U.S. Efforts In Greek Debt Crisis May Be Just Too Late

06/30/2015 03:36 pm ET | Updated Jun 30, 2015

The United States should have intervened a week ago when the latest talks between Greece and its creditors began to fall apart, a former senior International Monetary Fund official told The Huffington Post on Tuesday. Appeals for compromise over the Greek debt crisis come too late now, economist Peter Doyle said.

Nonetheless, on Monday evening, U.S. Treasury Secretary Jack Lew spoke with Greek Prime Minister Alexis Tsipras and other European officials, urging them to continue negotiating a bailout deal ahead of Greece's July 5 referendum on agreeing to any such deal. Greece needs additional funds to avoid defaulting on its debts, including a 1.6 billion euro payment due to the IMF on Tuesday by 6 p.m. Washington, D.C., time. As of Tuesday afternoon, Greece had yet to make the payment and was calling for an emergency loan from eurozone nations.

In Lew’s talks with Tsipras on Monday, the Treasury secretary emphasized that any deal must include both “a commitment to reforms” by Greece and a “discussion of potential debt relief” for the country, according to a statement from the Treasury Department. By mentioning debt relief, the U.S. seemed to call for greater compromise from Greece’s creditors.

So far, the eurozone nations have offered to make available to Greece previously promised loans in exchange for fiscal tightening and other reforms, but have refused to consider actually reducing the Greek debt in the current talks. A last-minute proposal on Tuesday by the European Commission, which represents eurozone nations in the talks, suggested there could be negotiations over debt relief later in the year if Greek citizens vote yes to the proposed bailout deal on July 5.

For its part, the IMF has paid lip service to the idea of debt relief for Greece. But it has not backed that up with any such endorsement in key official documents.

Greece claims -- and many economists agree -- that it will never be able to repay the debt it now owes and that continuing to try to do so is preventing the country from recovering economically.

To really help the situation, Doyle, the former IMF senior manager, said the U.S. needed to step into the negotiations between Greece and its creditors at a crucial moment a week ago. As the largest single contributor to the IMF, the U.S. has the greatest say over its policies.

Specifically, Doyle argues that the U.S. should have stopped the creditors from sending back Greece’s latest proposal covered with redlined changes on June 24 and then leaking it to the media. The way the counterproposal was made was widely seen as humiliating to Greece. Moreover, it did not offer any new concessions on debt relief, pension reforms or increases in the value-added tax. Greece reacted furiously to the counterproposal, beginning a downward turn that culminated Saturday in Greece's withdrawal from the talks and announcement of the referendum.

“I was truly amazed that the U.S. allowed the IMF to send back to Greece that redlined document,” Doyle said. “It must have slipped through the cracks in the White House," he added. "That redlined document was completely humiliating, and it says nothing about debt relief.”

Doyle noted that “in general, the U.S. has been on the side of the angels,” pushing Europe to compromise for the sake of the eurozone’s future.

“The U.S. position has been that the Europeans are completely crazy to risk a major conflagration in Europe over something so small as Greece,” he said.

The Obama administration says that its urgent appeals were responsible for getting the eurozone nations to bail out Greece in May 2010, when the euro was in danger of collapse. Then-Treasury Secretary Timothy Geithner recalled in notes for his 2015 memoir, which were leaked last year to the Financial Times, that eurozone nations in general, and Germany in particular, resisted rescuing Greece on the grounds that it would reward the country for its fiscal irresponsibility.

“But the main thing is I remember saying to [European leaders]: ‘You can put your foot on the neck of [Greece] if that’s what you want to do,’” Geithner recounted. “‘But you’ve got to make sure that you send a countervailing signal of reassurance to Europe and the world that you’re going to hold the thing together and not let it go. [You’re] going to protect the rest of the place.’”

In the Treasury Department’s Monday statement, it again highlighted the importance to the global economy of a “sustainable” accord between Greece and its creditors. But with European economies on the mend, confidence in the euro restored, and most of Greece’s debt held by governments rather than banks, many analysts predict that the impact on global markets of a Greek default and eurozone exit would be limited. And speaking at a Tuesday press conference, President Barack Obama downplayed the financial impact of those events on the U.S. economy.

Obama called the threat of a Greek default and eurozone departure an "issue of substantial concern," but one that is "primarily of concern to Europe." He added that Americans should not be bracing themselves for a "major shock."

CORRECTION: The deadline for Greece's 1.6 billion euro payment to the IMF was misstated in an earlier version of this story. The payment is due by 6 p.m. Washington, D.C., time, on Tuesday.

