Caribbean Times 65th Issue - Friday 5th August 2016

8 c a r i b b e a n t i m e s . a g
Friday 5th August 2016
IMF: Light up its darker crannies
The International Monetary Fund
(IMF), which has tormented small Caribbean
economies for five decades
with austerity measures and fierce
conditionalities, has been exposed as
adopting utterly different standards towards
Europe, especially the countries
of the European Currency Union. That
is except for Greece, which, throughout
its economic crisis, the IMF treated like
a third-world country.
According to a report, published on
28 th July by the IMF’s watchdog, the
Independent Evaluation Office (IEO),
the Fund’s top staff worked in cahoots
with the European Commission and the
European Central Bank to misrepresent
the situation in Greece to their own
Executive Board; laboured diligently
to protect the Eurozone in the interests
of its larger members, such as France
and Germany (which, incidentally, are
also the main controllers of the IMF);
and punished Greece with the burden
of alone carrying the cost of a bailout
– something that had not been done to
any other European Union country.
In a revealing and telling sentence
in the executive summary of its report,
the IEO declared that: “In general, the
IMF shared the widely-held “Europe is
different” mindset that encouraged the
view that large imbalances in national
current accounts were little cause for
concern and that sudden stops could
not happen within the euro area”. The
report, “The IMF and the crises in
Greece, Ireland, and Portugal: an evaluation
by the independent evaluation
office” can be read at: http://www.
ieo-imf.org/ieo/files/completedevaluations/EAC__REPORT%20v5.PDF
and
it is strongly recommended that officers
of all Finance Ministries and Central
Banks in the Caribbean should read it.
The authors of the report stated unequivocally
that: “The IMF’s handling
By Sir Ronald Sanders
of the euro area crisis raised issues of
accountability and transparency, which
helped create the perception that the
IMF treated Europe differently. Conducting
this evaluation proved challenging.
Some documents on sensitive
issues were prepared outside the regular,
established channels” and either
disappeared or were not made available
to the Evaluation Team.
The principal reason for handling
the financial crisis in Greece differently
was primarily to protect the Eurozone
at the insistence of the European Commission,
which negotiated on behalf of
the Eurogroup, subjecting IMF staff’s
technical judgments “to political pressure
from an early stage”. As a result of
this, in May 2010, the IMF Executive
Board approved a decision to provide
exceptional access financing to Greece
“without seeking pre-emptive debt restructuring,
even though its sovereign
debt was not deemed sustainable with
a high probability”. The truth is that
the actions in relation to Greece (hidden
from the Executive Board by the
management) were designed to make
French and German banks ‘whole’;
never mind what Greece was forced
to endure. In other words, Greece
was ‘sucker punched’ or, ‘fiscally water-boarded’
to use the more emotive
description of the former Greek Finance
Minister Yanis Varoufakis (now
Professor of Economics at the University
of Athens).
In a robust response to the IEO report,
Varoufakis observed that: “The
establishment press were claiming that
a finance minister of a small, bankrupt
nation which is being water-boarded by
the high and mighty troika functionaries
cannot afford to say, in public or in
private, that his small, bankrupt nation
was being water-boarded”. But, he
said Greece had “tried silence and obedience
from 2010 to 2014. The result?
A loss of 28% of national income and
grapes of wrath that were “…filling
and growing heavy, growing heavy for
the vintage”.
Of course, Greece, though a small
European economy, is significantly
larger than the small economies of the
Caribbean. When Finance Ministers
of small Caribbean countries complain
about the conditionalites of IMF programmes
that hurt more than help, as
Antigua and Barbuda’s Prime Minister
Gaston Browne did in August 2014,
they are roundly criticised for their audacity.
Browne had remarked about
the IMF strait-jacket that his government
inherited when it was voted into
office: “The fiscal problems have not
been resolved, but yet still we are being
asked to pay back US$119 million
over the next four years. We have to
pay back even before the problem is
solved”. And, small economies have
no capacity to stand-up to the IMF and
those who control it. Greece proved
that point and is now struggling as a
result.
Varoufakis feels that Greece is
owed an apology and officials of the
IMF should be fired now that the IEO
has exposed duplicity – even conspircont’d
on pg 9