Inclusion of IMF in Eurozone Crisis Management: Legitimacy Through External Expertise and Internal Depoliticisation

ABSTRACT A new technocratic knowledge regime emerged in Europe in 2010. Known as the Troika, it included the European Commission, the European Central Bank, and the IMF. The Greek Stand-By Arrangement was the IMF’s first Eurozone financial assistance involvement, controversial for both the EU and the IMF. We trace how the IMF entered the process, focusing on why EU institutions involved it. We used official documents, statements, and a unique set of 129 interviews with IMF and EU decision-makers and Member State officials. We argue that the EU sought the IMF’s expertise in loan and conditionality negotiation, public image credibility, perceived guarantee for austerity, and depoliticisation. They were internally motivated by lack of confidence in the European Commission among EU Member States. Legitimacy was sought externally through the IMF’s expertise. The IMF continued its previous depoliticising role, a crucial strategy in crisis management, now in a novel multilevel context.


Introduction
This article discusses the International Monetary Fund's (IMF) role as a depoliticising expert in crisis.In this context, depoliticisation consists of attempts to remove debates about economic policy from the spheres of electoral and intergovernmental politics, and frame them as less politicised questions of global economic expertise.To what extent was the IMF involved in the Eurozone crisis in order to play this role?The crisis could have been a time to openly politicise EU economic policy.Instead, a new technocratic knowledge regime (Campbell and Pedersen 2014) emerged.In 2010, the European Commission (Commission), the International Monetary Fund (IMF) and the European Central Bank (ECB) formed a triumvirate, later and here called the Troika, to negotiate the first Greek loan agreement.The Troika offered various institutional novelties, though these were also rooted in earlier economistic traditions and the previous technocratic nature of EU decision-making.The knowledge regime evolved, at least partially, as a response to the need to understand what caused the crisis and what should be done to overcome it.Bailout loans and economic adjustment programmes were negotiated within that regime.
We focus on the role of the IMF in Eurozone crisis decision-making during the spring 2010 negotiations that led to the first Greek loan package.It was the first coordinated Eurozone crisis response, and thus created path dependency in crisis resolution.We trace how and why the IMF entered the process.More specifically, we focus on how and why the EU institutions decided to let the IMF in.Thus, we fill the gap indicated by Hodson (2015, 571): "there has been little theoretically informed investigation of how and why the IMF found itself involved in European responses to the global financial crisis and to what end".The EU's reasons for the inclusion have received even less attention.Apart from the importance of understanding this particular case, we hope to contribute to more general debates on the depoliticisation of economic policy regimes in times of crisis.We show that depoliticisation can be an important part of crisis resolution strategies, also in multilevel contexts.
The financial crisis turned into a European debt and banking crisis at the latest in spring 2010.The first coordinated attempts to resolve the Eurozone crisis in May 2010 were the first Greek loan package, the European Financial Stability Fund (EFSF), and the European Financial Stability Mechanism (EFSM).The first two were co-financed by the EU (or by the Eurozone member states in the case of the EFSF and Greece) and the IMF.The Troika formed a path-dependent framework for all subsequent financial assistance programmes until the third Greek loan package in 2015, in which the IMF was no longer directly involved.
The contested nature of IMF's entry to the Troika makes it an intriguing research topic.Even if the IMF's involvement in Europe was not wholly unprecedented, the Greek Stand-By Arrangement (SBA) was something new.It was the IMF's first financial assistance involvement in a Eurozone country.The involvement of an international institution in matters of the still relatively new currency area touched many nerves.Its inclusion was a very difficult decision for the EU, especially for some member states (such as France), the Commission, and the ECB.Letting in an external actor traditionally involved in Third World countries could hurt the credibility of Eurozone monetary sovereignty and ideas of European self-determination.Participation was also controversial within the IMF.One reason was the programme's unprecedented size as the largest ever relative to the IMF quota (3212 percent of Greek quota) (Wyplosz and Sgherri 2017, 257, 272), and also as the second largest in absolute size in IMF loan history, previously surpassed only by the Brazil programme of 2002 (Reinhart and Trebesch 2016, 11).There were further worries about the decision to grant "exceptional access" to Greece without restructuring its public debt amid worries about debt sustainability, and the fact that the IMF changed its internal rules to enable this (Henning 2017, 86-87).Some research considers that the IMF took these actions amidst perceptions that Eurozone policymakers would have undue influence on the design of the SBA (see e.g.Blustein 2015, 17;Henning 2017, 89;IEO 2016, 17;Pénet 2018Pénet , 1048)).The IMF is used to operating alone in individual countries' loan arrangements (for an exception see Lütz & Kranke 2013), though there have sometimes been supplementary financiers (on their impact see Gould 2003).One novelty in dealing with the Eurozone was an additional decision-making layer of a region that has its own elaborate governance mechanisms.
Was the IMF brought in to depoliticise the process as an assumedly neutral expert?In many earlier debt crises, the IMF had been used as a "lightning rod" deemed capable of establishing conditionalities that could have induced greater anger if conducted by the creditor countries or private creditor banks (Teivainen 1999).Especially after increasingly detailed stand-by agreements were developed in the late 1950s, the IMF became very careful about deeds or words that could be considered political.It held to a doctrine of economic neutrality (Swedberg 1986) and practised the politics of economism (Teivainen 2002).The economic policy lines of the IMF did not tend to become overly controversial inside the IMF, partly because those who might oppose them never had much representation in the decision-making of the IMF.One novelty of the 2010 crisis was that the IMF was now involved with the EU, which through the combined representation of its member states could affect IMF decision-making.What implications did this novel constellation of power have for understanding how sovereignty is negotiated in times of debt and crisis?
