Money Is Power An Inside View of the IMF's Massive Global Influence

By and Ullrich Fichtner

Part 9: 'Europe Must Reform Itself, That's Clear'


A short time later, Min Zhu serves Chinese green tea in his office, which is number 12-200 C. He doesn't use teabags. "Don't swallow the leaves," he says. "You'll need them again, because the second cup is the best," he says with a smile.

Most of the offices at the Fund are sparsely decorated, but there is not a single picture in Min Zhu's orderly office, not even a photo. He wears rimless glasses and sports a ponytail, handing over his business card with both hands. The card reads "Special Advisor to the Managing Director." It's a new position, as new as China's influence at the Fund.

Min Zhu is the human face of the billions coming from China, and Min Zhu is here to explain Asia to his boss, Strauss-Kahn.

"I don't get paid by China," he says. "I think as an IMF man." These are the words of a diplomat, but in the world in which Min Zhu operates, no positions are filled without a nod to national interests.

When he talks about the new Fund, the changed Fund, Min Zhu says that the IMF today is "an international organization" that is supposed to "supervise and sustain global macro-stability, on both an economic and financial level." The Fund observes and analyzes, and its true strength stems from the fact that an insecure world is searching for economic competence, and that the IMF's competence is no longer questioned, the way it was after the Asian crisis in the 1990s.

What the World Could Learn from Asia

The IMF's purpose is to interpret and admonish. It may have a better understanding of crises than others, but it has little power to impose sanctions. It is constantly dependent on the instructions of those it is intended to monitor.

Min Zhu is proud of the Fund's new tools. One of them is the Financial Sector Assessment Program (FASP), which the IMF's detectives can use to monitor the global financial market and its complex instruments, those with complicated names like credit default swaps. The new IMF, says Min Zhu, is a beacon in the lunacy of the crisis. He likes it when IMF staffers are referred to as "global citizens who present global issues and developments in a neutral way."

Min Zhu says that the rest of the world could learn a thing or two from Asia's emerging markets, which he says have "a stronger heartbeat and better macro-economic conditions" than European countries, which leads to "greater political reserves." Deficits are lower, he says, and so is foreign debt, and many of the emerging markets are holding foreign exchange reserves, as well as having reached "reasonable inflation rates." Also, he adds, the Chinese and Indian markets understood, much earlier than the Americans, for example, that real estate has been the "most unstable market worldwide over the last 50 years." As a result, they have already introduced careful monitoring.

Is he predicting the fall of Europe and the rise of Asia? Min Zhu isn't that quick to make such assessments. He knows that China, outside its major cities, is still poor, and he knows that Europe has its strengths. "Yes, it sometimes takes a while to get decisions through all the parliaments, but Europe is taking steps, solid and strong steps in one direction," says Min Zhu.

But there are two things he finds amazing about Europe, an assessment he shares with his French boss. "There is the issue of social welfare, and demographic change. Everybody has longevity, so the cost for the pension and health insurance is very different today than, say, 20 years ago. The model, of course, does not fit today's needs. It would not survive tomorrow." Besides, he adds, Europe needs a growth strategy, an industrial strategy. Europe must invent new products and sectors that meet the demands of the world -- otherwise, with labor costs of $30 an hour, they won't prevail "against a country that pays $3." Reforms -- that's what it all boils down to, even at the new IMF, except that the target of the reforms has changed.

"Europe must reform itself, that's clear," says Min Zhu, the Chinese adviser at the International Monetary Fund. And then he adds, with a smile: "We'll be happy to help."

