"In Defense Of My Views On IMF Funding"
Our guest blogger is Nina Hachigian, Senior Fellow at the Center for American Progress Action Fund.
Chris Bowers took major exception to an article I recently wrote supporting US funding for the IMF. I was motivated to write the article by the neocon rants equating money for the IMF to money down the drain — despite the fact that the IMF was bailing out countries that the US would certainly not let fail, at a fraction of the cost of us trying to do it alone. As I wrote, that is an argument that I don’t consider very serious.
But some progressives in Congress also wanted to tie the IMF funding to specific changes in how the IMF conducts its business, with an eye toward more sensitivity to poor countries and greater transparency. I am very sympathetic to these goals, and this argument IS serious.
I think we should give the new Administration a chance to engage, however. It is sometimes hard to remember, but we are coming off of eight years in which the US disparaged and belittled multilateral organizations and often ignored them. The Administration now, wisely, wants to reengage. From the IMF, the US wants not only to continue to save countries from bankruptcy, but also to become a forum for examining China’s undervalued currency. In pursuing a broader agenda, the Administration can and has pushed for reforms, with some success, and we should give that approach some time to work. It shows more respect for a multilateral process that involves many countries than does categorical US demands. Moreover, if we attach hefty conditions, other countries might too, and that will complicate the whole process greatly.
Second, we are still in the throes of a once-in-a-century economic crisis. The IMF has already relaxed some of its conditions to ensure that it can act quickly and not cause additional social harm. But I fear that some of the new requirements that the members of congress want, like requiring Parliamentary approval for loan packages, could slow the process down too much at this juncture, and, in the end, cause more harm.
Finally, the US has been pushing hard for underdeveloped countries to get more of a say in IMF decisions. That pressure has had resulted in a marginal increase in voice for the underrepresented, with the promise of more to come. The answer to the problem of badly designed loan packages for poor countries is for poor countries themselves to have a greater hand in decision-making.