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Some say that all  politics are internal ones, and that that influences external decisions. This may be the case in the current  intensive negotiations between Greece and its European creditors led by Germany.

German finance minister Wolfgang Schäuble is leading the tough stance, basically rejecting in public any proposal that is different from the terms agreed upon in the bailout agreements. Is it the fear of contagion to other countries such as Portugal, Spain or Italy? The answer could lie closer to home.

Hamburg – Merkel’s weak spot

Hamburg is Germany’s second largest city and one of its richest. The northern port city resides in its own federal state, and this state is holding elections on February 15th.

The center right CDU party led by  German chancellor Angela Merkel has suffered a devastating defeat in previous elections there held in 2011. Not only did the Christian Democrats lose to the Socialists (SPD), but the latter obtained an absolute majority in the local parliament, a rare feat in German politics.

The majority of CDU supporters oppose any concessions to Greece. Merkel  has a past full of swings towards popular demand: her chameleon politics resulted in a 180 degrees shift against  nuclear energy after the Fukishima disaster, an agreement to the left wing policy of adopting a minimum wage for Germany after opposing it and quite a few other changes.

You can praise it as direct democracy in Europe’s largest country and economy or criticize  the lack of a backbone. It doesn’t really matter.

Timing for a resolution

For those following the crisis and its impact on the euro, it’s only important to understand that there is a good chance that Merkel and  Schäuble will continue playing tough with Greece until polls close in Hamburg on Sunday evening.

Afterwards, she could understand that risking a Grexit (or Alexit if you wish) is not in the best interest of her country and her voters, thus paving the way for a significant compromise on the following day.

There is a planned Eurogroup meeting on Monday, February 16th, and this is the one where  a compromise could be reached.

What do you think?

More:  Euro wedged between a rock and a hard place over Greece