Recent Items

IMF Labels Greece “Most Unhelpful Client in its History”

This report does not bode well for Greece Prime Minister Alex Tsipras’ efforts to resolve what he regards as an impasse over negotiating process, but the IMF and possibly the ECB regards as a more fundamental outtrade. The IMF clearly regards the structural reforms that the previous government agreed to as very much in place, while Greece appears to believe that it had won the right to renegotiate them. Various media reports over the last few week suggest that Greece’s creditor are largely aligned with the IMF view, but that could unduly reflect German and financial services industry bias in reporting.

Regardless, the IMF was clearly set forth in the memo as having to approve the reforms package with Greece before any funds could be released. Tsipras’ efforts to reach a “political” solution by going to top European officials ex Lagarde, meaning Merkel, Hollande, ECB chief Draghi, EC head Juncker look unlikely to succeed. Greece has never been an equal party in these talks. As we reported earlier, Greece was not a party to the drafting of the February memo; it was presented to Tsipras as a fait accompli, and the most favorable report says he asked only to have one word changed. Unless Merkel decides Grexit is too big a risk and decides to puts her foot down, Greece is unlikely to get any breaks. Indeed, the meeting could wind up having the European leaders tell Tsipras that he is at the end of his rope and needs to make some tough choices.

As Marshall Auerbach assessed the harsh remarks of the IMF via e-mail:

Really? Worse than Malaysia when they imposed capital controls? Worse than those corrupt Latin American dictatorships from the 1970s and 1980s? Worse than today’s Ukraine government?

I guess you can say the deck is really stacked against Greece pour decourager les autres.

From Bloomberg:

International Monetary Fund officials told their euro-area colleagues that Greece is the most unhelpful country the organization has dealt with in its 70-year history, according to two people familiar with the talks.

In a short and bad-tempered conference call on Tuesday, officials from the IMF, the European Central Bank and the European Commission complained that Greek officials aren’t adhering to a bailout extension deal reached in February or cooperating with creditors, said the people, who asked not to be identified because the call was private.

German finance officials said trying to persuade the Greek government to draw up a rigorous economic policy program is like riding a dead horse, the people said, while the IMF team said Greece’s attitude to its official creditors was unacceptable. The German Finance Ministry didn’t respond to multiple requests seeking comment.

Concern is growing among officials that the recalcitrance of Prime Minister Alexis Tsipras’s government may end up forcing Greece out of the euro, as the cash-strapped country refuses to take the action needed to trigger more financial support. Tsipras is pinning his hopes for a breakthrough on a meeting with ECB President Mario Draghi, German Chancellor Angela Merkel, French President Francois Hollande and European Commission head Jean-Claude Juncker this week in Brussels.

Print Friendly, PDF & Email

69 comments

  1. Patrick

    “trying to persuade the Greek government to draw up a rigorous economic policy program is like riding a dead horse”

    The fact that the Europeans see the negotiations as analogous to riding a horse, rather than, say, cooperation between partners, says a lot about why things are going so poorly.

    1. Jim Haygood

      How do you say corralito in Greek?

      Last chance to wire out those Greek euro deposits to a safe harbor. This weekend the ax could fall.

  2. DJG

    This indicates to me that there are too many parties and too much use of the media to do special pleading: “In a short and bad-tempered conference call on Tuesday, officials from the IMF, the European Central Bank and the European Commission complained that Greek officials aren’t adhering to a bailout extension deal reached in February or cooperating with creditors, said the people, who asked not to be identified because the call was private.” Really? Did they let Rupert Murdoch listen in, too? This is the same sort of disaster that is now going on with the absurd Tom Cotton (a letter made public?). It’s what gives life to Lindsey Graham and John McCain, let alone the mysteriously policy-free Hillary Clinton. I’m not arguing for the era when the Dulles Brothers mainly just talked to each other, but celebrity negotiation of economic policy seems a tad fraught.

    1. James Levy

      I think the problem is deeper. You are a highly educated Greek finance minister. You walk into a room. You have some really good ideas about how to help your country both improve its economic conditions and pay off its creditors–two things you see as inextricably linked. But everything you and your Prime Minister says is met with incredulity and hostility. You are not having a discussion. You are not collectively searching for a rational accommodation. You are being lectured to, threatened, and ordered about like a flunky. So you try to get the discussion out of that room. But you find that the room and the media and the Eurozone are all the same place. It’s enough to make any highly intelligent person lose their marbles. It’s Kafkanomics!

