The true nature of IMF: the case of Ukraine

The right to development is an inalienable human right… The human right to development also implies the full realization of the right of peoples to self-determination, which includes…the exercise of their inalienable right to full sovereignty over all their natural wealth and resources…

The United Nations Declaration on the Right to Development (1986)

Out of the frying pan into the fire

After the stunning civil protest known as the Euromaidan, or simply Maidan, the temporary government of Ukraine is preoccupied with pulling the country out of the economic chaos caused by the previous government of ex-president Viktor Yanukovych. Ukraine’s newly-elected prime-minister Arseniy Yatsenyuk announced:

The treasury is empty. We will do everything not to default. If we get the financial support from the IMF, the U.S., we will do it. I’m going to be the most unpopular prime minister in the history of my country. But this is the only solution. I would never promise any kind of huge achievements. First and the most important issue is to stabilize the situation.

While the Ukrainian government has been desperate to to get a new loan from the International Monetary Fund, I am strongly convinced IMF is nothing but another tool used by the global corporate elites to achieve certain strategic and political goals, with the loan beneficiaries becoming over-dependent on external financial assistance.

The true nature of IMF

The International Monetary Fund was created back in 1945. The organization’s stated objectives are to “foster global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world”. The Fund provides “political consultations and financing to countries in difficulty, as well as cooperates with developing states to promote their macroeconomic stability and reduce poverty”. These tasks are achieved by providing loans, which is generally accompanied with a number of conditions and “recommendations” to improve the situation.

Now let us ask ourselves a question: in what way can social spending cuts, recommended by IMF to Ukraine, as well as other states, help “achieve economic stability and reduce poverty”? In no way. And in fact – quite the contrary. The so-called “structural adjustments” laid out by IMF – privatization, governmental cuts on social welfare, increasing taxation, reducing state budget and many others – lead to destabilization and regression of national economies, impoverishment of populations, and hooking of member-states to loans.

Not only humiliating conditions are imposed to peoples in return for loans, the recipient-state has to give away most of its GDP to cover the national debt. Moreover, an IMF loan tranche is never used directly for social welfare (like salary increases, procurement of rare medical equipment, support of underprivileged groups of people) or economic (investing into industry and agriculture) purposes. Instead, it is always transferred for ‘storage’ to a country’s National Bank.

The results of IMF activities are staggering:

  • In 1980’s IMF demanded that Yugoslavia ceases regional leveling-off in return for a loan tranche, which contributed to unleashing the civil war.
  • In 1989 in return for a loan the government of Rwanda stopped supporting farmers and devalued the national currency. The result – sharp drop in people’s incomes and, again, a bloody war.
  • In 1980’s IMF granted another loan tranche to Mexico in return for privatization and governmental spending cuts. The result was equally unfortunate – impoverishment of the farmers, mass unemployment, huge expenditures for paying off the national debt.

And in the meantime, IMF continues recommending all these austere measures to the developing (and not only) countries, including Ukraine, in order to “overcome global financial crisis”. Do IMF business analysts not consider that these measures only increase crisis developments in the society? How come that “professional experts” do not envisage a likely growth on violence, crime and alcohol addiction as a result of “economic stabilization measures”? Can ‘advanced’ economists really bear the situation when most of the world’s GDP is given away to cover national debts, with peoples blaming their own governments?

In my view, economists, analysts and experts are fully aware of this. And the seeming contradictions disappear once you understand the true political objectives of the players:

  • The exclusively economic field of IMF activities is nothing but a myth. This organization is as much political as the UN or NATO, and is in essence a tool for achieving specific political goals by specific political elites. Interestingly enough, IMF displays its “true face” now and then. As an example, consider the not so late events in Belarus, when IMF demanded to release political prisoners in the country in return for a loan tranche.
  • It must be noted that IMF is mainly controlled by the U.S., with them being the main contributor to the Fund. And this is no wonder, as the U.S. Federal Reserve System (the country’s Central Bank) is a private institution enjoying the right of unrestricted dollar emission, with dollar not being valued against anything.
  • The offer that “cannot be resisted” – that is a loan via IMF for economic development – is in fact debt enslavement of national economies. This is the way economic crises are arranged – loans are imposed for the amounts that cannot be returned in principle; sooner or later, this a followed by a “margin call”, i.e. a request to fulfill all payment obligations.
  • What happens with countries that cannot meet their payment obligations? They are either threatened with default (consider the crisis situations in Greece, Spain, Portugal), or are forced to find a “diplomatic solution” of the problem. For example, reducing the amount of state debt in return for allowing foreign military bases into their territories, or signing profitable contracts with ‘right’ parties for the exploration and exploitation of a country’s strategical energy resources (such as oil).
  • In this way, little by little nation-states are giving away their sovereignty. It is this struggle for sovereignty of “secondary” players that characterizes the present-day geopolitical situation. And the International Monetary Fund is a powerful tool in this struggle. Not more, but not less.

A note about mass media

Undoubtedly, official world mass media will never be able to highlight the true reasons behind of the vicious circle, when after receiving “economic assistance” whole peoples are being deprived of their social, economic and human rights. This is the case as all world mass media are controlled by the same power that created international financial institutions to help achieve its strategic goals. The power that will never care how many children die of hunger all over the planet. The power that interferes aggressively into domestic politics of other nation-states. The power that crushed Yugoslavia, Serbia, Iraq, Afghanistan, Libya, and many other places uncovered by the media. The power that evaluates everything only from the perspective of profit. And such profit-seeking logic is by nature in conflict with the interests of most of world population.

Indeed, the most dangerous and lethal weapons of 21st century are not nuclear, chemical, or biological ones. These are mass media, or mass destruction media, to be more precise. However independent they may claim to be, mass media will always serve as a political tool to influence the population of this planet. The ongoing Crimean crisis in Ukraine is a vivid example. And this applies to each and every international or domestic political process. I am convinced that it is not that terrible if people die in a valiant battle for their country. It is much more terrible if people lose the war in their hearts and minds.


This post does not seek to explain Ukraine’s difficulties exclusively by an external factor. What it conveys is that the most talked about political events are often just a “top of the iceberg”. Virtually any country’s foreign policy is always in close relation with its domestic policy. Ukraine’s domestic policy, like that of many other states, is inevitably dependent upon IMF and similar international financial institutions.

The victory of democracy over slavery is the greatest myth that has been implanted into consciousness of masses. Slavery still exists today, although in more sophisticated financial, economic and political forms. I believe that every Ukrainian citizen and resident needs to understand what is behind advices and loans from international “financial partners”. Considering all the above, Ukraine’s key geopolitical priority lies in strengthening its national sovereignty. This is all the more important as no country without a full sovereignty can carry out independent policies for the sake of its national interests.


One thought on “The true nature of IMF: the case of Ukraine

  1. Pingback: The true nature of the IMF: the case of Ukraine | The Global Realm

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