Simon Johnson, former chief economist of the IMF and currenty a professor at MIT Sloan, gets it right:
The IMF is founded on the premise that it represents cooperation between all of the countries of the world. The reality is that it stands for and operationalizes US power, in cooperation with America’s closest allies.
Anyone who doubts that should review a recent letter orchestrated by the Bretton Woods Committee, addressed to Congressional leaders on behalf of an impressive array of former Republican and Democratic cabinet secretaries. The first paragraph reads, “The IMF has always been a valuable tool for advancing US national interests globally.”CommentsView/Create comment on this paragraph The US does not dictate what happens at the IMF, but it does have a disproportionate influence.
The letter Johnson cites states this:
The IMF has always been a valuable tool for advancing U.S. national interests globally, from helping navigate the Latin crisis of the 1980s to supporting the Arab Spring countries today with policy advice, technical assistance, and financial support. During the recent, unprecedented financial crisis, the IMF intensified support for affected countries and helped to stabilize their economies and maintain growth. It is important that the United States support the Fund, because of the returns it brings to our nation going forward.
In February, before the coup even occurred in Ukraine, Treasury Secretary Jack Lew told a group at the World Affairs Council in San Francisco:
At the core they have an economic crisis and they are going to need to deal with it. And the mechanism that’s best for Ukraine to deal with it would be to come to the IMF and have a package where they put in place economic reforms where they get the support that they need in exchange for the steps to fix their economy.
From NYT on Thursday:
After three weeks of urgent negotiations with the interim government of Ukraine and in an atmosphere of great power competition, the International Monetary Fund announced on Thursday an agreement to provide up to $18 billion in loans over two years to prevent the country’s default.
It should be noted this money isn’t going to the people of Ukraine. It is going to the banksters who have previously loaned money to Ukraine. And the loans will keep Ukraine under the thumb of the U.S.
Reprinted from Economic Policy Journal.