By
Vijay Prashad, Paola Estrada, Ana Maldonado, and Zoe PC

On March 16, 2020,
the chief of the International Monetary Fund (IMF) Kristalina
Georgieva wrote a blog
post
on the Fund’s website; it represents the kind of generosity
necessary in the midst of a global pandemic. “The IMF stands ready
to mobilize its $1 trillion lending capacity to help our membership,”
she wrote. Countries with “urgent balance-of-payments needs”
could be helped by the IMF’s “flexible and rapid-disbursing
emergency response toolkit.” Through these mechanisms, the IMF said
that it could provide $50 billion to developing countries and $10
billion to low-income countries at a zero-interest rate.

The day before
Georgieva made this public statement, the foreign ministry of the
government of Venezuela sent a letter to the IMF asking for funds to
finance the government’s “detection and response systems” for
its efforts against the coronavirus. In the letter, President Nicolas
Maduro wrote that his government is “taking different preventive
measures and following through strict and exhaustive controls to
protect the Venezuelan people.” These measures require funding,
which is why the government is “turning to your honorable
organization to request its evaluation about the possibility of
authorizing Venezuela a financing line of $5 billion from the Rapid
Financing Instrument emergency fund.”

Georgieva’s policy
to provide special assistance to countries should have been
sufficient for the IMF to provide the assistance that the Venezuelan
government had requested. But, very quickly, the Fund declined the
request from Venezuela.

It is important to
underline the fact that the IMF made this denial at a time when the
coronavirus had begun to spread in Venezuela. On March 15, when
Venezuelan President Nicolas Maduro’s government sent the letter to
the IMF, Maduro met with senior government officials in Caracas. The
Venezuelan pharmaceutical body (CIFAR) and the Venezuelan medical
equipment companies said that they would be able to increase
production of machines and medicines to stem the crisis; but, they
said, they would need key raw materials that have to be imported. It
is to pay for these imports that the Venezuelan government went to
the IMF. The denial of the loan will directly punish the Venezuelan
health apparatus and prevent Venezuela from properly tackling the
coronavirus pandemic.

“This is the most
serious situation we have ever faced,” said President Maduro as he
put in place new measures. The Venezuelan government imposed an
indefinite national quarantine and has put in place—building on the
local self-government (communes)—a process to distribute food and
key supplies. All the institutions of the state are now involved in
doing their part in helping “flatten the curve” and “break the
chain” of contagion. But, because of the IMF loan denial, the
country will have a harder time producing testing kits, respirators,
and key medicines for those infected with the virus.

Venezuela and the
IMF

Venezuela is a
founding member of the IMF. It has, despite being an oil-rich state,
come to the IMF several times for various forms of assistance. The
cycle of IMF interventions in Venezuela in the 1980s and early 1990s
led to an uprising in 1989 that delegitimized the Venezuelan elite;
it was on the back of the popular protests against the IMF that Hugo
Chávez built the coalition that propelled him to office in 1998 and
which started the Bolivarian Revolution in 1999. By 2007, Venezuela
paid off its outstanding debts to both the IMF and the World Bank;
Venezuela cut its ties to these institutions, hoping to build a Bank
of the South—rooted in Latin America—as an alternative. But
before this Bank could be set up, a round of crises struck Latin
America, forced by a fall in commodity prices.

Venezuela’s
economy relied upon foreign oil exports to generate the revenue
necessary to import goods. With the fall in oil prices came a
directed attack on Venezuela by a new round of unilateral sanctions
from the United States. These sanctions prevented oil companies and
transportation firms from doing business with Venezuela;
international banks seized Venezuela’s holdings in their vaults
(including $1.2 billion in gold in the Bank of England) and stopped
doing business with Venezuela. This sanctions regime, tightened
further after Donald Trump became the president of the United States,
deeply hurt Venezuela’s ability to sell its oil and buy products,
including supplies for its state health sector.

