Stranger in a Strange Land: IMF solutions cannot solve EU crisis

Monday, April 23, 2012

IMF solutions cannot solve EU crisis - An Interview with Michel Chossudovsky

April 21, 2012

The International Monetary Fund (IMF) chief and the head of the World Bank have described the economic situation as fragile.

Fears have been growing that failing to safeguard the eurozone countries could lead other countries like Spain into a Greece-like situation.

Press TV has conducted an interview with Michel Chossudovsky, director of the Center for Research on Globalization, to share his opinion on this issue.

IMF "Solutions" Cannot Solve Eurozone Crisis

by grtv

Press TV has conducted an interview with Michel Chossudovsky, director of the Centre for Research on Globalization, to share his opinion on this issue.

The following is a rough transcription of the interview.

Press TV: Lagarde is looking to increase funding for the IMF because there are fears that a further eruption of a financial crisis will leave the organization short of emergency cash. Now are times really going to revert back as badly again for the IMF to need such cash?

Chossudovsky: Well this is a repeated ritual. The IMF asked for cash from the member countries particularly the G7 and the G20 and this is in the form of contributions sent to quick dispersing loans by the IMF, but we must understand that this money is not going to do anything for the people who are the victims of economic crisis.

It is largely a safety net for the credit of banks and it means lending more money to be able to enable countries to repay - so you lend them money and then they repay that and that money goes to the bank. It is a circular process; the money comes back to the creditors.

So this is not going to change anything. In fact it is going to make matters worse. I should mention... this is well documented - the IMF cannot be the solution to this crisis. The IMF from the onslaught of the debt crisis in 1980’s through the application of what we call strong economic medicine - the so-called structural adjustment program - imposed on developing countries, has in fact triggered this crisis over a longer period.

And none of the solutions, which are being contemplated, are tackling the broader structural causes of what constitutes the most serious economic crisis in world history. It is not a double dip recession.

And the problem here is that there is a consensus among particular Western countries, but I would say G20 as well, that the application of austerity measures is a solution to the crisis when in fact anybody with a minimum understanding of the mechanism of austerity measures knows that this austerity measures are in fact the trigger for further collapse, bankruptcy, unemployment and so on.

So you have a situation where the solutions supposed by the IMF is in fact the cause and IMF economic medicine has to be scrapped. The people at the IMF do not have an understanding of the social impact of this crisis. They are dealing with superficial explanations and they are attempting to convince people that in the wake of the 2008 crisis...

Press TV: Professor I do sincere apologize for interrupting. Because of the shortage of time I wanted to get in one more question if I may.

Lagarde has also laid out five “dark clouds” namely high unemployment, slow growth, over rapid deleveraging by banks, strains in the Euro Zone and higher oil prices. Now, looking at that list objectively, aren’t many of those issues self-created by many countries and international organizations?

Chossudovsky: Well of course they are self created. I mean, well, I cannot blame it on Christine Lagarde - she has just started her mandate at IMF, but the IMF as an institution, triggers unemployment.

I mean we have tons and tons of evidence going back to the 1980’s and the thing is that what they have applied in the third world countries they are now applying in countries like Iceland, Greece, Portugal, Spain and most probably other countries of the European Union.

We cannot revive economic growth by curtailing public expenditure and by spearheading countries into bankruptcy. It is the most absurd proposition, but none the less it is the consensus because these people will meet on the weekend, they'll say what we need is more austerity measures and that will resolve it and then we need more money, the crisis fund of 320 billion dollars, which in fact is fictitious money...

Well, it is not quite fictitious money, but it is money from the public purse that goes to the IMF and then it goes to countries and from the countries it goes to the creditor banks, so in effect it is a transfer from the public purse to the creditor banks, which are private banking institutions.

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