IMF Tries a Little Tenderness w/ Greece, Others

Oh Greece may be weary--and borrowers they do get weary--meeting those old IMF conditionalities. Especially after the Asian financial crisis when it was at the height of its deregulation, privatization and liberalization phase, the IMF has been a global bogeyman for allegedly foisting the interests of capital on troubled states. While the institution has tried to rebut these charges alike with then-Director of Research Ken Rogoff claiming that the "IMF Strikes Back," even that claim looks suspect given that the movie he references talks about...an empire.

But that was then, this is now--or so they say. Supposedly the current batch of crisis-hit countries is not feeling the full brunt of the old conditionalities. While again browsing through the LSE employee newsletter, I came across a new International Organization article co-authored by Stephanie Rickard over at the Government department that may support this idea. However, the softening of policies is specific to the realm of labour--particularly stipulations on wage freezes, privatization and pension reform that have a bearing on benefits and compensation.

Their general finding is that democracies with significant input from labour (including and even especially the rioting in the streets variety) tend to avail of softer labour-related conditionalities from the IMF. From the accompanying press blurb:

Workers in debt-ridden countries get sympathetic treatment from the International Monetary Fund which is not the big bad wolf of popular myth a new study suggests [our PR guys may have gone overboard with that]. While the IMF demands reforms from countries seeking loans in times of economic crisis, the new research shows that it listens to the views of citizens, especially in democracies, and may soften the labour conditions it sets when they protest. For example, mass demonstrations in Greece during 2011 when the country took extreme austerity measures led the IMF to make compromises over wages, pensions and job numbers.

The authors of the study, published today in the journal International Organization, say their findings suggest that international bodies, including the IMF, are more likely to respond to domestic politics than to constrain them. This is particularly true when workers are politically powerful at home and especially when they can influence the outcome of a country’s democratic elections. In these cases, the research showed fewer and less stringent reforms to the country’s labour market because national governments negotiated with the IMF to represent workers’ interests and lessen the burdens of austerity on them.

There's an ungated copy of the article right now on the LSE website for those of you who are further interested.