December 4, 2020

E.U. Presses Ahead With Bailout Talks Despite I.M.F. Chief’s Absence

BRUSSELS — Despite the absence of Dominique Strauss-Kahn, the managing director of the International Monetary Fund, European finance ministers on Monday approved a bailout package for Portugal and debated new aid for debt-strapped Greece.

But the scandal engulfing Mr. Strauss-Kahn cast a long shadow, depriving ministers of the advice of a powerful and experienced European with a pivotal role on the global financial stage.

A former French economy minister, Mr. Strauss-Kahn was a member of the political generation that created the euro and someone who had the respect of the euro zone’s most senior politicians and officials.

And, though most diplomats expected him to leave the I.M.F. soon anyway to run for president of France in elections next year, the thought that he might now depart under a cloud increased concerns that the cozy arrangement under which a European gets to lead the fund was in doubt.

European officials insisted that the absence of Mr. Strauss-Kahn, who was being replaced in Brussels by Nemat Shafik, a deputy managing director at the I.M.F., would not affect efforts to control the debt crisis.

E.U. finance ministers said Monday that they agreed “unanimously” to grant aid worth a total of €78 billion, or $111 billion, to Portugal under a three-year program jointly administered by the European Union and the I.M.F.

In a statement, the ministers said the package would “address in a decisive manner the fiscal, financial and structural challenges of the Portuguese economy,” and would “thereby also help restore confidence and safeguard stability in the euro area.”

It added that the Portuguese authorities would encourage private investors “to maintain their overall exposures on a voluntary basis.” Although it was unclear how that encouragement would be offered, one possibility would be special guarantees to those who agreed to retain Portuguese bonds.

No interest rate was specified on the loan portion of the Portuguese package, though the country was expected to pay a little less than 6 percent.

Earlier on Monday, Amadeu Altafaj Tardio, a spokesman for the European Commission, the executive arm of the European Union, sought to reassure nervous markets that all parties to the talks were conducting business as usual despite the absence of Mr. Strauss-Kahn.

“There’s absolutely no question: Decisions which are under way will not be impacted, and this will not have an impact on the programs being applied,” Mr. Altafaj Tardio told reporters. The I.M.F., he added, “remains a strong institution as it always has been, and there will be full continuity.”

But even with Mr. Strauss-Kahn at the helm, Europeans have felt a hardening of attitudes at the I.M.F., where concerns have grown in North America about Europe’s internal policy divisions over the debt crisis.

Meanwhile, some in the developing world are concerned about the amount of effort the I.M.F., which has traditionally devoted resources to their problems, is having to concentrate on Europe, said an E.U. diplomat who was not authorized to speak publicly.

Chancellor Angela Merkel of Germany said Monday that it made sense for Europe to keep the top job at the I.M.F. for now, given its role in tackling the euro zone crisis, Reuters reported from Berlin. However, she said it was not yet time to discuss a successor.

“Generally, we know that in the medium term developing countries certainly have a claim both to the post of I.M.F. chief as well as World Bank chief,” Mrs. Merkel said. “I believe however that in the current phase, there are good reasons for Europe to have good candidates ready.” That view was echoed in Brussels by Didier Reynders, the Belgian finance minister. “It would be preferable if we continued to hold these posts in the future,” he said.

The new mood of uncertainty coincides with a change of leadership at the European Central Bank, with Mario Draghi of Italy all but certain to succeed Jean-Claude Trichet of France as president. Mr. Draghi’s nomination was expected to be formally proposed at the meeting Monday.

As a former French government minister, Mr. Strauss-Kahn is a strong presence who feels at home in the complex world of E.U. policy making.

Article source: http://feeds.nytimes.com/click.phdo?i=896b39305859b2da6fd43922db0aaed4

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