http://uspolitics.einnews.com/article.php?nid=269497 Chavez and the IMF: A Brief History of Money By Tracy Dove, Ph.D Editor, Russia Today May 4, 2007
As self-proclaimed champion of the underdogs of capitalism, Hugo Chavez has built a makeshift Coalition of the Unwilling to Participate in the Capitalist System from among various capitals around the world, and the path to Mr Chavez' doorway in Caracas is lined with supporters who think that nationalization of Venezuelan oil was a good place to start a new socialist revolution. Chavez' recent debut as the Peoples' economist, however, is premature, and his populist calls for a withdrawal from the IMF and World Bank are leaving many confused grimaces on the faces of his ministers. Chavez himself, appears nonplussed in his rhetoric- and chances are good that he doesn't understand exactly what the IMF is. If we assume the worst is true, then we can easily see that Hugo Chavez is actually angry at the "Washington Consensus" movement in the IMF, and not the IMF and the World Bank themselves. But we must give credit where credit is due, and certainly the IMF is not the same institution that it was back in the mid-40's, when world leaders were concerned with establishing an agency to that could intervene and stabilize broad swings in currency valuations that brought about political instability earlier in the century. But the IMF has evolved with the times, and the so-called "Quiet Revolution" of the 1980's institutionalized the lending of funds based on the borrower's good intention to reform its social state. Since then, the IMF has become adviser and lender at the same time, touching on the nerves of national sovereignty and giving a soap box to the likes of leaders like Chavez. What the President of Venezuela has in mind this very linkage that Argentina, Mexico, Thailand agreed to when they borrowed funds back in the 1990's to build their economies. The Washington Consensus at the time was an opinion shared in Washington, DC government circles that the IMF should become an active player in reforming countries where either budget deficits or excessive social expenditures were sapping economic vitality or preventing large internationals from tapping that vitality themselves. Pressure was exercised on the borrowing nations to lower or entirely remove tariffs and customs duties, and once EU-subsidized Italian tomatoes hit the market in Tunisia, they sold for less than the domestic variety. The anti-globalization movement peaked at about the time that the Washington Consensus ceased to be the flavor of the month at the IMF, and in hindsight we see that these policies didn't save Russia or Argentina from currency devaluations. Chavez sees IMF advice as yet more proof that the Americans are having their way with other nations' economies, and his call to withdraw from the IMF and the World Bank was intended to look like another nationalization- of sorts. What Mr. Chavez doesn't realize is that the debt that he has been issuing to finance his socialist revolution is ironically backed by and sold under the scrutiny of the IMF, and to withdraw would mean automatic default and many more problems than the President of Venezuela could solve within his own borders, which he would be financially constrained to if he went through with the promises in his speeches. At this moment, Zimbabwe is about to be expelled from the IMF for catastrophic handling of its economy. If Mr. Chavez still believes that a withdrawal from these institutions can be weathered by high oil prices, he may find himself closer to Mr. Mugabe than he may care to be. Tracy Dove, editor of Russia Today, is a Professor of History and the Department Chair of International Relations at the University of New York in Prague. See all previous articles by Tracy Dove here.
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