Translated from the German by Christopher Sultan

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lakechamplainer 10/05/2010
1. Who elected Strauss-Kahn?
I found this to be a very informative article. Kudos to Klaus Brinkbaeumer and Ullrich Fichtner. I get the sense the that Strauss and the other IMFers were trying to be careful about what they said, but didn't realize how it would sound to an average person. For example, * Print * E-Mail * Feedback 10/04/2010 Money Is Power An Inside View of the IMF's Massive Global Influence By Klaus Brinkbäumer and Ullrich Fichtner Photo Gallery: 9 Photos Martin H. Simon / MHS Three years ago, the International Monetary Fund was irrelevant, an object of derision for all opponents of globalization. Under director Dominique Strauss-Kahn and as a result of the global economic crisis, the IMF has since become more influential -- governing like a global financial authority. It is also putting Europe under pressure to reform. The building that houses the headquarters of the global economy is a heavily guarded, 12-story beige structure in downtown Washington with a large glass atrium and water bubbling in fountains. The flags of the 187 member states are lined up in tight formation. Visitors walking into the office building find the cafeteria on the right, where many meetings are held. There, experts in their shirtsleeves, their jackets draped over the backs of chairs, drink lattes out of paper cups and talk countries into crises or upturns. A little farther down the hallway is the Terrace, the IMF building's upscale restaurant where the director receives official guests. On a Tuesday afternoon in late September, as the first leaves are falling from trees outside, the director, wearing a blue suit and a blue tie, is sitting on a blue couch high up in his office at the headquarters of the International Monetary Fund (IMF), outlining his idea of a new world. Some of it already exists, in the form of a new world order established in September 2008 to replace the one that was collapsing at the time. The result wasn't half bad -- but it is robust? 'The Money Is The Medicine' These are important times for humanity. The crisis has forced everyone to see many things from a new perspective. Now the IMF is preparing for its annual meeting on Oct. 8. Can it live up to expectations, and can it police the new global economic order and keep global banks in check? "You have to imagine the IMF as a doctor," says Dominique Strauss-Kahn, the 61-year-old director of the International Monetary Fund. "The money is the medicine. But the countries -- the patients -- have to change their habits if they want to recover. It doesn't work any other way." He smiles benevolently as he says these things, his eyes disappearing behind small cushions of wrinkled skin. Who elected him to anything? Who his he to say how human beings should order their societies? In Strauss-Kahn's view, the IMF should become an administrative unit of sorts for the G-20, an agency that "tries to find solutions for global and national problems," and comes up with plans and create values. "In the end we aim at much more than just the right financial and economic policies. The ultimate goal, of course, is world peace through economic stability." This is the way Strauss-Kahn views his organization, and the astonishing thing is that hardly anyone, with the exception of a lone professor in Boston, disagrees with him anymore. As an American, I don't recall a process being followed to give up sovereignty and assign it to the IMF, and to assign them control of a large chunk of my tax dollars. I certainly don't support it, and it is clearly against the US Constitution.
BTraven 10/07/2010
2.
Zitat von lakechamplainerI found this to be a very informative article. Kudos to Klaus Brinkbaeumer and Ullrich Fichtner. I get the sense the that Strauss and the other IMFers were trying to be careful about what they said, but didn't realize how it would sound to an average person. For example, * Print * E-Mail * Feedback 10/04/2010 Money Is Power An Inside View of the IMF's Massive Global Influence By Klaus Brinkbäumer and Ullrich Fichtner Photo Gallery: 9 Photos Martin H. Simon / MHS Three years ago, the International Monetary Fund was irrelevant, an object of derision for all opponents of globalization. Under director Dominique Strauss-Kahn and as a result of the global economic crisis, the IMF has since become more influential -- governing like a global financial authority. It is also putting Europe under pressure to reform. The building that houses the headquarters of the global economy is a heavily guarded, 12-story beige structure in downtown Washington with a large glass atrium and water bubbling in fountains. The flags of the 187 member states are lined up in tight formation. Visitors walking into the office building find the cafeteria on the right, where many meetings are held. There, experts in their shirtsleeves, their jackets draped over the backs of chairs, drink lattes out of paper cups and talk countries into crises or upturns. A little farther down the hallway is the Terrace, the IMF building's upscale restaurant where the director receives official guests. On a Tuesday afternoon in late September, as the first leaves are falling from trees outside, the director, wearing a blue suit and a blue tie, is sitting on a blue couch high up in his office at the headquarters of the International Monetary Fund (IMF), outlining his idea of a new world. Some of it already exists, in the form of a new world order established in September 2008 to replace the one that was collapsing at the time. The result wasn't half bad -- but it is robust? 'The Money Is The Medicine' These are important times for humanity. The crisis has forced everyone to see many things from a new perspective. Now the IMF is preparing for its annual meeting on Oct. 8. Can it live up to expectations, and can it police the new global economic order and keep global banks in check? "You have to imagine the IMF as a doctor," says Dominique Strauss-Kahn, the 61-year-old director of the International Monetary Fund. "The money is the medicine. But the countries -- the patients -- have to change their habits if they want to recover. It doesn't work any other way." He smiles benevolently as he says these things, his eyes disappearing behind small cushions of wrinkled skin. Who elected him to anything? Who his he to say how human beings should order their societies? In Strauss-Kahn's view, the IMF should become an administrative unit of sorts for the G-20, an agency that "tries to find solutions for global and national problems," and comes up with plans and create values. "In the end we aim at much more than just the right financial and economic policies. The ultimate goal, of course, is world peace through economic stability." This is the way Strauss-Kahn views his organization, and the astonishing thing is that hardly anyone, with the exception of a lone professor in Boston, disagrees with him anymore. As an American, I don't recall a process being followed to give up sovereignty and assign it to the IMF, and to assign them control of a large chunk of my tax dollars. I certainly don't support it, and it is clearly against the US Constitution.
Presumably the man who runs the IMF does not know that his organisation could became redundant given that most countries "helped out" by the IMF have learned its lesson, namely to stockpile as much money as possible. China does it, Brazil too, even Argentina piles lot of cash. From one extreme to another one.
esperonto 10/08/2010
3. a bee in the bonnet
Its plain to me that these old guys who want the New World Order have what is known as a "bee in their bonnets", meaning a little idea they hope to capitalize on, which is more grandiose in concept than in its true practice -- namely, that this New World Order will not pan out. It will fall apart, but perhaps before doing so, a few people will get rich, and that is all it is really about. Humanity will shirk off the stress the NWO is putting on them with all this military action, and they will relax back into normal humans and laugh at the diabolicalness of the western minds trying to push people over the edge.
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