Republican Policy failure #2 IMF reform

[RandomGuy]

A recent diplomatic episode shows that this is a lesson the U.S. remains uninterested in learning. As readers of The Diplomat will know, in 2010, the IMF, with the support of the Obama Administration, passed a series of reforms that would shift member quota shares (and voting rights) to reflect the dynamics of a changing world economy, especially the economic growth of the BRICS grouping (Brazil, Russia, India, China, South Africa). For the past five years, the U.S. Congress has refused to ratify the IMF reform because many Republicans are generally dubious about international financial cooperation and because they fear it would give China more influence while decreasing U.S. influence (the second argument is prima facie spurious, as America would still remain the only member state with veto powers). As a result of Republican intransigence on the question of reform, the IMF is becoming less relevant to world economic cooperation. This has led IMF chief Christine Lagarde to proclaim “I will do belly-dancing if that’s what it takes to get the US to ratify.” But not even that threat was able to sell reform to the Republican Senate.

This episode is telling because it reverses the narrative the U.S. has created about China’s rise. Since 2005 the U.S. has constantly pressured China to become a “responsible stakeholder.” U.S. President Barack Obama has accused China of being a global “free rider.” But as IMF reform makes clear, the U.S. – or more precisely, large political blocs within the U.S. – doesn’t actually want to share a stake of its power with China: It likes the division of world power the way it is and sees no reason to allow any change. China is rising. Rather than adjust structures and relationships to this reality, it is nicer to pretend nothing needs to change.

http://thediplomat.com/2015/04/china-us-avoiding-the-improbable-war/

A bit of mild caution of China is prudent. But the GOP strategy/policy here, effectively "if Obama proposed it, it must be bad, so we will hate it" has run actively counter to our best interest, and undermined one of our key foreign policy tools.

[boutons_deux]

Repugs, irredeemable jingoists and war mongers, oppose all compromise, all cooperation, with ALL non-Repugs, domestic and foreign.

=========

btw, AIIB is being joined by nearly all US's major and minor allies, and enemies.

China says Iran joins AIIB as founder member

http://www.reuters.com/article/2015/04/08/us-asia-aiib-iran-idUSKBN0MZ08720150408?feedType=RSS&feedName=topNews


Asian Infrastructure Investment Bank

http://en.wikipedia.org/wiki/Asian_Infrastructure_Investment_Bank

[spursncowboys]

http://thediplomat.com/2015/04/china-us-avoiding-the-improbable-war/

A bit of mild caution of China is prudent. But the GOP strategy/policy here, effectively "if Obama proposed it, it must be bad, so we will hate it" has run actively counter to our best interest, and undermined one of our key foreign policy tools.

Does the overused and ridiculous notions of "more money will fix the problem" and "because they didn't agree, they hate babies, blacks, women, and want war" ever stop?

Does anyone really believe that China would have shelved its newly launched, $100 billion Asian Infrastructure Investment Bank (AIIB) (http://www.economist.com/blogs/economist-explains/2014/11/economist-explains-6) if Congress had approved the International Monetary Fund (IMF) “Reform Package” (http://www.realclearpolicy.com/blog/2015/04/06/imf_reformers_hold_congress_in_contempt_1254.html) negotiated by the Obama Administration in 2010?That’s what proponents of the IMF reforms would have you believe as they fired off a new round of high-powered salvos aimed at embarrassing congressional opposition to their desire to nearly double regular IMF lending.

In what can only be termed fear-mongering, Treasury Secretary Jacob Lew told Congress last month (http://www.wsj.com/articles/lew-warns-failure-to-approve-imf-overhauls-harming-u-s-interests-1426602549) that the U.S. is “losing clout at the International Monetary Fund” and that “Congress is undermining U.S. economic and national-security interests by failing to approve a five-year-old international deal for major governance overhauls at the IMF.”

