Yves here. While you were busy trying not to panic over the impact of coronavirus on your health, your job and finances, or both, the IMF was holding fast to its punitive playbook.
By Vijay Prashad, Paola Estrada, Ana Maldonado, and Zoe PC. Vijay Prashad is an Indian historian, editor and journalist. He is a writing fellow and chief correspondent at Globetrotter, a project of the Independent Media Institute and the chief editor of LeftWord Books and the director of Tricontinental: Institute for Social Research. He has written more than twenty books, including The Darker Nations: A People’s History of the Third World (The New Press, 2007), The Poorer Nations: A Possible History of the Global South (Verso, 2013), The Death of the Nation and the Future of the Arab Revolution(University of California Press, 2016) and Red Star Over the Third World (LeftWord, 2017). Paola Estrada is in the Secretariat of the International Peoples Assembly and is a member of the Brazilian chapter of ALBA Movements (Continental Coordination of Social Movements toward the Bolivarian Alliance for the Peoples of Our America).Ana Maldonado is in the Frente Francisco de Miranda (Venezuela). Zoe PC is a journalist with Peoples Dispatch and reports on people’s movements in Latin America. She is also associated with Congreso de los Pueblos in Colombia. Produced by Globetrotter, a project of the Independent Media Institute
On March 16, 2020, the chief of the International Monetary Fund (IMF) Kristalina Georgieva wrote a blog post on the Fund’s website; it represents the kind of generosity necessary in the midst of a global pandemic. “The IMF stands ready to mobilize its $1 trillion lending capacity to help our membership,” she wrote. Countries with “urgent balance-of-payments needs” could be helped by the IMF’s “flexible and rapid-disbursing emergency response toolkit.” Through these mechanisms, the IMF said that it could provide $50 billion to developing countries and $10 billion to low-income countries at a zero-interest rate.
The day before Georgieva made this public statement, the foreign ministry of the government of Venezuela sent a letter to the IMF asking for funds to finance the government’s “detection and response systems” for its efforts against the coronavirus. In the letter, President Nicolas Maduro wrote that his government is “taking different preventive measures and following through strict and exhaustive controls to protect the Venezuelan people.” These measures require funding, which is why the government is “turning to your honorable organization to request its evaluation about the possibility of authorizing Venezuela a financing line of $5 billion from the Rapid Financing Instrument emergency fund.”
Georgieva’s policy to provide special assistance to countries should have been sufficient for the IMF to provide the assistance that the Venezuelan government had requested. But, very quickly, the Fund declined the request from Venezuela.
It is important to underline the fact that the IMF made this denial at a time when the coronavirus had begun to spread in Venezuela. On March 15, when Venezuelan President Nicolas Maduro’s government sent the letter to the IMF, Maduro met with senior government officials in Caracas. The Venezuelan pharmaceutical body (CIFAR) and the Venezuelan medical equipment companies said that they would be able to increase production of machines and medicines to stem the crisis; but, they said, they would need key raw materials that have to be imported. It is to pay for these imports that the Venezuelan government went to the IMF. The denial of the loan will directly punish the Venezuelan health apparatus and prevent Venezuela from properly tackling the coronavirus pandemic.
“This is the most serious situation we have ever faced,” said President Maduro as he put in place new measures. The Venezuelan government imposed an indefinite national quarantine and has put in place—building on the local self-government (communes)—a process to distribute food and key supplies. All the institutions of the state are now involved in doing their part in helping “flatten the curve” and “break the chain” of contagion. But, because of the IMF loan denial, the country will have a harder time producing testing kits, respirators, and key medicines for those infected with the virus.
Venezuela and the IMF
Venezuela is a founding member of the IMF. It has, despite being an oil-rich state, come to the IMF several times for various forms of assistance. The cycle of IMF interventions in Venezuela in the 1980s and early 1990s led to an uprising in 1989 that delegitimized the Venezuelan elite; it was on the back of the popular protests against the IMF that Hugo Chávez built the coalition that propelled him to office in 1998 and which started the Bolivarian Revolution in 1999. By 2007, Venezuela paid off its outstanding debts to both the IMF and the World Bank; Venezuela cut its ties to these institutions, hoping to build a Bank of the South—rooted in Latin America—as an alternative. But before this Bank could be set up, a round of crises struck Latin America, forced by a fall in commodity prices.
Venezuela’s economy relied upon foreign oil exports to generate the revenue necessary to import goods. With the fall in oil prices came a directed attack on Venezuela by a new round of unilateral sanctions from the United States. These sanctions prevented oil companies and transportation firms from doing business with Venezuela; international banks seized Venezuela’s holdings in their vaults (including $1.2 billion in gold in the Bank of England) and stopped doing business with Venezuela. This sanctions regime, tightened further after Donald Trump became the president of the United States, deeply hurt Venezuela’s ability to sell its oil and buy products, including supplies for its state health sector.