      1. concretebunker

        Except no serious actions have been suggested! Greece wants the euro as long as their lifestyle is funded by others.

  3. Cugel

    Things proceed on course. Greece will be forced to capitulate 100% or else Grexit will be forced upon them amid withdrawal of support for the Greek banking system. They are going to “make the economy howl” as Nixon famously said of Chile before the coup.

    The problem here is that there will be blow-back from all this. The Germans can be as smug as they want and wash their hands of the problems. But, it’s unlikely to convince anybody who doesn’t already swallow their propaganda. What it will do is convince the Southern European countries that they have no future in the Eurozone and that the sooner they get out the better. The extremist parties will flourish, especially the Nazis.

    There’s been a lot of comment that the Germans prefer Golden Dawn. I doubt they think that way. They have a quasi-religious fixation on austerity, no matter how badly it fails. It’s simply an inability to see alternatives. They aren’t planning rationally at all. They can’t conceive of the concept of real cooperation, even to save themselves, and comfort themselves with the delusion that the crisis can “be contained” because nothing cataclysmic will happen in the next 6 months.

    1. cassiodorus

      As I said in today’s other discussion about Greece, it hinges on how the word “forced” is defined. I suppose by one criterion “forced” has already happened, given Djisselbloom’s provocations, so the Greek government should start printing drachmas tomorrow morning.

      1. Kurt Sperry

        Very interesting and broad discussion, one of the best recent pieces I’ve read on Greece. It’s really nice to read an analysis that is refuses to fall into jargon or arcane technobabble (and all the logical traps and mindf*** deer paths those digress into) and remain focused like that. There’s a level of clear eyed detachment, sophistication and grounding in first principles here you just never see in mainstream modern Western political discourse.

      2. Oregoncharles

        so Lapavitsas is the “anti-Varoufakis.” He is also Syriza’s ace in the hole, and their implicit threat.

        Think about it: he isn’t even a member of the party, but they put him on their list and into Parliament. Why? Because he’s their backup if the policy Varoufakis represents fails – if the Eurozone is too intransigent.

    2. Jim

      Greece and Germany is certainly a marriage made in hell. The whole Eurozone makes no sense at all.

  4. Oregoncharles

    1) Isn’t this part of the negotiations?

    2) ” Unless Merkel decides Grexit is too big a risk and decides to puts her foot down, Greece is unlikely to get any breaks. ” Merkel, and the rest of the world. Back to the game of Chicken. Minus the nukes, it’s quite reminiscent of the Cuban Missile Crisis – which, in my opinion, shaped the attitudes of my whole generation.

    It’s possible we’re seeing the whole world economy verrrrry slooooowly going smash. Or at least Europe’s. Various elections wait in the wings – Spain, Britain, France. How secure is the government in Italy?

    And China slowing down. Interesting times.

  5. Ben Johannson

    Tsipras and Varoufakis are sure doing their best to create an appearance of wanting to be kicked out of the euro.

    1. Kurt Sperry

      That is how it looks to me as well. They seem hellbent on transferring the responsibility of any incipient grexit very clearly and very publicly to the troika. Is this for political cover or does the grexit event unwind very differently in practical terms if it is imposed externally against Greece’s explicit wishes to remain in?

  6. nony mouse

    considering what the IMF is and does, Greece should wear that label with a mark of pride.

    1. reslez

      The IMF has the honor of being the only entity to destroy more countries than Yersina pestis.

  7. samhill

    A WHOLE LOT of people in Europe, not to mention the world, support Greece and Syriza, why has no one brought up a boycott of German products? Yes, there are more villains here than just Germany, but you have focus the stinkfinger if you want the mojo to work.

      1. JTMcPhee

        More DON”T support the Greeks in this situation? Maybe because of who is driving the Narrative and for whose benefit? God forbid if enough of us who “don’t” support the Greek polity, who Puritanically support the PTB because we are all convinced, and told over and over and over, that all debts should be repaid in full (except for certain privileged exceptions of course) however incurred under whatever exigencies subject to whatever impossible terms without even bankruptcy as an option and with suicide as a way out for an increasing number of despairing individuals but not for the “political economy,” suddenly get a clearer view of the situation they and most of the rest of us are in.

