Lew and Lagarde raise pressure on EU to avoid Grexit

US Treasury secretary Jack Lew and the IMF’s Christine Lagarde on Wednesday sought to increase pressure on European leaders to grant debt relief to Greece and help the country avoid an exit from the eurozone.

In separate interventions in Washington both said it was clear that Greece was in need of a “debt restructuring” in an implicit call for Germany and others to drop their opposition to any forgiveness of Greek debts.


“Greece is in a situation of acute crisis, which needs to be addressed seriously and promptly,” Ms Lagarde said. Getting out of that crisis would take both reforms by Athens and a “debt restructuring”, she said.

Warning that a Greek meltdown would cause hundreds of billions of dollars of economic damage around the world, Jack Lew issued the Obama administration’s loudest call yet for compromise.

Athens needed to play its part by giving the rest of Europe confidence that it would fulfil a new set of reform pledges, he said. But he also called on European creditors to be ready to restructure Greece’s €317bn debt pile.

“In the next few days what we’ll see is [whether] the parties come together and build enough trust that Greece will take the actions that it needs to take so that Europe will restructure the debt in a way that is more sustainable,” Mr Lew said.

“I certainly have ideas about how you can do that,” he added. “But it’s . . . a lot to do in a short period of time and I’ve said over and over again that the risk of an accident goes up dramatically when you create more of these kind of life and death deadlines.”

US officials have in recent weeks gradually been raising the pressure on both Greece and creditors such as Germany and France to come to a deal and steer around what many in Washington see as an avoidable crisis.

President Barack Obama spoke with both Angela Merkel, the German chancellor, and Alexis Tsipras, the Greek prime minister, on Tuesday. Mr Lew and other officials have also been in regular contact in recent days with their counterparts across Europe and at the International Monetary Fund.


The US has become an important advocate for granting Greece debt relief. Washington backed an IMF decision last week to release a controversial debt sustainability analysis that argued forcefully for a restructuring.

Ms Lagarde on Wednesday defended the release of that report just days ahead of Sunday’s referendum in Greece, saying it had never been intended to be a political move. Both sides in the referendum had seized on the report to their own ends, she pointed out, and it had simply enumerated what had been a longstanding IMF call for Greece’s debts to be restructured.

“Our analysis has not changed,” she said.

Mr Lew said the Greek crisis did not pose “any immediate threat” to the US economy.

But, speaking at a Brookings Institution event in Washington, Mr Lew lamented that Greek and European leaders had previously been within “a couple of billion dollars” of reaching a deal but were now creating economic risks on a far larger scale in Europe and beyond.


“For any of us who have participated in budget and fiscal policy discussions, you wouldn’t usually buy hundreds of billions [of dollars] of risk for a couple of billion dollar gap,” Mr Lew said.

“There’s a lot of unknowns if this goes to a place that completely melts down in Greece. I think that is a risk that the Europeans and global economy don’t need. I think geopolitically it would be a mistake.”

Mr Lew said the Greek prime minister could not accept new fiscal and structural reforms without being able to show voters that the country’s debt would be sustainable, and that no European government could support a deal without assurances that it would be properly implemented.




Fonte: FT