The IMF's actions in Eurozone crisis have been analysed in various studies (e.g.Clift 2018; Lütz and Hilgers 2019;Roos 2019).However, as pointed out by Hodson (2015, 571), there has been little research on how and why the IMF joined the Troika.Some research has identified the IMF's motivations (e.g.Janssen 2010; Pénet 2018), but the EU's reasons remain underexplored.Bastasin (2020) identifies the chronology of the IMF entering the process in 2010, but the reasons are not fully analysed.Henning (2017) explores the reasons for the IMF involvement (as do Brunnermeier, James, and Landau (2016) and Blustein (2015), who includes the secret talks on debt restructuring), but can be criticised for not sufficiently covering economic policy conflicts within the Troika (Clift 2019).From existing research, six possible explanations from the IMF side are detected: EU influence (Janssen 2010;Pénet 2018), lack of options (Pisani-Ferry 2014), fear of contagion (Blustein 2015;Clift 2018), regaining legitimacy (Blustein 2015;Gabor 2010), role of the managing director Dominique Strauss-Kahn (Brunnermeier, James, and Landau 2016) and IMF's own explanation of buying time (IEO 2016).Based on our analysis, we provide a comprehensive explanation instead of isolated causes.For the IMF,1 we argue that key reasons to join were the fear of contagion, European influence in the IMF, Strauss-Kahn's personal role, and the IMF's need for legitimacy.On the EU side, we agree with Hodson (2015, 585) that a key reason for EU member states to involve the IMF was the lack of confidence in the Commission as a credible crisis manager (see also Henning 2017).We provide the evidence Hodson (2015, 585) sees as lacking.Additionally, we see the pursuit of austerity as one major reason for IMF involvement (see Nordström and Teivainen 2022;Bastasin 2015;Blustein 2015;Brunnermeier, James, and Landau 2016;Henning 2017), besides the IMF's expertise (see Bastasin 2015;Blustein 2015;Brunnermeier, James, and Landau 2016;Henning 2017) and credibility (see Brunnermeier, James, and Landau 2016;Rogers 2012 on legitimacy to avoid internal discontent).Our novel argument, based on new and extensive data on different EU actors' perspectives, is that these reasons were all connected not only to the distrust towards the Commission, but also to the attempt to depoliticise the crisis resolution, especially because there were doubts about the political role of the Commission.This was a continuation of the role of an assumedly neutral actor, which the IMF had played previously (for historical examples, see Teivainen 1999).More broadly, depoliticisation as a crisis management strategy is intended to shield the economic policy paradigm from criticism and from democratic deliberation (on depoliticisation in various international organisations, see Petiteville 2018).As we will argue in the discussion section, depoliticisation in the EU was connected to internal and external legitimacy.As with Tallberg and Zürn (2019, 583), we conceptualise legitimacy as "beliefs of audiences that an IO's authority is appropriately exercised, and legitimation as a process of justification and contestation intended to shape such beliefs".We hope to contribute to their call (Tallberg and Zürn 2019, 582) for more research on legitimation processes by demonstrating how depoliticisation is used as a strategy to legitimate crisis management.In particular, when crisis management takes place in contexts such as the Troika, relatively isolated from democratic accountability, making the decisions seem non-political questions of technocratic expertise can be an important mechanism of legitimation.
Next, we present our data and methods, followed by the identification of the theoretical background: the IMF's earlier depoliticising role and its previous actions in Europe.Then, we assess how and why the IMF joined the Greek loan negotiations.After a further discussion of the results, we draw conclusions and indicate future research needs.

Data and methods
The analysis is based on official EU, IMF, German, and Finnish documents and statements, as well as on a unique data set of semi-structured interviews (129 in all) with EU decision-makers and Member State officials from Brussels, Finland, and Germany, conducted in the framework of a doctoral study on the use of expert knowledge in Eurozone crisis decision-making 2009-2012 (Nordström forthcoming).The interviewees consist mainly of Commission and Council officials and EU and national parliament advisors participating in the decision-making process, five key IMF officials, and a few civil society representatives who observed the process closely (Appendix 1).Some of the interviews were anonymous.Names are mentioned if the persons consented and were in a leading position in their mission or in the EU.The digitally recorded interviews took place between November 2017 and September 2022 in person in Brussels, Berlin, Helsinki, Athens, London, Geneva, Brugge and Amsterdam or online (23 interviews).The participants, apart from one, were interviewed once.The interviewees were asked about the role of different experts, expertise and alternatives in Eurozone crisis decision-making, especially in 2010, and how decisions were made.
The interviews went through qualitative content analysis.They were coded in Atlas.ti to identify mentions of the role of the IMF in the Greek loan negotiation process.We assessed what these quotes revealed about how and why the IMF joined the process.Furthermore, we evaluated these findings in relation to our written sources and theoretical framework.Data triangulation was needed as interviewees may promote their own subjective interpretation with hindsight or simply forget some details.

IMF's depoliticising role
One obvious justification for the IMF's2 participation in the Greek debt negotiations in 2010 was its long involvement in economic crisis management, often through strict economic policy conditionalities.During the first half of the 20th century, individual economic experts had played a similar role in advising indebted countries and providing external legitimacy for their economic policies.They were, however, often unable to convince indebted governments to maintain their recommended policies during times of crisis.Since its founding in 1944, the IMF has been an effective collective expert promoting economic-policy discipline (Teivainen 2002; see also Moschella 2012).