07/15/2015 3:26 PM EDT

Peaceful Rally Interrupted By Clashes

Danae Leivada reports from Athens:

Members of the Public Sector Union (ADEDY) and Leftist groups rallied in Athens' Syntagma Square on Wednesday night to remind the government Greeks answered the July 5 referendum on a new bailout program with a resounding "Oxi" or "No."

People gathered on the central square as lawmakers were scheduled to vote in parliament on a bill outlining numerous reforms the country's creditors demanded in return for fresh bailout funds.

The reforms were met with dismay and outrage by the protesters. One of them described the proposal as "a treacherous and harsh agreement." Another demonstrator told HuffPost the new deal was "worse than the ones that came before it."

While the demonstration started out peacefully, it was abruptly interrupted by anarchists who clashed with police in front of the parliament building.

07/15/2015 2:45 PM EDT

PHOTOS: Syntagma Square

Danae Leivada was in Athens' Syntagma Square before the clashes started.





The banner reads "No sacrifices for agreements with imperialists. No to blackmail and terrorism. Resistance and struggle against old and new bailouts -- Left Anti-Imperialist Co-Operation"

white poster

The poster reads "STOP to old and new bailout memoranda -- Workers' Solidarity"

yellow banner

The banner reads "Nationalize Banks -- Socialist Workers' Party"

07/15/2015 2:18 PM EDT

Clashes At Anti-Austerity Protests

The Associated Press reports:

07/15/2015 10:39 AM EDT

PHOTOS: Civil Servants On Strike



Protester holds a banner during a protest in central Athens, marking a 24-hours public sector and pharmacists strike on July 15, 2015 against the new package of austerity measures. (ANDREAS SOLARO/AFP/Getty Images)

07/15/2015 10:29 AM EDT

Secretary General Of Social Security To Hand In Resignation

George Romanias, the Secretary General of Social Security in Greece, announced he plans to resign the coming days, HuffPost Greece reports.

Romanias said he disagrees with the measures which will be introduced as part of the country's fresh bailout program. Romanias also claimed he, nor Deputy Social Security Minister Dimitris Stratoulis were consulted during the drafting of the bill of reforms Parliament is voting on today.

07/15/2015 10:26 AM EDT

'No To Blackmail'

President of the Greek Parliament Zoe Konstantopoulou urged lawmakers ahead of Wednesday's vote on a fresh bailout program for the country not to let "blackmail" succeed.

Konstantopoulou pointed at an IMF document that surfaced on Tuesday and indicated that Greece's debt is so sizable the country needs debt relief and a hirty-year grace period on servicing its debt.

“It is our duty to ask of our European partners to serve their obligations”, Konstantopoulou said, according to HuffPost Greece.

07/15/2015 9:46 AM EDT

Photos: Parliament Debates Passing Key Reforms

greeceGreek Finance Minister Euclid Tsakalotos (L) speaks with Deputy Prime Minister Yannis Dragasakis (R) during a parliament session in Athens, on July 15, 2015. (ANGELOS TZORTZINIS/AFP/Getty Images)

greeceGreek Prime Minister Alexis Tsipras attends his Syriza party's parliamentary group meeting at the Greek parliament in Athens on July 15, 2015. (LOUISA GOULIAMAKI/AFP/Getty Images)

07/15/2015 9:20 AM EDT

Political Cartoons Take On Greece And Eurozone

A flurry of political cartoons from around the globe tackles Greece's debt crisis with a sharp mix of comedy and tragedy, with a nod to Greek dramatic tradition.

The cartoons pull no punches -- one likens the nation to an ISIS hostage -- and range from heartbreaking to scathing -- especially for Merkel.

From American cartoonist Jim Morin

Read the full story here.

07/15/2015 8:33 AM EDT

Greece's Deputy Finance Minister Resigns

Deputy finance minister Nadia Valavani has resigned ahead of a vote in Greek parliament on whether to approve the reforms necessary for a bailout.

07/14/2015 3:50 PM EDT

IMF May Walk

The IMF's new memo calling for dramatic debt relief for Greece indicates that unless its requests are heeded, the IMF will not continue to participate in Greece's bailouts.

The Financial Times reports:

The [IMF] memo argues that only through large-scale debt relief — something eurozone officials have fiercely resisted — could Greece see its debt fall to levels where it would be able to return to the financial markets.

“Greece’s debt can now only be made sustainable through debt relief measures that go far beyond what Europe has been willing to consider so far,” the memo reads.

Under its rules, the IMF is not allowed to participate in a bailout if a country’s debt is deemed unsustainable and there is no prospect of it returning to private bond markets for financing. The IMF has bent its rules to participate in previous Greek bailouts, but the memo suggests it can no longer do so.

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