Daily Times

The International Monetary Fund has been at odds with other partners in the Greece bailout saga. Its economists have wondered whether strangling a state with the noose of austerity is a decent way of either eliminating debt, let alone stimulating growth. Not that the body has gone entirely anti-austerity. The European Commission, and the European Central Bank, have enjoyed taking the high road on trimming the Greece state while seeking debt repayments. Their obsession with credit, and their reduction of states and their citizens to bank balances, has betrayed a mania for debt hood over sovereignty. The point was amply illustrated by the financial occupation engineered in July, when Greece accepted a three-year, 86 billion-euro European Union bailout. The Syriza dream of financial independence and a comprehensive renegotiation of terms was at an end. The clash of positions within the Troika, and the IMF itself, has perpetuated something of an institutional, undermining perversion. Athens has been effectively receiving funding from an organisation which has, as its main directive, an obligation not to fund insolvent states. This has caused a degree of dissatisfaction in the ranks of the organisation, one demonstrated by a conversation leaked by WikiLeaks that supposedly took place on March 19. The dialogue between Delia Velculescu, the IMF’s Greek mission chief, and Peter Thomsen, the same organisation’s European head, became something of a bomb shell between Athens, its European counterparts, and the IMF. It hardly demonstrated a new won sweetness on the part of the IMF to be more generous. More accurately, it demonstrated the political haggling over how an oppressive debt-austerity regime could be handled for the next crisis. For one, the transcript notes how the IMF was keen to factor “debt relief” for Greece in Troika negotiations. The organisation, however, was worried about EU paralysis given the prospects of a “looming Brexit”. To that end, some arm twisting of the German Chancellor Angela Merkel was suggested. Should the IMF leave the Troika, things would “look bad and [would] lead to discomforting questions in the Bundestag.” In Thomsen’s near conspiratorial words, “In the past there has been only one time when the decision has been made and then that was when (the Greeks) were about to run out of money seriously and then to default.” Velculescu responds somewhat later with agreement, claiming that “we need an event, but I don’t know what that will be.” This revelation riled Greek Prime Minister Alexis Tsipras sufficiently to make him shoot a letter to IMF Chief Christine Lagarde. Her response on Sunday was that, “Any speculation that IMF staff would consider using a credit event as a negotiating tactic is simply nonsense.” Having dismissed it as nonsense, Lagarde proceeded to reproach Tsipras for not guarding against such leaks. It was “critical” that the Greek authorities respect the “privacy of their internal discussions and take all necessary steps to guarantee their personal safety.” The further disagreement here suggests an irritation on the part of the IMF regarding the Commission’s figures. The latter insist on a Primary Government Budget Surplus of 3.5 per cent, while the former, as stated by Thomsen, put it at 1.5 per cent. This comes down to whether Athens intends being compliant by accepting a revised austerity package plan. This has made the negotiating stance of the Tsipras government difficult: does it hold out for a softer beating in terms of the next austerity package, or will the chop be even more severe? The tipping point will be that calamitous “event”, no doubt a default to one of the Troika members. Courtesy – Counterpunch