It's a political victory for Merkel as she prepares for May elections. A newspaper here today called her Germany's "iron chancellor."
Yet this praise shields the fact that Merkel, under political and economic strain, had softened her stance on the bailout in recent weeks. Agreeing to any bailout plan, no matter the provisions, is an about face from her earlier stance that any IMF involvement in the eurozone would be an embarrassment, and that Greece should bear responsibility for its own debt.
As the severity of the crisis emerged in January, the immediate reaction from Greece and other EU members was that Germany, as the largest economy in the eurozone, should publicly assure investors that Berlin would provide assistance to Athens if necessary. This guarantee would calm investors and allow Greece to raise money through bond issues, they argued.
No such assurance came. The German public was opposed to providing help to what they considered a corrupt Greek government with lavish social welfare spending. Merkel, citing a clause in the European Constitution that prevented one member from bailing out another, repeatedly dismissed calls for German action.
In the following weeks, however, economic and political realities forced Merkel to change her position. Greece needed to raise $26.6 billion in April and May to make loan refinance payments – money that could not be raised without some kind of guarantee of an outside party. If Greece were to default, it would drag down the value of the euro and undermine confidence in the euro zone. The German economy would in turn suffer.