By Bertrand Benoit
BERLIN--The verdict of Greek voters on Sunday presents German
Chancellor Angela Merkel with her toughest challenge since the
eurozone crisis broke out five years ago.
How she responds in the coming days won't just determine the
fate of the eurozone, but will reflect on her as well, both at home
and abroad, and it is hard to imagine a scenario where she emerges
unscathed.
Given how much Germany has shaped the management of the
crisis--a mixture of emergency loans and unpopular economic
overhauls in the affected countries--the strong "no" vote emerging
in Greece, according to a partial count of ballots Sunday, was a
stinging blow.
A day earlier, the leading German newsmagazine Der Spiegel ran a
cover story that lay the responsibility for the future of Greece
and of the eurozone firmly at her feet. The magazine accused her of
provoking the crisis through an approach it called "pedagogical
imperialism."
Throughout the crisis, Ms. Merkel has repeated a mantra that "if
the euro fails, Europe fails." In parliament last week, she said
she would reopen talks with the Greek government after the
referendum.
After speaking by phone with French President François Hollande,
the two called for eurozone leaders to hold summit on Tuesday, Ms.
Merkel's spokesman Steffen Seibert late Sunday. "Both agree that
the vote of the Greek citizens is to be respected," Mr. Seibert
said.
Ms. Merkel faces two options.
Yielding some ground on the terms of a new bailout, in
particular by pledging some of the debt relief Greece and the
International Monetary Fund have been asking for, could still save
Greece from a devastating exit from the eurozone.
Yet while such a deal might secure the required approval of the
German parliament thanks to opposition votes and those of Ms.
Merkel's Social Democratic coalition allies, it would face
considerable opposition in the chancellor's own conservative ranks.
And it would still require a firm commitment to economic overhauls
an emboldened Greek government is now unlikely to give.
Conversations with lawmakers in the past week suggest many
conservatives might have rejected even the tough terms then under
discussion. Any deal that requires lawmakers to pump more taxpayer
money into Greece while seeing some of their past loans go up in
smoke could spark a full-scale rebellion, lawmakers say.
"For a successful rescue operation, the one who wants to be
rescued must let himself be rescued," Gunther Krichbaum, the
conservative chairman of parliament's European Union Affairs
Committee and advocate of a Greek exit from the eurozone, said last
week. "As Greece obviously doesn't want this, there's no option
left for those who want to rescue it."
When parliament convened last week for a debate on Greece, Ms.
Merkel's cautious speech gathered tepid applause from the
conservative benches--nothing like the thunderous clapping that
greeted Wolfgang Schäuble, the chancellor's uncompromising finance
minister.
Broader public support for a fresh Greek bailout isn't
guaranteed either. While several polls published last week showed
Germans were split on whether Greece should exit the euro, up to
three quarters rejected further concessions to Athens. Mr.
Schäuble, the embodiment of German intransigence in Greece,
received his highest rating ever.
A sweetened bailout could be particularly damaging for Ms.
Merkel because it would invalidate the very rationale for Germany's
approach to the crisis: that it can only be fixed if uncompetitive
economies are rebuilt and the eurozone's fiscal rules never bent
again.
In case of a Greek exit, German voters are sure to put the blame
largely on Greek Premier Alexis Tsipras, as recent polls indicate
they have done so far.
Given all that, principles and an instinct for self-preservation
may persuade Ms. Merkel to opt for the second option and stick with
her tough line, an outcome many analysts see as more likely.
In a research note published Sunday, Deutsche Bank said the most
probable result of a "no" vote would be the end of Greece's euro
membership, followed by the toppling of the Syriza government as
economic hardship mounts.
In private, Berlin officials have also warned about this
scenario in case of a no.
In an interview with the Bild tabloid on Saturday, Mr. Schäuble
played down the risk of a Greek exit for the rest of the euro area
and said remaining eurozone members would keep helping Greece. A
separate interview by the Social Democratic Foreign Minister
Frank-Walter Steinmeier warned of the "disastrous" signal such an
outcome would send, highlighting a potential conflict in Ms.
Merkel's "grand coalition" of the two biggest parties.
"Even with the best will in the world," the coming talks "will
be a long and difficult process," one senior government official
said.
Write to Bertrand Benoit at bertrand.benoit@wsj.com