UK signals support for more IMF cash
Notwithstanding major domestic political obstacles, UK chancellor George Osborne is preparing the ground for a significant new contribution of British funds to the IMF. Via the FT: George Osborne has swept away most of the hurdles the government had erected to prevent Britain pledging billions of pounds for the International Monetary Fund….His words represent a ...
Notwithstanding major domestic political obstacles, UK chancellor George Osborne is preparing the ground for a significant new contribution of British funds to the IMF. Via the FT:
Notwithstanding major domestic political obstacles, UK chancellor George Osborne is preparing the ground for a significant new contribution of British funds to the IMF. Via the FT:
George Osborne has swept away most of the hurdles the government had erected to prevent Britain pledging billions of pounds for the International Monetary Fund….His words represent a significant step towards the introduction of new legislation that would allow the government to participate in a wider replenishment of IMF resources – encouraged by signs that the eurozone was prepared to put its money where its mouth is.
Osborne did set certain conditions, including the participation of other G20 countries. And on a trip to Asia several weeks ago, Osborne appeared to be encouraging China and Japan to contribute. As I’ve argued several times before, the missing link here is the United States, which stubbornly refuses to consider new IMF funds. With some U.S. participation and a good measure of leadership, a viable IMF firewall appears possible.
The U.S. reluctance has two key elements. At a political level, the administration thinks there is no hope of Congress approving any additional funds. And as matter of bargaining tactics, the administration wants to keep as much pressure on Europe as possible and professes to fear that an IMF firewall would allow Europe’s leaders off the hook. (My own guess is that the former is determinative; in a more hospitable political climate, I think the administration would have already anted up, provided that other major states did the same.)
This could all turn out for the best. European officials are talking about combining their parallel bailout funds to maximize the impact. Recent bond auctions have given Italy and Spain a bit of breathing room (although Portugal now appears to be close to collapse). There are rumors that a deal on Greek debt restructuring could come as early as this weekend.
But make no mistake. The world has been running an enormous risk by letting the European debt crisis play out for this long, and the U.S. refusal to lead a major IMF effort is a key reason. The world might still dodge economic disaster, but responsible leaders never should have let it creep as close as it has. And for all Washington’s protestations of innocence, it shares in the responsibility for that.
David Bosco is a professor at Indiana University’s Hamilton Lugar School of Global and International Studies. He is the author of The Poseidon Project: The Struggle to Govern the World’s Oceans. Twitter: @multilateralist
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