Unending Greek Crisis Testing IMF-Europe Ties

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The massive financial rescue of Greece, with the country still struggling to meet its lenders' conditions, is placing strains on relations between the IMF and its European partners in the bailouts.

Officially, the three providers of funds to Greece -- the "troika" of the International Monetary Fund, the European Union, and the European Central Bank -- are unified as they press Athens to stick to the growth-crunching austerity program that came with their emergency loans.

But behind the scenes, the Greek problem is highlighting differences between the IMF and its European counterparts within the troika, according to officials and analysts who spoke to Agence France Presse.

The IMF, by its normal approach, wants mainly to help stabilize a country's finances and get it on a positive fiscal path that would, at least, allow it to pay back the Fund's loans.

But the EU and ECB see a bigger picture involving their own futures, particularly the survival of the eurozone.

"The fundamental difference between the IMF and the Europeans is that the IMF wants to be repaid while the Europeans are more focused on changes in Greece over the long term," said a European diplomat.

At the Fund's Washington headquarters, some officials are annoyed over how much money has gone to bail out Greece, while the European Union has been slow to press reforms on its ailing members.

"There are different approaches which can generate tensions," said one official who insisted on anonymity.

"The Fund is global and far away from the European context."

Within the troika, "Too much importance was given to politics at the expense of economics" said Arvind Virmani, who represents India at the Fund.

The IMF has repeatedly told its European partners of the necessity of reducing Greece's debt burden to put it on a sustainable path.

Last week, the Greek website Capital.gr reported that the troika, whose representatives are in Athens currently, still needed to achieve agreement among themselves over their approach to Athens' problems in adhering to its bailout targets.

Christine Lagarde, the IMF managing director, insisted in July that it was the Fund that is "holding the line" on the issue of Greece's ability to keep servicing its debt.

And on Thursday, IMF spokesman Gerry Rice said as well, even as troika representatives are reviewing Greece's performance, that there are "good arguments to extend the period for Greece to implement its fiscal adjustment." Any extension to its targets would "be dependent on the ability of financing," he said.

The troika format has been challenging for the IMF since it was launched by necessity of the huge joint rescues of Greece and then Ireland and Portugal.

The IMF has usually worked alone in its loans, negotiating the terms with recipient governments and then periodically reviewing progress.

In the troika format, it has to share judgments and decisions on loan disbursements with the ECB and EU -- and that has led to some conflicts.

For instance, the European diplomat said, the EU was surprised to learn in 2011 that Athens was preparing a draft law on administrative reforms.

"In fact, the IMF had suggested it. And the IMF and the Europeans had not spoken about it," he said.

Before Greece called for help in 2010, leaders in Brussels had a dim view of the IMF -- even though its head has always been a European.

In March 2009, Eurogroup president Jean-Claude Juncker said it would not be wise for a country from the European Union to approach the Fund.

One year later, European Central Bank chief Jean-Claude Trichet said such an event would be bad.

But the magnitude of Greece's needs -- 380 billion euros, most of it from the European Union -- has swept away the EU reservations about the IMF.

And Germany, which dragged its feet on helping Greece, ultimately insisted on the IMF's involvement, which has a key role in policing adherence to the conditions of rescue loans.

Economist Jacob Funk Kirkegaard of the Peterson Institute in Washington downplayed the differences within the troika, pointing out that the ECB had just requested the IMF to help oversee its new program of buying sovereign bonds of struggling eurozone countries.

"The ECB wouldn't make this request if they were really upset about the way the troika works," he told AFP. "It is a vote of confidence."