IMF Attempts to Smooth Tensions with Greece after Phone Transcripts Leak

The International Monetary Fund (IMF) spent the weekend trying to smooth tensions with Greece following the release of a transcript of leaked phone calls between IMF officials. The head of the International Monetary Fund, Christine Lagarde, took personal notice of the matter and attempted to smooth tensions with Greece Sunday after Greek officials raised questions about whether it can obtain further funding as part of its $98 billion bailout.

The International Monetary Fund (IMF) spent the weekend trying to smooth tensions with Greece following the release of a transcript of leaked phone calls between IMF officials. The head of the International Monetary Fund, Christine Lagarde, took personal notice of the matter and attempted to smooth tensions with Greece Sunday after Greek officials raised questions about whether it can obtain further funding as part of its $98 billion bailout.

As Lagarde said in a letter she wrote to the Greek Prime Minister, Alexis Tsipras, “I agree with you that successful negotiations are built on mutual trust, and this weekend’s incident has made me concerned as to whether we can indeed achieve progress in a climate of extreme sensitivity to statements of either side…On reflection, however, I have decided to allow our team to return to Athens to continue the discussions.”

The leaked telephone transcript in question was published by notorious website WikiLeaks on Saturday. The transcript revealed the IMF discussing using threats of withdrawing from the Greek bailout as a means of applying pressure to Germany to reduce Greece’s debt burden. The conversation was between Poul Thomsen, the head of the IMF’s European Union, and Delia Velkouleskou, the IMF’s Mission Chief for Greece.

“Look you, Mrs. Merkel, you face a question,” Poul Thomsen says in the transcript, speaking to Velkouleskou. “You have to think about what is more costly, to go ahead without the IMF…or take the debt relief that we think that Greece needs in order to keep us on board?”

The IMF has long taken a position that the Greek bailout will not succeed without more debt relief from existing creditors. It has also asked Greece to pursue more budget-cutting, reducing things like pension payouts and other benefits for citizens. While these measures would likely lead to results for Greece, the Greek government has grown to resent the proposed cuts. The leaked transcripts fueled fears that the IMF is trying to block other lenders from giving Greece aid. 

Upon learning of the transcripts, Greek Prime Minister Tsipras sent a letter to IMF head Lagarde demanding an explanation regarding the IMF’s position on these matters. In response, Lagarde wrote back, saying, “Any speculation that IMF staff would consider using a credit event as a negotiating tactic is simply nonsense.”