It’s becoming clear just what Margaret Thatcher meant when she told everyone that there was no alternative to neoliberalism.
In an absolutely stunning article, economist Michael Hudson explains how the US is wielding the International Monetary Fund (IMF) as a weapon against Russia and China as part a new Cold War. “In this U.S.-centered worldview, China and Russia loom as the great potential adversaries – defined as independent power centers from the United States as they create the Shanghai Cooperation Organization as an alternative to NATO, and the Asian Infrastructure Investment Bank (AIIB) as an alternative to the IMF and World Bank tandem.”
The IMF has quietly changed its rules on paying back loans. Ukraine owes $3 billion to Russia, and the note comes due December 20, 2015. Ukraine, the U.S.-backed regime, has announced its intention to default. Normally a country in arrears is not qualified for new loans. U.S. lobbyists have just changed the IMF rules to remove a critical lever on which Russia and other governments use to enforce payment of their loans.
According to Hudson, the underlying motivation for changing the IMF’s rules was, “…the threat that Chinese lending would provide an alternative to IMF loans and its demands for austerity. “IMF-watchers said the fund was originally thinking of ensuring China wouldn’t be able to foil IMF lending to member countries seeking bailouts as Beijing ramped up loans to developing economies around the world.” In short, U.S. strategists have designed a policy to block trade and financial agreements organized outside of U.S. control and that of the IMF and World Bank in which it holds unique veto power.
This is a pretty amazing demonstration of the power the US maintains through its manipulation of supposedly non-partisan institutions like the IMF. Anyway, Hudson is a better story teller, so I’m going to quote more from his article.
Read the whole thing.
“This is the back story of the U.S. fight to control the rest of the world. Tearing apart the IMF’s rules is only the most recent chapter. The broad drive against Russia, China and their prospective Eurasian allies has deteriorated into tactics without a realistic understanding of how they are bringing about precisely the kind of world they are seeking to prevent – a multilateral world.
Arena by arena, the core values of what used to be American and European social democratic ideology are being uprooted. The Enlightenment’s ideals of secular democracy and the rule of international law applied equally to all nations, classical free market theory (of markets free from unearned income and rent extraction by special vested interests), and public investment in infrastructure to hold down the cost of living and doing business are to be sacrificed to a militant U.S. unilateralism as “the indispensible nation.” Standing above the rule of law and national interests, American neocons proclaim that their nation’s destiny is to wage war to prevent foreign secular democracy from acting in ways other than submission to U.S. diplomacy. In practice, this means favoring special U.S. financial and corporate interests that control American foreign policy.
The upshot – and new basic guideline for IMF lending – is to create a new Iron Curtain splitting the world into pro-U.S. economies going neoliberal, and all other economies, including those seeking to maintain public investment in infrastructure, progressive taxation and what used to be viewed as progressive capitalism.”
And, here we can see the outlines of a new world order–corporate neofeudalism, where the rule of law is for suckers, and there is no alternative.
Update: Naked Capitalism is celebrating their 9th birthday. Bravo!