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| I.M.F.’s Call for More Cuts Irks Greece | I.M.F.’s Call for More Cuts Irks Greece |
| (about 9 hours later) | |
| ATHENS — As Greece enters a pivotal week in its economic crisis, tensions between the Greek government and the country’s international lenders have reached a boiling point. The government is resisting a push by the International Monetary Fund to impose additional austerity measures that Greek leaders fear could destabilize the shaky coalition government. | ATHENS — As Greece enters a pivotal week in its economic crisis, tensions between the Greek government and the country’s international lenders have reached a boiling point. The government is resisting a push by the International Monetary Fund to impose additional austerity measures that Greek leaders fear could destabilize the shaky coalition government. |
| Although those talks are expected to resume later this week, they have been suspended since an angry exchange last week between the Greek finance minister and the I.M.F.’s top negotiator for Greece. | Although those talks are expected to resume later this week, they have been suspended since an angry exchange last week between the Greek finance minister and the I.M.F.’s top negotiator for Greece. |
| The impasse has elevated tensions here as Greece braces for a nationwide general strike planned on Wednesday that threatens to bring public services to a halt. The Greek people are increasingly angry over the prospect that public salaries and pensions will be cut again in a last-ditch bid to secure a new loan installment of 31.5 billion euros, or $40.7 billion, from Greece’s creditors. | The impasse has elevated tensions here as Greece braces for a nationwide general strike planned on Wednesday that threatens to bring public services to a halt. The Greek people are increasingly angry over the prospect that public salaries and pensions will be cut again in a last-ditch bid to secure a new loan installment of 31.5 billion euros, or $40.7 billion, from Greece’s creditors. |
| The Greek prime minister, Antonis Samaras, plans to address the nation this week to bolster support for the austerity package. He has already publicly warned his center-right party, New Democracy, that he will oust lawmakers of the party failing to back the package once it comes up for a vote, probably in early October. | The Greek prime minister, Antonis Samaras, plans to address the nation this week to bolster support for the austerity package. He has already publicly warned his center-right party, New Democracy, that he will oust lawmakers of the party failing to back the package once it comes up for a vote, probably in early October. |
| Various European leaders have gone out of their way in recent weeks to voice support for the Greek government, which came to power in June. And they have praised the Samaras government’s renewed commitment to taking difficult steps to revamp the economy despite concern that Greece could be a ward of its euro zone partners for years to come. Chancellor Angela Merkel of Germany has joined France in declaring that Greece must stay in the euro union to avoid even the perception that the union would be vulnerable to a wider breakup. | Various European leaders have gone out of their way in recent weeks to voice support for the Greek government, which came to power in June. And they have praised the Samaras government’s renewed commitment to taking difficult steps to revamp the economy despite concern that Greece could be a ward of its euro zone partners for years to come. Chancellor Angela Merkel of Germany has joined France in declaring that Greece must stay in the euro union to avoid even the perception that the union would be vulnerable to a wider breakup. |
| In this political calculus, Ms. Merkel and others see Mr. Samaras as the last best hope for Greece. They worry that if the government teeters, new elections might be called in which his party could lose power to the increasingly popular leftist party Syriza, led by the political maverick Alexis Tsipras. Mr. Tsipras advocates tearing up the loan agreement with Greece’s international creditors. That would raise the risk of default and an eventual exit from the euro. | In this political calculus, Ms. Merkel and others see Mr. Samaras as the last best hope for Greece. They worry that if the government teeters, new elections might be called in which his party could lose power to the increasingly popular leftist party Syriza, led by the political maverick Alexis Tsipras. Mr. Tsipras advocates tearing up the loan agreement with Greece’s international creditors. That would raise the risk of default and an eventual exit from the euro. |
| The situation is also being monitored by Chinese officials, who would be reluctant to see a Greek exit from the euro destabilize the European Union, China’s largest trading partner. | The situation is also being monitored by Chinese officials, who would be reluctant to see a Greek exit from the euro destabilize the European Union, China’s largest trading partner. |
| “We want the euro zone to stay intact,” Du Qiwen, the Chinese ambassador to Greece, said in an interview on Monday. “If something in Europe goes seriously wrong, if there’s a major mishap in the euro zone, it would put pressure on the world economy and it would not be in the interest of the world community or China.” | |
