Former European Central Bank President Jean-Claude Trichet accused the International Monetary Fund on Tuesday of rewriting history by arguing that Greece should have been made to restructure its debt in a 2010 bailout.
The IMF said in a report this month that it lowered its own standards to join a flawed program for Athens, saying: «An upfront debt restructuring would have been better for Greece although this was not acceptable to the euro partners.”
Trichet, who was head of the ECB until late 2011, said the Fund never made such a suggestion at the time and should have taken more account of the need to stabilize the eurozone.
“I have absolutely no recollection that the IMF called for anything that would be stronger … in terms of conditionality or the scheduling,” he told Reuters Insider Television in an interview. “It seems to me that there is some kind of reconstruction of what has happened.”
“Secondly, in any case the IMF would be well inspired in my opinion to have an analysis on the system as a whole, because what was happening in Europe was not only (in) Greece,” he said.
A June 5 IMF report drawing lessons from Greece’s financial rescues caused tension between European Union authorities and the global lender and raised doubts about their cooperation in the Troika of international lenders to eurozone countries.
The European Commission has said undertaking a restructuring in 2010 would have been wrong, and that the Fund had not proposed it, while current ECB President Mario Draghi has warned against judging «what happened yesterday with today’s eyes.”
The first 110 billion euro rescue for Greece was put together amid extreme market turmoil in May 2010. Writedowns of nearly 75 percent were eventually imposed on private bondholders as part of a second 130 billion euro bailout last year, but the IMF said many investors had dumped their holdings by then.
Trichet defended the eurozone’s handling of the debt crisis, saying that both the EU and the 17-nation single currency bloc had demonstrated their resilience in the first major crisis to hit them since the euro was launched in 1999.
“The resilience of the euro area as an entity has also been remarkable. Don’t forget that nobody would have bet on this resilience ex ante and that we had the worst crisis ever since World War Two, in the United States and in Europe,” he said.
Asked whether the Troika was dead or could continue to work together after the row over Greece, he said: “It is indispensable. Of course it has to do as good a job as possible taking into account all the circumstances, which are still very demanding but were extremely grave when the system itself was at stake.” [Reuters]