Berlin insists on IMF involvement in Greek reform deal

Germany has insisted that it sees no future for EU assistance for Greece without the participation of the International Monetary Fund (IMF).

Amid reports of a heated dispute between the Greek government and the Washington-based institution in Brussels talks, senior Berlin officials said the IMF was as crucial a part of the strategy to stabilise Greece when it was brought to the table at German chancellor Angela Merkel’s insistence.

German jitters ahead of Brussels crisis talks was clear on Wednesday morning with a surprisingly sharp slump in the Ifo index, a closely-watched barometer of German business sentiment.

And, in another sign of the high stakes involved, officials close to Dr Merkel in Berlin were more restrained than usual in their efforts to spin expectations ahead of the looming Brussels meetings.

One official said on Wednesday that Berlin remained hopeful finance ministers would reach agreement in the evening but, “if not, we’ll see tomorrow morning”.

“A solution without the IMF is not conceivable, that is something we have repeated with constant politeness,” said the senior German official.

“All have said that it is important that the institutions act in concert and I assume that, as in the past, the institutions will come to present joint proposals or a joint evaluation [of the situation].”

While Dr Merkel has not ruled out any format of meeting in Brussels to help a final agreement over the line, her officials indicated she would prefer to include all heads of state and government in any talks.

Berlin had never, and would not now get involved in haggling over the small detail of the Greek programme – a competence German officials said lay squarely with the EU/IMF institutions and Greece.

The officials said it was “utterly wrong” that at a late-night meeting earlier this month Dr Merkel’s office, with the EU/IMF institutions and the French leader, had discussed the Greek programme in detail.

“We won’t start discussing what VAT rate should be raised to this or that rate,” said an official close to Dr Merkel.

Conciliatory signals

Ahead of David Cameron’s meeting in Berlin with Dr Merkel on Wednesday, German officials sent conciliatory signals on British reform proposals to be presented in Brussels ahead of a referendum on its EU membership.

The adoption of the euro and Schengen Agreement had, a senior Berlin official said, shown there was “no contradiction”between the concept of ever-closer union and the “reality of a differentiated union in which not all participate in everything”.

Reflecting a pessimistic view in the German media on Wednesday, French economist Thomas Piketty revived calls for a European debt conference similar to that held after the second World War.

"A restructuring of debt isn't just unavoidable in Greece but in many European countries," he told Thursday's edition of Die Zeit.

The author of Capital in the 21st Century accused Berlin of "undermining democracy in Europe" in the euro crisis, and the automatic debt triggers it anchored in the fiscal treaty a "great mistake".