American Interests and IMF Lending
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American Interests and IMF Lending Thomas Oatley and Jason Yackee1 Department of Political Science, University of North Carolina at Chapel Hill, NC, USA. E-mail: [email protected]
Does the United States shape the content of International Monetary Fund conditionality agreements? If so, in pursuit of what goals does the United States use its influence? We present evidence that American interests do shape the content of IMF conditionality agreements. We find that American policymakers use their influence in the IMF to pursue American financial and foreign policy objectives. The IMF offers larger loans to countries heavily indebted to American commercial banks than to other countries. In addition, the IMF offers larger loans to governments closely allied to the United States. International Politics (2004) 41, 415–429. doi:10.1057/palgrave.ip.8800085 Keywords: IMF; conditionality; United States
Introduction The International Monetary Fund (IMF) is one of the most important international organizations in the contemporary international system. The financial resources it controls, in conjunction with its ability to design economic policies for its member governments, allows the IMF to exert greater influence than practically any other international organization in history. Most would agree that American power plays a large role in shaping the IMF’s broad policy goals. The IMF’s emphasis on macroeconomic stability and structural adjustment, for example, reflects the American determination to extend market-based economies to the developing world. Less clear, however, is the extent to which American power extends down into the IMF’s operational decision-making. Of particular importance here is the American ability to exert influence in the decision-making process surrounding the creation of IMF conditionality agreements. Conditionality agreements are the IMF’s primary policy instrument. In the typical agreement, the Fund provides financial assistance to a member government in exchange for economic reform. Can American policymakers determine which governments receive IMF conditionality agreements and which do not? Can they determine the specific economic reforms included in a conditionality agreement? Can they determine the amount of financial assistance the IMF offers to governments in connection with conditionality agreements? If American power does influence
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the content of conditionality agreements, then in pursuit of what goals does the US use this influence? Abundant case studies suggest that the US does exert influence over conditionality agreements. During the 1980s, for example, the US pressured the Fund to extend credits to Argentina (Killick, 1998, 74). In 1982, the Reagan administration pressured the IMF to extend a 3.9 billion credit to Mexico (Cohen, 1985, 722). In 1995, the Clinton Administration pressured the Fund to offer assistance to Mexico. Moreover, American politicians act as though the US exerts influence over conditionality agr
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