        Not like it’s the only place the game is being played: “Seeds of suicide and slavery versus seeds of life and freedom: Contrary to its claims, Monsanto’s monopoly on seeds in India are the root cause behind the sharp increase in suicides.” http://www.aljazeera.com/indepth/opinion/2013/03/201332813553729250.html, and for us would-be-middle-classers in the US among other scams like payday and title loans, mortgagee fraud, 24% credit cards with all those fees, there’s this scam-jam: “”Student loans aren’t hope. They’re despair.” http://www.newappsblog.com/2013/08/student-loans-arent-hope-theyre-despair.html

  8. ToivoS

    The people of Greece, according to polls, are terrified of leaving the Euro or the EU. That is the problem that Tsipras faces in these negotiations. However, if the Germans remain intransigent in their negotiations with Greece and that becomes clear to the Greek people then maybe Tsipras will have the political space for Grexit. No more EU and no more EURO. The exit will cause some serious economic disruption in the short term but it will allow them to leave the crushing debt that they are under now. I am hoping that Tsipras succeeds but it will be a very difficult task.

    1. MyLessThanPrimeBeef

      Is that a case where a political sovereign opting for no monetary sovereignty?

    2. Calgacus

      The people of Greece, according to polls, are terrified of leaving the Euro or the EU.
      Greeks don’t seem so terrified from this poll – Table 4:
      If you were given the choice, would you prefer to have the Euro or your own national currency?
      32% of Greeks say Euro, 52% say national currency.

      So this may be a case where people need to lead their leaders.The most important thing about leaving the Euro is not stiffing creditors – but of being able to manage your own economy; of ending austerity permanently. Greece is already in serious economic disruption; the economy is already screaming. So there is no credible argument that Grexit would cause much worse in the short term, and Austerianism has ground Greece down so far already that after a short period of a few months, a newly independent Greece should prosper robustly. The truer danger of Grexit to the Euro is not financial, but economic. Greece might easily do so well outside the Euro that the Masters of Austerity could lose their stranglehold on Europe – and the cannier Eurocrats do see this (welcome) danger to them.

  9. MyLessThanPrimeBeef

    It’s a bit much over at Market Watch…they are called ‘clowns.’

    Something about posing for a Parisian publication and having a blonde wife must have set them off.

  10. vlade

    step one, nationalise greek banks over the weekend.
    step two, split into good/bad, with good keeping the liquidity and the bad keeping the ela support (so that the good can survive for a while w/o ela, while providing basic banking services). having a very brief look at the aggregate balance sheet of greek fis, this should be possible.
    while doing that, banks are closed and cap controls imposed
    step three, default on greek debt, possibly (that is, if possible) selectively
    step four, watch the germans fume
    if you’re feeling nice, you can say after step two ‘how about we negotiate NOW or should we just go to step three right away?

    oh, and sort the tax collection finally, as without it nothing will really work if you want to stay in eurzone (and bot have a sovereign currency)

  11. Christer Kamb

    Silly said; “Most Unhelpful Client in its History”

    No other nation/client in the developed world has ever been bankrupt and at the same time a member of a fixed exchange-rate mechanism without the possibilty to devalue/unpeg and/or print money. It´s extortion telling Greece they can´t borrow money from their ex-partners or i.e IMF/World Bank when exiting EMU. The blame is mutual of course.
    And you can´t compare with South-America and countries led on feudal principles by a small elite always robbing the small man. IMF on the other hand is a US-tool used when dollar escapes a country after a long boom leaving malinvestments and dollar-overindebtness behind. Greece´debts were doubled after joining the euro(0,80-1,60).

    1. Yves Smith Post author

      Oh, I don’t disagree that Greece has been put in an insane position, and that its all too visible upset isn’t justified. This is all really brutal. What bothers me is the degree of denial in the Greek government. Their focus should be on how to govern (as in deliver services competently as they can under these horrid circumstances, and communicate effectively with the public). I find it troubling that they seem to be really overestimating their ability to influence the Troika and Eurogroup, and are messaging to the public based on that overestimation. That will only lead to greater backlash.

