Although
much furor has arisen in Greece over the alleged high costs of the planned
upgrade of part of the Greek F-16 fighter fleet ($1.1 billion) announced when
Greek PM Tsipras met President Trump at the White House October 17th, much of
this was offset by Trump’s brief but completely clear recognition of the need
for some form of debt relief for Greece, currently hovering at close to $385
billion. These few words, albeit in a new formulation, became the prize PM
Tsipras needed to justify everything he has done in terms of improving
relations with the United States.
Enter the
Washington wordsmiths. It might be helpful to review who has said whatever
about Greek debt relief in recent years. The U.S. only formal involvement in
the Greek bailout packages since 2010 has been via the IMF, and by all counts
its role has been perceived as generally positive, as the largest “shareholder”
in the IMF’s share-based voting system. Remember that the IMF, by design,
resolutely declares any of its resources allocated to bailout programs are
“senior” and thus cannot be subject to restructuring or see bailout repayments
otherwise reduced if the borrowing country is to remain a member in good
standing. Thus its advice to other creditors on debt rescheduling is taken by
those creditors with a healthy dose of skepticism. It is also worth noting that
Greece’s European creditors have repeatedly told U.S. Government
representatives that “without any skin in the game,” it is very easy for
Washington to tell others to consider writing down a country’s sovereign debt.
And that is about as far as discussions have ever gone, as far as we know.
Obama-Lew
formulation: The Obama Administration, relatively active in its last years on
the Greek debt issue yet still largely ineffective, had preached the need for
“meaningful debt relief.” Most recently President Obama said, just prior to his
Athens visit in November 2016: “That is why I will continue to urge Greece’s
creditors to take the steps needed to ensure the country is well placed to
return to robust economic growth, including by providing meaningful debt
relief.” It is up to the reader do determine if “meaningful debt relief” in any
way translates into debt forgiveness, or is it perhaps just another way of
saying that something tangible must be done by Greece’s creditors to keep debt
repayment levels manageable.
Trump
formulation, Rose Garden October 17th 2017: President Trump certainly raised
eyebrows when he said: “I have encouraged the prime minister in his continued
implementation of reform and reform programs and I have totally reaffirmed our
support for a responsible debt-relief plan,” in his prepared marks to the press
in the Rose Garden, with U.S. Treasury Secretary Mnuchin seated in the front
row. We don’t know what this means in practice, as it was not discussed in the
follow-up question and answer session. But the bottom line is that the U.S.
will somehow remain engaged, at least at the IMF level, on the issue. The
inferred reference from the word “responsible debt-relief plan” means that some
other debt-relief proposals are in some way irresponsible or unrealistic. Trump
also took care to refer to continued reform implementation before debt relief
in his statement, maintaining the existing conditionality.
Vice
President Pence’s office, after Tsipras meeting October 18th: Greek PM Tsipras
and a few senior advisers met with Vice President Michael Pence on October 18th
and yet another mention of Greek debt relief emerged in the post-meeting
statement quickly issued by Pence’s office. “The Vice President congratulated
Prime Minister Tsipras on Greece’s return to economic growth and financial
markets, encouraged further reforms to spur investment, and reiterated U.S.
support for credible debt relief.” So now we have pivoted to the term “credible
debt relief” whatever that might mean. Did somebody somewhere complain about
Trump’s Rose Garden formulation and ask for something softer from the White
House? Time will tell.
https://www.neweurope.eu/article/trump-tsipras-washingtons-wordsmiths-responsible-debt-relief-plan-greece/