Paul Robinson — West Politicizes IMF to Support Ukraine

Power is shifting worldwide. As previously less developed economies grow at a faster rate than those of the West, Western states are becoming relatively less powerful. It is in the West’s interest, therefore, to use the years of financial, political, and military dominance which remain to it, to embed other rising powers into the system of multilateral institutions which it created in previous decades. This will only be possible if other states believe that those institutions can serve their interests too. That requires the West to foster rules which treat every state equally.

Unfortunately, the West is not proving very good at this.…

In effect, what it says is that the Western states, which have a majority of votes in the Executive Board of the IMF, were only happy with an IMF rule requiring that sovereign debt be repaid as long as they were the ones doing the lending. But once other countries (‘non-traditional creditors’) acquired financial power and made loans, such a rule became inconvenient. ‘Our’ debt has to be protected. Theirs does not.…

This is neoliberalism, which is synonymous with neo-imperialism and neocolonialism, rather than liberalism, a pillar of which is equality (absence of privilege).

The timing of the IMF’s decision was no coincidence. Ukraine is about to default on repaying $3 billion borrowed from the Russian Federation two years ago. Under the previous rules, this would have meant that the IMF would have to stop providing funds to Ukraine. Western nations don’t want that to happen. So they changed the rules. Moreover, they did so in order to achieve a very specific political objective – propping up the regime in Kiev and punishing Russia. This is not a suitable way to use what is meant to be an international financial institution supposedly serving the interests of all members of the international community. It makes the IMF a partisan tool of geopolitics.…

As financial power shifts away from the United States, new financial institutions are springing up, most notably China’s Asian Infrastructure Investment Bank. Other regional political and security institutions are also emerging in which the West plays no role. To preserve influence in a changing world, Western states should be looking to strengthen existing multilateral institutions. That requires fairness, not arbitrarily re-writing rules to work in their favour.

CIPS
West Politicizes IMF to Support Ukraine
Paul Robinson | Professor, Graduate School of Public and International Affairs at the University of Ottawa