Conservatives argue (http://blogs.wsj.com/economics/2014/03/25/everything-you-ever-wanted-to-know-about-washingtons-battle-over-the-imf/) that “the fund already has enough firepower” and that the justification for the lending increase (if there ever was one) “has now disappeared.” American Enterprise Institute economist Desmond Lachman goes on to note that as “the global economy recovers and Europe builds its own bailout reserves, the IMF doesn’t need more cash.” An increase in IMF lending would increase “the risk of ‘moral hazard’” and permit governments to “rely on emergency backstops rather than budget discipline.

This month it was former Harvard president and Obama economic adviser Larry Summers’s turn to deploy the alarmist rhetoric. In a Washington Post (http://www.washingtonpost.com/opinions/lawrence-summers-an-agenda-for-the-imf/2014/04/06/e68a39fa-bc09-11e3-96ae-f2c36d2b1245_story.html) op-ed, Professor Summers insisted that “passage by the Congress of authorization for IMF reform is imperative” as a political step “to reassure investors about populist threats in a number of countries and provide investor protection and backstop finance.” Yet he makes no substantive case to defend that assertion and does not address the moral hazard issue at all.

The reality is that the Chinese fund infrastructure projects in developing countries to benefit their own elites, and they have been doing it for a long time, as chronicled in The AEI–Heritage China Investment Tracker (http://www.aei.org/feature/china-tracker/). China may also be trying, as suggested by The Economist, to use the new bank (http://www.ft.com/cms/s/0/c58cbd66-dcee-11e4-975c-00144feab7de.html) to expand its influence “at the expense of America and Japan.” (http://www.economist.com/blogs/economist-explains/2014/11/economist-explains-6)Maybe so, but if that is the case, it makes it even less plausible to assert that the new bank has anything whatsoever to do with IMF reform. Lew and Summers are reaching to make the link in an effort to justify a reform that would weaken the U.S. position at the IMF and which, therefore, has little support in Congress or among the American people. Best to judge that reform on its own merits. The AIIB has nothing to do with it.
http://dailysignal.com/2015/04/07/would-china-have-launched-the-aiib-if-congress-had-approved-imf-reforms-yes/

[RandomGuy]

Does the overused and ridiculous notions of "more money will fix the problem"

http://img2.wikia.nocookie.net/__cb20141214203128/fossils-archeology/images/f/f6/640px-Annoyed-facepalm-picard-l.png

Um... okaaay.

I said that failing to fund it reduces our ability to project soft power.

In this, yes, money will fix the problem, since the problem is literally a lack of money.

Pretty self explanatory, I would hope.

The point here, though is that conservatives, and the GOP really are too paranoid of China


But the world is changing. Its bid for integration rejected, China has begun constructing its own system to run parallel to the U.S.-built system. In 2014 the BRICS nations, which comprise 3 billion people and around 20 percent of world GDP, launched their own $100 billion New Development Bank. Also in 2014, China launched an Asian Infrastructure Investment Bank (AIIB), another $100 billion institution. More than 50 nations have applied to join the AIIB so far according to the Global Times, and more will in the future, as Asia needs $8 trillion in infrastructure investment this decade alone. Regional and global enthusiasm for China’s initiative peeved the U.S., which pressured its allies not to join the bank. It has now become clear that this pressure has failed spectacularly. Ignoring U.S. protests, Britain announced it would join. France, Germany, and Italy quickly followed suit (later followed by South Korea and Australia), provoking a cry of outrage from a “senior US official” who insisted, “We are wary about a trend toward constant accommodation of China, which is not the best way to engage a rising power.”

It is this belief that brings us to the newly published book The Improbable War: China, The United States and Logic of Great Power Conflict by London School of Economics international relations professor Christopher Coker. Coker’s thesis is straightforward: War between China and the U.S. “is not inevitable, but nor is it as improbable as many experts suggest.” He argues that the kind of American attitude displayed above makes war more likely and that the leaders on both sides of the Pacific need to think carefully about the lessons of two other seemingly improbable wars in order to preserve peace today.



The problem is... that in failing to accommodate a Democratic presidents request to have some soft power tools to integrate China into an existing system, we have made an alternative less palatable.

Short sighted.