The IMF Takes Sides
In January 2019, the U.S. government attempted a coup against the government of President Maduro. It chose as its instrument Juan Guaidó, whom the U.S. named as the actual president of the country. U.S. banks hastily seized the Venezuelan state assets held by them and turned them over to Guaidó. Then, in a startling move, the IMF said that the Venezuelan government would no longer be allowed to use its $400 million in special drawing rights (SDRs), the currency of the IMF. It said that it had taken this action because of the political uncertainty in Venezuela. In other words, because of the attempted coup, which failed, the IMF said it would not “take sides” in Venezuela; by not “taking sides,” the IMF refused to allow the government of Venezuela to access its own funds. Strikingly, Guaidó adviser Ricardo Hausmann, a former IMF development committee chair and head of the Inter-American Development Bank, said at that time that he expected that when the regime change occurs, the money will be available to the new government. This is the IMF directly interfering in Venezuelan politics.
Neither at that time nor now has the IMF actually denied that the government of Nicolas Maduro is the legitimate government in Venezuela. The IMF continues to acknowledge on its website that the representative of Venezuela in the IMF is Simon Alejandro Zerpa Delgado, the minister of finance in Maduro’s government. One of the reasons why this is so is that Guaidó could not prove that he had the support of the majority of the member-states of the IMF. Since he could not prove his standing, the IMF—again extraordinarily—has denied the Maduro government its legitimate right to its own funds and to borrow against facilities provided by the Fund to its members.
The IMF Denies
Normally, the IMF takes time when it gets a request for funds. The request has to be studied by the analysts, who look at the situation in the country and see whether the request is legitimate. In this case, the IMF responded immediately. It said no.
A spokesperson for the Fund—Raphael Anspach—would not answer specific questions about this denial; in 2019, he had been similarly cautious about saying anything about the denial of access to the $400 million in SDRs. This time, Anspach sent us a formal statement that the IMF has released to the media. The statement said that while the IMF sympathizes with the predicament of the people of Venezuela, “it is not in a position to consider this request.” Why is this so? Because, the IMF says, its “engagement with member countries is predicated on official government recognition by the international community.” “There is,” the statement says, “no clarity on recognition at this time.”
But there is clarity. The IMF continues to list the Venezuelan foreign minister on its website. The United Nations continues to recognize the Venezuelan government. That should be the official standard for the IMF to make its determination. But it is not. It is taking dictation from the U.S. government. In April 2019, U.S. Vice President Mike Pence went to the UN Security Council, where he said that the UN should accept Juan Guaidó as the legitimate president of Venezuela; he turned to the Venezuelan ambassador to the UN—Samuel Moncada Acosta—and said, “You shouldn’t be here.” This is a moment of great symbolism, the United States acting as if the UN is its home and that it can invite whomsoever it wants.
The IMF denial of the $5 billion request from Venezuela follows Pence’s sentiment. It is a violation of the spirit of international cooperation that is at the heart of the UN Charter.
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can’t begin to imagine the magnitude of the disaster there when this thing spreads, having recently watched a documentary about the current state of their health system (basically completely broken, no drugs available whatsoever)
I guess pandemics are political. Well, disease has been use as a weapon before. Still, shameful what the United States and IMF are doing. One could say it is murder, a crime against humanity, even evil.
In this time of great need to cooperate, this is horrifying. Michael Hudson has referred to the IMF as the ‘knee breakers’ of Western financial interests. Cuba is helping Venezuela with supplies of Covid-19 inhibiting Interferon aplha 2B.
https://orinocotribune.com/president-maduro-venezuela-has-cuban-interferon-to-treat-possible-covid-19-coronavirus-cases/
Most leaders who steer their nations through this crisis will see their popularity soar and their legacies bolstered, if not cemented. The IMF, no doubt under US instructions, is refusing to provide the funds for Nicolas Maduro to help this battered nation fight the spread of this virus, lest they give him the springboard to endear himself to his people.
The US puppet Guaido on the other hand is surely being prepared to undermine the official government’s response, and to point at the inevitable death rate as a failure by Maduro. How utterly predictable from an evil and imperial playbook, weaponizing a public health crisis of global import for political ends. Just when one thinks an opportunity is at hand for the US to arrest its decades long decline into a murderous regime and show a semblance of conscience in the face of a common enemy confronting humanity, they redefine the very notion of what it means to be evil.
The IMF has always been an instrument of US imperialism. Venezuela is better off out of their corrupt neo-liberal forced austerity clutches.
Yes Venezuelans will suffer and die to a greater extent due to the cruelty of the IMF. Very sad and unnecessary except that Venezuela will demonstrate a way forward sans IMF, sans Evil Empire, which we will all need to figure out sooner or later. The imperial regime is crumbling from the inside – its corruption, cruelty, and unjust dominion will not last. Its parasitic overlords’ days are numbered.
My guess is just the opposite will happen.both venezuela and iran will be near broken from this and washington and the imf will suffer no consequences politically because the msm won’t report it.and even if they did it will be spun to america’s and the status quo’s advantage.
