Momani: American Politicization of the International Monetary Fund

B Momani, “American politicization of the International Monetary Fund,” Review of International Political Economy 11, no. 5 (2004): 880-904.

The IMF has been criticized as being a tool used by the US to influence the politics of other countries. The IMF denies this, and makes the claim that conditionality agreements are created through highly technocratic processes that are widely separated from the corruption of political interests. “This article argues that political intervention in the terms and conditions of IMF agreements occurs when IMF staff recommendations are repeatedly disregarded. This method traces politicization in the IMF decision-making process, by comparing and contrasting IMF staff’s Article IV Consultations for slippages in recommended conditions” (881).

IMF contributions are used to determine the relative voice of different member countries in establishing policy. These quotas are determined as a product of GDP production as well as current account factors. The US has the largest share of votes in the IMF with a total of 17% of the overall vote followed by Japan (~6%) and Germany (6%). The combination of 23 African countries represent a total of 1.16% of the total vote. Because many decisions require 85% consensus to be had, the US essentially wields a veto.

The literature is reviewed. It shows a mixture of results that all lean towards the US exerting a certain kind of power through determining lending conditionality. The author argues that this study will provide added-value because it will utilize IMF archives that were previously not available. The method will explore Article IV Consultations, which are produced by IMF staff and are expected to be mostly apolitical. If final conditionality differs greatly from the Article IV Consultations, then political motivations are assumed to be in play. If the final conditionality does not differ greatly, the opposite is concluded.

Figure 2 (888) outlines a causal flow-chart that can be used to determine whether or not political pressure was applied in IMF conditionality being imposed. The case study explored is Egypt.

“Based on numerous interviews with IMF staff, staff members expressed resentment towards the Executive Board for interfering in their negotiations with Egypt and other countries. The staff argued that many countries had important allies in the Executive Board which helped them receive favoritism” (895). Executive Board members who were keen on making sure that a certain policy towards a certain country went through stayed abreast of that country’s negotiation with the IMF for political reasons, it was argued by some.

“While there is no clear algorithm for IMF decision-making, based on IMF written statutes, the IMF argues that its decision-making is apolitical, and based on its staff’s recommendations. The IMF claims that external factors, such as the distribution of power inn the international system, is perhaps symbolically reflected in IMF quotas, but does not affect the final outcome of decisions. This is based on the belief that the IMF staff, who are technocratic and not politically motivated, determine the conditions attached to loan agreements” (898).

“In 1987 and 1991, Egypt demonstrated to the US government that tough IMF conditions would undermine Egypt’s political stability in an already volatile region and therefore the United States intervened to ensure two lenient agreements by usurping staff recommendations. Lenient agreements that did not reflect the Article IV Consultations prepared by the IMF staff prevailed because of US pressure on the Executive Board. So, it can be learned that the staff did not succumb to US pressure by changing the post-agreement Article IV consultations. On the contrary, the United States was able to push lenient agreements through without the implicit support of th EIMF staff. Decision-making in the Fund did not follow the principle of consensus building, but rather reaffirmed that US power in the Fund is enforced at all levels within the process of determining conditionality” (898-90).

Gill and Law: Global Hegemony and the Structural Power of Capital

S Gill and D Law, “Global Hegemony and the Structural Power of Capital,” Global Governance: Critical Concepts in Political Science 33, no. 4 (2004): 475-499.

"In this chapter we distinguish between direct and structural forms of power. We relate these to the concepts of hegemony, historic bloc and the 'extended' state, in our analysis of present-day capitalism. In so doing we seek to meet two major challenges. The first is to integrate better 'domestic' and 'international' levels of analysis. The second, related challenge, is to theorize the complementary and contradictory relations between the power of states and the power of capital" (93).

The authors start by distinguishing between the realist concept of hegemony and the Gramscian concept. The former argues that there is direct control of one over another, typically one state over another. The later concept argues that there is a set of structural forces that can exist that can create order. "A hegemonic order was one where consent, rather than coercion, primarily characterized the relations between classes, and between the state and civil society" (93).