[boutons_deux]

Does the overused and ridiculous notions of "more money will fix the problem" and "because they didn't agree, they hate babies, blacks, women, and want war" ever stop?

http://dailysignal.com/2015/04/07/would-china-have-launched-the-aiib-if-congress-had-approved-imf-reforms-yes/

when the Repugs stop "didn't agree, they hate babies, blacks, women, and want war", when they become serious about governing rather than All Politics, All The Time, then maybe the USA can make progress.

Repugs are the greatest threat to America, been fucking it hard for 35 years.

[ElNono]

The IMF needs to die in a fire. Anybody that has lived in a country under their policies would very likely feel the same way.

[FuzzyLumpkins]

The IMF needs to die in a fire. Anybody that has lived in a country under their policies would very likely feel the same way.

US borrows for free while everyone else eats shit.

[ElNono]

US borrows for free while everyone else eats shit.

It's not only that. A lot of these IMF 'accords' include a lot of political and social 'reforms' under the guise of economic 'goals'.

[boutons_deux]

It's not only that. A lot of these IMF 'accords' include a lot of political and social 'reforms' under the guise of economic 'goals'.

a lot of them have "we'll lend you $Bs, but you have to buy/import only from companies we specify"

[boutons_deux]

US borrows for free while everyone else eats shit.

oil importing countries are particularly hard hit now because they have to buy the strong US$ to pay for oil

[spursncowboys]

The IMF needs to die in a fire. Anybody that has lived in a country under their policies would very likely feel the same way.
That's really interesting. Could you give a timeline of what you saw, or what it created?

[ElNono]

That's really interesting. Could you give a timeline of what you saw, or what it created?

The 1990's in Argentina... IMF promised to keep lending money only if the country would privatize most of it's state held companies for pennies on the dollar, which it did, mostly to US and Spain interests, oftentimes without a bidding process. Receipts obviously fell, since these companies were now making money for private individuals, and compounded with a corrupt government that had no intentions to stop spending, the IMF just keep spoonfeeding loan after loan after loan and extending payment schedules. External debt growth was rampant. Then the IMF suggested increasing taxes. Eventually, the balloon popped, recession crept in, unemployment went up, and the country could not service the debt anymore.

Shortly afterwards, recession got real bad, but the IMF kept giving advice on what to do, even though indigence skyrocketed. Eventually, the president of the country had to fly out of the government building (akin to the White House) and resign, after a couple of protesters were shot dead. Most of these privatized companies started siphoning any earnings in US dollars out of the country, putting even more pressure on inflation which was already rampant. People were told they could not withdraw their savings. Democracy in the country died at around that time. That was the end of any kind of "free market", right wing, conservative party in Argentina, which basically became for all intents and purposes a single party system: center-left, left, or very left. A disgrace.

This was around the time the IMF came out and admitted they made "mistakes":
http://www.telegraph.co.uk/finance/2891368/IMF-admits-mistakes-in-Argentina-crisis.html

In the following years, due mostly to a commodities boom, since fresh dollars were coming in at the time, the government simply paid them in full and told them to shut their piehole and GTFO.
Brazil, who had a similar experience with the IMF, did the same thing.
http://www.larouchepub.com/other/2005/3250arg_brazil_imf.html

[Winehole23]

what RG calls "projection of soft power" via the IMF essentially amounted to economic colonialism wrt Brazil and Argentina. IMF loans were obviously in the US national interest short term, since the US was a prime beneficiary of the reforms foisted on Brazil and Argentina, but the strategic value of IMF loans to the US seems to have been undermined by the one-sidedness of the deals, the economic pain inflicted thereby, and the resulting political backlash.

in some cases it may be advantageous to the USA to reduce other countries to debt vassalage, might even be good policy -- but I tend to doubt this is what RG had in mind.

what did you have in mind, RG? counterexamples?

[Winehole23]

perhaps you think the IMF ought to be investing more in Africa or other areas where Chinese economic influence is spreading?

