Germany and US wage ‘silent war’ over Greece
A leaked telephone conversation, and the reactions which followed, revealed a “silent war” between the United States and Germany over the Greek crisis, with Athens’ leftist government finding itself more in tune with Washington than Berlin. WikiLeaks released a transcript, showing that the IMF was looking for a crisis “event”, obviously meaning a Greek default, in order to push the indebted nation, and European negotiators, into accepting its fiscal targets.
The March 19 conversation prompted Prime Minister Alexis Tsipras to write to IMF chief Christine Lagarde, in order to complain, and she made public her reply on April 3.
During a telephone conversation with Tsipras on Monday, US Vice President Joe Biden reassured the Greek prime minister and said that Athens’ EU partners should implement their commitment to ease the country’s debt in order for it to be sustainable.
“The Vice President also underscored the need for Europe to follow through on its commitment to put Greece’s debt on a sustainable path through debt relief,” a White House statement reads.
The statement sharply contrasted with Berlin’s warning earlier the same day that a debt haircut was out of discussion.
“A debt haircut is not up for debate at the moment,” Germany’s Finance Ministry spokesman, Martin Jaeger, said.
Biden and Tsipras agreed that a “constructive” cooperation was needed between Greece, Europe and the IMF having as a goal the completion of the country’s bailout first assessment “on time”.
“The Vice President and Prime Minister Tsipras agreed on the need for continued swift progress on Greece’s economic reforms and on the importance of Greece, the IMF, and European institutions working constructively to conclude the first review of Greece’s economic reform program in a timely manner,” the White House noted.
Greece’s international creditors are currently in Athens, and are holding discussions with the government on the terms of the country’s third bailout first assessment.
WikiLeaks quoted Paul Thomsen, head of the IMF’s EU department, and Delia Velculescu, the IMF mission chief for Greece, as saying that the fund would threaten Germany with abandoning the Greek bailout if no agreement could be reached on debt relief. The two officials also agreed that the target of a primary surplus of 3.5% of GDP in 2018 – agreed on between the EU and Greece – must be loosened at least to 2.5%, or even to 1.5 % of GDP.
The two IMF officials noted that Germany is under pressure due to the refugee crisis, and that EU partners might want to postpone the debt discussions after the Brexit referendum, as all decisions at an EU level would freeze one month before.
“[…] it drags on until July, and clearly the Europeans are not going to have any discussions for a month before the Brexits and so, at some stage they will want to take a break and then they want to start again after the European referendum,” Thomsen is quoted as saying.
The Syriza–led government has always opposed IMF’s participation in the bailout, criticising its firm stance in the negotiations.
A few days before the Greek referendum in July 2015, Minister of State Nikos Pappas stated that Europe could continue “without the IMF”.
“Europe has the institutional dynamic to find solutions for the crisis without the IMF,” he noted.
On the other hand, Berlin has insisted that the IMF should remain part of the Greek programme.
A potential IMF exit from Greece’s bailout would trigger a wave of reactions in the German lower house, where many allies of Angela Merkel have made clear that they will not vote for new aid to Athens if the Fund does not participate in the supervision of the Memorandum implementation.