FacebookTwitterGoogle+RedditEmail

No Sex, Still a Scandal at the IMF

Because it did not come amidst a sex scandal and because the outgoing leader was not one of the architects of the Iraq War, the surprise June resignation of the International Monetary Fund’s Managing Director Rodrigo de Rato did not garner the gleeful, gossipy headlines surrounding Paul Wolfowitz’s disgraceful exit from the World Bank.

Last week, the IMF announced the selection of a new leader, Dominique Strauss-Kahn, a former French finance minister, with the world again barely taking notice.

But that doesn’t mean there isn’t scandal at the Fund, or that the Fund’s policies are any less important than those of the Bank.

For decades, in various names, the IMF, along with the Bank, has imposed “structural adjustment” on developing countries — a set of corporate-oriented, market fundamentalist policies including slashing of government budgets, sale of government assets to local elites and foreign corporations (“privatization”), deregulation of the economy, and promoting exports and trade at the expense of local needs.

IMF policies have left shattered economies around the world, consigned untold millions to poverty, and directly and indirectly destroyed social welfare systems, including healthcare and education systems, throughout much of the developing world.

In the last few years, the IMF has seen a remarkable, quiet revolt against its power, influence and policies. Middle-income countries in Asia and Latin America have paid off their debts to the Fund, and announced they won’t borrow from the Fund any more. That move follows a string of high-profile Fund failures — interventions in economic crises (caused in no small part by IMF recommendations for countries to deregulate their financial systems) made drastically worse by Fund advice.

But most African countries don’t have the resources to pay off their debts to the IMF and other international lenders. They remain stuck in the debt trap, meaning they need new money from the IMF to pay off old loans, or at least the IMF stamp of approval to access capital from other sources. Which means they remain subject to IMF dictates.

Among other barbaric consequences, the IMF’s obsession with conservative financial prescriptions have left the nations worst hit by the HIV/AIDS pandemic unable to mobilize resources — or even to use donated monies — to address the pandemic or other excruciating health needs.

In March, the IMF’s Internal Evaluation Office (IEO) issued a report far more scandalous than anything connected to the Wolfowitz drama at the Bank.

The IEO found that IMF policy was preventing African countries from spending increased foreign aid on its intended purposes. Instead, the IMF was forcing countries to use increases in foreign aid to pay down debts or build currency reserves. Thanks to the IMF, more than 70 percent in increased foreign aid was being diverted, according to the IEO.

Alongside this refusal to let countries spend aid for intended purposes, the IMF has capped countries’ ability to spend more money on healthcare, including to hire more healthcare workers and pay them more. These are the key steps needed to address the healthcare infrastructure problem that almost everyone agrees is now the main impediment to further scaling up treating for people with HIV/AIDS and resuscitating countries’ ability to deliver basic health services to all.

Underlying these restrictions on countries’ ability to spend money to address pressing health needs is an IMF fixation on what it terms macroeconomic stability, by which it means very low inflation rates and no or limited deficit spending. Dressed up in the guise of technocratic economic advice, they are really policy decisions that restrain economic expansion, preventing countries from generating more resources for their own needs.

They are also policies that take no account of the special circumstances of countries facing the HIV/AIDS pandemic.

“The IMF doesn’t know what the hell it’s talking about,” says former UN Special Envoy for HIV/AIDS in Africa Stephen Lewis in his trademark direct manner. “It never sufficiently takes into account the damage that is done to a country when you strip the social sectors.”

In other words, failing to invest in healthcare and education not only is immoral, it actually weakens economies. The costs are particularly high when a deadly but treatable disease is ravaging people in the prime of their working years.

Urging an abandonment of these failed policies, more than 100 health and development organizations in a letter today called on Strauss-Kahn to change course. (My organization, Essential Action, was an initiator of the letter sent by the groups to Strauss-Kahn.)

The civil society organizations called on Strauss-Kahn, in his first 100 days after assuming office November 1, to ensure that the IMF:

* Changes policies on foreign aid spending, so that the IMF does not stand in the way of increased spending on health, HIV/AIDS and education.

* Abandons low inflation and deficit-reduction targets, so that the IMF does not stand in the way of policymakers in developing countries exploring and adopting more expansive fiscal and monetary policy options.

* Publicly states that it will cease and desist with its demands for wage bill ceilings that prevent the hiring of more healthcare workers.

* Provide immediate debt cancellation for all impoverished nations without harmful and unnecessarily restrictive policy conditions attached.

The odds of Strauss-Kahn adopting this agenda, on this timeframe, are, of course, slim.

But there is a reasonable chance that a concerted push from civil society — especially if joined by developing country governments — can make a difference.

The decision by middle-income countries to end their dependence on the Fund has left the IMF with a crisis of legitimacy, not to mention its own fiscal crisis (the interest payments on loans from middle-income countries were a key source of revenue).

