The breakdown of negotiations on Greece has come as a shock. Berlin and other European capitals look in disbelief at the Greek government’s resolve to inflict huge economic and financial damage on its own country and its citizens.

But Greece will not be the only loser. The stakes for the German government are high, both domestically and internationally. Yet Berlin has a rare window to use the present Greek tragedy to push for the implementation of urgently needed reforms, thereby making the euro sustainable and giving European integration again a stronger legitimacy.

Across Europe financial market risks are likely to be tremendous in the coming days and weeks. The most immediate challenge for eurozone governments is damage control. The risks from contagion have repeatedly been downplayed. But no one can reasonably predict whether and how the crisis will spill over from Greece.