Heavy fighting has broken out in the region of Nagorno-Karabakh, an enclave under control of Christian Armenians surrounded by mostly Muslim Azeris in the country of Azerbaijan. The relations between Armeniz and Azerbaijan over the status of Nagorno-Karabakh is long-standing, but became quite volatile after the disintegration of the former Soviet Union of which both countries were a part. A truce was arranged in 1994, but the issue has never been settled, and it is hard to imagine how it could be resolved given the way the borders are currently drawn. At this stage of the violence, it is hard to determine exactly what led to the outbreak, but more information will become available over time.
Wikileaks has published the transcript of a conversation between two IMF officials worrying about the possibility of a Greek sovereign debt default coinciding with the British referendum on exiting the European Union. The IMF has a difficult time justifying giving credit relief to Greece because its official policy is not to lend to countries if they have “unsustainable” debts. So the IMF believes that the European Union has to come up with the money to give to Greece to avoid a debt crisis in June when its debt payments are due. But Germany is very reluctant to lend any more money to Greece because many German citizens do not wish to bail out the Greeks. The transcript quotes Poul Thomsen, the head of the IMF’s European Department as saying:
“What is going to bring it all to a decision point? In the past there has been only one time when the decision has been made and then that was when [the Greeks] were about to run out of money seriously and to default. […] And possibly this is what is going to happen again. In that case, it drags on until July, and clearly the Europeans are not going to have any discussions for a month before the Brexits…”
The idea that the IMF would threaten to pull out of the negotiations as a way of levering Germany to offer Greece additional economic help is hardly diplomatic and places the IMF in a very uncomfortable political role. Needless to say, the Greeks are angry that their possible debt default and all its associated turmoil is the pawn in this power struggle.
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