Wednesday 22 November 2017

Rehn hits back at the IMF as Greek bailout row intensifies

EU's top economic official says fund didn't back plans for early debt restructuring

European Economic and Monetary Affairs Commissioner Olli Rehn says he doesn't think it's fair and just that (the IMF) is trying to wash its hands and throw dirty water on European shoulders
European Economic and Monetary Affairs Commissioner Olli Rehn says he doesn't think it's fair and just that (the IMF) is trying to wash its hands and throw dirty water on European shoulders

Jussi Rosendahl

THE EU's top economic official struck back at the IMF yesterday after the fund blamed Europe for mishandling Greece's first bailout, saying the IMF itself had not supported an early debt restructuring.

In a report earlier this week, the IMF blamed the eurozone for allowing Athens to delay restructuring its debts until 2012.

"I recall that the IMF's managing director, Dominique Strauss-Kahn, did not propose early debt restructuring, (and that) Christine Lagarde was opposed to it," Olli Rehn said.

Mr Rehn had earlier dismissed the IMF's comments, saying: "I don't think it's fair and just that (the IMF) is trying to wash its hands and throw dirty water on European shoulders."

The European Commission – which with the IMF and European Central Bank forms the "troika" that prepared aid packages for Greece, Ireland, Portugal, Spain and Cyprus – has said undertaking a restructuring in 2010 would have been wrong.

WARNED

On Thursday, European Central Bank president Mario Draghi also warned against judging "what happened yesterday with today's eyes".

The IMF published its view in an assessment of the Greek rescue late on Wednesday.

It also admitted it had lowered its normal standards for debt sustainability to take part in the €110bn bailout – the first of two for Greece – and that its projections for the Greek economy had been too optimistic.

Mr Rehn also criticised Franco-German proposals which included a full-time eurozone economic policy chief and opposition to more powers for the commission, the EU's executive.

He said yesterday that the proposals threatened the EU's principle of a community method which allowed smaller member states to play a key role in decision-making.

Co-operation between Germany and France is indispensable for developing the EU, he said, but is not enough on its own.

COMMUNITY

"Europe is too valuable to be left only for Germany and France. That is why we need the community method to make the European Union inclusive, so that small states can also have influence on decisions," Mr Rehn said in a speech in Helsinki.

German Chancellor Angela Merkel and French President Francois Hollande last week opposed handing more powers to the commission and said making the presidency of the eurogroup of eurozone finance ministers a full-time post would help improve policy co-ordination in the bloc.

The proposed moves could widen the gap between the eurozone's core states and other EU members that are not in the single currency, and put national governments rather than the EU's executive commission in the driver's seat.

"In many aspects they seem to suggest the wheel should be reinvented," Mr Rehn said. (Reuters)

Irish Independent

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