"Our contribution here mainly concerns the theory of power. We assume that theories of power and hegemony must subsume both normative and material, structural and existential...dimensions of social relations. Part of the richness of Gramschi's concepts is that they combine these elements. Because of this, they offer clues for overcoming the gulf between structure and agency. We believe a possible key to the resolution of the structure-action problem in social theory more generally, and international relations theory in particular may be through the development of mediating concepts such as structural power and historical bloc" (94).3

We may be moving towards a post-Fordian conception of production, which is obviously global. Therefore, we must look at hegemony, blocs and the state from the perspective of the global. This involves a revolution in the social forms of accumulation. This has been referred to as a regime of accumulation. "A regime therefore broadly encompasses the forms of socio-economic reproduction which together constitute the conditions of existence of economic development in a particular historical period of epoch. As such there may be different regimes of accumulation...coexisting at any point in time" (95).

The post-WWII regime of accumulation was very successful at promoting growth in industrialized countries for four reasons. Firstly, the core (the US) was stable and secure. Secondly, the US was able to sustain growth through demand created through deficits and militarism. Thirdly, the system was sustained through "embedded liberalism". Finally, inexpensive inputs, especially oil.

"In a structural sense, what was occurring in the post-war period was the emergence of a globally integrated economy whilst political regulation at the domestic level was becoming ever-more comprehensive" (97).

The authors put emphasis on the emergence of capital markets as a crucial aspect of the establishment of capitalism as a socio-economic system. They expand on this by offering myriad examples of the power of international oligopolistic capital.

"At the international level, the bargaining power of transnational corporations would be reduced if most national governments were able to co-ordinate their regulations and financial concessions. however, even supposedly like-minded, and wealthy countries...like the EC have not been able to seriously discuss, let alone achieve this goal" (106).

Gramsci: Selections from the Prison Notebooks (pp. 245-76)

Gramsci, A., Hoare, Q., & Nowell-Smith, G. (1971). Selections from the prison notebooks of Antonio Gramsci. London,: Lawrence & Wishart.

“…there exists an art as well as a science of politics" (251).

Gramsci begins this brief selection from Selections From the Prison Notebooks by making a comment about separations of powers: “…is a product of the struggle between civil society and political society in a specific historical period. This period is characterized by a certain unstable equilibrium between the classes, which is a result of the fact that certain categories of intellectuals…are still too closely tied to the old dominant classes” (245).

The process of socialization, or the important power of ideas, is one feature that shapes Gramsci’s thought. “If every State tends to create and maintain a certain type of civilization and of citizen…and to eliminate certain customs and attitudes and to disseminate others, then the Law will be its instrument for this purpose” (246).

The State is controlled by those who are in power in civil society. “In reality, the State must be conceived of as an ‘educator’, in as much as it tends precisely to create a new type or level of civilization” (247). The power is exerted, when it can be, through socialization. When it can not be, it is imposed by Law. “The Law is the repressive and negative aspect of the entire positive, civilizing activity undertaken by the State” (247).

“Political intuition is not expressed through the artist, but through the ‘leader’; and ‘intuition’ must be understood to mean not ‘knowledge of men’, but swiftness in connecting seemingly disparate facts, and in conceiving the means adequate to particular ends—thus discovering the interests involved, and arousing the passions of men and directing them towards a particular action” (252). Power is not crude deployment of material resource, but rather though ideational influence.

The Ethical State: “…every State is ethical in as much as one of its most important functions is to raise the great mass of the population to a particular cultural and moral level, a level…which corresponds to the needs of the productive forces for development, and hence to the interests of the ruling classes” (258).

Ability of a group to have influence in society without having to take the power of the state is Gramscian hegemony. “State = political society + civil society, in other words, hegemony protected by the armour of coercion” (263).

“The expressions ‘ethical State’ or ‘civil society’ would thus mean that this ‘image’ o fa Satat without a State was present to the greatest political and legal thinkers, in so far as they placed themselves on the terrain of pure science…” (263).

“A totalitarian policy is aimed precisely: 1. at ensuring that the members of a particular party find in that party all the satisfaction that they formerly found in a multiplicity of organizations, i.e. at breaking all the threads that bind these members to extraneous cultural organisms; 2. at destroying all other organizations or at incorporating them into a system of which the party is the sole regulator. This occurs: 1. when the given party is the bearer of a new culture—then one has a progressive phase; 2. when the given party wishes to prevent another force, bearer of a new culture, from becoming itself ‘totalitarianism’—then one has an objectively regressive and reactionary phase, even if that reaction (as invariably happens) does not avow itself, and seeks itself to appear as a bearer of a new culture” (265).

“..hegemony and dictatorship are indistinguishable, force and consent are simply equivalent; one cannot distinguish political society from civil society; only the State, and of course the State-as-government, exists, etc” (271).