      1. James Levy

        As you’ve linked in the past few days, both the Archdruid Report and Club Orlov have articles on just how completely in thrall political leaders and elites of all stripes are to PR, image management, and spin. I don’t know the men and women running the Greek government but I’d say they are just emulating the zeitgeist. No one worries about reality, they worry about manipulating the perception of reality.

      2. mpr

        Maybe they’re implementing my suggestion. Causing volatility while cleaning up in all kinds of derivatives.
        One can dream …

      3. Matt

        I do not think the Greek public has any doubts about the desires of the IMF and the ECB, as evidenced by the bank run. The rest is theater, as the Greek government is going to do what it can and not comply with the worst of the IMF and ECB demands. I do not understand how the “ECB” can veto Greek legislation. The Greek government is acting “bring it on” without saying so.

        1. Yves Smith Post author

          First, Greece agreed to taking “no unilateral action” that would affect its budget over the next four months. The humanitarian bill does that.

          Second, what is not well understood is that the treaties establishing the EU made clear that former nations were ceding sovereignity, that international law generally speaking (to the extent that nebulous concept is operative) didn’t apply and the former independent countries were agreeing to be governed by the treaties and any disputes were governed solely by the treaties and the judgments made by the European Court of Justice.

          Now of course, Germany, being a more equal animal, still has rulings by its Constitutional court that matter….

          1. mpr

            Wasn’t the humanitarian aid explicitly in the list of proposals “approved” by the ‘institutions’ following the last Eurogroup ? As such it is arguably not a unilateral move.

          2. Sibiriak

            Yves Smith: “Greece agreed to taking “no unilateral action” that would affect its budget over the next four months. The humanitarian bill does that.”

            ————-
            1) The humanitarian bill was discussed with the “institutions” et al., so the action wasn’t necessarily “unilateral.”

            2) The humanitarian bill was not officially “vetoed”:

            “the EUs economic affairs commissioner Pierre Moscovici denied [the Commission’s move] had been a veto of the bill.”

            http://www.ekathimerini.com/4dcgi/_w_articles_wsite1_1_18/03/2015_548336

            1. Yves Smith Post author

              No, Greece is bound by the written memo. The terms are very clear: no unilateral action. That means Greece needs explicit approval, which it has yet to receive.

              The EC formally cannot veto the Greek parliament. But Greece has violated the memorandum, which means the parties on the other side can treat it as no longer operative, and impose even tougher terms.

          3. Santi

            An emergency 200M€/year package can hardly be said to be “unilateral”, when it addresses humanitarian crisis levels, or to “affect the budget” when the public budget is about 50B€. Come on, this is less than would be spent in tear grenades by the Spanish government just is case we rebel. The fact that they choose this package, which is also supported by the former government party (ND voted yes to it) to stand for a (leaked) fight is very stupid politically unless they are trying to push us all to disaster, which I hope not, as bad as things look.

          4. Matt

            I was commenting “theater” in more symbolic way. In view of the Feb 24 letter written by Declan Costello with a March communique by Declan Costello claiming “inconsistent with the commitments made” it is a lot more concrete. Someone might as well investigate Costello’s involvement with Anglo Irish Bank debacle along with the German bank holdings and derivative plays in Ireland that the Irish taxpayers are now making good on.

      4. junomoneta

        In my eyes, the population still hoped for respite so they had a mandate to negotiate. The negotiations led to nowhere so hopefully this will convince the people that they now have to play hard ball. They first had to show the people that negotiating would not work. Now they can move on to plan B.

        The media and co. strategy was to do whatever they could to make them look like bad negotiators so they would lose the Greek people’ support.

      5. purple

        They are profoundly naive and irresponsible and have been for a long time. To not have a Plan B is not to have negotiating position.

      6. Christer Kamb

        Yves; Firstly I think this new government lacks experience from negotiations on a nation-toplevel including leading a government/country of course and secondly, perhaps most important, the elected party Syriza has a lot to stand up for in regards for it´s promises to their constituency. A New Deal if you will. People expect change and a clear breake from the Troika-agreements made by the former government. So I think is not a surprise that mr Tsipras and mr Varoufakis takes a very hard-line stand in the start of the negotiation-process. They really had to see their counter-parts. Yes they problably know by now they overestimated their chances and things rebounds. So time for round 2. Greece need money and you can´t do very much for the people without it. ELA-credits closed and the last straw public pensions already disposed. Next card in the game is Russia.

