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05/12/2016

Germany and US wage ‘silent war’ over Greece

Euro & Finance

Germany and US wage ‘silent war’ over Greece

Supporting Tsipras: US Vice President Joe Biden.

[Kelly Kline/Flickr]

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 19 March conversation prompted Greek Prime Minister Alexis Tsipras to write to IMF chief Christine Lagarde, in order to complain, and she made public her reply on 3 April.

During a telephone conversation with Tsipras on Monday (4 April), 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, stressed.

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.

The Wikileaks file

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.

IMF’s involvement

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”.

Tsipras: 'Greece is part of Europe'

The 5 July referendum called by the Greek government will be on the agreement proposed by international creditors, not on a Grexit, said Alexis Tsipras, late Friday night (26 June). EurActiv Greece reports.

EurActiv.com

“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.

“The IMF should remain in the programme,” Martin Jaeger said.

The same view is shared by the President of the Deutsche Bundesbank. “The IMF is an integral part of rescue programs,” Jens Weidmann said today (5 April).

In addition, Skai news quoted Biden as saying that “the IMF is certainly part of the solution” and that he was in close contact on the issue with IMF’s chief, Christine Lagarde.

Who leaked it?

EurActiv’s partner Der Tagesspiegel reported yesterday that the head of the Greek secret services, Yiannis Roubatis, had leaked the document.

“The head of the National Intelligence Service, a man of Alexis Tsipras, could be possibly the source of the ‘leak’, which affects anyway a climate of weak confidence among lenders and Greek government,” the report reads.

In reply, the Greek official issued a statement saying that the mission of the National Intelligence Service was to “protect our national security and our national sovereignty”.

He noted that his agency “operates in accordance with the Greek legislation, which always requires a Prosecution Order for tackling criminal activities or other threats”.

S&D supports “again” Tsipras, EPP silent

Reacting to the WikiLeaks revelations, S&D President, Gianni Pittella, fiercely criticised the IMF.

“If the recent news on the International Monetary Fund leak is confirmed, this would again call into question the credibility and authority of the IMF, which under no circumstances should give the impression it is acting as a political body, pursuing political goals. We do expect an official denial from the IMF,” the Italian lawmaker said.

Pitella continued, saying that the Commission and the Greek authorities had paved the way for an agreement on the review and “we urge the IMF not to create unjustified obstacles to it”.

Euractiv.com contacted several EPP officials for a comment on the issue. All of them declined to comment, saying that the discussion was “only focused on the Panama Leaks”.

Opposition blames Tsipras

In the meantime, Greece’s main opposition party, the right-wing New Democracy, accused Tsipras of playing communication games.

“The paper of the alleged ‘tough negotiation’ is getting burnt,” New Democracy sources noted.

The same sources noted that Tsipras was playing brinksmanship with the creditors, risking putting the country in an even worse situation.

New Democracy’s vice president, Adonis Georgiadis, ‘wondered’ about the government’s quick reaction to the WikiLeaks revelations.

“Within one hour, an extraordinary government council was convened, [they] issued a communique, the next steps were coordinated, the President of Greece made a statement […] it was impressive,” Georgiadis said.

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