The disciplinary power of the IMF expertise grew with conditional borrowing in the 1950s.Its managers became increasingly aware of the risk that it could be accused of political interference (Swedberg 1986, 388).As it often operated in previously colonised countries, it faced accusations of being an instrument of neo-colonialism.Plenty of attention was paid to keeping the image of the IMF as neutral as possible.The exact demands and the wording of the stand-by agreements were often kept secret.The IMF conditionalities were framed in terms that were intended to seem politically unbiased, to avoid accusations of violating indebted countries' sovereignty.
One aspect of the IMF's depoliticising role, aimed to produce external credibility, is derived from the fact that many consider the IMF a provider of technical expertise and an efficient problem solver (see Best 2012).Additionally, its doctrine of economic neutrality has helped shield it against accusations of violating the legitimacy of sovereign rule.Even in situations when the IMF's conditionalities have become politically controversial, indebted national governments could try to diffuse criticism directed at them by pointing to a powerful external actor beyond their control (Teivainen 2002).It provides them a backing of inevitability, behind which national political accusations of imposed economic policies could be channelled away.This has sometimes been referred to as a lightning rod role, or, as expressed below by one interviewee, a big bad wolf role.
The depoliticisation attempts sometimes fail.For example, the combined effect of the Asian financial crisis of the late 1990s and the following alter-globalisation street demonstrations in Europe and elsewhere brought growing discontent about the IMF to public attention.The early 2000s was a period of relatively intense politicisation of international economic institutions in the media and public debates (see Smith 2008).Though the IMF is institutionally shielded from the influence of popular discontent, it encountered new pressures to make its conditionalities less harsh.This was also one of the reasons why the IMF's discourse seemed slightly less austerity-focused (see e.g.Lütz & Kranke 2013, 311), especially during the early stages of Strauss-Kahn's leadership, which began in 2007.

IMF in Europe
The managing director of the IMF has always come from Europe.Even if the managing director post does not formally represent Europe, the arrangement was a result of politically negotiated deals.The exact impact of the European origin of the managing director is hard to measure, but at the very least it has contributed to the perception that Europe was not in a subordinate position inside the IMF, significantly different from the constellation of power in the involvement of the IMF in poorer indebted polities of the global south.Formally speaking, the shares of member country votes are the most fundamental indicator of decision-making in the IMF.
The vote share structure indicates that Europe has considerable influence in the IMF.According to Stone (2011), however, the US is far more important in the IMF than its share of votes suggests.Additionally, the US has a veto over major decisions.As Gros (2010) pointed out during the Greek crisis, the fragmentation of the EU vote in the IMF board meant that the power of the EU was less than the combined share of votes of the EU (or Eurozone) countries would suggest.An additional dimension in assessing the influence of the EU is whether the Fund is driven mainly by its powerful shareholders (see e.g.Bird 2007, pp. 702-703) or whether staffers' ideas and internal dynamics are instead central to explaining programme design (see e.g.Ban 2015;Chwieroth 2015;Clift 2018).In any case, the individual role of the managing director is important, especially when (s)he can influence decisions on other key appointments, such as the chief economist.
Research on IMF programmes has often focused on the global south.As noted by Clift (2018, 89), there has been less research on IMF relations with "advanced countries" that do not borrow from the Fund (for exceptions see e.g.Lütz & Kranke 2013;Broome and Seabrooke 2007).The Greek loan packages focused much novel attention on how the IMF functions vis-a-vis Europe.Nevertheless, European countries had already used IMF funds before, most importantly in the late 1970s.The IMF has been perceived as an institution in which Europeans participate in disciplining and conditioning indebted countries of the south rather than being themselves subject to conditions.According to Hodson (2015, 576), after the breakdown of the Bretton Woods arrangements in 1973, the IMF was transformed "for most developed economies from an agent with autonomous policy-making powers into a monitor carrying out police patrol on behalf of the members".In the late 1970s, this idea changed slightly with three important IMF missions in Europe: Britain 1976, Italy 1977, and Portugal 1978(Stallings 1982, 77-103).
Some aspects of the 1970s IMF missions in Europe can be considered precedents for the 2010 programmes.Both involvements followed a period in which the global relevance of the IMF had decreased.When the original Bretton Woods system broke down in the early 1970s, the IMF lost much of its earlier role as the guarantor of fixed exchange rates (Barro andJong-Wha 2005, 1247).This diminished the importance of the IMF to the countries of the global north.Also, although there was no Eurozone nor European Central Bank in the 1970s, and the world economy was less financialised, there were institutional constellations analogous to the Troika of 2010.Especially in the case of Italy, there were loans from the IMF, the EEC, and the Bundesbank.Even if it might not be fully warranted to call this arrangement a "proto-Troika", an additional similarity can be found in concerns about the impact of IMF involvement on sovereignty and democracy.Prime ministers in both Britain and Italy claimed that IMF involvement might threaten democracy (Stallings 1982).The conditions attached to European aid were, however, "set by the EEC Council of Ministers and monitored by the EEC Monetary Committee without formal regard for IMF conditionality" (Hodson 2015, 576).The increasingly supranational features of the EU have created novel ambiguities for the IMF, used to dealing with individual countries (Broome 2013).
During the global debt crisis of the 1980s, the IMF, as expressed in its own documents (Boughton 2000), "truly came of age as a participant in the international financial system".Its role during the cycles of indebtedness that affected many parts of the global south became so important that few remembered that its conditional funding could also be applied in European countries.In 2006, this was reflected in the talk by the first IMF deputy managing director, Anne O. Krueger (2006, february 23), at Stanford University: "We may no longer need to provide financial assistance to our industrial country members, but the dialogue we have with them remains vitally important".There would soon be plenty of dialogue, and also hard negotiations on the kind of financial assistance that Krueger had seemed to rule out.The programmes in Hungary, Latvia, and Romania in 2008 were the most important immediate precedent of the 2010 Greek crisis, as they included the first joint programme arrangements between the EU and the IMF (Seitz and Thomas 2012).However, they differed from the Troika as, for example, the ECB was not directly included.