        Nevertheless I have not seen much in the papers about their domestic communications and what people really say about how ordinary life has been affected with the new government. The risk of unexpected disappointments is rising as time goes and the most precious of all, confidence, could slip away very fast under these very hard cirkumstances.

  12. mike

    http://www.bloombergview.com/articles/2015-03-17/greece-s-euro-exit-seems-inevitable
    And if what Varoufakis went on to say is instructive of the game-theory professor’s mind-set, the lack of progress in negotiations with lenders isn’t so surprising:

    The most effective radical policy would be for a Greek government to rise up or a Greek prime minister or minister of finance, to rise up in EcoFin in the euro group, wherever, and say “folks, we’re defaulting. We shall not be repaying next May the 6 billion that supposedly we owe the European Central Bank.” My God you know, to have a destroyed economy that is borrowing from the ESM to pay to the European Central Bank is not just idiotic, but it’s the epitome of misanthropy. Say no to that. Put them in front of their contradictions. Make them face the contradictions of the euro zone themselves. Because the moment that the Greek prime minister declares default within the euro zone, all hell will break loose and either they will have to introduce shock absorbers, or the euro will die anyway, and then we can go to the drachma.

  13. ohmyheck

    How come nobody talks about the Credit Default Swaps that the Vampire Squidward and others must have?

    Just curious….

  14. generic

    This link is so worth it if you understand German. And supposedly there are subtitles.

    The question of whether the Varoufakis video was doctored has the best possible answer.

  15. Pookah Harvey

    Apparently the IMF implementation bureaucrats believe that Greece is the “Most Unhelpful Client in its History” because the Greeks are the only Europeans in power that listen to the IMF researchers who have been stating that austerity does not work.

  16. Vince in MN

    “…but the IMF and possibly the ECB regards [the negotiations] as a more fundamental outtrade”.

    I think you meant “outrage”, as in “how dare they refuse to pull down their pants and bend over”!

  17. Rialto

    Sounds like they already know Greece is on its way out. This is them preparing the ground for the blame game.

  18. mpr

    I’d be interested to see any reports on whether this move by Tsipras is a reaction to actual pushback in the technical talks, which supposedly started last week. In other words, are Syriza simply not presenting their own reforms in detail, or are they failing to get agreement from the Troika in the technical talks.

    If its the latter, it would actually make sense to give the process a nudge at the political level. However I haven’t seen any reports to this effect. The closest thing was the letter from Declan Costello.

  19. Jay M

    maybe IMF didn’t do marketing degree at Ivy League institution
    the buy side is stupid, right?

  20. thelonegunman

    yes… they just won’t roll over and get fucked…

    i understand it’s a matter of greek policy no more than one member of their government travel together…

    and, after the travails of DSK after he insisted the banksters take a haircut on ALL sovereign debt, no one will dare stand up to the triumvirate of the banksters, the unlimited unlawful and unregulated snooping (sold to the highest bidder), and the ‘law enforcement agencies’… after all – look at what happened to spitzer when he decided to do the same: stand up to the banksters.

  21. kimsarah

    What Tsipras needs at this point is all the support he can muster. Fair-weather bandwagon friends are of no use.
    The odds weren’t that great either for the Americans at the start of the Revolutionary War.

  22. Santi

    I was thinking about the complain made here ofter about the support (or lack thereof) from “companion” parties in Spain, Ireland, Portugal, or other countries, and it occurred to me that keeping relatively silent about the issue is about the best they can do.

    Obviously in the troika attitude about this issue is a mixture of standard amtssprache (the rules say so, the orders say so, we have no responsibility if you…), disconcert and big fear about contagion. So keeping cool and dissociating Spanish, Irish, … behavior from the current negotiations is the best that other countries parties can do. One deal at a time.

    On the other hand, another interesting thing to see is how the Commission is acting as a colonial delegate in Greece, as seen in the Paul Mason report posted here recently. The funny thing is that “the institutions” want the privileges of a slave owner without the legal duties to feed and cloth their slaves, and this is what Greece is saying no to. Declan Costello’s note is specially challenging as the humanitarian bill got overwhelming support, even got voted by ND, the previous government party. So opposing to it is very foolish politically.