| And yet, there remains a concern among a small number of technocrats in Greece that, positive oratory aside, the next round of cuts will be too severe to be viable politically — leaving open the danger of a euro exit, best efforts notwithstanding. | And yet, there remains a concern among a small number of technocrats in Greece that, positive oratory aside, the next round of cuts will be too severe to be viable politically — leaving open the danger of a euro exit, best efforts notwithstanding. |
| Among these thinkers, fear looms that perhaps Europe — with the I.M.F.’s help — is setting Greece up for a fall, especially now that the European Central Bank has set up a fire wall of sorts for the rest of the euro zone with a new bond-buying program intended to keep Spain and Italy from succumbing to the financial contagion that was formerly feared if Greece were to fail. | Among these thinkers, fear looms that perhaps Europe — with the I.M.F.’s help — is setting Greece up for a fall, especially now that the European Central Bank has set up a fire wall of sorts for the rest of the euro zone with a new bond-buying program intended to keep Spain and Italy from succumbing to the financial contagion that was formerly feared if Greece were to fail. |
| The broader financial markets are largely shrugging off the Greek turmoil, indicating that many investors are convinced that letting Greece go for the greater good of the euro zone would no longer be a European catastrophe. | The broader financial markets are largely shrugging off the Greek turmoil, indicating that many investors are convinced that letting Greece go for the greater good of the euro zone would no longer be a European catastrophe. |
| “I hope this is not the case, but my suspicion is that Angela Merkel may want to sacrifice Greece,” said Gikas Hardouvelis, an economist based in Athens who was a top economic adviser during the interim government that presided before Mr. Samaras came to power. “You kick out Greece to show that you are tough on the bad guys and lenient on the good guys.” | “I hope this is not the case, but my suspicion is that Angela Merkel may want to sacrifice Greece,” said Gikas Hardouvelis, an economist based in Athens who was a top economic adviser during the interim government that presided before Mr. Samaras came to power. “You kick out Greece to show that you are tough on the bad guys and lenient on the good guys.” |
| The Samaras administration has been laboring to show that it is now one of the good guys despite the inability of previous governments to carry out promises to mend the country’s finances. | The Samaras administration has been laboring to show that it is now one of the good guys despite the inability of previous governments to carry out promises to mend the country’s finances. |
| But officials from the troika of Greece’s international lenders — the I.M.F., the European Commission and the European Central Bank — have been burned in the past. And they recently signaled that they did not believe Mr. Samaras could deliver on at least 2 billion euros ($2.6 billion) in cuts proposed in the latest round of austerity measures Greece would have to impose to qualify for additional bailout money. | But officials from the troika of Greece’s international lenders — the I.M.F., the European Commission and the European Central Bank — have been burned in the past. And they recently signaled that they did not believe Mr. Samaras could deliver on at least 2 billion euros ($2.6 billion) in cuts proposed in the latest round of austerity measures Greece would have to impose to qualify for additional bailout money. |
| That led to a standoff between the sides that boiled over on Wednesday evening, when the normally even-keeled and optimistic Greek finance minister, Yannis Stournaras, lost his temper, according to two people with knowledge of the incident who were not authorized to speak publicly. | That led to a standoff between the sides that boiled over on Wednesday evening, when the normally even-keeled and optimistic Greek finance minister, Yannis Stournaras, lost his temper, according to two people with knowledge of the incident who were not authorized to speak publicly. |
| At the meeting, Poul Thomsen, the I.M.F.’s lead negotiator for Greece, was pushing hard for additional tax increases and wage and pension cuts, these people say. Mr. Stournaras angrily gestured to a bullet hole in one of the windows of the Finance Ministry. | At the meeting, Poul Thomsen, the I.M.F.’s lead negotiator for Greece, was pushing hard for additional tax increases and wage and pension cuts, these people say. Mr. Stournaras angrily gestured to a bullet hole in one of the windows of the Finance Ministry. |
| “You see this — this came from a bullet,” Mr. Stournaras said. “Do you want to overthrow the government?” | “You see this — this came from a bullet,” Mr. Stournaras said. “Do you want to overthrow the government?” |
| Mr. Stournaras threatened to resign, these people said, rather than approve cuts to public employee pensions and salaries beyond the 5 billion euros ($6.5 billion) to which the government had agreed. | Mr. Stournaras threatened to resign, these people said, rather than approve cuts to public employee pensions and salaries beyond the 5 billion euros ($6.5 billion) to which the government had agreed. |