U-turn in involving IMF
The Greek arrangement had its most concrete roots in previous collaboration to extend conditional loans to Hungary, Latvia, and Romania (Burns, Clifton, and Quaglia 2018, 737;Hodson 2015).For example, in the case of Latvia, the Commission discovered that it had neither the necessary information nor the technical capacity to bail out even this small European country.According to Bastasin, the IMF gave in to the conditions of the Commission, but let it be publicly known that it did so only because the EU was the main contributor.Additionally, the Commission, together with the ECB, convinced Latvia not to abandon its currency peg to the euro, which went against the advice of the IMF.(Bastasin 2015, 83, 138.)The initial demand to include the IMF in the Greek bailout came from the Netherlands (e.g.interviews 81 Commission; Van Rompuy's speech writer Luuk Van Middelaar).Both Germany and Finland first hesitated, but later in the spring they became the strongest proponents of IMF involvement (about Finland: Store 2014, 17; interview 127 Finnish official).3Germany's finance minister, Wolfgang Schäuble, opposed the IMF intervention (e.g.interviews 81 EC; Thomsen). 4The option found some support within the broader EU, in particular among non-Eurozone members, such as the UK and Sweden, less concerned about the credibility of the euro.Also, for example, the Bruegel think tank endorsed it in March 2010, which surprised most observers.(Bastasin 2015, p. 139; for member states' positions see Hodson 2015, 585.)The involvement was opposed, most importantly, by the Commission, the ECB, France, and Spain.According to Bastasin (2015, p. 87), French government officials saw the intervention of the IMF as the first step toward the disintegration of the euro area.Furthermore, it would have implied the arrival of Sarkozy's political rival Strauss-Kahn on the European political turf that Sarkozy hoped to continue to dominate (Bastasin 2015, 87).A legacy of concern about the involvement of US-led institutions also played a role.However, the interviewees' picture of France's position is more nuanced: There was an internal discussion inside France on the involvement of the IMF with two lines, one line that would say these are internal European affairs, let's not get the IMF involved with that.And the second line saying, look guys, we need them for credibility reasons even -so of course the Germans had this line but the French also, some of the French.
The interviewee saw the former as federalists and the latter more intergovernmentalists, and that in the end Sarkozy "had quite an intergovernmental way of looking at things" (Interview Member State official).According to the European Council President, Herman Van Rompuy (interview): The IMF was considered as dominated by the Americans but here was a nuisance in the sense that the managing director was French, as usual, and very pro-European.There was some kind of positive appreciation by the Germans and also by President Sarkozy, who had proposed Strauss-Kahn for the job, although he belonged to the socialist party, so in some way it was also his man.
Within the EU institutions, the IMF intervention was often seen as an acknowledgment of the failure of the Eurozone political project (Bastasin 2015, 139).For the ECB, the official reason was the fear that the IMF would insist on influencing the monetary conditions in the package, thus impinging on the ECB's autonomy and political independence.The doctrine of independent central banking, insulated from political steering, was formally stronger in the ECB than in most central banks of the world (see Streeck 2015).Even if the doctrine was mainly intended to shield monetary policy from politicians within the currency area, accepting advice from outside could also be considered a breach.While we argue that the IMF and its doctrine of economic neutrality were meant to play a depoliticising role in the Eurozone crisis management, it also included politicising aspects vis-a-vis the ECB's own neutrality doctrine.One of the reasons for worries about the IMF involvement was that its chief economist, Olivier Blanchard, had just published a paper suggesting that it could be advisable for a central bank to adopt an inflation target higher (four percent) than the ECB's target of two percent (Bastasin 2015, p. 161).
The crucial European Council (2010, february 11) meeting of 11 February mandated the Commission to monitor the implementation of the forthcoming ECOFIN "recommendations in liaison with the ECB and to propose needed additional measures, drawing on the expertise of the IMF".Thus, the ECB acquired a stronger role than the minor role of the IMF, as demanded by French President Nicholas Sarkozy.This was significant, as the ECB endorsed austerity policies more vigorously than the IMF (Bastasin 2015, 155).According to Olli Rehn, the European Commissioner for Economic and Monetary Affairs (interview), Trichet liked the formulation.
During the following month, a bailout loan (and stability mechanisms) was prepared in secret (Rehn 2012, 45), and European attitudes toward the IMF changed drastically.
The key was the German shift in February to support IMF involvement, which led other member states to accept it. 5The changed opinion of the German Chancellor, Angela Merkel, was crucial (interviews 81 Commission; Thomsen; see Henning 2017).The FDP party pushed IMF involvement strongly (interview 78 Bundestag).The ECB reluctantly agreed (interview Van Rompuy).The European Council announced on 25 March that it was ready to contribute, as ultima ratio, to a coordinated bilateral loan mechanism, complementing IMF financing.The role of the IMF was no longer marginal, but ancillary.The announcement was also significant because the IMF had not been expected to lend Greece more than €10 billion (based on the Greek share of IMF capital), while Athens's required funding for 2010 was around the magnitude of €50 billion (Bastasin 2015, 168).According to Commission's Benjamin Angel: "So, in that sense, we went for the IMF, but with a formulation which does not completely tie our hands.Which is to foresee the possibility to go without them.Which is a good compromise, I guess".
