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IMF: a large scale production of cheap apologies
by Leonidas Vatikiotis
15 April 2014

Reports released by the IMF Independent Evaluation Office on 18 March assessed projections for 103 countries over the period 1990-2011 and found, as its detractors had been telling them for decades, that the overall estimates were too optimistic. The Greek case was so blatant that together with Argentina in 2000 and the Asian crisis it appeared among the three biggest IMF forecast mistakes, occupying a special position at the top of this list of technocratic errors. The Evaluation Office thus recommended putting greater emphasis on cooperation with national authorities. In other words, to listen to “the Natives” a bit more, with whom it allegedly collaborates on an equal basis showing mutual respect and heeding their experience.

The report of the Evaluation Office is an absurdity. Aimed at answering criticism, refuting accusations of opacity and an incapacity to learn from its mistakes, and this took four years to elaborate. The report suggests that the IMF has sufficient maturity to face reality and its own failures. So there is no problem!

To believe a source in the IMF, the “apology industry” is either very naive or must have some material benefit . It suffices to take a closer look at the alleged “errors” to understand that these were not mistakes but deliberate distortions of reality, blinding the world with the science of multi page executive reports! To recall the climate of spring 2010, the goal of the George Papandreou government was to alleviate the concerns of the world over the suffering that the despised organization was about to produce. Even though Greek society wasn’t fully aware of the economic crimes of the IMF in Africa, Asia and Latin America it could see what would follow and was quite suspicious of the government’s policies. The ministers of Giorgos Papandreou (Loverdos Petalotis, Papakonstantinou, Diamantopoulou, Reppas, Ragkousis and many others), brushed over this saying that the necessary structural adjustments were like a bitter medicine that the sooner you drink it down the sooner it’s over and the illness is cured. Anyone talking about shock therapy was scoffed at as a conspiracy theorist. Anyone invoking the crimes in Asia and Latin America committed by IMF economic “Hit Men” was strictly criticized as it was assumed that “the IMF had changed”. This was the only discourse taught in the seminars organized in Athens by a known advertising company with the participation of many well-known journalists and parroted in the columns of the mainstream press or in the 8’ o clock news.

Conscious deception of society

Let us imagine that if in April or May 2010 the first Troika program announced that unemployment will skyrocket to 28%, that Greece will be mired in recession through 2014, record a drop in GDP of more than 21% (a percentage superior than the fall recorded in the crisis of the 30s in America) and that Greece would have still greater debt, if, in other words, they told the truth. Then the whole business of whittling away the reactions and the objections would collapse like a house of cards. Employees, pensioners and unemployed people would react ignoring the cost. The errors therefore of the IMF which as a common feature had the devaluation risk and the beautification of the situation (we never observed an inverse error!) was a conscious effort at misleading society. It was intentional, and not a technical, failure serving a broader geopolitical agenda.

The same conclusion follows from the handling, by the IMF, of the Asian and Argentinian situations. The crisis that Indonesia, Malaysia and Thailand endured was a cyclical crisis, it was the IMF, as lender of last resort, that turned it into an unprecedented and devastating recession that led to the deaths of thousands of people by starvation and suicide. The insufferable organization imposed rising interest rates and a sharp decline in public spending as non negotiable conditions for lending. This was also the case of Argentina. Under the stress of the painful social effects, we lose from our perspective that the prime issue for the IMF is to rescue the banks and to impose draconian austerity programs. Greece is being made to run the same gantlet.

The problem therefore is not so much that the first program predicted unemployment in 2012 at 14.8 % in 2013 at 14.3 % in 2014 at 14.1 % in 2015 at 13.4 % or GDP growth in 2012 to be 1.1 %, 2.1 % in 2013 and 2014 and 2.7 % in 2015, or exit the markets in 2012 . The problem is that the IMF is the most “lethal weapon” used by today’s, totalitarian capitalism in its effort to demolish the social conquests of the 20th century, to impose flexibility in labor relations and to generalize poverty.

In Greece the IMF had additional reasons to blur the situation and to present a false, idyllic picture. It became clear from a recently published IMF classified document, dated 10 May 2010, describing the minutes of an internal discussion concerning the risk of liquidating Greek bonds from French, German and Dutch banks that were significantly exposed to Greek debt. The risk had been stressed by the delegations of Argentina, Brazil and other countries and had been denied! On the third page in the second paragraph it says: “The Dutch, French and German chairs conveyed to the Board the commitments of their commercial banks to support Greece and to maintain their exposure"! We know very well what happened: over the next two years From May 2010 until February 2012, European banks, with the help of the SMP (Security Market Program), unloaded their bonds to the ECB. Greek banks and pension funds exploited the period of grace having secured the first loan of 110 billion euro. They then gave the green light for the haircut bond of March 2012. Therefore, the problem with the IMF is not only in its unreliable forecasts of macroeconomic indexes. The large northern European countries have known how to use IMF pressure, means and loans to impose their neoliberal agenda on the other countries in order to save own banks and financial elites to the detriment of the populations.

Leonidas Vatikiotis