IMF new tactics: It is better to appear unreliable than to let people understand that you serve specific interests
by system failure
Lately, we see an increasing number of revelations from
IMF executives or former executives related to the admission that the
Fund has failed on the objectives it had set for the recovery of
Greek economy and the exit from the debt crisis.
After the statement of Panagiotis Roumeliotis - former
Representative of Greece in IMF – to NY Times, that the IMF knew
that the program for Greece was impossible to implement because there
was nowhere a successful example, a statement that was made purely
for distraction purposes (
http://failedevolution.blogspot.gr/2012/10/some-methods-of-disorientation-in-greek.html
), it was the turn of Olivier Blanchard, chief economist at the Fund,
to admit through a report which was given to the public a few days
ago, that the Fund, together with all European leaders, finance
ministers, European Commission and ECB, made a serious mistake in
their calculations, underestimating the devastating consequences of
austerity policies imposed on indebted countries.
While it may seem strange, this is a corrective movement
from IMF officials. As the Fund has fully lost its reliability due to
the failed policies applied in many cases in the past, the officials
appear to change their tactics by being “honest”, and try to
“refine”, as much as they can, straight statements like that of
Roumeliotis . The move was made basically for three reasons:
First,
as the IMF has already lost its reliability and as the recent severe
economic crisis and its expansion into an economically developed area
like eurozone, has attracted the attention of public opinion on it,
the Fund is trying to change its strategy giving importance to its
public image and present a different picture at least in the part
that concerns the intransigence of its executives. Τheir unexplained
obsession about specific policies which was often accompanied with an
arrogant attitude, is well known. In the past, countries which
adopted these policies under the pressure of IMF, have experienced an
economic disaster. Josef Stiglitz in his book “Globalization and
its Discontents”, describes examples of this
behavior and its devastating effects on the follow. “Crises of
honesty” and admitting mistakes help to change this picture.
Secondly, as the debt crisis in eurozone gets a spiral
form out of control, the IMF wants to include, as equaly responsible,
other factors such as the various EU institutions and the ECB,
because the continuing crisis in eurozone and the fiscal worsening at
least in the countries of the periphery, are bringing bad signs for
the future. It is almost certain that the crisis will hit the heart
of the eurozone in future with unpredictable consequences, and as the
IMF knows that this will happen sooner or later, it does not want to
appear solely responsible for all this situation. However it is true
that specific policies of the EU and ECB have contributed to this
continuing crisis.
Third,
the "leak" in the form of a technical report, and the
admission that there was a mistake in calculations with the reference
to a specific factor known as the "multiplier", is an IMF
tactic to convince the public that it is a purely calculation error,
which is based on wrong estimates. Through this tactic, IMF is trying
to establish the false picture that operates purely technocratic and
that the catastrophic effects are solely due to wrong calculations
and estimates and not due to an attempt to serve specific banking and
speculative interests.
But the true role of IMF is well known to many,
especially in the Asian crisis in the late 90's, where the Fund gave
loans in order to resque the western investors, while the policies
imposed under its pressure, plunged into recession many countries of South-East Asia and inflated public debt with all the consequences, such as
increased poverty and unemployment.
And
finally, the destruction of the economy, the increasing poverty and
unemployment, are things that have real and serious consequences on
the lives of millions. And therefore, the new Blanchard confession,
can only be treated as another cynical and arrogant behavior by the
IMF and not as a sincere statement concerning wrong estimations.
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