[A-List] Argentina, IMF Stand-Off Continues

[Michael Keaney]

Stratfor writes:

The International Monetary Fund's job is -- well, it has some job, but no
one is really sure any longer what it is. In the case of Argentina, it seems
to be operating as a multinational bill collector for foreign financial
interests. In other cases, it seems to operate as a particularly inept
social worker, sending in home economists to teach impoverished housewives
how to make more nutritious meals for less. The IMF has been pilloried for
being a tool of globalist financial interests, for being inept at managing
financial crises and for being ineffective at disciplining profligate
nations. The odd thing is that the IMF is guilty of all the charges.

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This is quite radical stuff from Stratfor. That it misses the point of why
the IMF exists at all is mitigated by the fact that it points out all the
manifest failures of the IMF in terms of the functionalist criteria
according to which the institution is supposed to operate. Nobody would
publicly admit that it really operates to protect the interests of
Citigroup, Goldman Sachs, et al. But it is becoming harder to pretend
otherwise. Here is where the facilitation of accumulation creates a
legitimisation crisis. Or, in this case, fosters one. Because Köhler,
appointed thanks to energetic lobbying by Gerhard Schröder who insisted upon
a German taking over from Michel Camdessus, had to clean up a lot of the
mess he inherited from the Camdessus regime, which was reeling a bit thanks
to the fiasco of the Asian crisis and the attacks being made on the IMF by
the global anticapitalist movement and by the likes of Joseph Stiglitz,
among others. Köhler oversaw a streamlining of the conditionality criteria
for loans, expressly on the premise that the IMF had got itself into hot
water by being overly prescriptive and meddlesome. To publicly admit such a
thing is a measure of the damage limitation felt necessary in the aftermath
of a set of obvious failures, coupled with an incoming Bush administration
expressing doubts on all the received wisdom previously promoted by Clinton.
In particular, Treasury Sec Paul O'Neill was vocally sceptical about the
IMF's raison d'être -- a sharp contrast with his predecessor. O'Neill's
problem was that he really did believe in "the market", whereas Larry
Summers knows the difference between theory and practice. It explains why
O'Neill was singularly unsuited to the job Bush had given him (although
ironic that "the markets" never accepted the guardianship of someone who
sincerely believed in those same markets).

It looks like Stratfor has reached similar conclusions to O'Neill, with the
added bonus of having witnessed even more failure in the interim. It's
expressive of the growing crisis of the international financial system,
which depends upon a strategically pro-active US canny enough to disguise
its operations under the cloak of multilateralism. That's hardly been the
Bush administration's style, hence the lack of affinity between the
purveyors of the Washington consensus and Washington itself. But there
remains the issue of what Wall Street itself wishes.

It looks very like Argentina's refusal to buckle (so far) is triggering a
crisis of an already precarious status quo. Krueger's interim leadership may
be something to fear, given her track record, but the real signal of intent
will be the appointment of Köhler's successor. Whoever that is will be
responsible for a restructuring of the IMF more squarely in terms of US
interests, which now appear to encompass a reactivated Monroe Doctrine
(Haiti, Venezuela, Cuba, .... and Argentina). That the main losers of the
Argentina default were European was a happy event in the eyes of US
interests eager to accomplish once and for all the establishment of economic
and political hegemony over Argentina, at the expense of the French and
Spanish interests that had capitalised upon historic links to take advantage
of all the forced privatisations foisted upon Argentina by previous
"international community"-mandated diktats. Now the general principles of
property and debt repayment are at stake, and that is too much for the US to
countenance, whatever the compensatory pain being incurred by European
rivals. So we might well see a streamlining of the IMF in which it is
presented as leaner and fitter, apparently less involved in the
micromanagement of borrower countries' economies, but even more hardline in
its enforcement role -- in effect, uniting imperialist interests at the
expense of debtor countries, whilst concentrating power further in US hands.

This, of course, is no solution, in that the fallout from any crisis
precipitated by such hardline enforcement can be expected to provoke
widespread protest, not least from the global anticapitalist movement, whose
activities have already yielded concessions from the Washington consensus
(e.g. the World Bank's obsessing over social capital and
environmentally-friendly development). These, however cosmetic, nevertheless
are a real expense for those concerned to accumulate whilst socialising the
costs.

Michael Keaney