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

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Following Donald Trump in New Hampshire

It would be easy to dismiss the 69-year-old property mogul - but Trump is impossible to ignore.

Donald Trump doesn’t miss a beat. When a man in the front row of a packed school auditorium shouted, “We don’t want a scripted president,” he bellowed straight back, “No you don’t! And you don’t want a politically correct president,” a comment that sent the thousand-strong audience into a raucous standing ovation.

It was classic Trump: a move aimed at underlining his credentials as a populist, anti-politics insurgent. For bemused outsiders, his stump speech on 14 August at Winnacunnet High School in the tidy New Hampshire town of Hampton offered fresh insights into the methods by which Donald Trump has successfully hijacked the Republican race for the White House.

It would be easy to dismiss the 69-year-old property mogul. Trump’s campaign is powered by little more than personality and wealth. His pitch features few policies beyond building a giant wall along the Mexican border and putting his business associates in positions where they can strike better deals than the current administration. His campaign shtick resembles nothing so much as a stand-up comedy show. On Iraq: “It isn’t even a country. It’s a bunch of corrupt people.” On oil: “Iran, Isis, everybody has it but us.” And on China: “You hear that sucking sound? You know what that means . . . jobs, money.”

And yet he is impossible to ignore. Trump has led the polls for the Republican nomination since declaring his intention to run on 16 June – in a speech that accused Mexico of sending both rapists and murderers to the US. In New Hampshire he has a double-digit lead over Jeb Bush, who remains the favourite to win the nod, given his record as governor of Florida and his party connections – not least his father, George, and brother George W. This makes Trump the people’s choice.

Something similar is happening among Democrats. Although Hillary Clinton has a monopoly on donors and party grandees, Bernie Sanders, the self-proclaimed socialist senator from Vermont, is making a move in the polls. The US version of Jeremy Corbyn – the unreconstructed lefty selected to balance the debate – offers a different way of doing things from Clinton, who comes from a tired elite, or so runs the familiar argument.

And this is Trump’s main message: the rich are running politics for their advantage, donating money to the establishment in return for favours when they return to office. “Who knows it better than me?” he boasted to more whoops from the audience. “I’ve contributed to everyone.”

Trump acts like a heckler on stage. It’s his brash honesty that appeals to the likes of Bob Pennell, an orthopaedic surgeon who had travelled from neighbouring Massachusetts to see him speak. “He is shining the light on the rich and how they use the government,” Pennell said. “I always suspected it. But now I know.”

The result of such poor leadership, Trump argues, is that the US has lost its place as the dominant global economy – hence that sucking sound from China. It’s a message that strikes a chord with an audience that feels squeezed financially at home and sees its country adrift in the world.

Trump’s larger-than-life persona – and frequent, unverifiable boasts that his net worth stands at $10bn – felt like a throwback to days gone by, when “the American dream still meant something”, according to Jimmy Riordan, a diesel engine parts engineer. “It’s a cut-throat world and he’s the best businessman,” he said.

Quite what a Trump administration would look like, however, is anyone’s guess. In a rapid-fire question-and-answer session, he committed to federal investigations into the treatment of army veterans and the Environmental Protection Agency. An audience member asked if he would send astronauts to Mars. Trump smiled, saying he would first fix the US’s crumbling roads and airports. “Who’s better at infrastructure than Trump?” he asked, to more laughter.

Even a string of glaring gaffes has failed to dent his lead. Most recently he tried to undermine Megyn Kelly of Fox News after she probed his attitude towards women. Her dogged questioning, Trump said, was down to “blood coming out of her wherever”.

Yet to his supporters in the school auditorium, this kind of comment is not a misstep but a breath of fresh air. They say it shows he is his own man, that his personal fortune frees him from the need for spin doctors, lobbyists or donors who would seek favours should he reach office. Even his opponents can sense the appeal. “He doesn’t have to have their influence,” said Kerri Ruggiero, who is campaigning in the state for George Pataki, the Republican former New York governor, who is failing to gain traction. “It’s just him.”

Not everyone at the stump speech was a supporter. In New Hampshire, people take their responsibility as an early primary state seriously. A good showing here in February can make or break a candidate’s campaign. In the 1968 Democratic primaries, Eugene McCarthy came within 7 per cent of Lyndon B Johnson, a close enough result to force the sitting president to announce he would not run for re-election. Some showed up last Friday to gauge whether Trump was a credible figure. Others came to make a point. Noah Thompson, an 18-year-old student, wore a giant golden sombrero to protest against Trump’s comments about Mexicans.

“I probably would have voted for him,” Thompson confessed as the crowd headed for the exits, “if he hadn’t opened his mouth for two months.”

This article first appeared in the 20 August 2015 issue of the New Statesman, Corbyn wars