Rehn in jibe at IMF over Greek bailout review as Commission gets more criticism

Rehn in jibe at IMF over Greek bailout review as Commission gets more criticism

The European Commission continued on Friday its criticism of the International Monetary Fund over a report highlighting major design and implementation errors in the Greek bailout but Brussels also came in for more negative comments.

European Economic and Monetary Affairs Commissioner Olli Rehn criticized the IMF for breaking ranks from its European partners in the troika.

“I don’t think it’s fair and just for the IMF to wash its hands and throw the dirty water on the Europeans,” he said at an economic conference in Helsinki.

Rehn also denied that the IMF had pushed for an early restructuring of Greek debt in 2010, under the leadership of Dominique Strauss Kahn. He also pointed out that the current IMF chief, Christine Lagarde, had opposed the idea of a haircut when she was French finance minister in 2010.

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

On Thursday, the European Commission had rebuffed the IMF’s assessment of the Greek bailout, particularly the Fund’s assertion that Greek debt should have been restructured in 2010, not 2012.

“The report ignores the interconnected nature of the euro area member states,” said Olli Rehn’s spokesman Simon O'Connor said.

“A private sector debt restructuring would have certainly risked systemic contagion if we had done it at that stage.”

However, former Eurogroup chief Jean-Claude Juncker heaped more pressure on the Commission on Friday when he criticized Brussels’s economic forecasts for Greece as having “no link with reality”. The forecasts were “not based on scientific considerations,” said Juncker, according to the MNI news agency.

In an op-ed for Bloomberg, the IMF’s former chief economist Simon Johnson said that Germany and France had to bear the brunt of the blame for the failure of the Greek program because they failed to address weaknesses in their banks.

“It is the French and German governments that should be held responsible for the severity of the depression in Greece -- and for the excessive degree of hardship imposed on vulnerable people throughout the troubled periphery,” he wrote.

There has been no concerted response from the Greek government to the findings in the IMF’s report, although Prime Minister Antonis Samaras said on Thursday that much of what the Fund said was in line with his criticism of the program when he was in opposition.

“I do not look back. I am looking forward,” he said during a visit to Finland. “We must achieve and beat the targets in the program. Nothing should distract us from this.”


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