The next act in the Greek debt tragedy, regarding the declining eurozone and its nascent rescue, is upon us: It now seems that Greece may not be able to fulfill the requisite conditions to qualify for further financial aid from Europe.

This has stirred much ire within the German government. Some, few lawmakers are calling for Greece to be ejected from the single currency zone.

Furthermore, Chancellor Angela Merkel could struggle to achieve a majority in parliament to push through further loans to Greece and other eurozone countries struggling to stay afloat under piles of debt. A straw poll carried out in the Bundestag this week showed as much.

Greece will have to explain how it intends to gets its financial house in order, before the official vote takes place in Germany's parliament at the end of the month. The figures on Athens' books appear to be even worse than previously thought.

Merkel's comments over the weekend underlined the severity of the situation: "Under no circumstances can we simply offer help," she said, "Rather, we must impose conditions that would see countries with high levels of debt do their homework and actually reduce their debt."

But in comments after meeting with European Council President Hermann Van Rompuy, Merkel did say that if Greece was unable to do its homework, it would not necessarily be chucked from the eurozone.

'More Europe'

Even so, a Greek bankruptcy would have incalculable risks for the common currency. Some say the answer to the debt crisis is "more Europe." Udo Bullman, a German Social Democrat in the European Parliament, is one of them.

"There can be no backtracking. Any path which leads to national self-interest will lead us astray," he says. "There can only be a European future - for Germany too - if more authority is given at the European level."

Bullman advocates the much-debated and rather polarizing introduction of joint eurozone debt in the form of eurobonds, as well as the installation of a truly European finance minister for the currency bloc. He also wants to see a strengthening of the ability of national and European Parliaments to monitor indebted states.

"I believe we need to accelerate our involvement. Where is the Marshall Plan for Greece?" Bullman asks.

Greece needs investment in its real economy to create growth, he says, adding that the newly-established European crisis fund and emergency chute only serve to buy the eurozone time and calm the creditors, that is, the banks.

Give and take

European parliamentarian Markus Ferber agrees that more solidarity is essential. But the Bavarian conservative rejects introducing eurobonds, adding that greater unity is a two-way street requiring more from indebted states.

"This must also mean that the Southern Europeans accept the competitive pressure to adapt and reform. Only then can there be solidarity," says Ferber. "Otherwise, we'll end up with something no one wants, the terrible outcome of a permanent transfer union in which money flows from north to south. That's no future for the German taxpayer."

Ferber added that it was essential that the economic performance of countries like Germany and others in Europe's northern reaches not be abused. Several EU members are already seeing populist parties feeding euro-skepticism and opposing bailouts for indebted eurozone countries. Ferber said such movements could not be allowed to take hold in Germany.

"We need to bring the people with us. Why does Germany assume such responsibilities?" he asked. "If we don't pay close attention, we'll have greater problems than just whether we can lead the euro through stormy waters. Much of what we have achieved in the past could be lost."

Credit conditions for Greece will be discussed in the coming weeks by European finance ministers at the end of the summer break. How the economic tragedy will end remains unclear. But one thing is certain: European banks do not have enough capital to survive bankruptcy in Greece, Portugal, Ireland, Spain or Italy.

Author: Bernd Riegert / dfm
Editor: Nancy Isenson