January 14, 1998
Marketplace Radio, January 14, 1998
What the IMF is doing to South Korea is not much different from what it has done to dozens of countries around the globe: turning a short-term financial crisis into a long-term economic disaster, with the help of some extremist economic theory. The main difference is that this time, the world seems to be watching.
The IMF is determined to keep the Korean inflation rate almost as low as it was last year, in spite of a 60% drop in the value of the Korean currency, which has instantly made imported goods much more expensive. If the only way to do this is to put the economy through a prolonged recession, or even a depression– so be it. The IMF’s fanatical obsession is shared by central bankers everywhere: they care only about inflation, not unemployment, growth, economic development, or– last and very much least on the IMF’s agenda– poverty.
The IMF also serves as a creditors’ cartel, squeezing tens of billions of dollars of debt service out of the poorer countries of the world. At the same time it forces them to open their economies to foreign investment and trade, even when local industry or agriculture is destroyed in the process.
Since the IMF’s stamp of fiscal approval is the prerequisite for most other credit, the Fund has the power to enforce its agenda on all but the largest economies in the world. Witness the chaos that rained down upon Indonesia last week, like the wrath of God. Suharto’s government had the audacity to propose an increase in government spending after the IMF has specifically told them not to do so. They won’t do it again, if they are indeed around long enough to have another chance.
The Indonesian government is a corrupt dictatorship, but the IMF has shown even less respect, over the years, for democratically elected governments. Democracy is an impediment to everything they want to do, especially their mandate to protect the interests of transnational banks and corporations at the expense of everyone else. The South Korean bailout has made this abundantly clear: if the IMF has its way, Citibank, Chase Manhattan, and the other banks who made some bad business decisions will get their’s, and US taxpayers will guarantee it.
Or maybe they won’t. The Clinton administration is trying to fast-track an unprecedented $18.5 billion to the IMF as soon as Congress returns. A bipartisan coalition of legislators is against the funding, and has a good chance of blocking it.
The IMF is the international financial equivalent of the CIA: its documents and proceedings are shrouded in secrecy, its bureaucracy is unaccountable and blinded by ideology. If you had to pick one single institution most responsible for the perpetuation of poverty in the world, this would be it.
For the first time in 53 years, the IMF is being called to account for its terrible record. Let’s hope it’s the beginning of the end of its unchallenged rule.