Authored by Miki Pannell
In recent Brexit debates a reoccurring theme cropped up. ‘Why should we support a group of unelected European bureaucrats?’ The simpleton argument proved to be rather lame and it became clear that there was, in fact, a system of votes to elect EU leaders. The gripe appeared to be that there are certain ministerial positions and civil service posts within the EU Commission that the popular voter holds no sway over. Similarly, however, in most democracies, a voter can participate in the election of a ruling party, but has no say in the selection of individual cabinet members or certain public service posts.
No such argument is true of the IMF. The democratic voter has never had any influence whatsoever regarding who runs the institution, who funds it, or even, if it should exist in the first place.
The IMF has had criticism heaped on it over the years for being opaque, unaccountable and hugely ineffective. That’s the less caustic criticism. Diverging world equality levels show the institution to be a veritable failure.
Both the IMF and the World Bank were created in 1945 as mutual assistance organisations to help post-war reconstruction and have voting and governance structures which date from then. Over the years, the fund’s mandate has suffered a sinister form of mission creep. An organisation created to fund the alleviation of communal misery, is now, in many ways, the creator of such suffering. While the fund’s defenders view it as the G20’s self-elected central bank sidekick, critics prefer to see the IMF’s main role as the de facto world government’s heavy mob; enriching the super-wealthy with one hand, whilst imposing vicious austerity programmes on the needy with the other.
The latter is certainly more credible. After all, the internal voting share is based on a quota whose weighting was calculated using the country’s GDP and reserves… back in 1945! The US holds 16.74%, Japan 6.01%, Germany, 5.87% and both France and the UK 4.87%. The richer the nation was, the greater the influence. And the clear reason why the IMF has always chosen a European director.
Recent episodes in Greece will shed some light onto the real nature of the IMF’s ‘structural adjustment programs’ (a euphemism for austerity, involving reduction of public funding for services).
With the Greek economy effectively bankrupt (if a country could actually declare itself so), the IMF, EC and ECB troika have been bailing out the country for a decade and have forced the nation to endure hardships induced by the radical slashing of public spending.
Yet, the bailout packages were inextricably linked to the Greek government’s enormous arms procurement expenditure. This is military-industrial complex Euro-style. The recipients of the arms deals are ….yep, you’ve guessed it… the EU states with the biggest influence within the IMF. Billions have been spent on German and French weaponry. France allegedly insisted on Greece purchasing stealth frigates, as the IMF insisted on Greek pension cuts. The Germans sold Howitzers, as the IMF forced cutbacks on healthcare. You can guess the rest…
And this is where Christine Lagarde fits in so well. An undoubtedly charismatic woman, so revered in the press that she is deemed virtually above criticism. Few people command so much respect within the mainstream milieu. When they wheel out Warren Buffet or Alan Greenspan, both get similar royal treatment too, and perhaps therein lays the secret. Lagarde and her organisation have benefited massively from the Keynesian banking ethos and have used currency creation to consolidate positions within the world’s elitist financial community. The neoliberal mainstream press have positioned and promoted Madame Lagarde as a Gucci-bagged Mother Teresa – a benevolent financier out to mitigate world misery. The complete opposite is true. If you want a woman who has dedicated her entire life to such causes, plenty exist; try Susan George for one.
Expect to see a lot more of Lagarde in the future. The lady with the $467,940 tax-free diplomatic salary is a PR dream. Her fund even has its own moneymaking printing press, the little known SDR (Special Drawing Rights), a confusingly named non-public ‘money’ based on a basket of world currencies… basically fabricated out of thin air. You may not have heard about it, but the SDR might well be used to bail out the entire world in the impending crisis. Central banks are technically insolvent and have only managed to stay afloat because their government sponsors would neither issue transparent public audits nor open declarations of their own bankruptcies. Christine Lagarde, like her or loathe her, runs the only financial institution with something resembling a clean balance sheet. The lady is about to liquefy the world with more cash creation and the subsequent inflation will help impoverish - not empower - the poor of the planet.