International Monetary Fund officials discussed the possibility of putting pressure on German Chancellor Angela Merkel to give Greece debt relief, or the IMF would withdraw from the country’s bailout program, according to a transcript of a purported conversation published by WikiLeaks.
Three officials said the refugee crisis, the U.K. “Brexit” referendum and Greece’s July deadline to repay about 2.3 billion euros ($2.6 billion) in principal on Greek bonds held by the European Central Bank were key events that could bring the issue to a head, according to the transcript on the WikiLeaks website. When asked about the account, an IMF spokesperson in an e-mail said the fund never discusses leaks or supposed reports of internal discussions.
The purported conversation underscores tensions that still divide Greece’s creditors after six years and three financial bailouts. IMF has been at loggerheads with auditors from the European Commission over the fiscal measures that the continent’s most indebted state must implement in order to meet its agreed budget targets, while Germany and other euro area countries have been insisting that the Fund will eventually have to get on board for the bailout to proceed.
“Look you, Mrs. Merkel, you face a question, you have to think about what is more costly: to go ahead without the IMF, would the Bundestag say ‘The IMF is not on board?’ or to pick the debt relief that we think that Greece needs in order to keep us on board? Right?” the IMF’s head of European Department, Poul Thomsen, who oversees the Greek bailout program, is quoted as saying in a transcript dated March 19. The IMF’s mission chief for Greece, Delia Velculescu, who is on the call, responds that she hopes the moment the fund raises this question will come sooner, “for the sake of the Greeks and everyone else,” according to WikiLeaks. The officials discussed the prospect of an “event” that will force stalled Greek bailout talks to a conclusion, according to the transcript.
Greek government spokeswoman Olga Gerovasili said in an e-mailed statement that the IMF must clarify whether it intended to create conditions of bankruptcy just before the U.K referendum, and that Prime Minister Alexis Tsipras will contact IMF head Christine Lagarde asking for explanations.
A Greek government official in a separate e-mail to reporters said the transcript proves that the IMF wanted to cause a credit event in order to force its euro-area partners to agree with its views, while the purported connection between the U.K referendum and the Greek bailout talks would risk widening the destabilization of the EU.
“While the IMF entered the Greek program from the beginning because it had the technical knowledge and could push in ways the EU member states couldn’t, the IMF played and still plays the bad-cop role,” said Aristides Hatzis, a professor of law and economics at the University of Athens.. “If it leaves, it will be much easier for Greece to end up with dead ends, as a negotiation with the Europeans would be a political one that doesn’t have rules.”
Thomsen, in a blog post on Feb. 11, said Greece will face renewed euro-exit fears unless its government and European creditors come up with a credible plan to make the country’s debt sustainable. Greece and its European partners will face politically difficult decisions in the coming months, he said in the post.
The IMF spokesperson, in the e-mail, said the fund has maintained that Greece needs a durable solution, which puts the nation on a path of sustainable growth supported by a credible set of reforms matched by debt relief from its European partner.
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