December 13, 2017
Sunday, April 20, 2014

The IMF plays hard to get

Economy Minister Axel Kicillof.
Economy Minister Axel Kicillof.
Economy Minister Axel Kicillof.
By James Neilson
For the Herald
CFK’s government turns to organization for cash
If Axel Kicillof really is the dyed-in-the-wool Marxist some of his admirers and many of his detractors say he is, meeting all those IMF people may have been a distasteful experience for him. From his point of view, they are apologists for the rawest and most brutal kind of capitalism: to make sure they did not mistake him for a common-or-garden economy minister, he refused to put on a tie, a foible he shares with Israeli labour politicians and fire-breathing Iranian Islamists. But Kicillof is also assumed to be a big fan of John Maynard Keynes who was a “founding father” of both the IMF and the World Bank, so perhaps he enjoyed trying to persuade them to see things his way.
In any event, with Cristina’s blessing Axel went to Washington in search of some of the cash the government needs to tide it over until the end of next year. To nobody’s surprise, he returned empty-handed. Though IMF representatives congratulated him for moving in what they thought was the right direction by devaluing the peso, raising interest rates, slashing subsidies for gas as winter approached and producing statistics that seemed rather less outlandish than the previous ones, just before he turned up the organization had issued a report in which Argentina was blacklisted alongside Venezuela. That must have hurt. Argentina’s economy may be in bad shape, but compared to Venezuela’s it is a model of almost Teutonic efficiency.
Like many other politicians both here and in other parts of the world, among them Cristina’s late husband, she has long been accustomed to treating the IMF as a despicable ideological enemy of all that is good. She has repeatedly let it be known that, as far as she is concerned, it is staffed by a bunch of brain-dead incompetents in thrall to an economic death cult called “neoliberalism” who always get everything wrong. In an attempt to prevent the IMF from criticizing his patented economic model, back in 2005, Néstor handed it the ten billion dollars it was owed and told it to stop sticking its nose into Argentina’s affairs. From the IMF’s point of view, that was just as well; it can hardly be held responsible for the country’s current travails.
By sending the IMF packing, Néstor deprived his wife of a most convenient whipping boy. For decades, Argentine politicians and intellectuals had made out that, had they been left to their own devices, the country’s economy would have astounded the world by booming year after year, but for unspecified reasons the IMF kept putting obstacles in their path. Just why the IMF should behave in such a strange fashion was unclear. According to the more imaginative, mean-minded North Americans and Europeans wanted Argentina to remain poor either because they feared its dynamic industries would soon outperform theirs, or because they saw it as a strategic reserve they would eventually exploit for their own selfish purposes.
Such conspiracy theories may seem far-fetched to people elsewhere, but in Argentina politicians still cling to them to avoid being blamed for impoverishing a country that a century ago was by far the richest in Latin America but which has already slipped behind Chile and, the way things are going, could soon be overtaken by Paraguay and Bolivia. For many years, pretending to be under the thumb of the IMF had helped get them off the hook so they could win elections, but then Néstor and Cristina made the mistake of taking their own rhetoric literally. Apparently, the Patagonian couple really did believe that reducing ties with the IMF to the barest minimum would prove beneficial.
IMF bashing is a popular sport not only here but also in other countries where the government is forced to make spending cuts. Politicians encourage it for obvious reasons. Others join in because they would dearly like to think that, were it not for capitalism, poverty would have been abolished many years ago.
Some “neoliberals” agree with their ideological foes that the world would be a better place without the IMF, though what they have in mind would not merit the approval of leftists; they think it would be far better if feckless governments had to deal directly with the markets. This, by and large, is the alternative Cristina and Axel are facing. They understand that unless they manage to persuade the IMF to come to the rescue, Argentina’s financial fate will remain in the clammy hands of the markets. Not surprisingly, that particular prospect gives them the shivers.
When countries are chugging along nicely, they do not require the IMF’s help. Only when one is already on the brink of disaster does it feel the need to ask Christine Lagarde to send in a team of grim trouble-shooters to tell them what they must do to deserve some soft loans. That is the main reason why the IMF has such a sinister reputation. It is not, and cannot be, a charitable NGO.
Its business is forcing feckless governments to shape up by reminding them that the rest of the world is unwilling to put up with parasites that by rights should be able to stand on their own two feet especially if, as is the case with Argentina, they are lucky enough to possess enviable raw material resources that, adequately managed, should enable them to prosper.
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