Financial Times: Greece needs to keep the IMF at the table

Since Alexis Tsipras persuaded Greek voters to endorse a third bailout programme, after flirting last summer with sovereign default, eurozone creditors have been keen to view him as a responsible partner. The row over a leaked conversation between International Monetary Fund officials suggests they are wrong.

   The Greek prime minister has seized on the transcript of a teleconference about bailout negotiations to claim the IMF is trying to push the country towards bankruptcy, so as to impose ever-tougher austerity policies. Christine Lagarde, in a furious response, has all but openly accused him of wiretapping officials and leaking the recording.

   If it is true that the Greek government has engineered the crisis in an attempt to eject the IMF from bailout talks, then its tactics are irresponsible. Whatever the source of the leak, it is clear that Mr Tsipras wants the IMF to leave. Once again, he is displaying an instinct for short-term political gain and a disregard for his country’s long-term interests.

   The ever-unpopular IMF is an easy target for a prime minister facing criticism for his handling of the economy and the refugee crisis, and under pressure from the resurgent opposition headed by Kyriakos Mitsotakis. It is also true that the fund would be a tougher judge of Greece’s fiscal and economic performance.

   At present, Brussels insists that Greece has done nearly enough to complete the first review of its €86bn bailout - a necessary step before any further discussion of debt relief. The IMF has not yet agreed to join the rescue effort, because it believes the reforms agreed so far will not achieve the programme’s targets.

   Mr Tsipras would prefer to agree a path to debt relief without the IMF’s stricter conditions and monitoring. But this is an unrealistic goal. European creditors might demand less of Greece in the content of structural reforms. But they insist on targeting a primary surplus of 3.5 per cent of GDP that Greece is unlikely to meet under its current policies. Moreover, Germany has ruled out full-scale debt writedowns and is unlikely to agree to it without IMF involvement.

   The leaked conversation does not betray any conspiracy to force Greece into greater austerity. Poul Thomsen, head of the IMF’s European bureau, has already argued on his public blog that the current programme does not add up; that the IMF could accept less stringent reforms if accompanied by appropriate debt relief; and that both Greece and European creditors must stop delaying difficult decisions.

   This scenario is all too plausible. The EU’s negotiations with Greece over the past six years could be described as a strategy of “extend and pretend”, at every stage leaving unsolved problems to be dealt with at the next crisis. The IMF may not have an easy solution to Greece’s ills, but it is at least insisting on honesty, and it is the only organisation concerned with the long-term structural reforms needed for the country to prosper within the eurozone.

Πηγή: Financial Times