Wednesday, September 9, 2009

IMF Gives $164 million to Coup Government in Honduras, Following Familiar Pattern

IMF Gives $164 million to Coup Government in Honduras, Following Familiar Pattern
by Mark Weisbrot

The IMF is undergoing an unprecedented expansion of its access to resources, possibly reaching a trillion dollars. This week the European Union committed $175 billion, $67 billion more than even the $108 billion that Washington agreed to fork over after a tense standoff between the U.S. Congress and the Obama administration earlier this summer.

The Fund and its advocates argue that the IMF has changed. The IMF is "back in a new guise," said The Economist. This time, we are told, it's really going to act as a multilateral organization that looks out for the countries and people of the world, and not just for Washington, Wall Street, or European banks.

But it's looking more and more like the same old IMF on steroids. Last week the IMF disbursed $150.1 million to the de facto government of Honduras, and it plans to disburse another $13.8 million on September 9. The de facto government has no legitimacy in the world. It took power on June 28th in a military coup, in which the elected President, Manuel Zelaya, was taken from his home at gunpoint and flown out of the country. The Organization of American States suspended Honduras until democracy is restored, and the United Nations also called for the "immediate and unconditional return" of the elected president.

No country in the world recognizes the coup government of Honduras. From the Western Hemisphere and the European Union, only the United States retains an ambassador there. The World Bank paused lending to Honduras two days after the coup, and the Inter-American Development Bank did the same the next day. More recently the Central American Bank of Economic Integration suspended credit to Honduras. The European Union has suspended over $90 million in aid as well, and is considering further sanctions.

But the IMF has gone ahead and dumped a large amount of money on Honduras -- the equivalent would be more than $160 billion in the United States -- as though everything is ok there.

This is in keeping with U.S. policy, which is not surprising since the United States has been -- since the IMF's creation in 1944 -- the Fund's principal overseer. Washington has so far made only a symbolic gesture in cutting off about $18.5 million to Honduras, while continuing to pour in tens of millions more.

In fact, more than two months after the Honduran military overthrew the elected president of Honduras, the United States government has yet to determine that a military coup has actually occurred. This is because such a determination would require, under the U.S. Foreign Appropriations Act, a cut off of aid.

One of the largest sources of U.S. aid is the Millennium Challenge Corporation (MCC), a government entity whose board is chaired by U.S. Secretary of State Hillary Clinton.

Interestingly, there were two military coups in the last year in countries that were receiving MCC money: Madagascar and Mauritania. In both of those cases, MCC aid was suspended within three days of the coup.

The IMF's decision to give money to the Honduran government is reminiscent of its reaction to the 2002 coup that temporarily overthrew President Hugo Chavez of Venezuela. Just a few hours after that coup, the IMF's spokesperson announced that "we stand ready to assist the new administration in whatever manner they find suitable." This immediate pledge of support by the IMF to a military-installed government was at the time unprecedented. Given the resources and power of the IMF, it was an important source of international legitimacy for the coup government. Members of the U.S. Congress later wrote to the IMF to inquire how this happened. How did the IMF decide so quickly to support this illegitimate government? The Fund responded that no decision was made, that this was just an off-the-cuff remark by its spokesperson. But this seems very unlikely, and in the video on the IMF's web site, the spokesperson appears to be reading from a prepared statement when talking about money for the coup government.

In the Honduran case, the IMF would likely say that the current funds are part of a $250 billion package in which all member countries are receiving a share proportional to their IMF quota, regardless of governance. This is true, but it doesn't resolve the question as to whom the funds should be disbursed to, in the case of a non-recognized, illegitimate government that has seized power by force. The Fund could very easily postpone disbursing this money until some kind of determination could be made, rather than simply acting as though there were no question about the legitimacy of the coup government.

Interestingly, the IMF had no problem cutting off funds under its standby arrangement with the democratically-elected government of President Zelaya in November of last year, when the Fund did not agree with his economic policies.

