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The International Monetary Fund (IMF) is an organisation founded in 1945 in Washington, D.C. [1] which provides loans and financial guidances to countries in economic crisis. Arguably the utmost influential intergovernmental organisation in present day, the IMF can interfere in an economically periled nation by influencing its domestic economic policies.[2]
IMF's conditionality of loans include structural adjustments listed in the Washington Consensus which potentially contributes to greater disparity between the LEDCs and the MEDCs, the sheer fact that IMF was founded in D.C. insinuates the nature of its policies are steered in the direction of the West. Accordingly, the Western nations and multinational corporations become more dominant in the global economy, shaping the markets in their favour. That being so, the IMF perhaps supersedes the World Bank in terms of power since the latter issues tied loans. Subsequently, the IMF's jurisdiction over countries in crisis may be interpreted as a new form of economic and financial imperialism. Efforts by poorer countries to develop their economies and autonomy could be thwarted by the IMF; imposition of financial discipline could be construed as imperialist. On the other hand, IMF is often featured with imperialist characteristics in media.
The IMF's major interventions are 1998 Asian Financial Crisis and 2010 Greek Government-debt Crisis. This chapter will discuss the effects of IMF in these two cases respectively using an interdisciplinary approach. By analysing its influences in economic, political and social spheres, we could conclude that, IMF is the symptom and the cause of imperialism, which is embedded in our daily lives: unavoidable and authoritative.
IMF interventions in Asian crisis-economic approach:
Criticism pinpoints that iMF exploited Asia crisis to further impose its economic agenda in Asia. In Korea, IMF helped to bail out financial agencies and external lenders while requiring low inflation and later other reforms including deregulations and capital liberalisation.[3] This raised local sentiment that stated the programs were manipulated by America to benefit their industries.[4]As a consequence of the reforms, for example, the stock market had decreased by more than 40% and the value of its currency slashed by more than 50% compared with the year before.[5] Similar effects could also be found in other Asian countries. The contraction of economy in Thai deepened and in Indonesia, the rupiah kept falling and the economic problems are further deteriorated.[6]
The role of IMF was reconsidered by economists. Feldstein[7] emphasised the significance of autonomy in the domestic institutions which should not subordinate to the international agencies. Fischer[8] stated IMF should aim to help with the key problem which lies in the crisis instead of rushing to stucture adjustments. William K. Tabb[9] argued that although in the long-term these westernised financial reforms might bring economic growth, the shakeout during the transition could be destructive.
Greek Crisis-economic approach:
IMF policies shows advantages of efficient negotiations and implementations. And in the global context, IMF helped to prevent contagious effects, while also being criticised for risking causing turmoil.[10] Although the programs tackled the fiscal problem in Greek successfully, the IMF's former post evaluation of Greece's 2010 SBA[11] stated it did not achieve sustainable developments.
Introduction
[edit | edit source]The International Monetary Fund (IMF) is an organisation founded in 1945 in Washington, D.C., which provides loans and financial guidances to countries in economic crisis.[12] Arguably the IMF's conditionality of loans including a list of structural adjustments is featured with imperialist characteristics, which might lead to unwanted reforms or large amounts of debt, and this view can also be witnessed in media. According to the empirical evidence, economic problems always interrelate with political and social issues. In this case, this chapter will analyse with the lens of imperialism the IMF's interventions in the Asian and Greek crisis respectively, and their influences in economic, political and social spheres, which will help to evaluate the roles of this institution by using an interdisciplinary approach, instead of regarding it only as an economic agency.
IMF in media
[edit | edit source]The portraits of the IMF in mass media are often shadowed with criticisms towards imperialist ideology. A documentary film in 2001 by Stephanie Black, Life and Debt, reveals that the series of reforms which the IMF imposed on Jamaica brought only $4.6 billion of debts to this nation. The former Jamaica Prime Minister claimed the IMF's policy undermined the sovereignty of many nations suffered from colonisation in the interviews within the film.[13] Another documentary film called Debtocracy in 2011 by Katerina Kitidi and Aris Chatzistefanou presented the inviability of euro system, the IMF loans and 'support'.[14]
1997 Asian Economic Crisis
[edit | edit source]The Asian crisis which broke out first in Thailand spread in many countries and caused global panic. The IMF stepped in and provided bailouts for the nations severely affected to restore confidence in economies.
economic
[edit | edit source]Criticism pinpoints that iMF exploited Asia crisis to further impose its economic agenda in Asia. In Korea, IMF helped to bail out financial agencies and external lenders while requiring low inflation and later other reforms including deregulations and capital liberalisation.[15] This raised local sentiment that stated the programs were manipulated by America to benefit their industries.[16]As a consequence of the reforms, for example, the stock market had decreased by more than 40% and the value of its currency slashed by more than 50% compared with the year before.[9] Similar effects could also be found in other Asian countries. The contraction of economy in Thai deepened and in Indonesia, the rupiah kept falling and the economic problems are further deteriorated.[17]
The role of IMF was reconsidered by economists. Feldstein[18] emphasised the significance of autonomy in the domestic institutions which should not subordinate to the international agencies. Fischer[19] stated IMF should aim to help with the key problem which lies in the crisis instead of rushing to stucture adjustments. William K. Tabb[9] argued that although in the long-term these westernised financial reforms might bring economic growth, the shakeout during the transition could be destructive.
political
[edit | edit source]social
[edit | edit source]2010 Greek Government-debt Crisis
[edit | edit source]economic
[edit | edit source]political
[edit | edit source]social
[edit | edit source]Conclusion
[edit | edit source]Notes
[edit | edit source]overall: The Greek crisis started in 2009 and is the longest economic recession to date. To prevent contagious effects, rescue packages were launched by the Troika (European Commission, European Central Bank and IMF) with conducting austerity measures as preconditions. This left Greece excessive debts and subsequently, sovereignty and social crisis.
