IMF to Tsipras: “You’ve got to ask yourself one question. Do I feel lucky? Well, do ya, punk?”

After more of the familiar lies and misdirection yesterday, there were some optimistic noises from Brussels last night as the leaders of Germany, France and Greece met on the side-lines of the EU-Latin America summit.  They were short-lived.

Having tried to play the International Monetary Fund, and its managing director, Christine Lagarde, last week, the game theory academics in the Syriza-led Greek Government are being treated to a practical lesson in hard-ball negotiations by the IMF.  As the Guardian’s Larry Elliott notes

“You’ve got to ask yourself one question. Do I feel lucky? Well, do ya, punk?” The lines spoken by Clint Eastwood in Dirty Harry sprang to mind when the International Monetary Fund (IMF) announced that it had called its Greek negotiating team home from talks in Brussels.

The IMF’s message was short and brutal. There were still major differences between Greece and its creditors. There was no progress in narrowing those differences. The two sides were well away from an agreement.

So much, then, for the talk earlier this week that a deal is close. Shares across Europe surged on hopes that a resolution to the crisis was at hand, but that optimism was punctured by the news from Washington.

The IMF, clearly, has had enough. It was unimpressed by Greece’s decision to bundle up all four of the debt repayments due this month and is frustrated by the unwillingness of Alexis Tsipras, the Greek prime minister, to cross its two “red line” issues – pensions and labour-market reform.

This, then, is the IMF holding the gun to Alexis Tsipras’s head. It feels like a pivotal moment, the point where the creditors are saying “take it or leave it” and the Greeks have to decide whether the IMF really means it.

They’re not the only ones who have lost patience with the antics of the Athenians…

Earlier, European Council President Donald Tusk spelled out an unprecedentedly forthright message to Greece’s radical anti-austerity government after four months of bitter negotiations.

“There is no more time for gambling. The day is coming, I’m afraid, that someone says that the game is over,” he told a news conference after chairing an EU-Latin America summit that was dominated by intense talks with Mr Tsipras on the sidelines.

“It is very obvious that we need decisions, not negotiations,” Tusk said, adding that Athens needed to be “more realistic.”

Mr Tsipras held two hours of talks with European Commission President Jean-Claude Juncker, but neither side reported any breakthrough. “Come in the torture room,” Mr Juncker told Mr Tsipras at the start of their meeting. [added emphasis]

EU officials later described the talks as a “last attempt” to reach a debt deal.

Asked about concerns for the process raised by the departure of IMF and Greek negotiators, an EU diplomat said: “If the process was working properly the president would not have had to have a meeting with Tsipras today.”

As this earlier Guardian report noted,

The move left the Greek negotiating team with no option but to say it would also be leaving the talks and heading home to Athens.

“The ball is very much in Greece’s court,” IMF spokesman Gerry Rice said. “There are major differences between us in most key areas. There has been no progress in narrowing these differences recently.”

The IMF’s decision followed increasingly sharp criticism from EU officials frustrated at the Greek government’s continued refusal to bow to creditors’ demands.

Donald Tusk, the president of the European Council, earlier attempted to pressure the Greek prime minister, Alexis Tsipras, to agree terms with its creditors, warning that the time for gambling was over.

Tusk, a former prime minister of Poland, intervened in the negotiations over Greek debt repayments as Athens appeared steadfast in key areas of dispute.

Tsipras was due on Friday to resume talks in Brussels with the European commission president, Jean-Claude Juncker, to resolve the ongoing dispute over Athens’ implementation of wide-ranging reforms and steep spending cuts in return for further loans. Such a meeting is now in doubt.

As usual, keep a weather-eye on the Guardian’s live-blog for any further updates.

But, for now, the last word goes to Larry Elliott

For their part, the creditors say Greece is not serious about reform, with the IMF noting that the Greek government is contributing 10% of GDP to pensions against an EU average of 2%. Put simply, they know Greece is running out of money and wants to stay in the euro.

They are fed up with Tsipras acting like he is the one holding the .44 Magnum and they are threatening to pull the trigger.

This movie climaxes next week. [added emphasis]

[Really?! – Ed]  Possibly…

Latest Update From the Guardian’s Friday live-blog [6.43pm]

Here’s Ian Traynor’s report on the day’s Greek developments:

Greece has less than a week to strike a deal with its eurozone creditors to avoid defaulting on its massive debts and perhaps being kicked out of the single currency area, with German leaders and top EU officials now conceding that default is the likeliest outcome.

Negotiations between the leftist government in Athens and the creditors are now at their lowest ebb since Alexis Tsipras became Greek prime minister in January.

Chancellor Angela Merkel of Germany and Jean-Claude Juncker, the president of the European Commission, said on Friday that the talks with Greece would carry on ahead of next Thursday’s key meeting of eurozone finance ministers in Luxembourg. That meeting is now viewed as the deadline for a decision on Greece’s fate.

