Send a Tweet
Most Popular Choices
Share on Facebook 19 Share on Twitter 2 Printer Friendly Page More Sharing
Exclusive to OpEd News:
OpEdNews Op Eds    H2'ed 2/13/11

The IMF Protection Racket

By       (Page 1 of 2 pages)   5 comments
Follow Me on Twitter     Message Dr Stuart Jeanne Bramhall
Become a Fan
  (67 fans)

IMF Headquarters
IMF Headquarters
(Image by Latin American Herald Tribune)
  Details   DMCA

There seems to be strong consensus - at least outside of the US and Britain - that the IMF (International Monetary Fund) is a protection racket. Here is the Wikipedia definition of protection racket:

An extortion scheme whereby a criminal group or individual coerces other less powerful entities to pay money, allegedly for protection services against external threats (usually violence or property damage). Many racketeers will coerce potential clients into buying protection through property damage or other harassment. In some cases, the racketeers do little to protect the client from other predators, and their "protection" is little more than extortion.

Another way to think of it is an offer you can't refuse. Although I didn't realize it at the time, the Mafia and protection rackets were an integral part of my childhood in Milwaukee. Back then I thought it was normal for disk jockeys to get free meals at fancy Italian restaurants (someone with Mafia credentials was repaying my father for promoting an Italian accordion player on his show). I also assumed it was normal for Italians to bury their dead in lye in back alleys and abandoned warehouses.

This is how the IMF protection scam works:

Step 1: The IMF offers you a loan (as they did Hungary in July and Ireland in November).

IMF loans come with draconian conditions - structural adjustment programs, intended to open your country to foreign corporations. There is an immediate demand for your government to slash public spending - on education, health care, social services and basic needs, such as clean drinking water. Forcing a country to privatize their public water services immediately creates a market for multinational water monopoly to move in. Likewise forcing them to privatize health services (all industrialized countries, except for the US, have national health systems) creates more favorable markets for drug and health insurance companies.

Step 2: If you refuse the loan, the ratings agencies waltz in and bankrupt your country by downgrading your credit rating.

Since the 2008 economic collapse, all industrialized countries have been running large deficits. And because it's political suicide to raise taxes on the rich, they borrow the money they need to run government services from Wall Street investment banks. With a low credit rating, Goldman Sachs can jack your interest rate as high as 8%, and your country goes broke trying to make the interest payments.

Economic Blackmail vs CIA/Military Intervention

Apparently the IMF has greatly refined their technique since the seventies and eighties - relying more on economic pressure than brute force. As John Perkins describes in his 2004 Confessions of an Economic Hit Man, third world countries that refused IMF loans used to be threatened with covert CIA destabilization and regime change - or even political assassination. Obviously economic blackmail is a less expensive and more predictable approach.

The IMF: Saved by the Economic Collapse

Many people forget that the IMF was nearly bankrupt in 2007. Prior to the 2008 banking collapse, they only had outstanding loans to only a handful of countries (see There was a move in the late nineties for countries to pay off IMF loans early to escape crippling interest payments and draconian structural adjustment programs. Many Asian countries, badly burned in 1997, when the IMF and global currency traders virtually destroyed their economies, followed China's example and built substantial currency reserves to protect themselves against future IMF intervention. In fact, IMF revenues fell so steeply that there were forced to liquidate reserves to cover their bills.

The European debt crisis, generate mainly by massive banking bailouts and unwillingness to raise income taxes, has breathed new life into the IMF -- which has used their new-found wealth to undertake a major refurbish of their headquarters in Washington D.C. (see

The Case of New Zealand

Sometimes it's sufficient for the IMF to merely threaten to loan you money. New Zealand is a case in point. The IMF came knocking on our door in April 2010, issuing a warning that our public debt was too high and that we needed to (further) reduce public spending on education, health care and social services. The Mafia always did this to. If you were new to the neighborhood, the first visit was a friendly chat. They always waited till the second visit to put the squeeze on.

Next Page  1  |  2

(Note: You can view every article as one long page if you sign up as an Advocate Member, or higher).

Well Said 2   Valuable 2   Must Read 1  
Rate It | View Ratings

Dr Stuart Jeanne Bramhall Social Media Pages: Facebook page url on login Profile not filled in       Twitter page url on login Profile not filled in       Linkedin page url on login Profile not filled in       Instagram page url on login Profile not filled in

I am a 63 year old American child and adolescent psychiatrist and political refugee in New Zealand. I have just published a young adult novel THE BATTLE FOR TOMORROW (which won a NABE Pinnacle Achievement Award) about a 16 year old girl who (more...)
Go To Commenting
The views expressed herein are the sole responsibility of the author and do not necessarily reflect those of this website or its editors.
Follow Me on Twitter     Writers Guidelines

Contact AuthorContact Author Contact EditorContact Editor Author PageView Authors' Articles
Support OpEdNews

OpEdNews depends upon can't survive without your help.

If you value this article and the work of OpEdNews, please either Donate or Purchase a premium membership.

If you've enjoyed this, sign up for our daily or weekly newsletter to get lots of great progressive content.
Daily Weekly     OpEd News Newsletter
   (Opens new browser window)

Most Popular Articles by this Author:     (View All Most Popular Articles by this Author)

Did Fracking Cause the Virginia Earthquake?

The Tipping Point: When Do Americans Hit the Streets?

The President with No Past: Obama's Electability in 2012

The Mass Psychology of Fascism: Not a New Problem

Who Pulls Obama's Strings?

Developing Story: Hundreds of US-NATO Soldiers Arrive & Begin Operations on the Jordan-Syria Border

To View Comments or Join the Conversation:

Tell A Friend