The Troika lent nearly US$440 billion of loans during the five-year period, 2010-2015. But it turned out that one of the major consequences was the drop in GDP and more severe lasting debts burden. Greece's GDP dropped by 25% and its debt-to-GDP ratio rose from 127% in 2009 to around 170%.[20] And IMF also admitted for having underestimated the damage the fiscal consolidation policies brought.[21] Economists reveal that the bailouts simply transfer the debts from the private banks into public, instead of truly fixing the problems of Greece. [22]. A study in 2016 indicates the loans were in fact used to pay the previously piled debts, rescue private banks which were subordinated to other European banks, or compensate European investments. It claims only no more than $8 billion went to Greek populace.[23] While on the other hand, the austerity measures drove the Greek institutions to further undercut the wage and money in businesses. Therefore, some economic analysts, like Rasmus, raise the idea of 'an emerging new financial imperialism' behind the ideology of neoliberalism, which means within a union the underprivileged states' autonomy on their currency, fiscal expenditure and so on is being undermined, and then turn to be 'economic protectorates' as the case of Greece.[24]
- ↑ Investopedia. (2018). International Monetary Fund - IMF. [online] Available at: https://www.investopedia.com/terms/i/imf.asp [Accessed 22 Nov. 2018].
- ↑ Payer, C., 1974. The Debt Trap : The International Monetary Fund and the Third World, Nueva York (Estados Unidos): Monthly Review Press.
- ↑ Medley, Joseph E. (2000) 'The East Asian economic crisis: surging U.S. Imperialism?", Review of Radical Political Economics, 32(3), pp. 379-387.[1]
- ↑ Far Eastern Economic Review(1998)Fund under fire. May 14
- ↑ Tabb, William K.(1998) 'The East Asian financial crisis', Monthly review, 50(2), pp. 24-38.[2]
- ↑ Katz, S. Stanley(1999)'The Asian crisis, the IMF and the critics', Eastern Economic Journal, 25(4), pp. 421-439.[3]
- ↑ Feldstein, M. (1998)'What the IMF should do', Wall Street Journal, 6th October
- ↑ Fischer, S.(1998) 'The IMF and the Asian crisis', Forum Funds Lecture, University of California Los Angeles, 20th March.
- ↑ a b c Tabb WK.The East Asian financial crisis. Monthly review.1998 June;50(2):24-38.[4]
- ↑ Jost, Thomas and Seitz, Franz (2012)The role of the IMF in the European Debt Crisis, Weidener Diskussionspapiere, No. 32, ISBN 978-3-937804-34-7, Hochschule für angewandte Wissenschaften Amberg-Weiden (HAW), Weiden i.d.OPf. Available at:http://hdl.handle.net/10419/56452
- ↑ International Monetary Fund, 'Greece: ex post evaluation of exceptional access under the 2010 stand-by arrangement', IMF Country Report No.13/156 (Washington)
- ↑ International Monetary Fund. About the IMF: the IMF at a glance. Available from: https://www.imf.org/en/About [Accessed 5th December 2018].
- ↑ "Life and debt" Film website. About Life and Debt. Available from: http://www.lifeanddebt.org/about.html [Accessed 5th December 2018].
- ↑ Chakrabortty A. Debtocracy: the samizdat of Greek debt. Available from: https://www.theguardian.com/film/2011/jun/09/debtocracy-film [Accessed 5th December 2018]
- ↑ Medley JE. The East Asian economic crisis: surging U.S. imperialism?. Review of Radical Political Economics.2000 September 1;32(3):379-387.[5]
- ↑ Far Eastern Economic Review(1998)Fund under fire. May 14
- ↑ Katz SS. The Asian crisis, the IMF and the critics. Eastern Economic Journal. 1999 Fall;25(4):421-439.[6]
- ↑ Feldstein M. What the IMF should do. Wall Street Journal. 1998 October 6
- ↑ Fischer S. The IMF and the Asian crisis [Lecture] University of California Los Angeles. 20th March 1998.
- ↑ Eurostat. General government gross debt-annual data. Available from:https://ec.europa.eu/eurostat/tgm/table.do?tab=table&init=1&language=en&pcode=teina225&plugin=1 [Accessed 5th December 2018]
- ↑ Elliott L, Smith H. IMF 'to admit mistakes' in handling Greek debt crisis and bailout. Available from:https://www.theguardian.com/business/2013/jun/05/imf-admit-mistakes-greek-crisis-austerity [Accessed 5th December 2018].
- ↑ Janssen R. Greece and the IMF: who exactly is being saved? Available from: http://www.kalami.net/2010/cosmos/gr-imf-jul10.pdf [Assessed 5th December 2018]
- ↑ Rocholl J, Stahmer A. Where did the Greek bailout money go?. ESMT Berlin. Publication number: WP-16-02.https://www.esmt.org/where-did-greek-bailout-money-go
- ↑ Rasmus J. Greek debt and the new financial imperialism. Available from:https://www.counterpunch.org/2016/08/24/greek-debt-and-the-new-financial-imperialism/ [Accessed 5th December 2018].