Disagreement between IMF and Commission blocking deal, government says

The Greek government has argued that conflicting priorities between the IMF and commission are to blame for the lack of progress in negotiations with Greece.

05 May. 15 (18:23)

The government also underlines that, ‘with the situation as it is there cannot be a compromise. The responsibility lies exclusively with the institutions and the lack of understanding between them.

The non paper in detail

1.) The serious disagreements and conflicting positions between the IMF and European Commission create obstacles in the negotiations and high risks. While until recently the basic argument on the part of the institutions was that the Greek side had not submitted comprehensive proposals, it is now clear that proposals have both been submitted and substantive concessions have been made in the interest of an honourable compromise.
2.) Differences in strategy, however, between the institutions create obstacles:

• The IMF draws its red lines on the reforms, particularly on pension and labour reforms, while it has lax lines with regards to the issue of primary surplus. At the back of the IMF’s thinking is the idea of a debt write-down in order for it to be made sustainable.
• On the other hand the Commission has red lines on the issue of the primary surplus and consequently on the non write-down of the debt, and lax lines with regards to difficult reforms such as pensions and labour reforms.

3.) The consequence is that the institutions as a whole have red lines everytwhere. Pensions, labour reform [IMF] and primary surplus [Commission]. With this situation there cannot be compromise. The responsibility lies exclusively with the institutions and their inability to reach an understanding between them.
4.) With the Greek government having realized the flagrant contradiction, it took the initiative:

• To not put the omnibus bill before parliament before there is the prospect of an agreement
• To put on the table a discussion about the ‘day after’ - ie the strategy for an exit to the markets and financing of growth in the post-June era.

5.) In today’s Financial Times, the strategic oppositions between the Eurozone and the IMF are completely revealed (in an article by Peter Spiegel). The FT reveal that the head of the European Department of the IMF, Poul Thomsen, warned the Finance Ministers of the Eurozone that ‘the IMF will potentially not give its share of the 7.2 billion euro tranche’ in the event that ‘a large portion of the debt of Greece is not subject to a write down.’ At the same time, writes P. Spiegel, ‘the Eurozone which holds the larger part of the Greek debt has steadily opposed a lightening of the debt load.’
6 At the same time, the Commission of Financial Affairs, Pier Moscovici, confirmed the clash between the Commission and the IMF, stating that the issue of the debt “can be discussed only following an agreement over a reform program.’ A strategic disagreement, with its Greece at its epicenter, between the Commission and the IMF is operating to the detriment of the country.