‘Financial world split: Dollar group vs. BRICS group’
The International Monetary Fund [IMF] has decided to change its rules in order to support countries, which are unable to repay their lenders. The new policy will help Ukraine if it fails to repay $3 billion to Russia. Russian officials have condemned the decision as hasty and biased.
RT: What is it about Ukraine that's making the IMF so willing to change its guidelines?
Michael Hudson: It has really become a part of the Cold War. For many years the World Bank has been a part of the US Defense Department - Robert McNamara, Bob Zoellick, Paul Wolfowitz... But essentially Ukraine has now radically changed almost all of its rules. …
The IMF staff said: “Ukraine can’t pay back the money.” There is no visible way in which it can, because it declared war on its export sector. So Ukraine then was under pressure to give in to the US as if it has become like the World Bank, an arm of the Defense Department, that says: “Countries do have to repay loans to foreign governments accept for Russia, and by implication, accept for China, accept for the BRICS.”
So the IMF now says: “We are now only going to follow our rules and act on behalf of the dollar area. Countries that owe dollar debts to the US and its satellite currencies like the euro will have to pay. But if your owe debts to Russia, China, Iran, or any country not in the orbit, it is ok not to pay; we will lend you the money, the US will lend you the money, the IMF will lend you the money. You can now split the world into two currency groups: the dollar group and the BRICS group.” So this essentially is a declaration of financial war by the US against all countries that are not using the US dollar in foreign trade and are not basing their own domestic currency on the US dollar as the euro is doing. This is a radical change that is the most important change in half a century.
James Petras, from Binghamton University shared his opinion with RT:"I think it is a case of mutual manipulation. The US is interested in incorporating Ukraine into the NATO alliance and using it as a pressure point against Russia. On the other hand [Petro] Poroshenko’s economy is in dire straits; it is in a negative spin; it has few resources; it lacks popular support. He is still engaged in the warfare with the Eastern regions. He has alliances among the most extreme right-wing groups in Europe…His crony capitalism has alienated middle class Ukrainians. I think there is a question here of a government with the few resources, and a superpower looking to manipulate the regime to serve its imperial interest."
RT: The new rules are supposed to also apply to all other countries that are in debt. How much of a gamble is this for the IMF?
MH: It is a gamble that it will not lose Russia, China, the BRICS countries and other countries that they want to simply withdraw. Through the last 50 years the IMF has had bailout program saying: “We will lend a little bit of money and other governments will come in and they’ll join us to bail out programs. And the enforcement lever that we have to make sure that the governments will be repaid - if a country doesn’t repay the IMF, then we won’t make any further loans to it.”
That means that none of the other governments will join either. Well, now the IMF is saying: “If the US has a political or military fight with a country, or if there is a country that is not a part of the US dollar area, all that is changed." And it will no longer act as a collection agent for governments that owe countries except for the US, European and Japanese currency. That is a declaration of financial war...
RT: Ukraine isn't likely to repay its three billion dollar debt to Russia this year. Its international bailout is more than ten times bigger. How is it going to be able to pay any of it?
MH: They’ve already said they don’t intend to repay a single penny. They say: “We don’t have to pay Russia, because America is backing us, and America is going to support us…”
Last May when the IMF made the last loan to Ukraine, Lagarde said: “I hope Ukraine uses that to build up its industry and doesn’t go to war.” The next day President [Petro] Poroshenko said: “Now that we have the loan... we’re going to spend all the money we have militarily supporting the oligarchs in the East that are fighting against the Russian speakers.” So basically the IMF loan is to finance the civil war, ... the ethnic war of Ukrainian speakers against the Russian speakers, and the West against the East.
The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.