A few months and a million migrants ago, Greece’s financial problems were the biggest story in Europe. Yet despite last year’s bailout, Greece and its struggles could again push European unity to the brink, because the country’s reform process is headed for a confrontation.
As Greek Prime Minister Alexis Tsipras and his Syriza party celebrate one year in power, they now turn to a contentious question: pension reform. Greek unions have responded to threats of pension cuts with strikes and angry protests. Syriza and its coalition partner control just 153 of 300 seats in Parliament, a bare majority that leaves no political room for maneuver. Tsipras’ domestic political enemies are circling like buzzards.
Adding to the Prime Minister’s problems, the opposition New Democracy party is now headed by Kyriakos Mitsotakis, a credible and capable reformer. Mitsotakis has cleverly accepted the bailout’s headline numbers while challenging every step Tsipras takes to achieve them. Few of Greece’s smaller parties have any incentive to help Syriza absorb the blows that will come with more austerity.
As if Athens didn’t have enough problems, the country’s inability to slow the flow of migrants into Europe has angered E.U. policymakers. Greece has constructed just two of five promised reception camps meant to process migrants, and E.U. officials have threatened to cut the country out of the Schengen Agreement, which allows for free movement across borders, if the Syriza-led government fails to comply. That would shift Europe’s border to the north, leaving Greece flooded with refugees who have nowhere to go.
But Tsipras’ biggest problem may be that German Chancellor Angela Merkel can no longer afford to compromise with his government. Merkel has gambled that Germans will allow her to accept future waves of refugees into her country with no limit on their number. But as ordinary Germans fear the effect of the migrant surge on the country’s security and identity, Merkel has seen her approval ratings fall to their lowest levels in more than four years. She might soon become too politically weak to throw Greece yet another much needed lifeline. Trapped between an increasingly angry Greek public and creditors in no mood for concession, Tsipras might again find himself in the firing line.
That’s why, though the refugee crisis and Britain’s looming referendum on E.U. membership now dominate Europe’s news, Greece might yet be the story that pushes European consensus to the breaking point.
This appears in the February 08, 2016 issue of TIME.