The Greek premier is now threatening to go to the IMF for help if the Eurozone won’t come up with hard bailout numbers soon.
These are pretty tough words for someone asking for money:
“We have the worst of the IMF and none of the advantages. This is where Europe must come in and provide what the IMF can offer. Or Greece will have to go to the IMF. We hope that will not be necessary,” he said.
“I prefer a European solution as part of the eurozone, to show the world that Europe can act together. This is not to ask for money but to have an instrument on the table to stop the speculation. We expect the EU to live up to the challenge facing it. We are a eurozone country,” he said.
Some believe Greece can borrow money more cheaply from the IMF than from Europe.
Sources in Washington say Greece can expect to borrow from the IMF at around 3.25pc. While the EU has not specified its own terms, the Eurogroup said this week that any help would come at a punitive rate above the borrowing costs for other EU states, suggesting a rate of 4pc to 5pc.
So what’s the problem? Why might Europe be scared into caving to Greek demands? Because if Greece goes to the IMF, some believe credibility in the euro would be shattered since it would be seen as unable or unwilling to support its member countries when in trouble. Thus Mr. Papandreou is playing a game of chicken he thinks he can win.