According to Brunnermeier, James, and Landau (2016, 299) the IMF had as early as late 2009 considered a European programme instead of a specific Greek action, but it was not legally feasible, as neither the EU nor the euro area were member entities of the Fund, and hence ineligible to draw Fund resources.Many interviewees ascertain that preparations for IMF involvement were going on in secret before the official decisions.IMF mission chief Poul Thomsen (interview) confirmed this from the IMF side: IMF staff were secretly in Greece in January and on 1 March and there were meetings in Brussels."I think it was March 1, there was a secret meeting in Athens, where Rehn, Jürgen Stark, and myself by that time, were basically agreeing what needed to be done in terms of process" (interview Thomsen).Bob Traa (interview), second-incommand of the mission, had had frequent contact with the Greeks since the Article IV consultations in 2009.The Greek Finance Minister, George Papaconstantinou, revealed in our interview that the Greeks received tax assistance from the IMF in January 2010.He and the Greek PM, George Papandreou, secretly met Strauss-Kahn in Davos early 2010 to explore the possibility of a loan (Papaconstantinou 2016, 72).Papandreou and Strauss-Kahn had a close relationship (interview Traa).
By April it was apparent that Greece was becoming unable to borrow from the markets.Finally on 11 April, the Eurogroup (2010) decided that the Commission, in liaison with the ECB, would start "working on April 12th, with the International Monetary Fund and the Greek authorities on a joint program (including amounts and conditionality, building on the recommendations adopted by the ECOFIN Council in February)".On 21 April, Papaconstantinou told the Commission that Greece would request financial assistance.This was followed on 23 April by the Greek government's request for an initial loan of €45 billion from the EU and IMF to cover its financial needs for the remainder of the year.In a meeting between Rehn, Strauss-Kahn, Papaconstantinou, and Jean-Claude Trichet, the ECB President, on 24 April, it was clear that the IMF involvement was hoped to be as substantial as possible.During that meeting, Strauss-Kahn emphasised the need for the Greek debt to be sustainable (Rehn 2012, 47-48).It was agreed that the IMF's contribution would be 30 billion and it should amount to a third of the loan (Rehn 2012, 48;interviews Papaconstantinou;Thomsen). According to Rehn (interview), Strauss-Kahn responded to the EU's appeal by raising the IMF's contribution significantly.
The crucial phase when the economic conditionalities were drafted consisted of the Commission-IMF-ECB mission that visited Athens from 21 April to 3 May and negotiated with the Greek government.It was not yet called the Troika, and some attendees called themselves cousins (interview 93 Commission).
With the aim of supporting the Greek government, the Eurozone countries agreed on 2 May to provide 80 billion euros in bilateral loans (from 14 member states) as an ad hoc Greek Loan Facility (GLF) to Greece over three years, while the IMF agreed to provide 30 billion euros under its Stand-By Arrangement for Greece, putting together a joint package totalling 110 billion euros.The loans were conditional on the fulfilment of the programme that was drafted during the above-mentioned mission.The GLF was the EU's first institutional response to the Greek crisis (Salo 2017, 194).It was set up outside the regular EU treaty rules and had to be modelled on IMF crisis loans offers (Verdun 2015, 226).
At the same time, there was also a controversy regarding the IMF's involvement (250 billion euros) in the 750 billion EFSF that was decided on 9 April.The Ecofin (2010, may 9/10) statement indicated that "the IMF will participate in financing arrangements and is expected to provide at least half as much as the EU contribution through its usual facilities in line with the recent European programs".
Why did the EU agree in February-March 2010 to include the IMF in the crisis resolution?

IMF: contagion, European influence, and legitimacy
On one hand, the question is why the IMF was able to get involved despite the initial reluctance of key Eurozone policymakers (Blustein 2015, 5, p. 18).On the other hand, why did the IMF want to join a package as a junior partner with somewhat weak leverage, especially when it was unprecedented in size and had to bend its own rules?The IMF's Debt Sustainability Analysis projected the Greek public debt as not sustainable "with a high probability", which meant that the Fund had to alter its own rules for providing "exceptional access" without first requiring restructuring of the public debt.This was achieved with the "systemic exemption" clause, allowing exceptional access without restructuring in face of international "systemic spillovers".(Wyplosz and Sgherri 2017, 273-277.)It was the first time that the IMF changed a key element of its lending framework without prior deliberation to fit the specific constraints of a programme.Argentina, Brazil, India, Russia, and Switzerland criticised the programme for its lack of debt restructuring and private sector involvement.The Swiss executive director (supported by Australia, Brazil, and Iran) noted that the staff had "silently" changed, without prior approval by the board, the second criterion of the exceptional access policy, by extending it to cases where there is a "high risk of international systemic spillover effects".The systemic exception was a code word for the risk of contagion inside the Eurozone.In 2016, the IMF formally ended the systemic exemption (Brunnermeier, James, and Landau 2016, 300-301, 313).
The second question, why the IMF wanted to join, has been explained in six different ways: European influence, lack of options, fear of contagion, regaining legitimacy, role of Strauss-Kahn and buying time.The first explanation is European influence: European governments' joint veto in the IMF's Executive Board and their control over the managing directorship (Pénet 2018(Pénet , 1039(Pénet , 1047(Pénet -1048)).The IMF has had historically strong links with Europe and especially French politics (Brunnermeier, James, and Landau 2016, 290).Some argue that during the Greek crisis the IMF mainly protected European banks with heavy exposures to Greek bonds (Janssen 2010, 6;Pénet 2018Pénet , 1031Pénet , 1047)).However, the IMF had previously supported banks without a politically costly bailout programme.Thus, this does not fully explain the involvement.