We're still a long way from a reformed IMF.
Mark Weisbrot is co-director of the Center for Economic and Policy Research, in Washington, D.C. He received his Ph.D. in economics from the University of Michigan. He is co-author, with Dean Baker, of Social Security: The Phony Crisis (University of Chicago Press, 2000), and has written numerous research papers on economic policy. He is also president of Just Foreign Policy. This article was first published by the Guardian on September 2009 and then reproduced on the CEPR Web site under a Creative Commons license. En español: . Comment | Trackback | Print
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September 2, 2009

 

IMF: stop funding Honduras

By giving millions of dollars to Honduras, the IMF is supporting an illegitimate coup government the world doesn't recognise
The IMF is undergoing an unprecedented expansion of its access to resources, possibly reaching a trillion dollars. This week the EU committed $175bn, $67bn more than even the $108bn that Washington agreed to fork over after a tense stand-off between the US Congress and the Obama administration earlier this summer.
The Fund and its advocates argue that the IMF has changed. The IMF is "back in a new guise", says the Economist. This time, we are told, it's really going to act as a multilateral organisation that looks out for the countries and people of the world, and not just for Washington, Wall Street or European banks.
But it's looking more and more like the same old IMF on steroids. Last week the IMF disbursed $150m to the de facto government of Honduras, and it plans to disburse another $13.8m on 9 September. The de facto government has no legitimacy in the world. It took power on 28 June in a military coup, in which the elected President Manuel Zelaya was taken from his home at gunpoint and flown out of the country.
The Organisation of American States suspended Honduras until democracy is restored, and the UN also called for the "immediate and unconditional return" of the elected president.
No country in the world recognises the coup government of Honduras. From the western hemisphere and the EU, only the US retains an ambassador there. The World Bank paused lending to Honduras two days after the coup, and the Inter-American Development Bank did the same the next day. More recently the Central American Bank of Economic Integration suspended credit to Honduras. The EU has suspended over $90m in aid as well, and is considering further sanctions.
But the IMF has gone ahead and dumped a large amount of money on Honduras – the equivalent would be more than $160bn in the US – as though everything is OK there.
This is in keeping with US policy, which is not surprising since the US has been – since the IMF's creation in 1944 – the Fund's principal overseer. Washington made a symbolic gesture earlier this year by cutting off about $18.5m to Honduras, and the state department announced on Thursday that it is terminating other assistance.
But more than two months after the Honduran military overthrew the elected president of Honduras, the US government has yet to determine that a military coup has actually occurred. This is because such a determination would require, under the US Foreign Appropriations Act, a complete cutoff of aid.
One of the largest sources of US aid is the Millennium Challenge Corporation (MCC), a government entity whose board is chaired by Hillary Clinton, the US secretary of state.
Interestingly, there were two military coups in the last year in countries that were receiving MCC money: Madagascar and Mauritania. In both of those cases MCC aid was suspended within three days of the coup.
The IMF's decision to give money to the Honduran government is reminiscent of its reaction to the 2002 coup that temporarily overthrew President Hugo Chávez of Venezuela. Just a few hours after that coup, the IMF's spokesperson announced: "We stand ready to assist the new administration in whatever manner they find suitable."
This immediate pledge of support by the IMF to a military-installed government was at the time unprecedented. Given the resources and power of the IMF, it was an important source of international legitimacy for the coup government. Members of the US Congress later wrote to the IMF to inquire how this happened. How did the IMF decide so quickly to support this illegitimate government?
The Fund responded that no decision was made, that this was just an off-the-cuff remark by its spokesperson. But this seems very unlikely, and in the video on the IMF's website, the spokesperson appears to be reading from a prepared statement when talking about money for the coup government.
In the Honduran case, the IMF would likely say that the current funds are part of a $250bn package in which all member countries are receiving a share proportional to their IMF quota, regardless of governance. This is true, but it doesn't resolve the question as to whom the funds should be disbursed to, in the case of a non-recognised, illegitimate government that has seized power by force. The Fund could very easily postpone disbursing this money until some kind of determination could be made, rather than simply acting as though there were no question about the legitimacy of the coup government.
Interestingly, the IMF had no problem cutting off funds under its standby arrangement with the democratically elected government of President Zelaya in November of last year, when the Fund did not agree with his economic policies.
We're still a long way from a reformed IMF.

