Bloomberg — Group of Seven finance chiefs don’t see eye-to-eye on trade, so they’re reverting to a default issue in economic diplomacy: Greece.
Officials arriving on Thursday for talks in the Southern Italian port of Bari — a crossroads of commerce for more than two millenia — downplayed any focus on their festering disagreement after two abortive Group of 20 discussions this year suggested the Trump administration won’t sign up to the long-existing global consensus on free trade.
That leaves sideline talks on Greece as the most fruitful arena for talks for now. On Wednesday, a senior U.S. Treasury official said they are looking for Europe to take the lead in solving the country’s debt problem. On cue, representatives from the International Monetary Fund, the European Central Bank, as well as Germany, Italy and France are set to discuss it, according to European Union officials who asked not to be named as meetings of that so-called Washington Group are informal.
Talks on easing Greece’s debt load have been picking up steam amid hopes of striking a deal later this month. Among the preferred options is the use of leftovers from the country’s latest euro-area-backed bailout to repay about 12.4 billion euros of IMF loans to Greece outstanding, according to EU officials.
Loans from the European Stability Mechanism carry much lower interest and much longer maturities than those extended by the fund, meaning that such a swap operation would ease Greece’s funding needs in the immediate future, even as the overall impact on debt sustainability will be limited.
A key issue in the talks is the assumptions about Greece’s budget performance after 2018, when the current bailout expires. The IMF has repeatedly raised doubts about Greece’s ability to maintain a stellar budget record for decades. Less ambitious fiscal targets, though, would increase the need for debt relief.
One advantage of talking about Greece is that the country isn’t represented at the G-7 or in the Washington Group, so it can’t disagree.
By contrast, trade remains highly contentious and may loom large in Bari as finance ministers and central bank governors meet.
