The IMF/WB

[Ele'ill]

Why are they bad?

Specific examples of what they have done.

[Jack]

Forced Argentina to privatise their social welfare programs, destroying the economy.

Forced Bolivia to privatise its water supply, resulting in the Cochacomba Water War.

Another example of where IMF Structural Adjustment Programmes aggravated the problem was in Kenya (http://en.wikipedia.org/wiki/Kenya). Before the IMF got involved in the country, the Kenyan central bank oversaw all currency movements in and out of the country. The IMF mandated that the Kenyan central bank had to allow easier currency movement. However, the adjustment resulted in very little foreign investment, but allowed Kamlesh Manusuklal Damji Pattni (http://en.wikipedia.org/wiki/Kamlesh_Manusuklal_Damji_Pattni), with the help of corrupt government officials, to siphon off billions of Kenyan shillings (http://en.wikipedia.org/wiki/Kenyan_shilling) in what came to be known as the Goldenberg scandal (http://en.wikipedia.org/wiki/Goldenberg_scandal), leaving the country worse off than it was before the IMF reforms were implemented

[TheCultofAbeLincoln]

They're bad because, without the USSR, they almost control the whole racket on loans to poor countries. And, as Jack pointed out, they demand certain concessions in exchange for the money they loan.

No specifics here, I know, but I really think a lot of the problem stems from the fact that poor countries can no longer play two-economic systems off against each other for an advantage. Now they have neo-liberalism, Take it or Leave it.

[griffjam]

The IMF was always the arch-villain of the global justice movemente. It is the most powerful, most arrogant, most pitiless instrument through which neoliberal policies have, for the last 25 years been imposed on the poorer countries of the global South, basically, by manipulating debt. In exchange for emergency refinancing, the IMF would demand “structural adjustment programs” that forced massive cuts in health, education, price supports on food, and endless privatization schemes that allowed foreign capitalists to buy up local resources at firesale prices. Structural adjustment never somehow worked to get countries back on their feet economically, but that just meant they remained in crisis, and the solution was always to insist on yet another round of structural adjustment.

The IMF had another, less celebrated, role: of global enforcer. It was their job to ensure that no country (no matter how poor) could ever be allowed to default on loans to Western bankers (no matter how foolish). Even if a banker were to offer a corrupt dictator a billion dollar loan, and that dictator placed it directly in his Swiss bank account and fled the country, the IMF would ensure billion dollars (plus generous interest) would have to be extracted from his former victims. If a country did default, for any reason, the IMF could impose a credit boycott whose economic effects were roughly comparable to that of a nuclear bomb. (All this flies in the face of even elementary economic theory, whereby those lending money are supposed to be accepting a certain degree of risk, but in the world of international politics, economic laws are only held to be binding on the poor.) This role was their downfall.

What happened was that Argentina defaulted and got away with it. In the ‘90s, Argentina had been the IMF’s star pupil in Latin America—they had literally privatized every public facility except the customs bureau. Then in 2002, the economy crashed. The immediate results we all know: battles in the streets, popular assemblies, the overthrow of three governments in one month, road blockades, occupied factories… “Horizontalism”—broadly anarchist principles—were at the core of popular resistance. The political class was so completely discredited that politicians were obliged to put on wigs and phony mustaches to be able to eat in restaurants without being physically attacked. When Nestor Kirchner, a moderate social democrat, took power in 2003, he knew he had to do something dramatic in order to get most of the population even to accept even the idea of having a government, let alone his own. So he did. He did, in fact, the one thing no one in that position is ever supposed to do. He defaulted on Argentina’s foreign debt.

Actually Kirchner was quite clever about it. He did not default on his IMF loans. He defaulted on Argentina’s private debt, announcing that for all outstanding loans, he would only pay 25 cents on the dollar. Citibank and Chase of course went to the IMF, their accustomed enforcer, to demand punishment. But for the first time in its history, the IMF balked. First of all, with Argentina’s economy already in ruins, even the economic equivalent of a nuclear bomb would do little more than make the rubble bounce. Second of all, just about everyone was aware it was the IMF’s disastrous advice that set the stage for Argentina’s crash in the first place. Third and most decisively, this was at the very height of the impact of the global justice movement: the IMF was already the most hated institution on the planet, and willfully destroying what little remained of the Argentine middle class would have been pushing things just a little bit too far.

