After Europe?s Herculean struggle to hammer out another bailout for Greece, the spotlight in the debt drama turns to the International Monetary Fund, which must decide how much to contribute.
After having already pledged 30 billion euros ($40 billion) to a huge rescue effort that has not worked, the IMF?s management must convince its doubtful shareholders to hand over billions more in hopes that Athens?s finances will improve and the eurozone will stabilize.
But while European Union nations have little choice but to pony up for the new 130 billion euro bailout, certain IMF member states have cooled on the idea of putting more money in after a series of setbacks in Greece: deepening recession, delayed reforms, stalled privatizations and political complications.
IMF managing director Christine Lagarde said on Tuesday that she will propose to IMF directors that the Fund contribute to the package, aiming to make a decision by the second week of March.
Lagarde gave no figures, but German finance minister Wolfgang Schauble said the Fund?s contribution could be as much as 13 billion euros, or 10 percent of the total deal.
Even that would be a lot smaller proportion than the Fund?s 27 percent part in the first 110-billion-euro EU-IMF bailout for Greece in 2010.
That IMF loan to Greece was unprecedented: over the course of a little more than a year and a half, it has disbursed more aid to Greece than it has for any other single country, 20.3 billion euros.
At 13 billion euros for the new deal, the IMF would leave Germany as the leading contributor to the package.
While they remain mum to not destabilize the deal, a number of IMF contributors cannot be happy about being asked for more money for Greece.
?The question that everybody should ask, and I can guarantee you that the Brazilian, the Indian or the Chinese directors are asking themselves, is how such a small country as Greece has become a threat to the global economy?? said Adam Lerrick, a US economist with the American Enterprise Institute.
But, he added, ?The IMF directors will vote a new loan to Greece because it?s in everyone?s interest to stabilize the system.? The 187-nation IMF remains largely dominated by the transatlantic power axis. The Europeans justify asking for a lifeline from the rest of the world, by arguing that eurozone stability is crucial for global economic growth.
The United States, the biggest IMF stakeholder, was the first to declare its support for further IMF support to Greece, on Sunday, the eve of the eurozone finance ministers? meeting to decide on the second bailout.
The Greek government has undertaken ?a very strong and very difficult package of reforms, deserving of support of the international community,? said US Treasury Secretary Timothy Geithner.
?Of course the US supports Greece,? said Lerrick.
?The US government has a time horizon of eight months. Do you think they?ll take the risk that Greece blows up before the (November presidential) election? They won?t,? he told AFP.
The IMF?s participation is also seen as crucial for setting and enforcing performance conditions for Athens — government austerity, reforms, and asset sales in order to close its budget gap.
But such measures have also made the Fund more unpopular than ever in Greece, and a target of bashing as the country heads for elections tentatively scheduled for April.
And so its presence could potentially alter the political outcome of the polls.
?Smaller leftist parties, which oppose the bailout and harsh austerity, are gaining support among the public,? said analysts at IHS Global Insight. [AFP]