Greek debacle could wipe off Merkel's smile

Two years ago Angela Merkel won a resounding election victory following her deft handling of the euro debt crisis.

Now, the German chancellor risks becoming one of the major losers of the drama surrounding cash-strapped Greece and its tenuous grip on euro membership. The crisis that has engulfed the eurozone since the January election of Greek Prime Minister Alexis Tsipras' hard-left led government has been a key test of Merkel's leadership and still threatens to blunt her political authority.

"If the euro fails, Europe fails," Merkel has repeatedly said in declaring her support for the eurozone's most indebted state to remain a member of the common currency.

But the political costs are rising. Even if debt-wracked Athens and its creditors finally negotiate a new debt deal, the agreement is likely to face an uphill battle to be approved in several national eurozone parliaments, including the Greek legislature and Germany's Bundestag.

http://www.afr.com/markets/greek-debacle-could-wipe-off-merkels-smile-20150710-gi8pel