[ElNono]

what RG calls "projection of soft power" via the IMF essentially amounted to economic colonialism wrt Brazil and Argentina. IMF loans were obviously in the US national interest short term, since the US was a prime beneficiary of the reforms foisted on Brazil and Argentina, but the strategic value of IMF loans to the US seems to have been undermined by the one-sidedness of the deals, the economic pain inflicted thereby, and the resulting political backlash.

in some cases it may be advantageous to the USA to reduce other countries to debt vassalage, might even be good policy -- but I tend to doubt this is what RG had in mind.

what did you have in mind, RG? counterexamples?

From outside you get an extremely clear picture on how much is the US government co-opted by some of these economic groups. The IMF is largely a policy arm, but you also have all these other special interest groups purchasing hard assets on cents on the dollar, just to liquidate whatever is there and then get the fuck out, or using the US representation abroad to protect their interests (ie: US intellectual property cartels are relentless on this). There's very little "free market" involved in all this, it's actually the exact opposite: strongarm your way to market distortions using the US government as leverage. I've lived quite a bit here in the US, and I know Americans are, in large part, nothing like that. But it's difficult to explain that to common folks somewhere else, when you see the kind of devastation some of these economic pillaging leave behind.

[spursncowboys]

The 1990's in Argentina... IMF promised to keep lending money only if the country would privatize most of it's state held companies for pennies on the dollar, which it did, mostly to US and Spain interests, oftentimes without a bidding process. Receipts obviously fell, since these companies were now making money for private individuals, and compounded with a corrupt government that had no intentions to stop spending, the IMF just keep spoonfeeding loan after loan after loan and extending payment schedules. External debt growth was rampant. Then the IMF suggested increasing taxes. Eventually, the balloon popped, recession crept in, unemployment went up, and the country could not service the debt anymore.

Shortly afterwards, recession got real bad, but the IMF kept giving advice on what to do, even though indigence skyrocketed. Eventually, the president of the country had to fly out of the government building (akin to the White House) and resign, after a couple of protesters were shot dead. Most of these privatized companies started siphoning any earnings in US dollars out of the country, putting even more pressure on inflation which was already rampant. People were told they could not withdraw their savings. Democracy in the country died at around that time. That was the end of any kind of "free market", right wing, conservative party in Argentina, which basically became for all intents and purposes a single party system: center-left, left, or very left. A disgrace.

This was around the time the IMF came out and admitted they made "mistakes":
http://www.telegraph.co.uk/finance/2891368/IMF-admits-mistakes-in-Argentina-crisis.html

In the following years, due mostly to a commodities boom, since fresh dollars were coming in at the time, the government simply paid them in full and told them to shut their piehole and GTFO.
Brazil, who had a similar experience with the IMF, did the same thing.
http://www.larouchepub.com/other/2005/3250arg_brazil_imf.html
But Brazil did the same thing by nationalizing everything, right?
So government program invaded by corruption only made a problem, no one thought they had-worse?
That's crazy. So you lived through it?

[ElNono]

But Brazil did the same thing by nationalizing everything, right?
So government program invaded by corruption only made a problem, no one thought they had-worse?
That's crazy. So you lived through it?

Neither Argentina or Brazil nationalized everything back. They did take back some companies, especially airlines and energy, but generally there's plenty of private companies (water, cable, phone, internet, etc), they're just more heavily regulated, and capital controls are more heavily enforced. These countries aren't like the US, their currency does need backing.

The general corruption and incompetence was always there. Argentina and Brazil actually sought to play the IMF neoliberal, heterodox game, and were touted as exemplary by both the US and IMF during the time, but when everything went to shit, the IMF just said "oops", but the devastation was real, and they only offered more loans, not a way out of the deep debt mountain their policies helped create. Policies that were largely incongruent with the political or social realities of those countries.

Democracy took a big L after that. If you remember, I said in the other thread I'm a fan of pendulum swings. But after that mess, neoliberalism became a toxic word. To this day, the country has only gone more towards the left, and it's a real shame.

I lived through half of it. By the end of 1999, I had my Italian passport, job offers in the Netherlands and here in the US, but no work in Argentina. I took the US job. But my family is there, so I always kept abreast of the situation.

