Ukraine loans don't make sense absent political motivation and the need to prop up western banks and exporters exposed to Ukraine
This article originally appeared at LewRockwell.com
The IMF is a bank that supports both the world’s system of states and the hegemonic role of the United States in that system. It is funded by its 188 or so member states, and it makes loans to them.
This funding is extracted from taxpayers who, however, have no control over the loans made. Most of the member states also have no control.
Research suggests that loans are directed to countries on the basis of subsidizing or aiding banks and exporters of the 5 major countries that control the IMF. In other words, the IMF is a crony capitalist institution and a political institution that supports a small group of controlling members.
Dr. Michael Breen has a book on the politics of IMF lending. Excerpts can be read here. Dr. Breen tells us that loan approvals are delegated to a 5-member Executive Board, which has members from the G5: United States, United Kingdom, Germany, France and Japan.
“Many scholars argue accordingly that IMF policies are driven by the powerful states that oversee and guide policy, intervening when necessary to align policy with their preferences. In particular, many scholars have stressed that the United States uses its position as the fund’s largest shareholder to achieve its foreign policy objectives.”
Breen carefully tests the hypothesis that IMF loans are related to the economic exposure (banks and exporters) of the G5 countries. He finds significant evidence “consistent with the hypothesis that IMF loans and program approval are responsive to an increase in the economic exposure of the most exposed member of the G5.”
In the case of Ukraine, we surmise that the most exposed members are France and Germany or the major EU countries. In fact, when press releases are made about loans, they sometimes mention that a Ukraine recovery will benefit EU exporters.
At the very same time that IMF loans to Ukraine are being made in exceptionally large amounts ($40 billion), especially considering the poor record of Ukraine and the very high loan risk, we see that they play into the foreign policy objectives of the U.S.
The IMF’s requests for deep structural reform in Ukraine’s government presumably does the same, although there may well be frictions among the IMF bureaucrats, the U.S. Department of State and other members of the elite that have their hands in Ukraine.
The policies and the policy-making arms of empire are not accidental. They are all by design. From the point of view of neutral observers not bound or wedded to the system of states or empire, these designs have been brutal, callous, immoral, and frequently stupid, mismanaged, risky, ignorant and horribly wasteful.
These designs evince overall themes, however, revealed in the policies. In the Ukraine loans, we see two clear thrusts: to achieve foreign policy objectives of dominance and to succor banks and exporters.