THE International Monetary Fund is the "only global fire brigade we have" to extinguish the blaze threatening the eurozone, Andrew Tyrie, chairman of the Commons Treasury Committee, says today.
In a pamphlet for the Centre for Policy Studies, the right-wing think-tank, the Conservative MP for Chichester insists only the international economic watchdog has the "necessary detachment and economic credibility to help sort out this crisis".
Mr Tyrie explains there are three possible outcomes for the eurozone – radical reform to improve competitiveness, transferring money from the richer to the poorer countries, or struggling countries such as Greece leaving the eurozone altogether.
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With the first two of these appearing unlikely, the committee chairman notes: "We should therefore take advantage of the breathing space afforded by the latest bailout to develop a contingency plan for Greece to leave the eurozone."
On Spain, he says the markets doubt its capacity to service its debt. "They doubt whether the Spanish tax system can raise the necessary revenue while the Government engages in the deep structural reforms needed.
"Without those enduring reforms, another eurozone crisis would emerge in time even after a bailout."
Referring to the IMF, he claims the watchdog is facing testing times with its credibility on the line; in April it raised more than £269 billion, including another £10bn loan from the UK, for its global bailout fund, which almost doubled in size.
The eurozone's new fund, which comes on stream in July, has £567bn with a lending capacity of £405bn. The IMF's job would not be to decide among the policy choices but to evaluate them, present them to the euro area governments and put pressure on those governments to make a sustainable choice, explains Mr Tyrie, stressing: "Its influence could be decisive."
He calls for the watchdog's major non-EU members to speak out, noting more than 75% of the body's voting rights belong to non-eurozone countries.
"They should instruct the IMF to take a detached view. They may need to watch like hawks to fend off special pleading. Never has the IMF's well-established unsentimentality been more needed," he says.
He adds there are three persuasive points: "First, there is a non-negligible risk of a serious regional and a possibly global economic fire. The eurozone crisis has the capacity to engulf us all.
"Second, non-eurozone countries should not rely on the eurozone to do the hard work. The third reason for backing the IMF is the simplest: they are the only global fire brigade we have."