| When the incident was reported to Mr. Samaras a few minutes later, he called Mr. Thomsen to say that negotiations could not be conducted this way. Soon after, Mr. Thomsen left the meeting to let tensions cool. | When the incident was reported to Mr. Samaras a few minutes later, he called Mr. Thomsen to say that negotiations could not be conducted this way. Soon after, Mr. Thomsen left the meeting to let tensions cool. |
| Other troika officials departed Greece on Saturday with plans to return to resume discussions by the end of this week. | Other troika officials departed Greece on Saturday with plans to return to resume discussions by the end of this week. |
| The blowup underscores to some extent a widening rift within the troika. I.M.F. officials are under pressure from the fund’s Washington headquarters to reduce its exposure to Greece. But that puts the I.M.F. at odds with the European troika members, whose organizations would need to put up the bulk of the next installment of bailout loans that Greece is counting on. | The blowup underscores to some extent a widening rift within the troika. I.M.F. officials are under pressure from the fund’s Washington headquarters to reduce its exposure to Greece. But that puts the I.M.F. at odds with the European troika members, whose organizations would need to put up the bulk of the next installment of bailout loans that Greece is counting on. |
| Under its guidelines, the I.M.F. cannot lend additional money to a country if it becomes clear that the government can no longer meet its financial obligations — a line that many contend Greece crossed long ago. | Under its guidelines, the I.M.F. cannot lend additional money to a country if it becomes clear that the government can no longer meet its financial obligations — a line that many contend Greece crossed long ago. |
| “The numbers have to add up, otherwise it would be irresponsible to lend more money,” said an I.M.F. official who was not authorized to speak publicly. “It is clear that the political system is struggling — but we need 13.5 billion euros. The ball is in Greece’s court.” | “The numbers have to add up, otherwise it would be irresponsible to lend more money,” said an I.M.F. official who was not authorized to speak publicly. “It is clear that the political system is struggling — but we need 13.5 billion euros. The ball is in Greece’s court.” |
| The impasse reveals the extent of the government’s alarm at the worsening mood on the streets. More protests are likely in October, when Parliament is expected to vote on the measure. Many Greeks are now talking about the potential for civil unrest when the weather turns colder and many people may not be able to afford to heat their homes. Fuel prices, including gasoline, have been climbing, and whatever cushion Greeks on the margins had in their savings is gone. | The impasse reveals the extent of the government’s alarm at the worsening mood on the streets. More protests are likely in October, when Parliament is expected to vote on the measure. Many Greeks are now talking about the potential for civil unrest when the weather turns colder and many people may not be able to afford to heat their homes. Fuel prices, including gasoline, have been climbing, and whatever cushion Greeks on the margins had in their savings is gone. |
| Moreover, questions are swirling about the extent to which Greece’s police force will be willing and able to maintain public order, because it is also facing salary cuts. A number of officers were held off with pepper spray by riot police officers last week outside of Mr. Samaras’s residence, where they held a demonstration. | Moreover, questions are swirling about the extent to which Greece’s police force will be willing and able to maintain public order, because it is also facing salary cuts. A number of officers were held off with pepper spray by riot police officers last week outside of Mr. Samaras’s residence, where they held a demonstration. |
| Even other members of the troika have been taken aback by the I.M.F.’s persistence in pushing for more spending cuts and tax increases — especially an additional tax on Greece’s traumatized corporations. | Even other members of the troika have been taken aback by the I.M.F.’s persistence in pushing for more spending cuts and tax increases — especially an additional tax on Greece’s traumatized corporations. |
| “It’s a question of emotional intelligence,” said one official involved in the discussions who was not authorized to speak publicly. “This government has some legitimacy, and it has found some support in Europe. And now it is being pushed to make further cuts to the bone that may risk a social explosion.” | “It’s a question of emotional intelligence,” said one official involved in the discussions who was not authorized to speak publicly. “This government has some legitimacy, and it has found some support in Europe. And now it is being pushed to make further cuts to the bone that may risk a social explosion.” |
Liz Alderman reported from Athens and Landon Thomas Jr. from London. Niki Kitsantonis contributed reporting from Athens. | Liz Alderman reported from Athens and Landon Thomas Jr. from London. Niki Kitsantonis contributed reporting from Athens. |
| This article has been revised to reflect the following correction: | |
| Correction: September 25, 2012 | |
A previous version of this article misspelled the name of the Chinese ambassador to Greece. It is Du Qiwen, not Du Quiwen. |
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