Summer of 2012

Late one night in May 2012, after a long crisis summit of eurozone leaders, Angela Merkel marched her exhausted advisers to a quiet table in the bar of the Amigo Hotel in Brussels. The aides were ready for bed, but the chancellor, brimming with her usual small-hours stamina, made them draw up a decision tree: a diagram mapping out the consequences and reactions – domestic, European, financial, diplomatic – that might flow from each possible path she could take in dealing with the Greek crisis.

Greece’s floundering politicians had just shocked Europe again. Snap elections, called despite European misgivings, had seen Greek voters abandon established parties and turn to fringe movements of the far-left and far-right. After two years of austerity and economic deterioration, there was no more majority in support of the bailout memorandum – indeed no governing majority at all. Repeat elections in June were seen as Greece’s last chance to avoid political paralysis, bank runs and a euro exit. In Germany, swaths of the political class – including Finance Minister Wolfgang Schaeuble – had written off Greece’s political class as feckless and incapable of reforming the country. Some in Berlin spoke of Greece as the euro’s “infected leg,” a gangrenous appendage that needed to be amputated to save the body of Europe.

Merkel’s diagram spotlighted the ugly ramifications of Grexit. The risk of devastating capital flight from other countries on the eurozone periphery was hard to quantify. So was the damage to Germany’s image and standing in Europe after forcing the expulsion of a country from its currency union. Merkel didn’t want to go down in history as the chancellor who partially unraveled the great project of European unification begun by her political paragon, Konrad Adenauer.

But financing a Greece that wouldn’t or couldn’t tame its deficits and revamp its economy was also unpalatable. It would lead to rebellion among her center-right lawmakers and voters. It would expose Germany to financial blackmail by other euro countries that mismanaged their economies – including Italy, whose teetering debts have always been Germans’ deepest fear about a deeper commitment to European fiscal union.

The late-night analysis reinvigorated Merkel’s belief about helping Greece to stay in the euro: Yes. If.

She would resist the “infected leg” lobby in Berlin. But she needed a partner in Athens who would make Greece swallow the bitter economic medicine that Merkel needed as a quid pro quo for German-backed loans.

That August, Greece’s freshly elected leader Antonis Samaras visited Berlin conscious that he had much work to do to convince Merkel he was the right partner. His track record, from anti-memorandum populism in opposition to limiting the scope of the Papademos government, didn’t inspire confidence, and he knew it. Before driving to the Chancellery, Samaras spent hours in his room at the Berlin Hilton practicing his pitch. His mea culpa for past politicking and his promise to work “day and night” to hit the memorandum’s goals persuaded Merkel to bet on him. She soon visited Athens to show her support. The Grexit chorus in Berlin went quiet.

The summer of 2012 showed the strengths of Merkel’s leadership in Europe, and its limitations. Her careful, considered approach and her sense of patience and perspective allowed her to resist many pressures and avoid many mistakes. But the weight she put on reducing the political risks she faced in Germany had the effect of heightening political risks in weaker countries on the euro’s periphery. Greece’s political dramas of the crisis era stemmed, in large part, from an unworkable initial bailout plan that satisfied German constraints but expected too much, too quickly of a debtor nation with a depressed economy, a hurting society and a feeble state. The consequences nearly broke Greek politics.

When Samaras’ government ran out of energy in 2014, and he once more visited Berlin to beg for an easier path to completing the memorandum, Merkel continued to demand the full economic medicine, refusing to risk more of her domestic political capital to help him. Her red lines contributed to another earthquake in Greek politics, until Alexis Tsipras too had learned the painful meaning of Merkel’s “yes, if.”

On September 8 this year, at a public event in Duesseldorf, the Nigerian author Chimamanda Ngozi Adichie asked Merkel when the burden of her long leadership in Europe had weighed most heavily on her shoulders.

Merkel’s answer was immediate.

“It was heaviest in the euro crisis, when I was very tough, from many people’s viewpoint, in the demands on Greece, in order that Greece also got help from us. Because I was deeply convinced that otherwise we cannot have a common currency, if we don’t also share a certain basic economic structure. But that is incredibly hard, when you see that you’re asking a lot of people. It affected the citizens. It was in part, in the end, also good, perhaps, for the citizens of Greece. But in that situation, there was unemployment, or people had less money because you had to raise taxes, or they lost their jobs because we said the public administration must be reformed. And when you have colleagues who have to carry this through domestically, who have to suffer demonstrations, and then my image was portrayed, in various ways, as the evil woman – that was hard.”

Marcus Walker is the Wall Street Journal’s South Europe bureau chief.