    1. Santi

      A better description of the situation would be the workshop on Anger and domination systems by Marshal Rosemberg:

      Domination systems require:

      1. Suppression of self

      2. Moralistic judgments

      3. Amtssprache (this expression was used by Nazi officials to describe a bureaucratic language that denies choice, with words like should, have to, ought)

      4. The crucial concept of deserve

      Now anger is the result, it’s a fire alarm that tells us we are thinking in a way that supports domination systems; you are thinking in a way that contributes to the oppressive world order and you are part of it.

      (…)

      We have been trained to be nice dead people or bullies. When you are in a position of authority you are justified in being a bully. You don’t call yourself a bully – you call yourself an authority. In domination systems authorities are given legal power to bully through the system of deserve, in which punishment, rewards and other forms of coercion get you to do things.

      Basically what Tsipras and Varoufakis are trying to do is to refuse being bullied and break the fate of the discourse, so that the hegemony of the discourse is no longer working for “the institutions”.

  23. Swedish Lex

    Being the lamb that repeatedly gets slaughtered at Merkel’s and Schäuble’s altar of domestic politics and of fanatical belief in their own propaganda, Greece, without allies with balls, has no choice but to go full “North Korea” (including Paris Match coverage) on the Troika. It is a tactic that can backfire at any moment but Greece ultimately has not much to lose.

    When Tsirpas first launched the WWII repayment thing, the world shook their heads. Now even leading Germans are saying that the Greeks may have a point.

    The longer this drags on, the more will public opinion go the way of Greece. Unless Merkel does a Dr. Strangelove first.

    Spanish élections at the end of the year. A new coalition in Spain could provide Greece with a powerful ally.

  24. dbk

    I admit to being a bit confused about Germany’s veto (cf. Declan Costello’s letter) of the various pieces of legislation related to humanitarian assistance. My understanding was that these measures were essentially fiscally-neutral [one in particular, the debt forgiveness and chance to pay outstanding taxes in 100 installments, would be a source of considerable new revenue], and that the Troika (aka the Institutions) would not interfere – in any case, the total amount involved, 200 million, was small.

    W/r/t both this and the previous thread, it’s important for outside observers to understand that Syriza is now the only game in town. ND and PASOK have been discredited, that other party is polling at 4.7%, and the military has not been heard from. Nobody’s talking about elections because frankly, there’s nobody left to elect. The Greeks chose Syriza, and they’re going to go the distance with them. And yeah, they’re leftists.

    I’m not a fan of extrapolating character traits to the national level, but it’s important to note that as fractious as the Greeks are among themselves (witness Syriza, a pretty typical example of a Greek organization), when confronted by a serious outside threat, there is a tendency towards en bloc solidarity which can take on pretty phenomenal proportions. The government has popular support, and if the worst happens (“disorderly Grexit/Grexident”), the people will have been educated to understand why it happened. The degree of political awareness here is pretty remarkable.

    In other news, the Parliamentary Committee on Public Debt was formed yesterday.
    http://www.thepressproject.net/article/74607/Greece-establishes-Audit-Committee-of-Public-Debt

  25. Calgacus

    One should not forget the basics. Which everybody, including me, always does.

    International Monetary Fund officials told their euro-area colleagues that Greece is the most unhelpful country the organization has dealt with in its 70-year history.
    The post-70s IMF is a gang of thugs, wreaking colossal destruction everywhere. The World Bank & the IMF are the “international loan-sharking institutions” in Jonathan Kwitny’s apt phrase, and they – or at least enough people – in these institutions know perfectly well what they are doing. Viciously imposing unpayable debts on the poor, conditioned on them degrading themselves, punching themselves in the face for their “betters’ ” amusement, weighting these debts with absurd conditions that make them less payable, not more. Proving that it is not about economic debt, but oppression and humiliation.

    Being unhelpful to people who make “organized crime” look like selfless humanitarians is a badge of honor. And next to Argentina, Greece may merit this praise from the IMF. But Tsipras & Varoufakis should not rest on this laurel, but become every more unhelpful to this con-man oppressor, educating everyone and themselves that its power derives almost wholly from the minds, the distorted thinking in nations they oppress. This knowledge was becoming widespread in G. W. Bush’s time – there has been real been real retreat in Obama’s time.

  26. Edward

    For the IMF to declare “Greece is the most unhelpful country the organization has dealt with in its 70-year history” is a genuine badge of honor for Greece.

Comments are closed.