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Secret IMF Documents: 2010 Greek Bailout Was a Bankers’ Bailout
9 October 2013
(EIRNS)—Secret minutes of the International Monetary Fund board meetings held in May 2010, at which the Greek bailout was discussed, reveal that many delegates saw the bailout of Greece as nothing less than a bailout of European banks. Furthermore the bailout was so outrageous that it would be doomed to failure and would destroy the Greek economy. Euro zone. Source: en.wikipedia.org/wiki/Eurozone According to Tuesday’s Wall Street Journal, which published excerpts from the minutes, Brazilian IMF executive director Nogueira Batista said at a board meeting on May 9, 2010, "The risks of the program are immense.... As it stands, the program risks substituting private for official financing. In other and starker words, it may be seen not as a rescue of Greece, which will have to undergo a wrenching adjustment, but as a bailout of Greece’s private debt holders, mainly European financial institutions." The records also showed that nearly a third of the board’s members, representing more than 40 non-European countries, raised major objections at the meeting. "The alternative of a voluntary debt restructuring should have been on the table.... The European authorities would have been well advised to come up with an orderly debt restructuring process," said Argentina’s executive director Pablo Andrés Pereira. "The bottom line is that the approved strategy would only have a marginal impact on Greece’s solvency problems.... It is very likely that Greece might end up worse off after implementing this program." He added that the program "seems to replicate the mistakes (i.e., unsustainable fiscal tightening) made in the run-up to Argentina’s crisis of 2001." "We have considerable doubts about the feasibility of the program.... We have doubts on the growth assumptions, which seem to be overly benign," said Swiss executive director René Weber. "Even a small negative deviation from the baseline growth projections would make the debt level unsustainable over the longer term.... Why has debt restructuring and the involvement of the private sector in the rescue package not been considered so far?" India’s representative Arvind Virmani said, "The scale of the fiscal reduction without any monetary policy offset is unprecedented....[It] is a mammoth burden that the economy could hardly bear. Even if, arguably, the program is successfully implemented, it could trigger a deflationary spiral of falling prices, falling employment, and falling fiscal revenues that could eventually undermine the program itself." All these objections were ignored by the U.S. and most European countries, who were able to push through an approval of the program, because they account for more than half of the IMF’s voting rights. |