Secondly, it has been posited that the IMF lent significantly due to not having other options to tackle the crisis (IEO 2016, 15;IMF 2013, 32;Pisani-Ferry 2014, 75;Wyplosz and Sgherri 2017, 272, 282).This is related to the third explanation: that the IMF joined the Greek loan package because it feared the contagion effects.The aim of the extraordinary lending was to create a financial backstop or "firewall" to contain adverse market sentiment and to prevent another Lehman-like shock to global financial stability (Blustein 2015, 16;Clift 2018, 20, 114, 136-137, 141;Wyplosz and Sgherri 2017, 275).
Fourthly, responding to the IMF's Independent Evaluation Office's 2016 assessment of the SBA, IMF Managing Director Christine Lagarde argued that to prevent a "Lehmanlike systemic shock" due to Greece, the IMF lent exceptionally to "[buy] time to mobilize political support among Euro Area members to build firewalls and a crisis management framework" (IEO 2016, 57-58).Some agree with Lagarde's admission of the SBA as a "holding operation" (IEO 2016, 30;IMF 2013, 28).This, however, seems an ex post facto explanation that does not explain why the IMF committed to its 250 billion euro share in EFSF only a week later.
Fifthly, some believe that the reason was to increase the legitimacy of the IMF (e.g.interview Thomsen).Before the crisis, the IMF faced a "question of identity": it had trouble legitimising itself as an adviser for emerging market economies and struggled to fund its activities and allocate its resources.According to Gabor (2010, 805-806), the financial crisis was an important moment of resuscitation, as the IMF had "virtually gone out of business" in the preceding years.One of the reasons was the commodity boom, which benefited, for example, many Latin American countries that had no need for IMF funding as export earnings were relatively high.During the sovereign debt crisis, the IMF secured its role as the institution to watch the financial system, even if it failed to detect the crisis of 2008 in the first place.When the "crisis came, the IMF assumed that their role was over" (interview Commissioner Lázló Andor).Peter Blustein (2015, 3, 16-17) argues that the SBA was driven by Strauss-Kahn's perception that the IMF had undergone a severe crisis of relevance, and not participating in the Greek programme would have been detrimental to the Fund's global standing.As the EU was at first unwilling to include the IMF in the bailout, the IMF had to offer more money.Indeed, it seems that the IMF's role was questioned, but this had already changed before Greece (Broome 2015, 147): at the G20 crisis summit in London in April 2009, the major countries agreed on a doubling of the IMF's resources and a governance reform that would give greater weight to dynamic emerging economies (Brunnermeier, James, and Landau 2016, 298).Additionally, before Greece, the IMF had already been involved in European loans, such as in Hungary.Finally, it is worth emphasising the role of Strauss-Kahn and his vision on how to intervene in Europe (Brunnermeier, James, and Landau 2016, 300;interviews Papaconstantinou;Thomsen;Traa).
The conclusive reason for the IMF's involvement from its own perspective is a combination of these factors.However, we argue based on our data and a close reading of earlier research that the most relevant ones were the fear of contagion (see Nordström and Laiho 2022), European influence in the IMF, Strauss-Kahn's personal role, and the need for the IMF to gain legitimacy.Next, we turn to the European perspective, the main focus of our analysis.

EU: expertise and depoliticisation
Strauss-Kahn has revealed that the Greek prime minister had been talking to him in secret about IMF involvement since November or December 2009.Petros Christodoulou, the head of Greece's public-debt authority, said the IMF involvement would "eliminate the default risk and the refinancing risk and definitely raise the credibility of the government's austerity package" (Brunnermeier, James, and Landau 2016, 299-300).Greece also strategically used the threat of turning to the IMF for help in order to receive support from the EU.Bastasin (2015, 160) indicates that Papandreou used this strategy vis-a-vis Germany, although with meagre initial results as the policy did not change at first and Greece was left to help itself.
According to an interview (47 think tank), In Brussels and in Frankfurt, there was a reluctance for two reasons.One reason is that they felt that IMF would bring the United States and they said we have to deal with that ourselves, we don't want to have the US involvement into this.So, for political reasons, we don't want that.And another reason which is in the sense the complement is the same element but it's a complement.We need to build our own institutional element.So, okay, if there is a problem, it's an occasion to build the institution element, a European IMF.So, let's not use an external one.
These points, like monetary sovereignty (e.g.82 Commission), were highlighted in other interviews.Nonetheless, as market pressure intensified, financing conditions deteriorated, and doubts surfaced over the reliability of Greek public finance data, the necessity of ample external support became apparent (Brunnermeier, James, and Landau 2016, 299).Doubts related to the sovereignty-eroding aspects, including the role of the US, of the IMF's involvement in the Eurozone became less influential and the IMF's less political image as an expert providing technical and financial assistance was strengthened.According to our data, there are at least four interconnected main themes conjoining the various reasons for the EU to involve the IMF: the need for practical expertise in loan and conditionality negotiations, public image (credibility), the perceived need for strictness, and depoliticisation.They are all connected to a lack of confidence in the Commission.
