.”

It was an impressive display that the EU is confronted by issues other than Brexit and that national political squabbling continues as usual.

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Merkel awarded Elie Wiesel Prize for preservation of Holocaust memory

Chancellor Merkel has been awarded the Holocaust Memorial Museum’s highest honor for her help preserving memories of the Holocaust. She visited Buchenwald concentration camp with the man after whom the award was named.

German Chancellor Angela Merkel attends a wreath laying ceremony during her visit to the concentration camp Dachau (picture-alliance/AP Photo/K. Joensson)

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German Chancellor Angela Merkel was honored on Monday by the Holocaust Memorial Museum in the US for her contributions to Holocaust memory and education.

She was awarded the Elie Wiesel Prize – the highest award given by the museum.

The museum said it gave the award for her “unwavering commitment to making the preservation of Holocaust memory a priority for Germany.”

“When the museum was facing staunch opposition in its effort to open the largest closed Holocaust archive in the world, the International Tracing Service, Chancellor Merkel changed her government’s policy and sent her justice minister to the museum to announce Germany’s support for opening the archives, thereby enabling thousands of survivors and their families to discover for the first time the fate of loved ones,” the museum said in a statement.

“The Chancellor has supported the creation and strengthening of Holocaust-related institutions in Germany which have become among the museum’s most important partners. She has repeatedly and vigorously condemned all manifestations of antisemitism.

“Her visit to Buchenwald with the museum’s founding chairman Elie Wiesel in 2009 was symbolic of the many efforts that have been made by Germany to confront its past.”

Merkel thanked the museum for the award, saying in a video message “We owe it to the victims who went through immeasurable suffering to explore these deepest recesses of our being,” referencing a quote by Wiesel.

German ambassador to the US Peter Wittig accepted the award on her behalf in Washington.

I am honored to have accepted the Elie Wiesel Award, the highest honor of @HolocaustMuseum, on behalf of Chancellor Angela Merkel tonight

Merkel said the award was a “major gesture” of ties between US Holocaust memorial efforts and Germany that was not to be taken for granted.

Merkel said that for Germany to have a bright future, it was essential to understand the Holocaust as “the ultimate betrayal of all civilized values.”

Holocaust survivor Eli Wiesel listens to US President George W. Bush at the Holocaust Memorial Museum in Washington (picture-alliance/dpa/Brack Pool)Holocaust survivor Eli Wiesel was a tireless human rights campaigner

Elie Wiesel was a Holocaust survivor and the founding chairman of the museum. He was awarded the Nobel Peace Prize in 1986  He died last year.

The museum has awarded the prize since 2011 to recognize “internationally prominent individuals whose actions have advanced the museum’s vision of a world where people confront hatred, prevent genocide, and promote human dignity.”

April 24 was Holocaust Remembrance Day, known as Yom Hashoah. It marked the anniversary of the Warsaw Ghetto Uprising.

Why the troika and Syriza must remove Greece’s debt roadblocks together

Greek Prime Minister Alexis Tsipras looks on before answering a question on corruption, during the Prime Minister's Question Time at the parliament in Athens, Greece, February 10, 2017. REUTERS/Alkis Konstantinidis - RTX30ETE

Greek prime minister Alexis Tsipras answers questions in parliament, 10 February 2017
Image: REUTERS/Alkis Konstantinidis

Cutting emissions isn’t enough, we need to start removing carbon from the atmosphere

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On 7 April in Malta, euro-area finance ministers agreed on the key elements of a deal that would unlock further financial assistance to Greece under the current (third) €86 billion bailout. The “in principle” agreement came as a huge relief, as Greece will be unable to meet the €7.4 billion in debt payments due in July without external financing.

But the economic drama continues. Several more steps need to be taken for Greece to avert default.

First, the troika of creditors must return to Athens to finalize the review and present it to Eurogroup ministers by June at the latest. Once it has agreed terms, Greece needs to legislate the agreed measures to ensure that, ignoring outstanding debt, tax income exceeds spending by 3.5% of GDP annually (what is known as a primary surplus) at least until 2020. Prime Minister Alexis Tsipras, leader of the ruling radical left Syriza party, has said he would not submit the measures to a vote in parliament without agreement on debt relief. Creditors, on the other hand, say that debt relief will not be discussed before the measures are voted, and the review is completed.

Once staff-level agreement is reached, the IMF needs to decide whether it will participate in the Greek program with financing. Some euro-area creditors – notably Germany and the Netherlands – have made it clear they will not approve further assistance to Greece without IMF participation. The roadblock? The IMF believes the Greek debt is “highly unsustainable” at 180% of GDP, and has said it would only present a program to its executive board if it receives “satisfactory assurances on a credible strategy to restore debt sustainability”.

German voters hold the purse strings

For this to happen, Eurogroup ministers need to decide the fiscal targets that Greece must meet over the medium term, as well as the debt relief that will be provided after the program is successfully concluded in 2018.

The two are obviously linked; any easing of the primary surplus target beyond 2020, as demanded by the IMF, would need to be accompanied by deeper debt relief to keep the debt burden sustainable. With German elections due in September, and with the country’s voters hostile to the idea of cutting Greece more slack, the debt-relief proposals likely to be agreed upon will be the minimum necessary to keep the IMF on board. Final decisions may go down to the wire if staff-level agreement is delayed, if Greek parliament does not approve the measures, or if European creditors cannot agree on the debt-relief parameters.

The main elements of the agreement reached in Malta are commitments to cut pension spending in 2019 and to broaden the tax base by reducing the tax-free threshold in 2020. Each of these measures, to be legislated in the immediate future, is expected to improve the fiscal balance by 1% of GDP. The reduction in the tax-free threshold would be brought forward to 2019 if Greece fails to meet the 2018 primary surplus target of 3.5% of GDP. To sugar-coat the pill, creditors have agreed that Greece would take measures to increase social spending and cut taxes if it overshoots the fiscal targets. The whole package is nevertheless a far cry from Prime Minister Tsipras’s defiant stance as recently as late January, when he celebrated two years in office by proclaiming the end of austerity and ruling out any further fiscal measures.

Reality check for Tsipras

It’s not uncommon for Greece to seek a scapegoat, the latest ones being the usual suspects: the IMF and German finance minister Wolfgang Schӓuble, who make “unreasonable demands”, as well as various local players allegedly undermining the government. If Syriza has learned anything since taking office, it is that policy-making is much harder than opposing someone else’s agenda. The protracted negotiations have helped Tsipras gain his party’s approval for the pension and tax reform, but they have also taken a toll on the economy, which returned to recession in the last quarter of 2016. Liquidity is drying up as the government accumulates domestic arrears to meet external debt payments, and with Greek banks suffering large deposit withdrawals. A deal with creditors needs to be struck soon to help restore confidence and restart growth.

The IMF spring meetings in Washington in 21-23 April provide an opportunity to make progress toward finalizing the list of reforms Greece needs to legislate to conclude the review, and quantifying the parameters of a debt deal that satisfies all sides. In a speech in Brussels on 12 April, IMF managing director Christine Lagarde said: “What I have seen in the last couple of weeks is heading in the right direction. We are only halfway through in the discussions.” All sides will need to compromise to strike a deal that is unlikely to fully satisfy anyone. But the cost of no deal for everyone concerned is too big to even contemplate.

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