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Saturday, April 2, 2016

WikiLeaks - IMF Internal Meeting Predicts Greek 'Disaster', Threatens to Leave Troika

via TO ΒΗΜΑ: Wikileaks: Αποκαλυπτική συνομιλία Τόμσεν-Βελκουλέσκου για την αξιολόγηση

WikiLeaks - IMF Internal Meeting Predicts Greek 'Disaster', Threatens to Leave Troika

Tim Worstall at Forbes thinks that "Wikileaks Release Is Pretty Much What We All Knew Anyway"

Peter Spiegel 's column at CNBC  and his FT Column

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The International Monetary Fund is considering forcing Germany’s leadership to quickly grant wide-ranging debt relief for Greece or allow the Fund to exit Athens’ bailout programme after six years, according to a transcript of an internal IMF teleconference published by WikiLeaks.
The teleconference, between the head of the IMF’s European operations and its top Greek bailout monitor, is the clearest sign to date that the Fund wants to leave Greece’s €86bn rescue to the EU alone and wash its hands of a programme that has led to a torrent of criticism.
During the call, which occurred just two weeks ago, Poul Thomsen, head of the IMF’s European bureau, notes that Berlin is under intense political pressure because of the refugee crisis and suggests confronting Angela Merkel, the German chancellor, to either agree to debt relief or allow the IMF to exit.
German officials have repeatedly said they could not participate in Greece’s bailout without the IMF on board, and senior members of the Bundestag have warned Ms Merkel they would reject new eurozone loans to Greece if only EU authorities were monitoring the programme.
“Look, you Ms 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’?” the transcript quotes Mr Thomsen as saying to his staff. “Or [does Ms Merkel] pick the debt relief that we think that Greece needs in order to keep us on board? Right? That is really the issue.”
The IMF said it would not comment on “supposed reports of internal discussions.” But it noted that it has long pushed for “a credible set of reforms matched by debt relief from [Greece’s] European partners.”
One official involved in the talks said the transcript accurately reflected Mr Thomsen’s private and publicly-stated views, albeit in “more direct and colourful language.” Many of the points raised by Mr Thomsen in the call have been made publicly on his IMF blog.
Greek officials, however, reacted angrily to the revelation, arguing it was evidence the IMF was “blackmailing” Germany on the debt relief issue. 
“We will not allow anyone to play with fire and blackmail Greece or Germany or Europe,” said a senior Greek official. Alexis Tsipras, the Greek prime minister, was meeting with his cabinet on Saturday to decide how to respond and was expected to talk to Christine Lagarde, the IMF managing director, later in the day.
The IMF teleconference came just days after Wolfgang Schäuble, the powerful German finance minister, publicly said he was opposed to Greek debt relief — despite the fact eurozone leaders agreed to restructuring last July at a high-drama EU summit that agreed to a third bailout programme.
In the past there has been only one time when the decision has been made and then that was when they were about to run out ofmoney
- Poul Thomsen, IMF
The transcript shows IMF officials fretting that despite public claims, eurozone leaders wanted to move quickly to agree debt relief — which has long been an IMF demand, since Mr Thomsen believes Greece cannot survive economically without a large-scale restructuring — a decision will probably be delayed until July, when Greece is faced with its next big debt payment.
“What is going to bring it all to a decision point? In the past there has been only one time when the decision has been made and then that was when they were about to run out of money seriously and to default,” Mr Thomsen is quoted as saying. “And possibly this is what is going to happen again. In that case, it drags on until July.”
But Mr Thomsen notes that in addition to causing instability in Greece, a drawn-out deliberation on debt relief is politically dangerous for the EU because it will coincide with strife prompted by the refugee crisis and play out at the same time as Britain’s June 23 referendum on EU membership.
“Clearly the Europeans are not going to have any discussion a month before the Brexit [vote] and so, at some stage, they will want to take a break and then want to start again after the European referendum,” Mr Thomsen says.
Olga Gerovasili, a Greek government spokesman, said the statement showed Mr Thomsen was pushing for a Greek default before the British referendum in June.
"The Greek government asks the IMF for explanations whether pursuing the creation of bankruptcy conditions in Greece, just before the British referendum, is the Fund's official position,” Ms Gerovasili said.
A spokeswoman for Ms Merkel declined to comment. Berlin is likely to play down the reported remarks and avoid inflaming the political tensions surrounding the Greek rescue. The government is expected to remain very sceptical about deep debt cuts for Athens: it has repeatedly argued that these do not have to be on the immediate agenda as Greece has already been granted debt relief for the next few years.
Berlin will however be keen for the IMF to stay involved in the rescue, as the Bundestag’s support for the package depends on continued IMF financial backing.
Ms Merkel is also concerned to avoid undermining support for the EU in the UK in the run-up to the referendum. She has said that British membership is not only in UK’s interest but also Germany’s and the whole EU’s.
Although much of the transcript reiterates well-known IMF positions on Greece, it lays out in clear detail the profound differences between Mr Thomsen and the European Commission, and highlights the IMF’s belief that Brussels no longer has any credibility in judging Greece’s fiscal and economic performance. The IMF and the commission are the bailout’s two leading monitors and have clashed for months over how to proceed with the programme.
Delia Velculescu, who oversees the Greek programme for the IMF, is quoted showing frustration with the European Commission’s backsliding on reforms required by Athens and says eurozone finance ministers should be forced to decide whether to accept the IMF’s pessimistic view of the bailout’s likelihood of success or a more optimistic view from Brussels. 
“They need to take a stand on whether they believe our projections or the commission’s projections,” Ms Velculescu says.
Despite Greek anger over the disclosure, the transcript also shows the IMF arguing on Greece’s behalf, saying it wants to ease off tough budget surplus targets and grant Athens significant debt relief — both policies Mr Tsipras has long asked for.
“I hope for the sake of the Greeks we are going to find a solution soon,” Mr Thomsen says.

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