Firstly, according to the interviewees, the Commission was seen to be too political.Merkel said that "we need a truly independent institution because you the commission you are independent but, in fact, you are too close to our member states" (interview Commission president José Manuel Barroso).The IMF was regarded as a depoliticising factor by several EU leaders in the politically charged situation.As we have explained, this was not a novelty for the IMF.It is one of the intended effects of delegating decision-making to what is widely considered a neutral expert organisation or, even if the neutrality of the IMF is not assumed, at least an external actor to which the potential criticism of an adjustment programme can be channelled to diffuse internal political tensions.It can be a strategy to make harsh adjustment policies more palatable or more difficult to oppose, and it can partially insulate the decision-making from (member states and European) politics.In this case there is evidence for both interpretations.For some the IMF was again a lightning rod: it is easier for the IMF to say mea culpa than for the ECB, as the latter, despite its autonomy in principle, is responsible to its member states (interview 9 NGO).It can also tone down accusations between member states (E 11/2010).Economist Henrik Enderlein advocated in the German Bundestag for IMF involvement, because through it one could not politicise (Protokoll 17/18 2010).The IMF was further from the EU member states: because, here it was really because they didn't trust the Commission.The Commission was foreseen, was seen for now as being too close to the beneficiary.And they thought that having the IMF would balance conditions.Because they wanted a big bad wolf.(Interview Commission's Benjamin Angel) Rehn (interview) highlighted as well that Germany, Finland, and the Netherlands did not trust the Commission.
Prior conceptions played a role in the perception that the Commission would not be strict enough on economic policy."And I think that, in the end, was also the reason why Germany wanted the IMF on board.Because, they thought it [was] an outside factor.Which would be more strict" (Interview 111 ECB)."There was a lot of distrust of Germany and others vis-à-vis the Commission; they had thought that it had been too soft on Greece in the years before the eruption of the crisis" (interview 106 MEP).The dissatisfaction towards the Commission was the key (Henning 2017, 41).
Rather the northern member states who put their faith on the IMF to balance perceived flexibility, […] knowing that the economic department has historically also always been in French hands for decades.And of course there was Portuguese president [Barroso].(Interview Van Middelaar) The need for strictness seems to have been a crucial point, especially for the Germans, who shifted to supporting IMF involvement. 6The importance of Germany within the Eurozone was evident in the fact that once it had changed its position about IMF involvement, others also became more willing to accept it.Merkel thought that the Commission's approach was too complacent and thus turned to the idea of involving the IMF directly (see Bastasin 2015, 145).
[Merkel] did not trust Barroso at all, she thought the Commission was too soft, and she felt that the Commission would not convince the markets.So, the IMF, (a) were technically competent, (b) they could convince the market, and (c) she could convince the Bundestag, […] she had come to the Bundestag and said, "We'll never bail out Greece."So, to make that switch, she needed something to throw in that.And the IMF was the solution.(Interview Papaconstantinou) According to Brunnermeier, James, and Landau, Merkel's shift happened in part because she thought that, as a bad cop coming from the outside, the IMF would impose strict conditions that the Europeans on their own might not be able to agree."Europe in and of itself is not in a position to solve such a problem", according to Merkel."The IMF simply has more experience".The IMF was needed to substitute for the lacking consensus about economic reform (Brunnermeier, James, and Landau 2016, 290, 299).It is possible that, for the Germans, the IMF provided a bolster against a possible challenge to the Greek rescue in the German Constitutional Court.Ilkka Kajaste, a Finnish civil servant, pointed out to the Finnish parliament as well that with the IMF the loan would not be construed as a pure bailout operation (prohibited by the EU treaties).Interestingly, he felt that the IMF emphasising the improvement of the private sector and competitiveness would balance the otherwise strict conditionalities (TaVP 47; E 11/ 2010vp).
Fourthly, there was a need to improve the credibility and authority of the crisis resolution, which is also linked to the subsequent points and to depoliticisation.Historically, it has been a basis for IMF involvement (Brunnermeier, James, and Landau 2016, 294).In other words, the actors wanted to project a certain image to the world, especially to the volatile financial sector.Historically, one of the main functions of the IMF, sometimes more than the concrete funding, has been to flash a green light to other potential funders and investors (Swedberg 1986;Teivainen 1999).In the complex webs of credit ratings and policy conditionalities, the value of a seemingly symbolic stamp of approval can be high, especially when market expectations affect sovereign yields adversely.IMF mission chief Poul Thomsen highlighted in our interview that, apart from the funding provided by the IMF in the Greek crisis, it was crucial to show that the IMF had "skin in the game"."There was a discussion about the participation of the IMF.Whereas opinions differed, with the Commission not being very keen on it, several Member States considered it as a guarantee of the credibility of the program" (interview 68 Council).The IMF brought credibility as it had experience in negotiating and monitoring conditional loan programmes (E11/2010).It evoked stability, which would encourage others to invest in Greece."As the situation was changing so rapidly, the IMF was wanted to stabilize the situation and give a sign to the markets, that they should take into account that it is not only EU, but IMF is also involved" (interview 59 Council).
Germany wanted the IMF to express non-partisan information and credibility (interview Barroso).Both the government and the Bundesbank thought that the Commission would not be capable of forcing a national government into a decisive policy correction; no political authority in Europe could legitimately impose itself on a national government (Bastasin 2015, 145).Indeed, the difficulty of attaining unanimity in the Eurozone was one of the reasons for IMF involvement (and for the creation of the Franco-German leadership) (Bastasin 463).Merkel and Schäuble saw that, without the IMF, EU economic governance lacked credibility in the short term (Hodson 2015, 585-586).
Additionally, the IMF's resources were one obvious reason for the involvement, related to credibility as well (E 11/2010 vp).
[B]y the way, another reason to have the IMF on board is that at the end of the week and we always ended up having two-thirds of the money we needed and the one third that would top up and make the number big came from the IMF so there was also this issue of disposable money.(interview 95 Member state official) Bastasin advances two arguments that do not appear in the interviews: since the EU Council's decision-making is unanimity-based, the presence of the IMF would make it easier to cut the lifeline by letting Greece default if the situation turned unsustainable (Bastasin 2015, 168).A second one was the will to maintain the status quo of institutional arrangements as opposed to radical reform (Bastasin 2015).
