World Economy

IMF Confesses It Immolated Greece

IMF Confesses It Immolated Greece IMF Confesses It Immolated Greece

The International Monetary Fund, which has tormented small Caribbean economies for five decades with austerity measures and fierce conditionalities, has been exposed as adopting utterly different standards towards Europe, especially the countries of the European Currency Union. That is except for Greece which, throughout its economic crisis, the IMF treated it like a Third World country, IEO report says.

According to a report published on July 28, 2016 by the IMF’s watchdog, the Independent Evaluation Office, the fund’s top staff worked in cahoots with the European Commission and the European Central Bank to misrepresent the situation in Greece to their own executive board; labored diligently to protect the Eurozone in the interest of its larger members, such as France and Germany (which, incidentally, are also the main controllers of the IMF); and punished Greece with the burden of carrying alone the cost of a bailout—something that had not been done to any other European Union country.

In a revealing and telling sentence in the executive summary of its report, the IEO declared that: “In general, the IMF shared the widely held ‘Europe is different’ mindset that encouraged the view that large imbalances in national current accounts were little cause for concern and that sudden stops could not happen within the eurozone.”

The authors of the report stated unequivocally that: “The IMF’s handling of the eurozone crisis raised issues of accountability and transparency, which helped create the perception that the IMF treated Europe differently. Conducting this evaluation proved challenging. Some documents on sensitive issues were prepared outside the regular, established channels”, and either disappeared or were not made available to the evaluation team.

The principal reason for handling the financial crisis in Greece differently was primarily to protect the eurozone at the insistence of the European Commission, which negotiated on behalf of the eurogroup, subjecting IMF staff’s technical judgments “to political pressure from an early stage”.

As a result of this, in May 2010 the IMF executive board approved a decision to provide exceptional access financing to Greece “without seeking pre-emptive debt restructuring, even though its sovereign debt was not deemed sustainable with a high probability”.

The truth is that the actions in relation to Greece (hidden from the executive board by the management) were designed to make French and German banks ‘whole’—never mind what Greece was forced to endure.

In other words, Greece was ‘sucker punched’ or fiscally waterboarded, to use the more emotive description of the former Greek Finance Minister Yanis Varoufakis (now professor of economics at the University of Athens).