Europe gets a taste of its own medicine

Through the IMF, Asian capital now has a stranglehold on European nations – just as Europe did durin

A fierce and profoundly important battle is under way to find a new leader for the IMF. Angela Merkel fired the starting gun on Monday last week when she insisted that the disgraced former head Dominique Strauss-Kahn must be followed by another European.

It seemed almost impolitic at the time – it wasn't entirely clear what had happened in New York – and there were more than a few prominent figures leaping to Strauss-Kahn's professional, if not his personal, defence. But Merkel had good reason to come out of the blocks so quickly.

The IMF has historically been Europe's toy to dispose of, just as the World Bank has always been led by an American. But the rest of the world would be only too happy to see a pair of non-European hands take hold of the top job at the IMF – a job that, after a few years in the doldrums, became once more a premier seat of global power under Strauss-Kahn .

In all likelihood, they willo be disappointed once again, and Merkel is likely to get her way. The French finance minister, Christine Lagarde, is the current strong favourite to replace her countryman as the IMF's next head. And if not her, then it will be one of the other Europeans – Turkey's Kemal Dervis and Germany's Axel Weber being my tips over and above the now slow-running Gordon Brown – who all already have the wind in their sail.

But it may yet prove to be a hollow victory for Europe, because of one of the legacies of Strauss-Kahn's leadership that is going to follow the IMF as surely and as doggedly as last week's rape allegations will follow him.

In order to reinvigorate the IMF and turn it into the decisive and powerful body it has become under his leadership, Strauss-Kahn retooled its whole approach and boosted its coffers by promising the rest of the world a greater say in the way that it was run, up to and including reform of the controversial quota system that has long distorted IMF politics in favour of Europe and America. He did this above all by opening the door to the might of Asian capital. That is a door it will now be impossible to close.

So Europe's leaders ought to beware. While they may in the very short term get what they are asking for, their demands are looking increasingly unjustifiable to the rest of the world. Latin America did not have one of its leaders as head of the IMF during its debt crisis of the 1980s. And nor, more to the point, did Asia during the Asian financial crisis of the late 1990s.

It is worth recognising that Europe is today living on political debt to Asia at least as much as it is living on economic debt to the IMF. And what sparked Latin America's lost decade? It was, in part, the US Federal Reserve's self-protecting interest-rate hikes that tipped Mexico over the edge in 1982.

Asian capital today is not so far away from having a similar silent stranglehold on European nations. So a Latin American-style crisis in Europe remains a distinct possibility.

And however much some politicians bay for the blood of austerity in Portugal, Ireland and Greece to avoid this, the truth is that the balance of our fate will be determined by those who are footing the bill from far away. That, after all, is what Europeans at the IMF used to tell the rest of world.

Simon Reid-Henry is a lecturer at Queen Mary, University of London.

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Seven things we learnt from the Battle for Number 10

Jeremy Corbyn emerged the better as he and Theresa May faced a live studio audience and Jeremy Paxman. 

1. Jeremy Corbyn is a natural performer

The Labour leader put in a bravura performance in both the audience Q&A and in his tussle with Jeremy Paxman. He is often uncomfortable at Prime Minister’s Questions but outside of the Commons chamber he has the confidence of a veteran of countless panels, televised discussions and hustings.

If, like me, you watched him at more hustings in the Labour leadership contests of 2015 and 2016 than you care to count, this performance wasn’t a surprise. Corbyn has been doing this for a long time and it showed.

2. And he’s improving all the time

Jeremy Corbyn isn’t quite perfect in this format, however. He has a temper and is prone to the odd flash of irritation that looks bad on television in particular. None of the four candidates he has faced for the Labour leadership – not Yvette Cooper, not Andy Burnham, not Liz Kendall and not Owen Smith – have managed to get under his skin, but when an interviewer has done so, the results have never been pretty for the Labour leader.

The big fear going into tonight for Corbyn was that his temper would get the better of him. But he remained serene in the fact of Paxman’s attempts to rile him until quite close to the end. By that point, Paxman’s frequent interruptions meant that the studio audience, at least, was firmly on Corbyn’s side.

3. Theresa May was wise to swerve the debates

On Jeremy Corbyn’s performance, this validated Theresa May’s decision not to face him directly. He was fluent and assured, she was nervous and warbly.  It was a misstep even to agree to this event. Anyone who decides their vote as far as TV performances tonight will opt for Jeremy Corbyn, there’s no doubt of that.

But if she does make it back to Downing Street it will, in part, be because in one of the few good moves of her campaign she chose to avoid debating Corbyn directly.

4.…but she found a way to survive

Theresa May’s social care U-Turn and her misfiring campaign mean that the voters don’t love her as they once did. But she found an alternate route through the audience Q&A, smothering the audience with grimly dull answers that mostly bored the dissent out of listeners.

5. Theresa May’s manifesto has damaged her. The only question is how badly

It’s undeniable now that Theresa May’s election campaign has been a failure, but we still don’t know the extent of the failure. It may be that she manages to win a big majority by running against Jeremy Corbyn. She will be powerful as far as votes in the House of Commons but she will never again be seen as the electoral asset she once was at Westminster.

It could be that she ends up with a small majority in which case she may not last very much longer at Downing Street. And it could be that Jeremy Corbyn ends up defeating her on 8 June.

That the audience openly laughed when she talked of costings in her manifesto felt like the creaking of a rope bridge over a perilous ravine. Her path may well hold until 8 June, but you wouldn’t want to be in her shoes yourself and no-one would bet on the Conservative Party risking a repeat of the trip in 2022, no matter what happens in two weeks’ time.

6. Jeremy Paxman had a patchy night but can still pack a punch

If Jeremy Paxman ever does produce a collected Greatest Hits, this performance is unlikely to make the boxset. He tried and failed to rouse Jeremy Corbyn into anger and succeeded only in making the audience side with the Labour leader. So committed was he to cutting across Theresa May that he interrupted her while making a mistake.

He did, however, do a better job of damaging Theresa May than he did Jeremy Corbyn.  But not much better.

7. Theresa May may have opposed Brexit, but now she needs it to save her

It’s not a good sign for the sitting Prime Minister that the audience laughed at many of her statements. She had only one reliable set of applause lines: her commitment to getting the best Brexit deal.

In a supreme irony, the woman who opposed a Leave vote now needs the election to be a referendum re-run if she is to secure the big majority she dreams of. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.

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