Greece: The IMF has “criminal responsibility” for the country’s debt crisis

Source:  theguardian.com
Ian Traynor in Brussels and Helena Smith in Athens
16 June 2015

Greece’s prime minister has said the International Monetary Fund has “criminal responsibility” for the country’s debt crisis as it emerged Athens could miss a €1.6bn (£1.15bn) payment to the lender this month.

Speaking in the Greek parliament Alexis Tsipras called on creditors to reassess the IMF’s insistence on tough cuts as part of the country’s bailout.

“The time has come for the IMF’s proposals to be judged not just by us but especially by Europe,” he said. “Right now, what dominates is the IMF’s harsh views on tough measures, and Europe’s on denying any discussion over debt viability.”

A political plan

He added: “The fixation on cuts … is most likely part of a political plan … to humiliate an entire people that has suffered in the past five years through no fault of its own.”

Earlier it emerged Greece was threatening to miss this month’s €1.6bn debt repayment to the International Monetary Fund this month, in a move that would bring it closer to default and ejection from the euro.

“The government will not pay the IMF, if by the end of the month an agreement hasn’t been achieved with lenders,” Alexis Tsipras is reported to have told opposition party leader, Stavros Theodorakis, during talks between the two in Athens today.

Eurozone finance ministers meet in Luxembourg on Thursday for what has been billed as the latest “last-chance” for an agreement, but the negotiating atmosphere is at a nadir since Tsipras came to power in January, talks are at stalemate and hopes of a breakthrough are slim.

Challenging the legitimacy of the negotiations

The eurozone and the European commission said they will only negotiate if Greece tables serious new proposals on fiscal targets, including pensions reforms and liberalisation of the labour market. But Yanis Varoufakis, the Greek finance minister, said he would not take any new proposals to Luxembourg and challenged the legitimacy of the negotiations.

The Greek politician’s threat of default now raises the game of poker a notch further.

“It was said in the manner of “can’t pay, won’t pay,” a senior member of Theodorakis’ centrist Potami party told the Guardian. “If there isn’t an agreement the money simply won’t be there.”

Other aides quoted Tsipras as saying that in the event of an agreement not being achieved non-payment would be the “only route” Greece could take.

Irreconcilable positions

Talks ground to a halt in Brussels last weekend when the Greek team showed up at the commission but no negotiations took place because of irreconcilable positions. Both sides say they are willing to negotiate but are waiting for offers from the other side.

Earlier this month, Greece became the first country after Zambia – and the first-ever advanced western economy – to miss an IMF payment, resorting to legislation that allows members to “bundle up” loans by paying them in full at the end of the month.

Greece’s current bailout expires on 30 June, the same day it is due to repay the IMF. Without agreement extending the rescue package and freeing up to €19bn in bailout funds tied to Greek reforms, Athens will run out of cash.

The crisis should be resolved by political leaders, not technocrats

The German tabloid Bild reported that the Greek government had discovered a way of deferring the IMF payment until the end of the year. Greek officials denied the report.

With the chances of a deal on Thursday fading fast, there was talk in Brussels of convening an emergency eurozone summit between Friday and next Monday. That would suit Tsipras who regularly insists that the crisis should be resolved by political leaders, not technocrats.

There is an EU summit in Brussels on Thursday and Friday next week. The summit has to grapple with major issues such as David Cameron’s in/out referendum on the EU, sanctions on Russia, and the Mediterranean refugee emergency. Leaders, especially Angela Merkel, do not want next week’s summit hijacked by Greece. But that appears inevitable without a breakthrough.

Refusing to pay the IMF would not formally put Greece in default on its huge government debts – since the IMF is not a commercial lender – but it would represent a big step towards that eventuality and open the question as to whether Greece, without an agreement with the eurozone, will be able to redeem more than €3bn of bonds at the European Central Bank next month.

EU leaders are for the first time talking openly about Greek default and its ejection from the euro.

Valdis Dombrovskis, vice-president of the European commission, said eurozone leaders were discussing “less favourable scenarios” for Greece, while the Finnish prime minister, Juha Sipila, said an agreement with Greece now would require a miracle.

“The possibility of (Greek) insolvency was discussed in the sidelines of the EU summit last week. Several countries have mentally prepared for it,” she said.

Source:  Eurozone braces for Greek exit as Athens threatens to miss IMF payment  The Guardian

One thought on “Greece: The IMF has “criminal responsibility” for the country’s debt crisis

  1. Pingback: Nobel laureate tells TIME that the institutions and countries that have enforced cost-cutting on Greece “have criminal responsibility” | JSC: Jamaicans in Solidarity with Cuba

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