9. IMF

A large contributing factor to World War II was the failure of the German economy after the harsh peace settlement conditions imposed on them after WW I. The global powers recognised this and when peace was signed they set up the IMF as part of the United Nations action.

All the quotes on this page comes from http://en.wikipedia.org/wiki/International_Monetary_Fund

“The International Monetary Fund (IMF) is an organization of 187 countries, working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world.[1] The organization’s stated objectives are to promote international economic cooperation, international trade, employment, and exchange rate stability, including by making resources available to member countries to meet balance of payments needs.[2] Its headquarters are in Washington, D.C.

“The IMF describes itself as “an organization of 187 countries (as of July 2010), working to foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty.”

However, all members are not equal. In fact, one member specifically is less equal than any of the others.

“Major decisions require an 85 percent supermajority.The United States has always been the only country able to block a supermajority on its own.”

I have, in the previous chapters, made a number of comments that I will be showing how the IMF is involved in anti-smoking legislation in different countries. Before I do this let’s review the major criticisms of the IMF. From the same source:

“Two criticisms from economists have been that financial aid is always bound to so-called Conditionalities, including SAPs. It is claimed that conditionalities (economic performance targets established as a precondition for IMF loans) retard social stability and hence inhibit the stated goals of the IMF, while Structural Adjustment Programs lead to an increase in poverty in recipient countries.[28]

“The IMF sometimes advocates “austerity programmes,” cutting public spending and increasing taxes even when the economy is weak, in order to bring budgets closer to a balance, thus reducingbudget deficits. Countries are often advised to lower their corporate tax rate. In Globalization and Its DiscontentsJoseph E. Stiglitz, former chief economist and senior vice president at the World Bank, criticizes these policies.[29] He argues that by converting to a more monetarist approach, the purpose of the fund is no longer valid, as it was designed to provide funds for countries to carry outKeynesian reflations, and that the IMF “was not participating in a conspiracy, but it was reflecting the interests and ideology of the Western financial community.”

“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 [financial] speculators in business. They’re not interested in development, or what helps a country to get out of poverty.”

Joseph Stiglitz[32]

“Secondly, the Fund worked on the incorrect assumption that all payments disequilibria were caused domestically. The Group of 24 (G-24), on behalf of LDC members, and the United Nations Conference on Trade and Development (UNCTAD) complained that the Fund did not distinguish sufficiently between disequilibria with predominantly external as opposed to internal causes. This criticism was voiced in the aftermath of the 1973 oil crisis. Then LDCs found themselves with payments deficits due to adverse changes in their terms of trade, with the Fund prescribing stabilisation programmes similar to those suggested for deficits caused by government over-spending. Faced with long-term, externally-generated disequilibria, the Group of 24 argued that LDCs should be allowed more time to adjust their economies and that the policies needed to achieve such adjustment are different from demand-management programmes devised primarily with internally generated disequilibria in mind.

“The third criticism was that the effects of Fund policies were anti-developmental. The deflationary effects of IMF programmes quickly led to losses of output and employment in economies where incomes were low and unemployment was high. Moreover, it was sometimes claimed that the burden of the deflationary effects was borne disproportionately by the poor.

“Fourthly is the accusation that harsh policy conditions were self-defeating where a vicious circle developed when members refused loans due to harsh conditionality, making their economy worse and eventually taking loans as a drastic medicine.

“Lastly is the point that the Fund’s policies lack a clear economic rationale. Its policy foundations were theoretical and unclear due to differing opinions and departmental rivalries whilst dealing with countries with widely varying economic circumstances.”

I have shown this very long quote so that readers can be reassured that I am not riding an anti-IMF horse on my own but that many well known economists are against the policies of the IMF – including a governor of the World Bank.

We have all seen how the population of Greece has reacted to the proposed austerity measures that the IMF has asked the Greek government to impose (and the Irish, and the French, and Spain); but not the USA which is the country with, by far, the biggest debt.

Isn’t it a surprise that the USA has the only veto vote on the IMF and is not asking itself to implement austerity measures?

Here is one example of the IMF’s interference going wrong:

Argentina, which had been considered by the IMF to be a model country in its compliance to policy proposals by the Bretton Woods institutions, experienced a catastrophic economic crisis in 2001,[34]which some believe to have been caused by IMF-induced budget restrictions—which undercut the government’s ability to sustain national infrastructure even in crucial areas such as health, education, and security—and privatization of strategically vital national resources.[35] Others attribute the crisis to Argentina’s misdesigned fiscal federalism, which caused subnational spending to increase rapidly.[36] The crisis added to widespread hatred of this institution in Argentina and other South American countries, with many blaming the IMF for the region’s economic problems.[37] The current—as of early 2006—trend toward moderate left-wing governments in the region and a growing concern with the development of a regional economic policy largely independent of big business pressures has been ascribed to this crisis.”

Now read here about the relationship between IMF and the global Cigarette Companies – well you know by now that there are only two.

The global Merchants of Death, a.k.a Philip Morris British American Tobacco, have a good friend in the International Monetary Fund. The IMF doesn’t think twice about forcing low-income nations to sell their inefficient tobacco monopolies to multinational tobacco corporations that are true masters of killing for profit. On September 23, 2002, Essential Action released a report detailing how the IMF pushes policies that undermine public health and help Big Tobacco. We also held a demonstration in front of the IMF headquarters to expose the IMF’s “pack of lies”!

International Monetary Fund Support for Tobacco Privatization and for Tobacco Tax and Tariff Reduction, and the Cost to Public Health
To access the report, click here: HTML , PDF

In particular, Essential Action’s investigation found that the IMF has pushed for tobacco privatization in: Bulgaria, Korea, Mali, Moldova, Thailand, Turkey. Essential Action also found that the IMF has supported excise tax or tariff reductions in: Djibouti, The Gambia, Macedonia, Peru, and Uganda.”



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