The IMF Takes
Sides

In January 2019, the
U.S. government attempted a coup against the government of President
Maduro. It chose as its instrument Juan Guaidó, whom the U.S. named
as the actual president of the country. U.S. banks hastily seized the
Venezuelan state assets held by them and turned them over to Guaidó.
Then, in a startling move, the IMF said that the Venezuelan
government would no longer be allowed to use its $400 million in
special drawing rights (SDRs), the currency of the IMF. It said that
it had taken this action because of the political uncertainty in
Venezuela. In other words, because of the attempted coup, which
failed, the IMF said it would not “take sides” in Venezuela; by
not “taking sides,” the IMF refused to allow the government of
Venezuela to access its own funds. Strikingly, Guaidó adviser
Ricardo Hausmann, a former IMF development committee chair and head
of the Inter-American Development Bank, said at that time that he
expected that when the regime change occurs, the money will be
available to the new government. This is the IMF directly interfering
in Venezuelan politics.

Neither at that time
nor now has the IMF actually denied that the government of Nicolas
Maduro is the legitimate government in Venezuela. The IMF continues
to acknowledge on its website that the representative of Venezuela in
the IMF is Simon Alejandro Zerpa Delgado, the minister of finance in
Maduro’s government. One of the reasons why this is so is that
Guaidó could not prove that he had the support of the majority of
the member-states of the IMF. Since he could not prove his standing,
the IMF—again extraordinarily—has denied the Maduro government
its legitimate right to its own funds and to borrow against
facilities provided by the Fund to its members.

The IMF Denies

Normally, the IMF
takes time when it gets a request for funds. The request has to be
studied by the analysts, who look at the situation in the country and
see whether the request is legitimate. In this case, the IMF
responded immediately. It said no.

A spokesperson for
the Fund—Raphael Anspach—would not answer specific questions
about this denial; in 2019, he had been similarly cautious about
saying anything about the denial of access to the $400 million in
SDRs. This time, Anspach sent us a formal statement that the IMF has
released to the media. The statement said that while the IMF
sympathizes with the predicament of the people of Venezuela, “it is
not in a position to consider this request.” Why is this so?
Because, the IMF says, its “engagement with member countries is
predicated on official government recognition by the international
community.” “There is,” the statement says, “no clarity on
recognition at this time.”

But there is
clarity. The IMF continues to list the Venezuelan foreign minister on
its website. The United Nations continues to recognize the Venezuelan
government. That should be the official standard for the IMF to make
its determination. But it is not. It is taking dictation from the
U.S. government. In April 2019, U.S. Vice President Mike Pence went
to the UN Security Council, where he said that the UN should accept
Juan Guaidó as the legitimate president of Venezuela; he turned to
the Venezuelan ambassador to the UN—Samuel Moncada Acosta—and
said, “You shouldn’t be here.” This is a moment of great
symbolism, the United States acting as if the UN is its home and that
it can invite whomsoever it wants.

The IMF denial of the $5 billion request from Venezuela follows Pence’s sentiment. It is a violation of the spirit of international cooperation that is at the heart of the UN Charter.

Author
Bios:

Vijay
Prashad is an Indian historian, editor and journalist. He is a
writing fellow and chief correspondent at Globetrotter,
a project of the Independent Media Institute. He is the chief editor
of LeftWord
Books
and the director of Tricontinental:
Institute for Social Research.
He has written more than twenty books, including The
Darker Nations: A People’s History of the Third World
(The New Press, 2007), The
Poorer Nations: A Possible History of the Global South
(Verso, 2013), The
Death of the Nation and the Future of the Arab Revolution
(University of California Press, 2016) and Red
Star Over the Third World
(LeftWord, 2017).

Paola
Estrada is in the Secretariat of the International Peoples Assembly
and is a member of the Brazilian chapter of ALBA Movements
(Continental Coordination of Social Movements toward the Bolivarian
Alliance for the Peoples of Our America).

Ana
Maldonado is in the Frente Francisco de Miranda (Venezuela).

Zoe
PC is a journalist with Peoples
Dispatch
and reports on people’s movements in Latin America. She is also
associated with Congreso de los Pueblos in Colombia.

Source: Independent Media Institute

Credit Line: This article was produced by Globetrotter, a project of the Independent Media Institute.