 

IMF bails out Honduras Coup Regime with $150 million

3813318304_3ce4848a11_b.jpg
Reuters' Spanish service and Venezeuala's Telesur are reporting that the IMF granted US$150 million to the defacto regime in Honduras, which is now into into its third month.
Both reports stem from a press release by the Honduran Central Bank (BCH).
The BCH release reads (in part):
"At the initiative of the twenty industrialized and emerging countries (G-20), presided by the Prime Minister of England, Gordon Brown, the International Monetary Fund injects liquidity into the world economy and Honduras augments it's international reserves by $150.1 million."
The CBH release goes on to state that the money was received on August 28th. Telesur is reporting that the IMF will give another $13.8 million to the coup regime next week.
The IMF does not have an update on their Honduras page since before the coup happened. The BCH has not posted a press release in English since last year.
The only report on the payment in English thus far is posted on Iran's PressTV.

Photo of anti-coup protesters in Honduras by Sandra Cuffe. All translations above are unofficial.




FMI detiene fondos para Honduras

A pesar de que el Fondo designo 165 millones de dólares, estableció que el país no podrá usarlos; la condición es que su Gobierno de facto sea reconocido por la comunidad mundial.

Roberto Micheletti gobierna el país luego de que Manuel Zelaya fuera destituido. (Foto: AP) Roberto Micheletti gobierna el país luego de que Manuel Zelaya fuera destituido. (Foto: AP)
WASHINGTON (Reuters) — Honduras no podrá usar los 165 millones de dólares (104.8 millones de DEG) asignados al país por el Fondo Monetario Internacional hasta que el Gobierno de facto sea reconocido por la comunidad global, dijo el martes un portavoz del organismo. Los recursos forman parte de un total de 250,000 millones de dólares que el FMI emitió en Derechos Especiales de Giro (DEG) para fortalecer las reservas de los países en medio de la crisis mundial.
Cada país recibe una parte de ese total en DEG, la unidad contable del FMI, según el tamaño de su cuota en el organismo.
Para convertir la asignación de DEG en moneda dura, los países deben alcanzar un acuerdo con otro miembro del FMI para comprar los DEG.
El portavoz indicó que los recursos podrán ser contabilizados como parte de las reservas internacionales de Honduras, pero que no podrán ser convertidos en monedas duras.
"En el caso específico de Honduras, el actual régimen de facto no puede usar los DEG hasta que se tome una decisión sobre si el Fondo tendrá trato con ese régimen en calidad de Gobierno de Honduras", explicó el portavoz.
La comunidad internacional está presionando por el retorno del destituido presidente hondureño Manuel Zelaya a su cargo, luego de que el mandatario fue removido por el ejército de su país a fines de junio.
El Congreso de Honduras designó a un presidente interino, Roberto Micheletti.


El FMI "presiona" a Honduras

Roberto Micheletti.
El FMI aún no se ha reunido para decidir si reconoce o no al actual gobierno de Roberto Micheletti.
La presidenta del Banco Central de Honduras dijo este lunes que el anuncio del FMI de bloquear los US$163 millones acreditados en su cuenta no va a afectar al país a pesar de la "crisis política" que está atravesando.
Además consideró que "es una medida mas de presión" contra el gobierno de Roberto Micheletti.
"A pesar de la crisis política, la situación no es tan caótica ni tan alarmante como en otros países latinoamericanos", dijo a BBC Mundo la jefa del organismo emisor hondureño, Sandra Midence.
El Fondo Monetario Internacional (FMI) envió un comunicado a los medios de prensa anunciando que Honduras no podrá utilizar los US$163 millones en Derechos Especiales de Giro (SDR, por sus siglas en inglés).
"El presente régimen de facto no podrá utilizar esos fondos hasta que no se tome una decisión sobre si el Fondo tratará con ese régimen como el gobierno de Honduras", indicó el FMI en el comunicado.

