Sunday

25th Sep 2022

Rehn in war of words with IMF

EU economic affairs commissioner Olli Rehn joined the increasingly bitter war of words between the EU's executive body and the IMF on Friday, accusing the Washington-based fund of 'washing its hands' of its role in the Greek debt crisis.

Speaking during a conference in Helsinki on Friday (7 June), the normally cerebral Rehn commented that "I don't think it's fair and just (for the IMF) to wash its hands and throw the dirty water on the Europeans' shoulders."

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The commission has been stung by criticisms contained in a 50-page IMF staff report published Wednesday night, particularly the charge that it had done little to stimulate Greece's recession-hit economy which is projected to have contracted by over 23 percent between 2008 and 2013.

"The EC, with the focus of its reforms more on compliance with EU norms than on growth impact, was not able to contribute much to identifying growth enhancing structural reforms," alleged the report.

The IMF report also including self-criticism that it had underestimated the impact its rescue plan would have on the Greek economy and re-written its own rules,

Speaking with reporters In the margins of the Economic Ideas Forum, Rehn also refuted the report's suggestion that the commission, together with Germany and France, had opposed efforts by the IMF to agree an early restructuring of Greece's debt

“I do not recall Dominique Strauss-Kahn calling for an early restructuring of Greek debt, but I do remember Christine Lagarde opposing it,” he said.

The rift also threatens the future workings of the Troika - composed of officials from the Commission, IMF and the European Central Bank (ECB) - which manages the eurozone's other bailout packages in Ireland, Portugal and Cyprus.

Meanwhile, although neither the German or French governments has made any attempt so far to defend the commission, European Central Bank President Mario Draghi came to its defence.

"What usually happens when such mea culpa is pronounced is the mistake of historical projection," said Draghi at the ECB's monthly press conference on Thursday (6 June).

"We tend to judge things that happened yesterday with today's eyes. Three to four years ago when the adjustment in Greece was discussed - the situation was very different, there was very high volatility, risk of contagion to other countries very high. So why don't you look forward and take stock of positive route taken," he added.

For his part, Greek Prime Minister Antonis Samaras has also refused to get involved in the slanging match beyond noting on Thursday that much of the IMF analysis corresponded with his criticism of the programme as opposition leader between 2009 and 2012.

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