Europe’s finance ministers are due to meet Monday in an effort to break the impasse over Greece and its debt. What ought to happen was spelled out last week in a leaked letter from the head of the International Monetary Fund to the group. It wasn’t what the ministers wanted to hear.
Managing Director Christine Lagarde said the IMF cannot support a plan of the kind Europe’s ministers have been demanding — a plan that requires promises Greece can’t or won’t keep and that postpones, yet again, agreement on debt relief. The IMF’s implicit threat to withhold its support and walk away from the talks is justified.
Essentially, the euro zone ministers and Greece’s government have been feeling their way toward an agreement that neither side thinks will work. The spirit of these talks recalls the old joke about the Soviet Union: “We pretend to work and they pretend to pay us.” Under this emerging deal, Greece assents to a range of new fiscal cuts, including additional “contingency measures” to be automatically activated if necessary, with the aim of achieving and sustaining a primary budget surplus of 3.5 percent of gross domestic product. And the euro zone says: That will do fine.