"Reservas confortables"

Midence, que asumió al frente del Banco Central el 29 de julio -un días después del golpe de Estado que derrocó y expulsó al presidente Manuel Zelaya- le indicó a BBC Mundo que su gobierno se enteró a través de los medios de la decisión del FMI, ya que no recibió ningún comunicado oficial.
El presente régimen de facto no podrá utilizar esos fondos hasta que no se tome una decisión sobre si el Fondo tratará con ese régimen como el gobierno de Honduras
Comunicado del FMI
Y aclaró que, de todos modos, "ya habíamos decidido no utilizar ese dinero y dejarlo de reserva, ya que tenemos todavía unos fondos de reserva confortables por el valor de US$2.223 millones", lo que equivale que el país puede subsistir "con 3,6 meses de importaciones".
Además, opinó que "se está haciendo ver que la crisis política nos puede derivar en una crisis económica", cuando ya desde enero, según explicó, se avizoraba la contracción de la economía como consecuencia de la crisis mundial.
Midence recalcó su "especial preocupación (...) de que la medida del FMI traiga un mensaje de incertidumbre, inestabilidad y zozobra".
Una portavoz del FMI, Simonetta Nardin, le explicó a BBC Mundo que el Fondo es un organismo internacional y trata con gobiernos.
Por lo tanto, indicó, "Honduras no puede usar el dinero asignado porque tiene el problema del gobierno".
Al respecto, una portavoz del FMI le dijo a la agencia de noticias EFE que el Fondo todavía no ha decidido cuándo se reunirá para decidir si reconoce o no al actual gobierno del presidente interino, Roberto Micheletti.

Derechos de giro

El 28 de agosto, el FMI inyectó unos US$250.000 millones en los bancos centrales de todo el mundo para potenciar sus reservas de divisas y aumentar la liquidez en el sistema financiero.
A pesar de la crisis política, la situación no es tan caótica ni tan alarmante como en otros países latinoamericanos
Sandra Midence, presidenta del Banco Central de Honduras
Además, el 9 de septiembre la entidad distribuirá otros US$33.000 millones.
Cada uno de los 186 miembros del FMI recibirá SDR de acuerdo con su cuota de participación en el Fondo.
El SDR es una moneda virtual creada por el Fondo, que administra un pequeño mercado donde los gobiernos la intercambian por divisas reales.
En la práctica, para un banco central tener SDR es lo mismo que poseer una divisa fuerte, como dólares o euros, por lo que la recepción de la moneda del Fondo supondrá un fortalecimiento de sus reservas.
A Honduras le corresponden 104,8 millones de SDR que equivalen al cambio actual a unos US$163 millones.
Por lo demás, el Fondo insistió en el comunicado que el organismo no tiene en la actualidad ningún acuerdo financiero con Honduras.
La decisión del FMI se da a sólo días del anuncio del gobierno de Estados Unidos de suspender una ayuda financiera de US$30 millones a Tegucigalpa, como una nueva medida de presión para lograr el retorno de Zelaya al poder.


Honduras: US State Dept Condemns "Coup d'Etat", Curtails Aid Print E-mail
Written by Daniel Luban   
Tuesday, 08 September 2009
 (IPS) - Frustrated by the continued intransigence of the Honduran regime that ousted President Manuel Zelaya, the U.S. State Department followed through Wednesday on threats to cut off aid to Honduras.

"Restoration of the terminated assistance will be predicated upon a return to democratic, constitutional governance in Honduras," the State Department said in a statement.

Calling Zelaya's removal a "coup d'etat", the U.S. also stated that it would not recognise the results of the scheduled November presidential elections in Honduras under the current circumstances.

The State Department did not elaborate on the aid cutoff, and there were conflicting reports as to exactly how much aid was being terminated.

A U.S. official told Reuters that the total cuts were over 30 million dollars, while the New York Times put the total at around 22 million dollars. The board of the Millennium Challenge Fund, which currently provides about 135 million dollars to Honduras, will discuss whether to cut off its aid next week, the Times reported.