The final reason was expertise.The IMF was seen as a gatekeeper that would not allow a bad programme without the required austerity (Protokoll Nr. 17/21 2010).It would send a strong signal to the market (for credibility see E 11/2010 vp).Most of our data highlights the expertise and know-how of the IMF as a reason for its participation in the process: And, I think, in the end, there was an agreement that the IMF had experience with country assistance, with how to deal it, with sending missions.And then, yeah, they had the knowledge, of course, the ECB had never done that, the IMF did it.And, also, the European Commission had never done that.They, of course, had country experts, lots of them, and they were making projections for all these countries.But, never gone to a mission.(Interview 111 ECB) At that stage there was an aspiration to include the IMF due to its expertise, because it had a long history in advancing these and the Commission didn't.And the 2010 Commission, even if it was a big doer, it didn't have many economists or expertise.The IMF was wanted to bring robustness … Support for building this package.(Interview 59 Council) Van Rompuy (interview) recounted: when I confronted Barroso with 'you have only 3 people, what kind of expertise do you have?', they were embarrassed with the question.[…] the IMF, they can put a lot of people on it and they have that kind of background in crisis management.
However, for Van Rompuy, "it was not a problem of expertise, it was a problem of trust".
This expertise was at least officially the main reason to include the IMF in the crisis resolution in 2010.It would give quality, authority, and credibility, but also austerity and depoliticisation.For example, Germany was mainly motivated by the Fund's technical expertise and its capacity to take a tough position on Greece (Bastasin 2015, 145;Blustein 2015, 5;Henning 2017, 93-95).Some interviewees see this expertise as one reason, but not the main one.Others indicate that it was the demand for technical outside competence that changed the European governments' minds (Brunnermeier, James, and Landau 2016, 289).
Again, these reasons were related to distrust towards the Commission."There was the view that there was expertise, maybe there was a bit of lack of trust with the commission that, you know, why didn't the commission see some of those things and let's ask an external element" (interview 47 think tank).The overarching theme connected to the various reasons is depoliticisation: the IMF's "neutral" economic policies and expertise would give credibility and authority to the package.At the same time, it would guarantee that the Commission would not bend to the wishes of certain member states and it would act as a lightning rod, shifting the blame away from creditor EU states.

Discussion
Based on the interviews, our explanation (expertise, credibility and austerity connected to lack of confidence towards Commission and depoliticisation) for EU's motivations to include the IMF is compatible with some earlier explanatory factors combining credibility (Rogers 2012 refers to legitimacy; Brunnermeier, James, and Landau 2016), technical expertise, and need for strictness, often in the form of austerity (Bastasin 2015;Blustein 2015;Brunnermeier, James, and Landau 2016;Henning 2017).Expertise as a main reason is consistent with Clift's (2020, 106) argument that "the Fund's influence rests on its mandate, reputation and track record as a technocratic, scientific source of reputable economic policy wisdom".However, we point out that these were all related to distrust towards the Commission (see also Hodson 2015).The EU, including the Council, had not been able to prevent the Greek economic problems, while the IMF's surveillance background was well known.Henning (2017) argues as well that distrust was the major driver.He emphasises German internal politics and the need for Bundestag approval (Henning 2017), while our explanation takes in a wider constituency of EU actors.
Our additional contribution is to point out how the European motivations were connected to depoliticisation.The IMF was supposed to constrain the Commission, which was widely considered too close to the southern member states, but also to shift some of the blame for harsh policies outside the EU (see also Rogers 2012& Bastasin 2015 for the second point).Even if it does not appear strongly in our interview data, a different reason for some member states to accept the inclusion of the IMF may have been so that the crisis management would not seem too German-driven.The IMF's loan negotiations expertise brought credibility (creditworthiness) to financial markets that favoured the depoliticisation of EMU problems.While it can be politically important for the internal legitimacy of European economic policies to represent all voices, including those more sceptical of strict austerity that are sometimes associated with southern member states, for the external credibility of the policies it was deemed important to bring in the IMF to emphasise austeritarian voices.
Thus, the IMF played the same two roles of depoliticisation as before, aiming for legitimacy towards external (credibility) and internal actors (not relying only on Commission).Bringing in the IMF to enhance strict conditionalities continued its historical role of depoliticising economic policies in the form of "neutral" experts.In the economistic way of thinking, the economy seems neutral, outside the political.At the same time, economism is expressed as the political use of the doctrine of economic neutrality.The politics of economism helps provide credibility to the financial sector.
So, for me, the issue was mainly a political problem in Europe, not so much information and technical problem.Big hurdle was political, in my own perspective.In the end, an alternative view of the world won.An alternative view of the world that basically said […], in order to manage a sovereign debt crisis, it is necessary to have specific knowledge and experience in managing this type of situation.The IMF has that expert knowledge that experienced Europe doesn't.We need the IMF.(Interview 129 EC official) The IMF was the "neutral" part needed to connect the pieces of the crisis resolution.Depoliticisation in EU politics was also not new, as the Commission had previously used technocratic power.Moreover, in 2010 EU institutional actors and international organisations such as the IMF and the World Bank sought to strengthen their internal research units and departments (Coman 2018, 4) in order to regain their credibility as neutral depoliticising actors.After the initial insulation of decision-making to technocrats, the depoliticising strategy failed in many ways, and the eurocrisis fuelled populism.

Conclusions
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 2022).
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 2019, 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. 7Here, legitimacy is not defined as responding to citizen's desires (for that use see Carstensen and Schmidt 2018). 8 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.
Background interviews (such as NGOs, academics, and embassy officials) 10 Background interviews with specialists on EU lobbying in Brussels or Germany 17 TOTAL 129