Strauss-Kahn, who comes from the left side of the French political spectrum, takes office as a self-proclaimed reformer with a special interest in low-income countries. Most of his talk about reform has focused on giving developing countries a greater say in the governing process, not on the substance of Fund policy, however.

It is too much to hold out hope that Strauss-Kahn may assist with the transformation of the IMF — he won’t have the power, even on the off chance that he secretly harbors the desire — but he might lessen the harm caused by the institution, and give the world’s poorest countries more policy space.

Whether that happens will depend in no small part on whether the world pays attention and demands change. Can some fraction of the attention devoted to whether Paul Wolfowitz improperly helped deliver a big paycheck to his partner be devoted in the months and years ahead to how IMF policies impact the lives and well-being of hundreds of millions of people?

ROBERT WEISSMAN is editor of the Washington, D.C.-based Multinational Monitor and director of Essential Action.

 

More articles by:

ROBERT WEISSMAN is president of Public Citizen.

December 11, 2018
Eric Draitser
AFRICOM: A Neocolonial Occupation Force?
Sheldon Richman
War Over Ukraine?
Louis Proyect
Why World War II, Not the New Deal, Ended the Great Depression
Howard Lisnoff
Police Violence and Mass Policing in the U.S.
Mark Ashwill
A “Patriotic” Education Study Abroad Program in Viet Nam: God Bless America, Right or Wrong!
Laura Flanders
HUD Official to Move into Public Housing?
Nino Pagliccia
Resistance is Not Terrorism
Matthew Johnson
See No Evil, See No Good: The Truth Is Not Black and White
Maria Paez Victor
How Reuters Slandered Venezuela’s Social Benefits Card
December 10, 2018
Jacques R. Pauwels
Foreign Interventions in Revolutionary Russia
Richard Klin
The Disasters of War
Katie Fite
Rebranding Bundy
Gary Olson
A Few Thoughts on Politics and Personal Identity
Patrick Cockburn
Brexit Britain’s Crisis of Self-Confidence Will Only End in Tears and Rising Nationalism
Andrew Moss
Undocumented Citizen
Dean Baker
Trump and China: Going With Patent Holders Against Workers
Lawrence Wittner
Reviving the Nuclear Disarmament Movement: a Practical Proposal
Dan Siegel
Thoughts on the 2018 Elections and Beyond
Thomas Knapp
Election 2020: I Can Smell the Dumpster Fires Already
Weekend Edition
December 07, 2018
Friday - Sunday
Steve Hendricks
What If We Just Buy Off Big Fossil Fuel? A Novel Plan to Mitigate the Climate Calamity
Jeffrey St. Clair
Cancer as Weapon: Poppy Bush’s Radioactive War on Iraq
Paul Street
The McCain and Bush Death Tours: Establishment Rituals in How to be a Proper Ruler
Jason Hirthler
Laws of the Jungle: The Free Market and the Continuity of Change
Ajamu Baraka
The Universal Declaration of Human Rights at 70: Time to De-Colonize Human Rights!
Andrew Levine
Thoughts on Strategy for a Left Opposition
Jennifer Matsui
Dead of Night Redux: A Zombie Rises, A Spook Falls
Rob Urie
Degrowth: Toward a Green Revolution
Binoy Kampmark
The Bomb that Did Not Detonate: Julian Assange, Manafort and The Guardian
Robert Hunziker
The Deathly Insect Dilemma
Robert Fisk
Spare Me the American Tears for the Murder of Jamal Khashoggi
Joseph Natoli
Tribal Justice
Ron Jacobs
Getting Pushed Off the Capitalist Cliff
Macdonald Stainsby
Unist’ot’en Camp is Under Threat in Northern Canada
Senator Tom Harkin
Questions for Vice-President Bush on Posada Carriles
W. T. Whitney
Two Years and Colombia’s Peace Agreement is in Shreds
Ron Jacobs
Getting Pushed Off the Capitalist Cliff
Ramzy Baroud
The Conspiracy Against Refugees
David Rosen
The Swamp Stinks: Trump & Washington’s Rot
Raouf Halaby
Wall-to-Wall Whitewashing
Daniel Falcone
Noam Chomsky Turns 90
Dean Baker
An Inverted Bond Yield Curve: Is a Recession Coming?
Nick Pemberton
The Case For Chuck Mertz (Not Noam Chomsky) as America’s Leading Intellectual
Ralph Nader
New Book about Ethics and Whistleblowing for Engineers Affects Us All!
Dan Kovalik
The Return of the Nicaraguan Contras, and the Rise of the Pro-Contra Left
Jeremy Kuzmarov
Exposing the Crimes of the CIAs Fair-Haired Boy, Paul Kagame, and the Rwandan Patriotic Front
FacebookTwitterGoogle+RedditEmail