After weeks of hesitation, the State Department made the decision to cut aid after the de facto government rejected the San Jose Accord, an agreement moderated by Costa Rican President Oscar Arias that would return Zelaya to power until the November elections.

"The Secretary of State has made the decision, consistent with U.S. legislation, recognizing the need for strong measures in light of the continued resistance to the adoption of the San Jose Accord by the de facto regime and continuing failure to restore democratic, constitutional rule to Honduras," the State Department said.

Also on Wednesday, Zelaya met with Secretary of State Hillary Clinton in Washington. A day earlier, he called on U.S. President Barack Obama to take a harder line on the de facto government of Honduras, which is currently led by interim President Roberto Micheletti.

The State Department called the removal of Zelaya a "coup d'etat", which would appear to compel the withholding of Millennium Challenge funds.

The U.S. also noted that is in the process of revoking the visas of individual members and supporters of the de facto regime.

The decision to get tougher with the de facto government drew praise from many Latin American analysts.

"It's critically important that the U.S. government has stated that they won't recognise the November elections," said Vicki Gass of the Washington Office on Latin America (WOLA). "But I think it would've been stronger if they had declared the coup illegal, demonstrating to the de facto regime that they're serious about a return to constitutional order."

But right-wing politicians and commentators in the U.S. who have supported Zelaya's removal were quick to denounce the decision.

"I believe this decision will significantly undermine U.S. national security interests and foreign policy priorities in Honduras and the region as a whole," said U.S. Representative Ileana Ros-Lehtinen, a Florida Republican.

Ros-Lehtinen accused the Obama administration of "punish[ing] those in Honduras struggling to preserve the rule of law, fundamental liberties, and democratic values".

On Jun. 28, the military seized Zelaya at his home and forced him onto a plane to Costa Rica.

The de facto government and its supporters in the U.S. argue that Zelaya's removal was legal and a defence of democracy in Honduras.

They point to Zelaya's attempts to conduct a referendum to determine whether there was support to modify the constitution and end presidential term limits.

Zelaya's opponents argue that this amounted to an illegal power grab, and highlight his friendship with left-wing Latin American leaders such as Venezuelan President Hugo Chavez.

Zelaya dismisses these accusations, saying that the "poll was non-binding, and it was a democratic exercise," and that his opponents are "seeking to legalise the coup."

The State Department said Wednesday that it "recognises the complicated nature" of the events leading to Zelaya's removal, but nonetheless maintains that it constituted a coup.

In the weeks following Zelaya's removal, the de facto government took steps to quiet international criticism by agreeing to take part in negotiations mediated by Arias.

In July, Robert Micheletti, the interim president under the de facto government, took to the pages of the Wall Street Journal to argue that "the way forward is to work" with Arias.

But after it became clear that Arias would insist on Zelaya's return to power, Micheletti and his government refused to abide by the results of the San Jose Accord.

By holding out until the schedule Nov. 29 elections, the de facto government hoped to make Zelaya's return a moot point.

In response, the OAS – along with a number of Latin American governments – refused to recognise the results of the November elections, and on Wednesday the U.S. joined them.

The elections "must be undertaken in a free, fair and transparent manner... must also be free of taint and open to all Hondurans to exercise their democratic franchise," the State Department said.

While stating that it could not currently recognise the election results, the U.S. noted that "a positive conclusion of the Arias process would provide a sound basis for legitimate elections to proceed".

Many human rights observers have become increasingly critical of the actions taken by the government to quiet dissent within Honduras.

Several human rights groups, including Amnesty International and Human Rights Watch, have reported violence against demonstrators opposed to the coup as well as intimidation of the media. Zelaya himself claims that since June, 1,500 people have been detained for political reasons, and that his supporters have been beaten, raped, and murdered.

Analysts hope that a resolution of the crisis that began Jun. 28 can allow Honduras to deal with deeper-seated problems.

"People want a return to constitutional order, but they also want issues of poverty, impunity, inequality and corruption to be addressed," WOLA's Gass told IPS. "They don't feel the current system does this, and there are larger long-term issues that need to be addressed."

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