Merkel was said to have resigned herself to a Greek default, and at a meeting on Thursday night in Bratislava, eurocrats preparing for the Luxembourg talks included the default scenario in their discussions for the first time.

Full story here

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  • Robin Keogh

    It looks as if Tspras might have to go to the polls on Greece to get an answer as to what the next move should be. The IMF can bark all they like and they can get upset all they like but bundling the debt is in their own rule book, they have no right to get sassy about it simply because it is a rarely used mechanism. Moreover, the negotiating poition of the IMF is somewhat at odds with their own research department which has advised the creditiors to give some slack.

    Tspras knows full well that Europe will not give an inch, not because they cant, because they wont. And the countries that are pushing hardest for Greece to keep feeling the pain are Spain and Ireland. Two countries whose governemnts would be destroyed if Greece manages some sort of debt writedown or temporary warehousing.

    Beyond all this of course is the human cost itself. The cuts already imposed and the loss of jobs are forcing Greeks into abject poverty, not seen since the days of WW2. The cuts the EU are insisting on will exacerbate the situation, causing further poverty and a shrinking of the economy even further.Greek’s national debt at 180% of GDP is simply unpayable, try as one might, one will never get blood from a stone. Europe need to wake up to this reality, or Putin’s pipeline will be the dynamic that saves Greece from distruction, rather than the countries of the EU who are supposed to be a family of nations rather than a pack of dogs.

  • It looks as if Tspras might have to go to the polls on Greece to get an answer as to what the next move should be. The IMF can bark all they like and they can get upset all they like but bundling the debt is in their own rule book, they have no right to get sassy about it simply because it is a rarely used mechanism.

    “Go ahead, make [the IMF’s] day.”

  • Zig70

    More a case of ‘we know exactly how many bullets you have’ . The IMF have got away with shooting blanks. My guess is there are a lot more toys to through out of the pram before we see the real position. The Greeks aren’t broke yet and don’t forget the Russians.

  • Robin Keogh

    The might just do that but if they do go to the polls it could be a veryrainey day for the IMF.

  • That’s utter nonsense, Robin.
    ‘We have a mandate to pursue fantasy politics’ doesn’t work in the real world – in this case outside of Greece. Particularly when every other political leader has their own, separate, mandate too.
    As Syriza, and Tsipras, are finding out…
    In the meantime, 30 June.

  • Robin Keogh

    With respect, ‘fantasy politics’ is not defined by you or me. Syriza is the first party in decades to stand up to the extremes of neo liberal economic extremes – which be the way is system that got the world into this mess in the first place. Fantasy politics are only fantasies if they are unrealisable dreams, and as of yet we are none the wiser…roll on 30th June.

  • chrisjones2

    …and in the process it may destroy its own country

    I am afraid your hubris cant protect against harsh realities. The Greeks lied to get credit, lied to keep it and allowed rampant corruption to undermine the finances of the state. In Ireland it was mostly house prices. In Athens not paying tax

    Greece was relying on funding its lifestyle by mugging Germany and the Germans have woken up and said ‘no more’

    Grexit looms

  • the rich get richer

    The Greeks should Tell Them to Fook Off in the Most Polite manner Possible but still Fook Off.

    Take your country back. Show some Pride, Backbone and Fook em Attitude.

    Also If the Greeks Exit the EU The British Electorate are more likely to vote to Leave the Rotten Organisation the EU has become.

  • the rich get richer

    I hope so. Its time for the people of Europe to Wake Up and See what the EU now is.

    It certainly is not for the benefit of Ordinary people.

    Its being run for the benefit of the Super Rich, Super Bankers and Super Politicians.

  • Old Mortality

    I don’t think there is any question of the Greeks leaving the EU even if they don’t survive in the eurozone.

  • whatif1984true

    In Greece a civil servant can retire at 58 (if 35 years service completed) and gets 80% of his wage as a pension. His ’employer’ pension contributions have often been unpaid and so his pension has to come straight out of ‘Government’ funds. Over the the years to 2007 pensions had been increased well above inflation. The Governments’ have been bribing the electorate by continuing this state of affairs.
    The Civil Service is a major part of the economy and is heavily overstaffed. In the last 7-8 years they have been implementing a policy of recruiting one employee for every 5 leaving.
    Civil Service wages have been quite a lot higher than private sector wages and one target that has been suggested is the total reduction of civil service wages by 20-25 % this continues to be being implemented/imposed and has still a good way to go before it is completed.
    With unemployment heading towards 30%, further staffing reductions (150,000 is mooted) plus the proposed wage and pension reductions, there is a seismic effect on the Greek GDP.
    If there is a GREXIT where will the pensions and wages come from. Certainly if they default then money remains in their bank, the question is how long will it be before the financial world forgives and forgets.

