Christine Lagarde's "tough love" is an insult to Greece

By urging Greeks to pay up without whingeing the IMF chief has revealed her deep historical and cult.

You are crossing the road, a little absent-minded. About two-thirds of the way, you become aware of oncoming traffic. And right then, in that moment of panic, instead of speeding up to the safety of the near pavement, you freeze. Or, even worse, you try to turn and go back to where you came.

It is an illogical reaction to a simple, urgent problem. We’ve all done it. But when the head of the International Monetary Fund behaves in such a way, faced with the oncoming juggernaut of economic crisis, it is a source of deep concern.

In an interview for the Guardian, Christine Lagarde did exactly that. She chose to tell Greece it was payback time. “That’s right”, she said calmly, “Yeah.” She chose to talk about starving babies in sub-Saharan Africa to strengthen her call to Greece to stop whingeing and pay up. She chose to pinpoint tax evasion by a fraction of the population of a country which accounts for less than 0.5% of the world’s GDP as the sole source of the world’s economic woes. She chose to bury her head in the sand.

But, while her argument has been loudly lauded as “tough love” in many a luxurious Northern European dinner-party, over a glass of cheeky Beaujolais Nouveau, the most rudimentary scrutiny reveals it to be strategically, economically and intellectually flawed.

Her stance shows a complete misunderstanding of the psychology of a nation which has suffered nearly five years of recession and the severest of austerity cuts; a nation which is increasingly and vocally rejecting foreign interference and which is being pushed to political extremes in the upcoming election.

What was the idea, strategically, behind such a statement? If anyone seriously believed that having a representative of the IMF – the Grand Protector of the financial status quo – tell Greece to put up and shut up, would have the effect of encouraging people to vote for centrist pro-austerity parties, then they understand the mood there even less than I thought.

There are very few ways one could make such a move even more cack-handed. One could choose, as the vessel of such sentiments, an ex-Finance Minister of a Eurozone country; perhaps someone who left France with its highest deficit in 60 years. One could choose someone currently under investigation for not just one but two cases of fraud in shady financial deals. One could even accompany this interview with a pictorial which showed her dispensing thrift advice, while displaying a deep tropical tan, heavy jewellery and expensively tailored clothes.

And from such a throne of non-credibility, came the attractively packaged but intellectually hollow arguments.

First, the insidious idea that the misery engulfing the people of any nation is to be ignored, on the basis that there is even worse misery elsewhere. That in some way helping Greece – a member of the European Union for thirty years – is a direct alternative to helping “little kids from a school in a little village in Niger”. There is no such proposed programme to help little kids in Niger, you understand. This is a fictional programme, part of the IMF’s varied portfolio of fictional charitable work, that could, possibly, maybe happen, if only Greeks stopped being so selfish.

The hollow nonsense continued to flow freely. Faced with the question of women without access to a midwife when they give birth, patients dying without access to drugs, the elderly dying alone for lack of care and children starving, Lagarde’s response is simply to say that it is very easy for them to help themselves. How? "By all paying their tax. Yeah."

That’s right. Because, plainly, it is the same mothers without access to midwives, the elderly without care, the sick who cannot afford the newly introduced €5 hospital admission fee, the children without food, who have hoards of taxable income and are busily trying to send it to banks in Switzerland, while starving. Greece as one homogenous, tax-dodging mass responsible for its own downfall.

Which all enforces the grand illusion that all this is nothing to do with a global financial crisis, brought about by the very interests that the IMF represents. Instead, it was a Greek time-bomb waiting to explode. This, however, creates some difficulty in explaining the IMF’s assessment of Greece in May 2008. It boasted headlines like; “The Greek economy has been buoyant for several years and growth is expected to remain robust for some time”; “The Greek banking sector appears to be sound and has thus far remained largely unaffected by the financial market turmoil”; and “in view of Greece’s membership in the EMU, the availability of financing for the external deficit is not a concern”.

Presumably, what is implicit in Lagarde’s comments is: We got it wrong then, but you should take our advice now. We’re definitely, definitely right this time. The IMF is, after all, the forensic scientist of the world’s financial woes. “It's not either austerity or growth, that's just a false debate”, Lagarde explains. “Nobody could argue against growth. And no one could argue against having to repay your debts. The question and the difficulty is how do you reconcile the two, and in which order do you take them? I would argue that you do it on a country by country case.”

I invite Christine Lagarde to name one example, one country, one case where the IMF decided that repaying a debt came second to growth.

It certainly was not Malawi – ordered by the IMF to sell its grain reserves in 2001 to private companies in order to repay a debt with 56% interest (which it had been advised to take by the IMF); a move which directly caused hundreds of people to die the next year.

It certainly was not Argentina which, having been the busty centrefold of IMF policies throughout the 1990′s sticking religiously to all IMF advice – privatising everything but their anthem, liberalising industries, lowering corporation taxes while tightening public spending, suffered one of the most catastrophic economic collapses in 2001. The IMF demanded it got paid first and actively lobbied against discounts to creditors.

As a matter of fact, there appears to be not a single example of the IMF’s Structural Adjustment policies applied to a crisis situation where they haven’t brought more misery and stagnation. Its obsession with austerity has recently been described as “dangerous” for European recovery, by the OECD.

