Leaked Call Shows Continued Strains Between Greece and Its Creditors

IMF officials’ conversation highlights risk that bailout program could be headed for more drama

The Wall Street Journal

By MARCUS WALKER and  NEKTARIA STAMOULI
Updated April 2, 2016 1:38 p.m. ET


ATHENS—A leaked phone call held by International Monetary Fund officials is exposing strains between Greece and its international creditors, highlighting the risk that the country’s bailout program could be headed for more drama this summer.

A transcript of the March 19 phone call, involving IMF officials in Washington and Athens, was published by the Wikileaks website on Saturday and shows how IMF officials are struggling to persuade Germany and other eurozone countries to give Greece the debt relief and easier fiscal targets that the IMF thinks are needed.



In the call, the head of the IMF’s European department, Poul Thomsen, discusses with his colleagues how the Washington-based fund wants German Chancellor Angela Merkel to make a choice by this summer: ease Greece’s debt burden or lose the IMF’s participation in its bailout.

“Look, you Mrs. Merkel you face a question, you have to think about what is more costly: to go ahead without the IMF…or to pick the debt relief that we think that Greece needs in order to keep us on board,” Mr. Thomsen tells his colleagues, according to the Wikileaks transcript.

A German government spokesman declined to comment.

Germany isn’t keen on debt relief, which would mean taking a hit on its loans to Greece. But Berlin has made clear to Athens—which would like to get rid of the IMF—that the fund has to stay involved, for the credibility of the program.

An IMF spokeswoman declined to comment on the leak. It isn’t clear who tapped and leaked the conversation, held between Mr. Thomsen in Washington and the IMF’s Greek mission chief Delia Velculescu, as well as another IMF official, at a room in Athens’s Hilton Hotel.

The IMF’s hope of forcing Germany to confront the tortured math of the Greek bailout isn’t new. Nor is the IMF staff’s unwillingness to continue lending to Greece if the bailout deal doesn’t add up, in its view.

But Greece’s government seized on the leaked conversation to support its claim that the IMF is the main obstacle to completing the current review of the bailout program and securing fresh rescue loans, which Greece needs to repay large debts falling due in July.

Prime Minister Alexis Tsipras sent a letter to IMF Managing Director Christine Lagarde on Saturday, demanding to know whether the IMF officials’ views expressed on the leaked phone call were the fund’s official position, according to Greek government officials.

The officials said Mr. Tsipras had spoken to Greece’s president, whose role is largely ceremonial, and to other Greek party heads about the call, and would also seek to speak with other European leaders including Ms. Merkel.

Greek officials presented the leaked conversation as evidence that the IMF wants to push Greece to the brink of bankruptcy in order to force the country and Europe into accepting IMF demands.

“The Greek government is demanding explanations from the Fund on whether its official position is to create default conditions in Greece,” government spokeswoman Olga Gerovasili said.

Mr. Tsipras and his top aides have identified the IMF as their chief adversary in bailout talks—despite the IMF’s support for Greek debt relief—because the fund is demanding unpopular austerity measures from Athens, including pension cuts and a lower tax-free threshold for person income tax.

Mr. Tsipras is eager to complete the bailout review with only milder fiscal measures. The European Commission, which represents eurozone governments in bailout talks with Athens, appears more willing to soften the austerity measures.

In the leaked phone call, Ms. Velculescu accuses the commission of “backtracking” on an agreement with the IMF to press Greece for budget savings worth 2.5% of gross domestic product in the current review.

A commission spokesman said the commission doesn’t comment on leaks.

The IMF officials discuss how—similarly to past years—difficult decisions about the Greek bailout are likely to be put off until Greece is on the verge of bankruptcy this July. Mr. Thomsen expresses surprise that Germany didn’t resolve the issue earlier this spring to get it out of the way, given that Europe is also grappling with the migration crisis.

Mr. Thomsen tells his colleagues that the U.K.’s referendum in June on whether to stay in the European Union is likely to occupy Europe’s attention for a month, further delaying a resolution of the latest Greek problem.

Write to Marcus Walker at marcus.walker@wsj.com and Nektaria Stamouli at nektaria.stamouli@wsj.com