Dilemmas multiply for a COVID-19 scarred world


By Lynn Ockersz

The IMF has done well to select the least developed countries for some preferential treatment at this juncture on the question of debt repayments but it opens itself to the charge of veering from objective criteria in its treatment of crisis-scarred Venezuela.  The IMF has rejected the latter’s request for a $5 billion loan to manage her COVID-19-linked woes on the ground that ‘there is no clarity on international recognition of the country’s government.’

A statement issued by the IMF said: ‘As we have mentioned before, IMF engagement with member countries is predicated on official government recognition by the international community, as reflected in the IMF’s membership. There is no clarity on recognition at this time.’  Among other matters, the question on who constitutes the ‘international community’ arises for constructive discussion and debate.

However, the principal issue revolves around the prime mandate of the IMF and the same question could be raised in relation to the World Bank. The general perception of the IMF-WB combine is that these twin institutions are chiefly concerned with development and humanitarian issues. Fostering equitable development has been seen as their main mission. But, as is known, controversy has dogged these organizations over the decades on particularly their equity credentials and in present times Venezuela proves the point afresh.

While Venezuela herself has had the penchant to constantly wade into controversy on issues linked to democratic development over the past 20 years or more, it should be plain to see that the ‘ordinary people’ of the country need to be helped very badly. President Maduro may not be the most democratic of leaders but the Venezuelan President and his ruling strata need to be distinguished from the general citizenry of the country.  Depriving the country of much needed assistance could be tantamount to depriving the Venezuelan people of the opportunity of scraping through the present economic crisis in the country which is compounded by COVID-19. In short, it is mainly the people who would suffer as a result of the IMF decision.

On the other hand, an obligation is cast on international development institutions to ensure that the people of Venezuela and not the Maduro-led ruling cabal benefits in the main from the IMF assistance.  This must be done in consideration of the widely-known fact that most ruling strata of the global South are parasitic and exploitive in character. Accordingly, inasmuch as the Venezuelan people need to be assisted, it must be ensured that such help is not siphoned to the private coffers of Venezuela’s ruling class. Admittedly, this is bound be a task of the most exacting kind but it must be undertaken. Accountability on the part of rulers for development and other resources lavished on countries, therefore, is a principal requirement.

There is the thought-provoking backdrop to this crop of questions linked to Venezuela of the US, besides 50 other countries, lending their support to Venezuelan opposition leader Juan Guaido’s claim to the presidency. This political crisis too is at the heart of Venezuela’s problems but the featuring of the US in this squabble leaves the observer with no choice but to conclude that what the IMF has in mind when it refers to the ‘international community’ is that section of the world community, led by the US, that is opposed to the Maduro presidency.  It is plain that issues in international politics figure prominently IMF decision-making.

Thus, Venezuela raises the question as to the degree to which international financial institutions, such as the IMF, are objective and impartial in the discharge of their obligations. One could argue that this has always been the case but the huge humanitarian issues triggered by the COVID-19 crisis underscores the importance of international development and financial organizations freeing themselves of the pressures sourced by extraneous political developments and issues.

In the Venezuelan context these issues are compounded by the widely known fact that President Maduro is backed by Russia and China. This is going to the heart of current international politics. The power struggle between the West, on the one hand, and Russia and China, on the other, has reduced Venezuela to a Cold War style proxy war site.  Thus is the wellbeing of the Venezuelan people compromised badly in this proxy squabble between two big power formations.

The chequered record of the international financial institutions notwithstanding, they are obliged to play a considerable and constructive role in the days ahead as the world continues to wither in the grip of COVID-19. While the majority of big economic powers from East and West could be expected to with great difficulty weather the current devastation, this would not apply to those countries of the so-called Middle Income kind.  There is every likelihood of their sliding back into widespread poverty as they battle the virus and its results.  Consequently, the IMF-WB combine would need to gird itself to take on new and cumbrous responsibilities.

In fact poverty could not only be expected to be rampant but grow steadily in a post-COVID-19 world. This would be a consequence of economies failing and sliding into recession. Regions with the largest populations and most notable poverty levels, such as South Asia, would need extra attention on the part of international development institutions.

However, development organizations could be expected to be notably proactive in poverty alleviation and reduction issues only to the extent to which they are well funded.  The latter in turn would depend on the largesse of their donors, particularly First World ones. But in a world scarred by recession and reduced economic activity, being extra-generous could prove an uphill task.

For instance, it is doubtful whether the US would be forthcoming with sizeable financial funding for the IMF and WB. Given the Trump administration’s tendency to be opposed to multilateralism and its preference for isolationism one wonders whether it could be counted on to do its bit to bail out an unprecedentedly troubled world. Besides, such initiatives are bound to rile the US tax paying public which could be expected to be weighed down by financial woes. Indeed, the world is heading for a ‘Winter of Discontent’.

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