Incalculable – Calculable President

The scary part of the ongoing hullabaloo in Washington is that the President may feel ever more desperate and might conclude that a ‘good’ external crisis may help to dilute some of the problems. Options to start such a crisis are legend. Rather than continuing to annoy Mexico, President Trump may have a look across the Atlantic – and see the chance to annoy the EU as well as Germany, latter being branded as serious currency manipulator. The most elegant way to go would be via the IMF. Why? The IMF currently is in serious conflict with its European Troika partners about Greece. This already had created the so far unknown situation of a public split board about the continued participation of the IMF in the Greek programs. The European representatives very much sided with the perspective of the EU and European governments which says that Greece is on a good path and will further stabilize, and thus needs no additional debt relief. The IMF, on the other side, states that Greece is on a unsustainable path and will urgently need substantial debts relief in order to avoid an economic and social breakdown. Given its own guidelines, the organization is not allowed to further participate in a country program where the candidate is not fulfilling debt sustainability criteria. Governments of Germany and also the Netherlands need the IMF on board, as they would have to go back to their national Parliament to get permission to continue with rescue packages for Greece without the IMF. Both countries have soon elections and it is clear that Parliaments would not be willing to give their governments free hands.

This is the chance for President Trump. He needs still to figure out who is representing the US in the board of the IMF. Given that the US holds the most votes and has the strongest standing in the IMF, it would be a easy decision to chose the right person to stop any further participation of the IMF in the Troika. If one assumes that Merkel will not turn to the Bundestag, then the Greek Crisis is back before the summer, and this time it will be all about GREXIT. President Trump and his team already told everybody and their dog that the Eurozone will crumble. This is the chance to restart the attack and to make the forecast to reality. He could do that in an elegant way by hiding behind the strict criteria of the IMF. What a temptation!

One could think that a return of the Eurozone crisis in times of Brexit and critical elections in European core countries is not in the interest of the US, not to talk about the EU. However, so far President did not stand out by being a calculable personae. His dealer-wheeler personality may lead him to go for a quick shot without taking into consideration that any renewed Eurozone turbulences will also impact the US.