Romania, Globalisation and the IMF

Globalisation is a contested concept. While it is argued that it refers to economic integration, the sceptics see it as rather limited because of the power of nation states and the distance between them. For a political economy perspective, I define globalisation as “international economic integration, where institutions such as International Monetary Fund (IMF), World Bank (WB), World Trade Organisation (WTO) etc. become more powerful building up what it is known as ‘global governance’”. The power of international institutions is therefore one of the main elements that contribute to the consolidation of globalisation.

IMF’s main task is to ensure that the international monetary system functions well by maintaining currency stability, thus preventing a new crisis.

It provides short-term financing in order to stabilise exchange rates which take the form of loans. When a country borrows money from IMF, it accepts that domestic economic policies are unsustainable due to a failure of the policy in managing resources or to changes in the international economy that affect the national economy. In order for a country to be eligible to take a loan, it has to agree to some conditionality requirements in which the country either has to cooperate with the Fund or has to develop a project for financial and fiscal stabilisation policies. Then, the country must introduce a stabilisation programme which results in compression of the economy.

Conditionality policies have been subject to criticism because of the austerity that they trigger. In Romania, the government announced in May 2010 that wages would be reduced by 25% and pensions and unemployment benefits by 15% in order to be eligible for a loan which has triggered social unrest.

What is left for Romania?

In a country where pensioners get around 90£/month, 15% less equals not enough money to survive. Yes, to survive. They need drugs, they need food, they need to pay monthly bills and accommodation. What with? Well… I do not know. And I am not expecting you to know either. My Romanian retired people do not either. They will find out, I guess… How? By getting sick more often, by becoming more sensitive, by gradually dying…

Why? Because of corruption. Yes, the IMF can be seen as a bad actor because of the social cost it triggers. But if Romania was doing well, if our politicians had behave well, Romanian would not have got here, to start with. How is it possible, in a country where a pension averages £90 a month, the so-called politicians earn thousands of pounds a month? Is there any justice, in this world? If it is, please, send some to my country.

I have send some emails to the EU entitled “Romania needs help”. Romania needs help on the long-run. Because of the actual levels of corruption, people will die. Because of our greedy politicians, who do not care about our population but about their pockets, people are dying….

So, I have sent these emails to the EU. I’ll probably get nothing back. No answer. No reaction.  But I have tried. And I will not give up. I will keep trying. Romania belongs to all its citizens: on its territory or ex-pats. Romania needs us. I wish we all tried. Until justice will reach our country.

END of a battle, but not of the war.

For more on the topic, follow http://www.economist.com/blogs/easternapproaches/2010/06/romania_0

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