Ger­many and US wage ‘silent war’ over Greece

Financial Mirror (Cyprus) - - FRONT PAGE -

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.

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