by David Singh Grewal
July 5, 2015
The Greek crisis has made it painfully clear that the International Monetary Fund (IMF) needs a change at the top — and that the U.S. must use its privileged position as the IMF’s biggest contributor to insist on it.
Over the last month of debt negotiations with the Greek government, the IMF’s Managing Director, French politician Christine Lagarde, has emerged as a hard-liner who has pursued an austerity agenda that even her own staff economists believe damaging. Last Thursday, over the objections of the Europeans but with American support, the IMF released an assessment of the Greek crisis, a draft Debt Sustainability Analysis showing that further austerity would undermine Greece’s ability to return to growth. The report’s contested release revealed a house divided, with IMF staff critical of the agenda for which Lagarde has been a leading spokesperson.
Time and again, Lagarde has been intransigent in negotiations with the current Greek government, arguably the most hawkish of the “Troika” representing Greece’s creditors — the IMF, the European Commission and the European Central Bank. The unsurprising result was that Greece was pushed last week into “arrears” with the IMF, a polite term for default. Greece’s failure to make an interest payment on its IMF debt is the first time in the institution’s history that a developed country has defaulted.