Forest of Dean & Wye Valley

The shadow of the IMF

In A.Graham on October 3, 2011 at 11:28 am

David Cameron positively glowed with pink-cheeked satisfaction when the International Monetary Fund gave its endorsement to his “slash and burn” approach to our economy.

You can see where they’re coming from. These days getting the IMF’s seal of approval is like being endorsed by Shylock. Yet it was founded with the best of intentions.

It’s come a long way since it was first set up towards the end of the war – in Bretton Woods, New Hampshire, USA, in July 1944. Its aim was the stabilisation and re-building of the world economy after the slump years of the ‘thirties and the economic disintegration caused by war.

Economists like J. M. Keynes backed the idea. But what was to emerge in later years was something very different from the original ideals of the IMF. Loans came to be given to those in need under strict conditions. Usually it meant the restructuring of a country’s economy and the sale of public assets. Resources in “Third World” countries were plundered at the behest of the IMF.

Examples abound. After the Haiti earthquake disaster, the IMF gave a loan of $100 million – on condition that public employees would be refused any pay increases, and the price of electricity was raised. In Tanzania, the IMF loan came with the condition that the country’s water supply was sold off. In Bolivia, the government was told to sell off its oil and water.

And so it goes on. For some time now, the IMF has been accused of merely acting to further the interests of Western (mainly US) capitalism. But one critic goes even further.

Joseph E Stiglitz (a leading economist and former senior Vice-President at the World Bank) said:

“When the IMF arrives in a country, they are interested in only one thing. How do we make sure the banks and financial institutions are paid. It is the IMF that keeps the speculators in business.”

A harsh verdict from someone who knows what he’s talking about. An old saying springs to mind: “beware of Greeks bearing gifts”. Except ironically in this case it’s Greece that is bearing the brunt of the “bail out” imposed by the IMF and the EU.

So when the IMF tells Cameron and Osborne that they’re following the right policy, we need to see this in the context of the Fund’s track record. And who would really want a helping hand like this?


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