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19 October 2006

Country Ownership

I find it bizarre the way the IMF talks about the importance of improving "country ownership" of its programs. Apparently it's one of the ways in which the IMF is modernising itself, and becoming even more relevant. It talks as though this is an amazing discovery.

But, I wonder, what the hell have they been doing for the past 50 years. Shouldn't admitting that country ownership hasn't been a priority all that time be a horridly embarassing thing, not a cause for celebration? It's like they read some management book that has told them that a room full of economists ruining the lives of millions of people on an economic modelling whim is possibly a bad thing. So... you mean... democracy is important. And we should listen to people when they talk to us. Gee. Why didn't you say so earlier?

You'll never hear anyone say that they've ever done anything wrong. People only ever get more right than they already were.

Comments

  1. You’re absolutely right. Possibly even more right than previously ;-)

    Waldon Bello has this to say about the role of the IMF in undermining democracies (the other article on the IMF/World Bank Spring Meetings in Singapore in this issue of Focus on the Global South is also worth a read: http://www.focusweb.org/fuelling-discontent-the-world-bank-and-international-monetary-fund-in-sing.html

    Democracy suffered a further blow in 1997-2001 following the Asian financial crisis. This time it was not the local elites that were the culprit. It was the International Monetary Fund (IMF), which pressured the Chavalit government, then the second Chuan government to adopt a very severe reform program that consisted of radically cutting expenditures, decreeing many corporations bankrupt, liberalizing foreign investment laws, and privatizing state enterprises. The IMF assembled a $72 billion rescue fund, but it was money that was spent not to save the local economy but to enable the government to pay off the foreign creditors of the country. When the Chavalit government hesitated to adopt these measures, the IMF pressed for a change in government. The second Chuan government complied fully with the Fund, and for the next three years Thailand had a government that was accountable not to the people but to a foreign institution. Not surprisingly, the government lost much of its credibility as the country plunged into recession and one million Thais fell under the poverty line. Meanwhile the US Trade Representative told the US Congress that the Thai government’s “commitments to restructure public enterprises and accelerate privatization of certain key sectors-including energy, transportation, utilities, and communications-[are expected] to create new business opportunities for US firms.”

    The IMF, in short, contributed greatly to sapping the legitimacy of Thailand’s fledgling democracy, and, in this connection, this was not the only instance where the Fund contributed to eroding the credibility of a government, especially among the poor. If there is today a pattern reversing so-called “Third Wave” of democratization that took off as a trend in the developing world since the mid-seventies, the IMF-supported of course by the US government-is part of the answer. An IMF program requiring steep rises in transport costs destroyed the last ounce of legitimacy of Venezuelan democracy in 1989 and plunged the country into the spontaneous rising known as the “Caracazo.” Earlier, in 1987, the IMF forced the new democratic Aquino government in the Philippines to adopt a national economic program prioritizing debt repayment over development, pushing the Philippines into a period of stagnation, rising poverty, and rising inequality that saw, among other things, the squandering of much of the legitimacy of the democracy that succeeded Marcos. Also, a key contributor to the unraveling of Pakistan’s democracy were the structural adjustment programs that the IMF and the World Bank got both the government of Benazir Bhutto and that of her rival Nawaz Sharif to impose on the country. Since parliamentary democracy became associated with a rise in poverty and economic stagnation, it is not surprising that the Musahrraf coup was viewed with relief by most Pakistanis, from both the middle classes and the working masses.

    ben / 9:40am / 20 October 2006

  2. The IMF tried the same shit on South Korea, but South Korea didn’t take all the money offered and paid it back early. South Korea bounced back after 18 months or something. Now they’ve built up enough reserves that they might not need the IMF if the same thing happens again.

    It feels miserable telling poor countries that they need to build up their own foreign reserves so they can be independent, but I think it’s probably the only way. Any other sort of mutual insurance scheme (like the IMF, or an Asia-wide crisis reserve) are vulnerable to abuse from insiders if outsiders can’t intervene, and prone to abuse from outsiders if they can intervene. Australia survived the attack on our currency from LTCM because we had foreign reserves. Hong Kong’s government made money on the Asian financial crisis because it had reserves to buy the assets investors were abandoning. I don’t think anyone even bothers attacking China’s currency, because China has so many reserves speculators would get their arse kicked.

    Ryan / 12:32pm / 20 October 2006

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