What's really crazy is that it wasn't even the worst crisis I remember in the country. The previous one in the late 80s, I think, was worse.

[boutons_deux]

An estimated 3.4 million people have been physically or economically displaced in the past decade by projects funded by the World Bank. The bank has regularly failed to protect the poor and vulnerable people it claims to serve, a new 11-month investigation has revealed.

The International Consortium of Investigative Journalists, working with The Huffington Post, The Guardian, and a team of more than 50 journalists from 21 countries, has uncovered systemic failures by the World Bank and cases of mass evictions and human rights abuses by some of the bank’s major clients.

Among the findings



New evidence that links World Bank money to a resettlement program in Ethiopia that, witnesses say, was enforced with beatings (http://projects.huffingtonpost.com/worldbank-evicted-abandoned/new-evidence-ties-worldbank-to-human-rights-abuses-ethiopia/?utm_campaign=world_bank_release&utm_source=email&utm_medium=link), rape, and murder;
Inside sources and a groundbreaking data analysis indicate (http://www.icij.org/project/world-bank/explore-10-years-world-bank-resettlement-data?utm_campaign=world_bank_release&utm_source=email&utm_medium=link) the bank regularly fails to enforce its own safeguard policies designed to protect vulnerable communities; and
Reports of homes burned down (http://projects.huffingtonpost.com/worldbank-evicted-abandoned/worldbank-projects-leave-trail-misery-around-globe-kenya?utm_campaign=world_bank_release&utm_source=email&utm_medium=link) in Kenya, a shanty town destroyed (http://projects.huffingtonpost.com/worldbank-evicted-abandoned?utm_campaign=world_bank_release&utm_source=email&utm_medium=link) in Nigeria, and Peruvian farmers’ lands turned toxic (http://projects.huffingtonpost.com/worldbank-evicted-abandoned/how-worldbank-finances-environmental-destruction-peru?utm_campaign=world_bank_release&utm_source=email&utm_medium=link) by projects linked to World Bank funding — all at a time when the bank is rewriting its safeguard policies and has proposed to give its borrowers more authority to police themselves.


http://us4.campaign-archive2.com/?u=8dc6eceed67f7f012462d0b12&id=7a758a89fe&e=3b8f64cce8

[boutons_deux]

The World Bank and the Battle for the Future of Farming

There is a battle raging over the future of farming on this planet, and the front line, this week, is at the Spring Meetings of the World Bank in Washington, DC.

There are two visions. They are often portrayed as being about differences in technical approaches but are, in truth, far more fundamental. This is a battle over nothing less than the structure of global power and the sustainability of life on this planet.

In one corner are the World Bank and its financial backers, primarily rich country governments, multinational agriculture corporations and large private foundations.

Their vision is one in which farming is seen, first and foremost, as a mega-industry, primarily concerned with efficiency, output and profitability.

The way they go about this is to promote “business friendly” policy environments and aggressive structural reform programs (http://en.wikipedia.org/wiki/Structural_adjustment) focused on liberalizing economies to make them more amenable to large multinational businesses and foreign investment.

Their case rests on the claim that the only way to feed a growing world population is to focus on increasing overall food production through more widespread use of genetically modified seeds and the synthetic fertilizer and pesticides that they need, economies-of-scale, and vast, centrally planned industrial farming operations.

In the other corner are a group of 260 NGOs, think tanks, smallholder farmer’s groups, environmental organizations and trade unions, of which /The Rules (http://www.therules.org/), the organization I work for, is one.

http://www.commondreams.org/views/2015/04/17/world-bank-and-battle-future-farming

Guess which "vision" is going to win, always wins? (and China is buying ag land and resources all over the planet)

[Winehole23]

IMF Lagarde found guilty of wasting $400 million in French taxpayer money on a loan to a political insider. Court imposes no penalty, IMF allows her to keep her job.

https://www.theguardian.com/world/2016/dec/19/christine-lagarde-avoids-sentence-despite-guilty-verdict-in-negligence-trial