Perhaps you are right but I would not count the Persians nor the Venezuelans out – they are already in tight economic straights and adapting and here inside the empire we are soft and panicking. Plus the economy is in freefall headed for a depression that we are not ready for. We shall see if the imperial institutions will survive.
The IMF is a political tool, the finance arm of domination. This can be said without doubt and this is another example, a very dark one.
The IMF is nothing more than a tool for the US to use. I as a US citizen for 78 years am ashamed of our government. They are a criminal when using extreme sanctions. It ends up with many innocent people dyeing. Our leaders present and past should be charged and prosecuted. Our government is no better than other tyrants now and in the past. The US government is the biggest terrorist organization on the planet.
Plus 100
This is only Standard Operational Procedure. It is just that in the past you had a veneer of legality and civility but now laws are broken out in the open. Just today I saw Pompeo not only threaten members of the International Criminal Court for investigating US war crimes but also threatened their families. Bolton did it in a private office but now Pompeo can just do it in public.
But for Venezuelan, any flu pandemic outbreak will not be restricted to within its borders but will eventually spread throughout the South American continent. What is needed is an international strategy for containment and mitigation but the IMF is playing political games for Washington’s gain. Good luck with that idea. It may be that China helps out here like that have with Iran, Serbia & Italy and established itself a presence in Venezuela – right in America’s back yard. Wouldn’t that be a spectacular own goal?
One should beware of the law of unintended consequences.
This isn’t a flu pandemic — and it’s already spread throughout the South American continent. That’s what a pandemic of a zoonosis is: it’s everywhere and spreads like wildfire because nobody has any resistance. What you do in one single country has very little to do with that (if you stop its spread via a method other than mass immunization or just letting everyone catch it and become immune — which is not recommended unless you like lots of deaths — you’ll constantly have to be on guard against reinfection from outside.)
I can’t help but notice that nearly everyone in this comment thread is damning the IMF, but few people appear to be mentioning that Venezuela is hardly an innocent party in all of this. Maduro is a dictator who has catastrophically impoverished his country and more importantly right now completely wrecked its once good healthcare system. The IMF giving it a loan isn’t going to help much: it doesn’t have either ventilators or drugs, it can’t make them, it barely has the electricity to operate ventilators, and it’ll likely be at the end of any queue for buying them as well: and supply chains are seized up because of everyone else’s measures against the virus. By this point the pandemic will probably be mostly over before anything turns up in Venezuela, even if it bought them now. So money doesn’t help because you can’t buy what you need with it!
The only solution that I can see would be to actually donate ventilation gear, ECMO kit etc directly to Venezuela, and nobody’s likely to do that when they’re in such desperate need of the same things themselves and it’s so likely that in Venezuela they would be wasted, reserved for the corrupt upper crust, or immediately resold or stripped for spare parts for sale for the benefit of the well-connected black-marketeers who are making out like bandits from Venezuela’s ongoing pain.)
“Maduro is a dictator who has catastrophically impoverished his country and more importantly right now completely wrecked its once good healthcare system.”
Maduro was elected with over 60% of the vote in a heavily monitored election. How many American politicians can make similar claims?
US economic sanctions are responsible for wrecking the Venezuelan healthcare system. The sanctions deny ordinary working people access to medicines, medical device replacements and clean water.
https://www.dw.com/en/the-human-cost-of-the-us-sanctions-on-venezuela/a-50647399
To me, the point of this article is that the IMF, an organization that cloaks itself in global impartiality, is showing who it really represents——in no uncertain terms.
‘Maduro is a dictator who has catastrophically impoverished his country.. ‘. This is an imperialist narrative tactic.
https://www.counterpunch.org/2019/03/04/crocodile-tears-for-venezuela-from-late-victorian-holocausts-to-21st-century-imperialism/
Ya, my family tried to donate a bunch of medical equipment to a poor hospital in Venezuela once, but it got stolen in transit. Sigh, bastards…
Meanwhile the USA increases sanctions on Iran while they are in the grip of the coronavirus pandemic. Pompeus Maximus says: “The Wuhan virus is a killer and the Iranian regime is an accomplice.”
Pure projection from a known liar. And who is the father of all lies? Who does this obese potentate serve?
The depravity of the US government knows no bounds.
The only ray of hope for Venezuela and Iran is that the US is imploding. Without testing and isolation, the US will cease to function. China is stepping into the breach. The world will be very different in six months. Maybe even sooner. It actually already is.
Americans were dealing with a s#$t sandwich already. Then a global pandemic came along and knocked out all the remaining legs holding them up.
I had from my youth expectations of the UN that have been repeatedly ground down.
If for instance Venezuela has a legal right to its money, then it ought be given its money.
I myself may not be happy with what the nation does with its money, but then there have been people in my own life that didn’t care much for what I did with my money either.
I’ve given people money and discovered that I didn’t like what they did with it.