Policy makers here in Washington, badly shaken by the anti-American tone of Turkish president Recep Erdoğan, want the European Commission, the European Central Bank, and the International Monetary Fund—the so-called Troika—to get Greece’s finances settled and the country on a path to stability. And soon, now that Turkey can no longer be counted on to serve as a regional anchor. But the EC is busy with Brexit, the ECB with efforts to prevent a full-blown European recession, both more interested in saving the euro than in saving Greece, and this has not been the best of years for the International Monetary Fund.
An internal report accuses the IMF of succumbing to political pressure from Eurozone governments, ignoring its own rules, and keeping members of its executive board in the dark about sensitive policy questions during negotiations over bail-outs for Greece and Ireland. The IMF has “lost its credibility as a crisis manager,” produced “overly optimistic projections” in relation to Greece to justify contributing €30 billion to a Greek bailout. “Political factors seemed to play a bigger role than pure technical considerations …” says Eswar Prasad, a Cornell University economist and former chief of the IMF’s Financial Studies Division. In the end, the IMF signed on to a programme that many, among them Joseph Stiglitz, winner of the Nobel Memorial Prize in Economics, say the IMF favored Germany and the creditors, shored up the euro, ignored its own rules on lending only to sustainable borrowers, and did nothing to ameliorate the plight of ordinary Greeks. Then-managing director Dominique Strauss-Kahn, visions of the Élysée Palace dancing in his head, was what former president George W. Bush calls “the decider”. You can take the boy out of France, but you can’t take France out of the boy.