Nobel-winning Joseph Stiglitz, put it at its bluntest: “When the IMF arrives in a country, they are interested in only one thing. How do we make sure the banks and financial institutions are paid?... It is the IMF that keeps the speculators in business. They’re not interested in development, or what helps a country to get out of poverty.”

So, should we simply discount Christine Lagarde’s noisy drivel? Should we ignore the IMF’s advice altogether? That would be a mistake. This is, for instance, what they said about the UK economy: “The financial sector is strong and well supervised with a principle-based approach. The fiscal framework is good, and the mission focused on how to build fiscal cushions needed to respond to adverse shocks.”

They said this in 2007, a year before the entire house of cards collapsed on our heads – a collapse for which our children’s children will be paying, for many decades to come. The conclusion, therefore, must be that one should never ignore the IMF’s advice. One should study carefully what is being advocated, then do precisely the opposite.

Many Greek voters certainly plan to. That’s right. Yeah.

Greek-born, Alex Andreou has a background in law and economics. He runs the Sturdy Beggars Theatre Company and blogs here You can find him on twitter @sturdyalex

Getty
Show Hide image

I’m in Bangladesh as I needed to put a few thousand miles between myself and the Hovel

So I had to go to Dhaka. To its literary festival, to be precise.

So I had to go to Dhaka. To its literary festival, to be precise. I was invited a few months ago, I’m not sure why. It was certainly before some maniac at the London Review Bookshop, probably desperate to drum up custom for an event I was chairing there, described me as “Britain’s most influential book critic”, a title that cheered me up, to be sure, but, for all the benefits that have accrued to me as a result, may as well have been “Ireland’s most unpredictable wasp”, or “Poland’s wonkiest ladder”.

My invitation to Dhaka arrived, instead, shortly before the July attack on the Holey Artisan Bakery by Islamist extremists, in which 29 people were killed. Before then, I had noticed that Bangladesh was becoming one of those countries where writers and atheists were hacked to pieces more than was strictly necessary, and had experienced some collywobbles, but an epic dinner at Rules given me by Ahsan Akbar, the festival’s director, made me snap my fingers at danger.

Really, it would have been rude to refuse to travel; besides, the threat I constitute to myself is at least on a level with the one posed by any militants. If you think I exaggerate, the state of my bedroom alone, which I have not allowed Martha the Cleaner to enter for the past three weeks, on the grounds that it is too shameful, is enough to make me want to kill myself. I had to get out of there before I did myself any further psychic damage by merely looking at it. It was time to put a few thousand miles between myself and the Hovel.

I have been in Bangladesh only a day now, but never, considering how I am being treated, has the title “Down and Out” been less applicable to the words beneath it. The journey started with an Emirates flight from Heathrow, and if what I was in was economy, then heaven alone knows what first class is like. Maybe it is heaven, and indeed the steps leading up to the next floor of the plane suggested something magical and other-worldly, like the staircase in A Matter of Life and Death.

I scanned the inflight entertainment brochure with awe. It covered several pages. I decided to watch La Grande Illusion, the Renoir classic, but then, realising that I actually have the DVD at home but just haven’t got round to watching it yet, settled on a binge-watch of episodes of M*A*S*H and a surprisingly fascinating documentary on the making of Star Trek: the Next Generation. This after playing the Velvet Underground for my take-off. The music selection itself, I must say, is incredible. It’s like flipping through the record collection of your coolest friend. Not just Unknown Pleasures and Never Mind the Bollocks: there’s Captain Beefheart’s Trout Mask Replica, for crying out loud. I was aching for sleep, having pretty much not slept since the night of the US election, but it was almost too exciting.

And now Dhaka. We arrived in darkness, but this only made the lights of the police escort all the more visible. Having a police escort is a new experience for me, unless you count the more informally organised police escort I was offered after being caught with two tabs of LSD in the vicinity of Buckingham Palace in 1982. (Long story.) This time, though, the police were armed and, notionally, on my side, though one of them seemed to be giving us the evils.

“No,” said one of my fellow authors, “that’s just a sexy underlook.” (I hadn’t encountered the word “underlook” before, but from now on I intend to adopt one as part of my seduction technique, even if this might be a risky thing to try at my age.)

My fellow authors are delightful. They have to be. The English-speaking author abroad on a cultural jolly is bound by a firm obligation: to ensure that as much as possible of every conversation consists of a joke. I suspect that a convention of comedians would be notable for its seriousness of word
and deed; writers are happier to subvert themselves. Maybe. But even V S Naipaul, who opened the festival from his wheelchair, was able to crack wise a couple of times before and after cutting the ribbon.

The hotel is so luxurious that it fills me with guilt. As for Dhaka, I’ve not been here long enough, except to marvel at the traffic, which moves only at the exact moment you have given up all hope of ever moving again, and at the kindness of the people, and at the warm, soupy air. The city isn’t exactly tidy – but, as you might have gathered, that kind of thing isn’t going to bother me. l

Nicholas Lezard is a literary critic for the Guardian and also writes for the Independent. He writes the Down and Out in London column for the New Statesman.

This article first appeared in the 24 November 2016 issue of the New Statesman, Blair: out of exile