Greece is demanding an explanation from the IMF, which, according to leaked internal discussions, have been mulling a crisis “event” to force Athens to obey, and threatening to leave the troika of creditors if Germany refuses to provide debt relief to the country.
“The Greek government is demanding explanations from the IMF over whether seeking to create default conditions in Greece, shortly ahead of the referendum in Britain, is the fund's official position,” Greek government spokeswoman Olga Gerovassili said in a statement cited by AFP.
Prime Minister Alexis Tsipras reportedly held an emergency meeting with key ministers on Saturday following the scandalous report, while his office announced that Tsipras “will immediately send an official letter to Christine Lagarde over the issue.”
The leaked document published by WikiLeaks on Saturday unveils a conversation between two International Monetary Fund (IMF) officials in charge of managing the ongoing Greek debt crisis – Poul Thomsen, the head of the IMF's European Department, and Delia Velkouleskou, the IMF Mission Chief for Greece in March 19, 2016.
The only reason why negotiations last year resulted in a deal between Greece and its creditors was because Athens was “about to run out of money seriously and to default,” Thomsen assumed during the conversation. The talks starting mid-April, he believes, could drag for months and will not bring the sides to a “decision point.”
“That is not an event. That is not going to cause them to... That discussion can go on for a long time,” said. “Because they are not close to the event, whatever it is.”
“I agree that we need an event, but I don't know what that will be,” Velkouleskou replied, also agreeing that the talks would drag past July, as the UK "Brexit" referendum which is to take place in June 2016 is going to “paralyse European decision making at the critical moment.”
Greece is “not even getting close” to accepting “our views,” Thomsen added. However, Velkouleskou said that if Athens is “pressured enough,” they would. “But they don't have any incentive and they know that the Commission is willing to compromise, so that is the problem,” she added.
Another possibility, on which both agreed, was to tell Germany that IMF will abandon the Troika group (IMF, European Commission and the European Central Bank) if the fund and the Commission fail to reach an agreement on Greek debt relief.
Thomsen suggested the IMF should say: “Look, you Mrs. 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'? or to pick the debt relief that we think that Greece needs in order to keep us on board?”
The creditors will resume talks on Greece's budget deficit and reform progress next week, hoping to conclude a bailout review and unlock further IMF loans as well as pave the way for negotiations on debt restructuring. The talks have been delayed twice since January over the disagreements between the lenders, and Greece’s reluctance to implement some of the “draconian measures” agreed under the last year’s deal.
The review has been adjourned twice since January due to a rift among the lenders over the estimated size of Greece's fiscal gap by 2018, as well as disagreements with Athens on pension reforms and the management of bad loans.