  • Old Mortality

    Robin
    You just have to understand that once you need to borrow externally and don’t have your own currency, you’re in big trouble. After Grexit, the Greeks will be completely excluded from external borrowing so, unless the Chinese spot an opportunity to buy an entire European country, they will be poor for a lot longer.

  • whatif1984true

    They may be standing up and shouting but they are not facing the facts. Their Civil service is over manned, over paid and has considerably earlier pension ages and pension earnings than Germany (and most others including our selves). They cannot do this without our money and they shout unfair. Fantasy is too gentle a word to describe such behaviour.

  • chrisjones2

    all that sounds terribly familiar

  • chrisjones2

    “The cuts already imposed and the loss of jobs are forcing Greeks into abject poverty, ”

    …..but they will not agree to any effective action to fix this ie anything that involves them paying anything

    As for Putin, let him do what he wants in Greece. Its not a strategic issue for NATO and Russia is rapidly losing its gas bargaining chips as other supplies transform the world market

  • chrisjones2

    …but a worse day for the Greek people

  • chrisjones2

    The problem, is that they have no time for a poll. They owe the money now. The decision needs to be made now

  • Kevin Breslin

    Why is the Greek links to the IMF being associated with the EU?

    Iceland and Ukraine are non-EU European countries that have paid or have had to pay debts to the IMF!

    Their country’s elected governments have signed up to these loan arrangements and bailouts from other countries’ contribution to the IMF fund.

    Why would the IMF be abated from debt collection if the Greeks left the EU, Algeria left the ECC/EU and it has signed up to IMF protocols and have signed up to paying back IMF?

    They would have to leave the IMF like Cuba did. Andorra is de facto Eurozone state while not in the IMF de jure … keeping the Euro and leaving the IMF and EU without going back to a drachma that could be toxic in this economic climate.

  • Kevin Breslin

    Russia is a net IMF contributor these days, are you sure THEY would be happy with the Greeks defaulting on IMF debts at their nation’s expense?

  • kensei

    If they are prepared to exit the Euro, they can default and take the consequences. There is always a choice. If their creditors don’t want them to exit the Euro, they also can bend. There is an element of Game Theory here too – both sides could end up with the outcome they do not want.

    The democratic argument should not be lightly dismissed. It doesn’t matter what the Greek Government signs up to, if they don’t do it with the consent of the governed then they will be replaced. Where that replacement is democratic, or scarier, violent and totalitarian, it’ll happen. That route is probably worse for everyone concerned.

    In any case, all politics is fantasy, to some degree.

    “We propose things,” Madsen Pirie once boasted, “which people regard as being on the edge of lunacy. The next thing you know, they’re on the edge of policy.”

    “We’re an empire now, and when we act, we create our own reality”

    The current assumption is that Greece can exit without making a mess, or creating longer term threats. The assumption was Bear Sterns could fail without consequences. I’d be happier if someone bent.

  • kensei

    Then they’ll have their own currency and can happily deflate away. They’ll suffer a cost for deflating and it could well be acute in the short term, but in the medium to long term it’s unknown.

    As is whether it’ll create a sense of vulnerability for other economies or not and cause a slow motion Euro break up. Or if it’ll strength the Euro, which would make life uncomfortable for export heavy Germany.

  • chrisjones2

    in precise terms its unknown but in broad terms it will be a 1930s style inflation collapse of the economy and abject poverty for a generation

  • kensei

    What’s your evidence for that?

  • whatif1984true

    I hoped that it would ring a bell……
    Maybe we will soon see Greek and German flags flown by themuns and themuns.

  • Latest Update From the Guardian’s Friday live-blog [6.43pm]

    Here’s Ian Traynor’s report on the day’s Greek developments:

    Greece has less than a week to strike a deal with its eurozone creditors to avoid defaulting on its massive debts and perhaps being kicked out of the single currency area, with German leaders and top EU officials now conceding that default is the likeliest outcome.

    Negotiations between the leftist government in Athens and the creditors are now at their lowest ebb since Alexis Tsipras became Greek prime minister in January.

    Chancellor Angela Merkel of Germany and Jean-Claude Juncker, the president of the European Commission, said on Friday that the talks with Greece would carry on ahead of next Thursday’s key meeting of eurozone finance ministers in Luxembourg. That meeting is now viewed as the deadline for a decision on Greece’s fate.

    Merkel was said to have resigned herself to a Greek default, and at a meeting on Thursday night in Bratislava, eurocrats preparing for the Luxembourg talks included the default scenario in their discussions for the first time.

    Full story here

  • Old Mortality

    ‘Then they’ll have their own currency and can happily deflate away. They’ll suffer a cost for deflating and it could well be acute in the short term….’

    In other words, continued austerity and possibly worse.