The Nation’s Confused IMF Conspiracy

Dec 29th, 2010 | By | Category: The Nation

International Monetary Fund (IMF)

The Nation logoIt was only two days ago that the IMF approved a nine-month extension of Pakistan’s Stand-By Arrangement. Which means that it took The Nation less than 36 hours to invent a new conspiracy to explain how the decision is a tool of American hegemony and government corruption.

The Nation makes several accusations against both the IMF and the government. Most notably by impugning the IMF’s rationale for supporting Pakistan’s economy.

…the IMF’s wider agenda, that of ensuring that the USA’s will is done, should not be lost sight of.

But China is an IMF member country. So is Saudi Arabia. And while the US has the largest quota of a single country, the EU has a combined vote of 32% – almost twice that of the US. In fact, historically the IMF’s managing director has been European, not American, the present Managing Director being Dominique Strauss-Kahn, a Frenchman. For the IMF to be a blatant tool of American interests, one would have to accept that the US was controlling China, Russia, Venezuela and other nations that traditionally oppose or resist American interests. It’s simply beyond reason.

The newspaper goes on to suggest that the US via the IMF is using “the charge of corruption…as a stick to beat the government into obedience”. Ironic considering one of the key themes of The Nation has been cries of rampant corruption in the government. Should we surmise from this, then, that The Nation too is a puppet of American interests?

What makes the claim particularly ironic, however, is that The Nation actually accuses the government of devising the RGST scheme to protect its own corruption!

The plea that is used by the IMF for the RGST is the improvement of the tax:GDP ratio. If that is the case, why would the IMF want the imposition of a tax that would only cause inflation, while the Pakistani state left a major sector, that of agriculture, untaxed. The problem is that agricultural incomes appertain to those in the legislatures, on both sides of the political divide, and they use these positions to prevent any tax being levied on the incomes which enable them to live a life of leisure enlivened only by politics.

If The Nation is correct (which is certainly disputed by many economists) that the RGST will cause inflation in affected sectors, isn’t it also possible that the government did not apply the tax on agriculture in order to protect the common people from price hikes on food essentials?

Regardless of one’s position on the proposed RGST, claiming that it is a conspiracy by the US to keep Pakistan’s cooperation in the war against terrorist militant groups is just silly. Development economists from various nations have made critical analysis of the IMF and its policies in the past. Some of those critiques have resulted in changes to IMF structure and policies as the economic firm adapts to more effectively aid nations hit by economic downturns and natural disasters.

Reading The Nation, however, one could easily believe that the newspaper would rather the economy sink just to spite the present government. Whatever its intentions, though, the logic and analysis of its editorial page is deplorable.

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