Dominique Strauss Kahn and the IMF
As an almost off topic piece of poverty news I’d like to translate a French article published recently on the events concerning Dominique Strauss Kahn (yes just like you I’m French) in New York, so that people can maybe get a different perspective on what is going on, and understand what effects Strauss-Kahn has had on poverty and international mechanisms helping alleviating it.
The now former general director of the IMF (International Monetary Fund), Dominique Strauss-Kahn (DSK), leaves behind him important successes concerning the modernization of the institution but also major ongoing reforms that risk being abandoned because of his premature leave. Regardless of whether he is found guilty or not, this article indirectly shows why he was one of the best candidate for the French elections and why so many people still support him and believe in a plot let by Sarkozy (which would not be his first time, far from it).
Here’s how DSK has transformed this major international body that affects the lives of millions of poor in the world.
Reforming the right to vote
It took DSK 6 months to bring a consensus between all member States to slightly re-balance the rights to vote in a fairer way, especially for emerging economies (the structure of the IMF is such that it is made to benefit mostly the rich nations). There has been much struggle but in November 2010 a new distribution of these rights was more representative of the state of the world economy. There's no reason why India, Brazil, South Africa and the rest of the world should have a smaller influence than western countries over an organization that affects them directly, right?
Re-equilibrating the finances
The financial situation at the IMF was so bad in 2007 (the year that DSK was nominated) that it had had to sell part of its gold and lay off a few cadres. Today, only 3-4 years after, the organization’s never been so rich. The member states decided in 2009 to lend it enough to triple its resources and then in November 2010 to double their permanent contribution to the capital (all that meaning a great sign of trust in the institution).
Zero interest loan for poor countries
For the first time in its history, the IMF decided in 2009 to cancel all the interests on the poorest countries for a period of two and a half years with a possibility of extension.
The modernization of lending and surveillance instruments
When the world economic crisis struck, the IMF tried to find ways to protect countries that weren’t necessarily in a desperate situation, in order to protect world markets. It invented in 2009 a new range of flexible and adjustable credits for countries with good governance.
The unfinished business
Improving the image of the IMF
Strauss-Kahn often expressed his satisfaction at seeing the IMF having an improved image, especially in countries where its previous actions left a bitter and disastrous memory like in South Korea, Indonesia, or places like Africa or Brazil where it was (and often still is) deemed an instrument of domination for developed countries. Still, the IMF has had in many countries to intervene and impose severe austerity measures like in Greece that made him unpopular. However it is said that the Greek administration at least has come to trust DSK’s competence to solve the situation.
Changing the institution’s vision of the world
DSK is first and foremost a politician, and made speeches on inequalities and the damages of financial globalization that left their mark on people’s minds. Surely the translation of these speeches into action has left many still unsatisfied, but some first steps were made. In particular it started the partial giving up of dogmas and mechanisms that were clearly crafted to protect the interests of the founding member states (i.e. the developed nations).
An additional and concluding note by the Economist:
“Before his fall, Mr Strauss-Kahn had done more than any other recent managing director to restore the IMF’s reputation. A few years ago the fund’s very relevance was being questioned. But his early and prescient endorsement of fiscal stimulus during the crisis was taken seriously and acted upon. … His championing of the need to insulate the poor from the effects of fiscal austerity has, many believe, led the fund to become kinder and gentler. Now it is Mr Strauss-Kahn’s reputation that needs urgent repair”.
In a way if Strauss-Kahn’s now completely out of the game for the next elections, it may be a good thing if he has a chance of recovering his job at the IMF (though that too sounds unlikely). It just seems like such a waste not to employ someone highly competent at the right positions. Be it as president of France (and god knows France could make use of a competent president for once), or a head of the IMF. The institution needs to keep on its reforms and re-balancing of its mechanisms if it is to fulfill its true role of alleviating poverty in the world.