IMF involvement is depoliticizing, but IMF legitimacy is key- empirics prove

Expertise is always needed to make economic policy programmes. Especially in uncertain crisis times, experts can have greater influence on decision-making if they have access to decision-makers. Our analysis sheds light on the IMF’s expert role in the earliest stage of the Eurozone crisis. We explain how and why the IMF joined and influenced the first Greek loan package in 2010. We indicate that a new knowledge regime (the Troika) was formed in spring 2010 and, as it had direct influence on the Greek loan, it turned into a de facto policymaking regime. The conclusive reason for the IMF’s involvement from the IMF’s perspective is a combination of factors. We argue that the most relevant ones were the fear of contagion, European influence in the IMF, Strauss-Kahn’s personal role, and the IMF’s need for legitimacy. Indeed, the IMF strengthened its financing role, but at the same time Greece’s declining economy challenged IMF’s credibility as a neutral expert (Nordström and Teivainen Citation2022).¶ For the EU, there was some friction between reasons to oppose and to justify IMF involvement. The former included monetary sovereignty and the legitimacy of the EU as an autonomous actor that should not request the help of an institution associated mostly with devising economic programmes for poorer and weaker countries. IMF involvement was justified by the credibility it would bring to the crisis resolution, especially as there was a lack of confidence in the Commission for being too political and lacking crisis management expertise. The specific reasons for including the IMF, that were all connected to lack of confidence towards the Commission, were the need for practical expertise and perceived quality in loan and conditionality negotiations, its public image of credibility, the perceived need for the IMF as a strict guarantor of austerity, and depoliticisation, which was also linked to all the former motives. Similar to IMF’s earlier history, there was depoliticisation in two dimensions: the expertise and (economic) neutrality doctrine of the IMF were used to depoliticise the crisis at the same time that the programme decision-making was kept in general on a technocratic level. This message was intended especially for the outside world. Additionally, depoliticisation was intended to diffuse political tensions inside the EU. This, however, failed and did not prevent the Eurozone crisis from repoliticising economic policies. Our study shows that depoliticisation is used as a strategy to legitimate crisis management. International organisations’ capacity to deliver is conditioned on their legitimacy (Tallberg and Zürn Citation2019, 581).¶ Sovereignty was renegotiated in a multilevel way: Greece’s sovereignty was partly surrendered to external experts, as has been common in the IMF’s history. At the same time, in a novel way, the EU, as creditor with one of its member states as debtor, managed its monetary sovereignty by compromising it in a less serious manner by inviting the IMF as a “neutral” expert and junior partner. This compromise was easier than in a nation state, as the decision-makers did not have to pay so much attention to the (non-existent) European demos, but still difficult for the many decision-makers who tried to protect the recently established EMU monetary sovereignty. The Troika’s legitimacy was sought externally among the financial sector through IMF’s credible expertise and austerity policies, and internally among the EU member state political elite by limiting the Commission’s powers.Footnote7 Here, legitimacy is not defined as responding to citizen’s desires (for that use see Carstensen and Schmidt Citation2018).Footnote8¶ A further research avenue would be to study whether the IMF played a similar depoliticising role in the subsequent loan agreements, when the Commission had already acquired expertise and a reputation as a guarantor of austerity. What role did depoliticisation signify in the exit of the IMF from the Troika? Additionally, it would be relevant to analyse the later internal IMF critique, and to what extent it was used to restore the depoliticising role when the IMF’s image of neutrality had received a serious blow from the European bailouts.