Ambassador Byron Blake is former deputy permanent representative to the United Nations and former assistant secretary general of CARICOM.
This article was originally carried in the Jamaica Gleaner on September 9, 2024. It is republished with the author’s permission.
The appointment of Dr. Nigel Clarke as a deputy managing director of the International Monetary Fund (IMF) is a signal achievement by, and honour for, him. Dr Clarke, Finance Minister under the new Andrew Holness Jamaica Labour Party (JLP) administration, wisely continued an IMF programme forced on Dr. Peter Phillips (Finance Minister under Portia Simpson Miller’s People’s National Party – PNP – Administration of 2012-2016). Dr. Phillips took the heat for the harsh preconditions and moved it into implementation. Dr. Clarke’s strong support of and steady hand in steering the programme into one of the fund’s most successful interventions would have impressed many senior officials at the Fund. This is more so because some would have had memories of his party’s spectacular mismanagement of the very favourable 2009 programme under which they received resources without having to satisfy preconditions.
Jamaica’s 2008 decision to return to a borrowing relationship with the Fund blindsided the developing world and created a new space for the Fund. Many developing countries, emboldened by Jamaica’s spectacular termination of borrowing relations in the 1990s, had begun to avoid or even wind down programmes with them. The IMF had begun to trim staff. Jamaica’s decision to re-engage was the first step in the resurrection of the institution. That was followed by the international financial crisis, which began to unfold at the same time. The appointment could, in part, be another nod to Jamaica after the failure of the sweetheart programme of 2009.
So both Dr. Clarke and Jamaica can take a lap.
But here is the caution, in particular, small Island developing states. Do not build up any expectation that Dr. Clarke will create or stimulate change for you in the IMF. There are five reasons.
First, existential challenge, the adverse impacts of a worsening climate change crisis, including the economic and financial aspects, demand radical changes in the policy, social and technological behaviour, and approaches of the major corporations and countries, which dictate the policy direction of the IMF and other such institutions. These corporations and countries have resisted the adjustments demanded of them since the Rio Conference of 1992.
Second, the IMF is a lender. That is embedded in its constitution. Hence, the IMF’s recent “innovative” programme to offer “long-term affordable financing” to ameliorate the impacts of the global pandemic and climate change, the resilience and sustainability trust, is a 20-year loan-based facility. No loan facility is suitable for investments arising from such exogenous shocks where the infrastructure created will, in all probability, have to be replaced before the loan is amortised. The fundamental change required will need a change in the Bretton Woods system, a matter that has been resisted since the 1970s with the call for a New International Economic Order (NIEO) by visionaries like Julius Nyerere and Michael Manley.
STRUCTURED INSTITUTION
Third, Dr. Clarke goes into the IMF, a very structured institution. Below the board of governors is a 24-member executive board in which CARICOM states are distributed across three constituencies. The executive board is chaired by the managing director, assisted by one first deputy managing director and three deputy managing directors. Dr. Clarke, as the last appointee, will be the third of the three. This group is expected to function as a team. Managing Director Kristalina Georgiera, spoke about the expectations of Dr. Clarke’s first 90 days – spending much of that time learning about the institution and how it operates.
Our translation: Dr. Clarke will spend his first 90 days becoming the “institutional man”. For more than 25 years, I have been saying to anyone, including officials from the IMF, World Bank, and IDB, who would hear me, that we will not recommend anyone to work in those institutions because they undergo a brain transplant, which makes it difficult, if not impossible, to recognise them after a few years. Now we know how the process of transformation takes place at the higher levels. The truth is that those institutions do not recruit persons from developing countries to help them understand the challenges of the countries and hence to shape more appropriate policy solutions but rather, persons who can convince developing countries that the institution’s policy or other proposals are the absolute best for them. I first encountered this phenomenon in the 1980s, the heyday of The Washington Consensus and Structural Adjustment.
A Ghanaian, who had experience working at the Institute of Development Studies at the University of Guyana alongside persons like Professor Clive Thomas, and at Cave Hill in Barbados but then an economist at the World Bank, tried to convince Marius St Rose, director at the CDB, and me, as director at the CARICOM Secretariat, two UWI, Mona-trained economists, that education was a long-term and hence bad investment. Further, it was an unnecessary investment. His mother in Ghana could not read and was none the worse for it. Those were the days when “projects” with short-term, measurable returns were the “flavour of the month” in Washington. Projects or programmes such as education and reafforestation were long term, risky, and not fundable.
DEVELOPING COUNTRIES
Fourth, delegations from the Washington-based Institutions to developing countries are now, almost always, headed by persons from developing countries. When Enrique Iglesias, a radical Uruguayan foreign minister, became president of the Inter-American Development Bank (IDB) in the late 1980s, policymakers in Latin America were convinced that the IDB would maintain its status as a small but diligent counterpoint to the World Bank and the IMF. The IDB, under Iglesias, held a Washington-based package of support to Jamaica hostage until the Government agreed to remove subsidies, including differential interest rates, to the agricultural sector and to liberalise the foreign exchange market. It was that IDB president of whom, the chairman of a high-level symposium in Caracas, the President of Venezuela, Carlos Andrés Pérez, having summarised all other presentations, said, “And now, my friend Enrique, what do I say? ‘You made these arguments so much better when you were on this side.’”
Fifth, Dr. Clarke will be a great ambassador for the IMF. He is bright, young, and ambitious. He is articulate and believable. He will not only be able to present the positions of the IMF to developing countries with empathy, but he will also be able to develop counterarguments for the IMF. He will be aware of the concerns of both sides, but his allegiance will be with his institution. At the same time, the developing countries, particularly the Caribbean countries, will be reluctant to contend with him publicly. My most distressing experience negotiating for the Group of 77 and China was in 2008 when a young, bright, ambitious, German-trained Trinidadian economist and then staffer at the IMF broke all protocols and, essentially, became the lead negotiator for the developed countries. Under the protocols, staff members of international institutions respond to questions, usually to provide technical explanations for the benefit of the meeting, not for any particular group. The G77 Members urged me to silence him, publicly. I could not. How could a senior Caribbean person destroy a young, upcoming Caribbean national?
Finally, Small Island Developing Countries (SIDS), will need to advance radical proposals at upcoming international meetings. These will include the Bridgetown Initiative, which seeks to reform the world of development finance, particularly how rich countries help poor countries cope with and adapt to climate change. They cannot assume a friend in court.
