From Socialist Voice, December 2010

The IMF

A worker’s guide to our new rulers


The International Monetary Fund was founded in the United States in 1944 as an organisation that would oversee the international capitalist system. Its declared aim is to stabilise exchange rates and to assist in the reconstruction of the international payment system. It does this by enforcing “liberalising” economic policies, especially on poorer countries, as a condition for loans or aid.
     Wealthy countries contribute to a fund from which less wealthy countries obtain loans, or sometimes “aid,” usually on punitive terms that also tie them to the global capitalist system. Loans and aid are accompanied by a requirement that the country adopt specified “reforms,” such as privatising state enterprises or services (including health and education), reducing (or abolishing) social welfare, sacking public servants, abolishing price controls, or lowering corporate tax.
     Since the counter-revolutions in eastern Europe practically every country in the world is now a member of the IMF, the only significant exceptions being Cuba (which pulled out in 1964) and North Korea. In 2007 the president of Ecuador, Rafael Correa, announced the expulsion of the World Bank representative. Shortly afterwards the president of Venezuela, Hugo Chávez, announced that the country would withdraw from the IMF and the World Bank, though for technical reasons this has not yet taken effect.
     China has been a member since 1980. This year it was allowed to increase its stake to obtain the third-largest quota (the amount of capital subscribed and the corresponding voting power), behind the United States and Japan and overtaking Germany, France, and Britain.
     Unlike legitimate international organisations, voting in the IMF is not on the basis of “one country one vote” but in accordance with a formula based on the amount of capital subscribed, the country’s GDP, its foreign exchange reserves, and other financial criteria. Important decisions require an 85 per cent vote. In addition, the United States has a veto.
     In 2001, Argentina—considered a model country for its acceptance of the conditions imposed on it—experienced a catastrophic economic crisis. This was blamed by the government on IMF conditions, which undermined its ability to maintain the national infrastructure, especially in such crucial areas as health, education, and social welfare, together with the privatisation of strategic national resources. In 2002 the government decided to default—simply refusing to pay back the loans—while reversing the economic decisions. The resulting recovery enabled it to pay off most of the debt.
     In 2008 a study by analysts from the University of Cambridge and Yale University concluded that the conditions imposed by the IMF resulted in thousands of deaths in eastern Europe, particularly from TB, because of the requirement that the public health service be weakened.
     This is the organisation, along with the European Union and European Central Bank, to which the gombeen politicians of Ireland have handed over control of the budget and economic policy and therefore in effect our national sovereignty.

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