Wednesday, May 02, 2012

Economy: IMF can do nothing but cripple developing countries

IMF and developing countries

IMF can do nothing but cripple developing countries

Daria Deryabina

Twenty years ago, Russia was admitted to the IMF, designed to create the most favorable conditions for the growth of the world economies. But now it becomes obvious that the organization does not heal but cripples the developing countries, using them in the interests of the developed countries. Yet, things are changing, and now Moscow is considered by the EU as one of the saviors in the financial crisis.

After the collapse of the Soviet Union, the newborn state of the Russian Federation, taking on the debt of the Union, proclaimed itself the successor to the Soviet era. But Boris Yeltsin who headed the country was unable to cope with the rapidly burgeoning underground economy and the country plunged into chaos. It was when the International Monetary Fund has emerged, established as the result of the Bretton Woods conference. It called for the increased international trade by maintaining a stable exchange rate of the member states.

The Soviet Union, despite its active part in creating the fund, refused to ratify the agreement on accession to the organization. One can only imagine the reaction of the Western vultures looking at an unstable Russia after the fall of the "Iron Curtain". It turned out that the laws had nearly no effect in the new country, giving way to all-out privatization, but simply - theft of the state property. Therefore, the IMF decided to hold off and switch to a more stable countries.
For 90 years, the credit institution has been headed by the United States and Britain that do not want to lose sight of the geopolitical impact and that could destroy the economies of many countries that had economic potential. The IMF and World Bank have developed a special type of macroeconomic policy - the Washington Consensus, recommended for the states experiencing economic and financial crisis. At the time they included all of Asia (the collapse of the stock market), Russia (default), Eastern Europe (the Soviet collapse and the transition from planned to market economies) and Latin America.

As time has shown, in 2011, this set of ten rules of the International Monetary Fund had admitted failures - three years later the global economic crisis has emerged. Washington Consensus, despite the declaration of the neoliberal economy, was no better than the socialist consensus adopted in 1917. But this time, neither China nor Russia has followed the advice of the IMF and opted out of the crisis in their own ways. Beijing instead of feeding the banks continued to invest in the industry, and Moscow has not complied with the recommendations in terms of fiscal discipline, lower taxes, deregulation and property rights, although it borrowed $22 billion.