German Chancellor Angela Merkel insisted Tuesday that Berlin wants the International Monetary Fund to remain part of the Greek bailout but ruled out a debt haircut for Greece – a key demand by the IMF and Athens.
“The German position is that the IMF is taking part in an agreement… We want a quick conclusion to these talks,” Merkel said after meeting with IMF Managing Director Christine Lagarde and other world financial leaders in Berlin Tuesday. But she added that discussions about debt relief cannot begin before Greece complies with the commitments it has made.
“It’s not a demand of the federal government to have no debt haircut but rather in our opinion this is legally not possible in the eurozone,” Merkel said. She added that the negotiations between Greece and the representatives of the country’s quartet of lenders “are on the right track but we are still not where we want to be.”
For her part, Lagarde reiterated her call for debt relief for Greece and her determination to “continue helping Greece” but also noted that Athens must do more.
“We are clearly not where we want to be and particularly where Greece should be in order to be stable, in order to be prosperous, in order to respond to the Greek population’s needs,” she added.
US Vice President Joe Biden, who was also in Berlin, echoed similar sentiments, saying that the IMF must be part of the solution for Greece and reportedly also urged Greek Prime Minister Alexis Tsipras, during a phone conversation, to take tough decisions.
Athens wants the bailout review to be completed by April 22 so as to unfreeze roughly 5 billion euros in bailout funds and open the way for debt relief talks.
Meanwhile, despite initial outrage and indignation over the leaked conversations between IMF officials about Greece’s stalled bailout negotiations, sources said the fallout may have actually helped the Greek bid to wrap up the bailout review by April 22 and strengthen the government’s cohesion in the face of “an outside enemy” – the IMF.
The government chose not to respond to a series of comments in the international media which suggested that Greece was behind the wiretapping of the conversations between the IMF’s Europe director Poul Thomsen and Delia Velculescu, the woman overseeing the Greek bailout for the IMF.
Both agreed that an “event” was required to force Greece to introduce the necessary financial reforms and therefore facilitate the completion of the review and force Germany – the country’s largest creditor – to agree to relief of Greece’s debt burden.