So Argentina was allowed to get away with it. After that, everything changed. Brazil and Argentina together arranged to pay back their outstanding debt to the IMF itself. With a little help from Chavez, so did the rest of the continent. In 2003, Latin American IMF debt stood at $49 billion. Now it’s $694 million. To put that in perspective: that’s a decline of 98.6%. For every thousand dollars owed four years ago, Latin America now owes fourteen bucks. Asia followed. China and India now both have no outstanding debt to the IMF and refuse to take out new loans. The boycott now includes Korea, Thailand, Indonesia, Malaysia, the Philippines and pretty much every other significant regional economy. Also Russia. The Fund is reduced to lording it over the economies of Africa, and maybe some parts of the Middle East and former Soviet sphere (basically those without oil). As a result its revenues have plummeted by 80% in four years. In the irony of all possible ironies, it’s increasingly looking like the IMF will go bankrupt if they can’t find someone willing to bail them out. Neither is it clear there’s anyone particularly wants to. With its reputation as fiscal enforcer in tatters, the IMF no longer serves any obvious purpose even for capitalists. There’s been a number of proposals at recent G8 meetings to make up a new mission for the organization—a kind of international bankruptcy court, perhaps—but all ended up getting torpedoed for one reason or another. Even if the IMF does survive, it has already been reduced to a cardboard cut-out of its former self.

The World Bank, which early on took on the role of good cop, is in somewhat better shape. But emphasis here must be placed on the word “somewhat”—as in, its revenue has only fallen by 60%, not 80%, and there are few actual boycotts. On the other hand the Bank is currently being kept alive largely by the fact India and China are still willing to deal with it, and both sides know that, so it is no longer in much of a position to dictate terms.

Obviously, all of this does not mean all the monsters have been slain. In Latin America, neoliberalism might be on the run, but China and India are carrying out devastating “reforms” within their own countries, European social protections are under attack, and most of Africa, despite much hypocritical posturing on the part of the Bonos and rich countries of the world, is still locked in debt, and now also facing a new colonization by China. The US, its economic power retreating in most of the world, is frantically trying to redouble its grip over Mexico and Central America. We’re not living in utopia. But we already knew that. The question is why we never noticed our victories.

[Die Neue Zeit]

How ironic. I was expecting the IMF to be the good cop, being headed by a European, with the American-headed World Bank being the bad cop. So much for European Union "progressivism." :rolleyes:

[Hoxhaist]

The WB and IMF force countries to abandon social programs and drop protections against foreign corporations undermining local business. They act as the preparers of the terrain for foreign corporate exploiters and lackeys of the multinational ruling class. Their primary goal is soften the economic defenses of the "third world" in exchange for loans to the nation once their social programs and trade barriers have been neutered.

[Cumannach]

The IMF/WB are vile murderous scum. They will let people die on the streets so the state can meet their repayments with interest.

[Ele'ill]

Just to maybe add to this a little - Wouldn't it be an imperialist standpoint to lay blame on the already shakey economic conditions of these impoverished countries and to lay blame on their corrupt governments rather than acknowledge that the IMF takes advantage of this?

The IMF is in 'partnership' with 184 countries however the US and the other handful of global elites (countries) have more voting power within the IMF and this is based on the economic size of the country.

I heard that this changed though although I can't find evidence that it did. The IMF website also states that most votes are done by consensus.



What happens when countries refuse to sign on with the IMF and are there recent examples?


Also, what would happen if the economically smaller countries had more votes than the larger countries?

[funkmasterswede]

Structural Adjustment Programs....enough said

[Ele'ill]

Structural Adjustment Programs....enough said

Unfortunately that isn't enough. I was curious to see the level of knowledge in here on the issue. Above average.

The main problem is that the documentation for why the IMF/WB are corrupt is non existant. All of the websites online ALWAYS start off with an opinion such as 'The imf hurts women. The imf makes other countries pull their women out of schools.'

That doesn't cut it if we want people to learn about the issues.

The other side of this is that the few sites that list details go overboard and you have to read through the entire history of global trade.

[RGacky3]

The main problem is that the documentation for why the IMF/WB are corrupt is non existant.

The IMF is'nt corrupt, it works within the boundaries that was set for it, it does exactly what its supposed to do. However that includes keeping "markets open" meaning allowing maximum profit for the Super Capitalists.

Its like saying the US government is corrupt for being pro-business, its not, thats just the natural flow of power in a Capitalist system.

Also the votes really don't matter, the ones that fund the IMF are the big wealthy countries, so it really depends on keeping them happy. You can put in wahtever regulations and rules you want, money always has the power.

[Bright Banana Beard]

My question is, how long will it be that IMF/WB will be irrelevant?

[Bud Struggle]

My question is, how long will it be that IMF/WB will be irrelevant?

It seems to rule the world.

Till the Revolution, would be the answer.