Notes from the field (Washington, D.C.)
Although the 2008 financial crisis unfolded differently in each country, the crisis was a global one. Accordingly, in nearly all of our case study countries – Greece, Cyprus, Iceland, Ireland and Portugal – external actors influenced the trajectory of post-crisis recovery. In four of the countries, the ‘troika’ (the European Commission, the European Central Bank, and the International Monetary Fund) provided loans to prop up failing banks and dictated many of the economic reforms that the countries undertook; Iceland dealt primarily with the IMF.
We travelled to Washington, D.C., to visit the International Monetary Fund to investigate their role in influencing post-crisis processes of accountability. The IMF is an economic institution, so its mandate prevents it from getting directly involved in the domestic arenas in which demands for political accountability are made. However, because the ‘blame game’ that follows crises can undermine a country’s capacity to implement macro-economic reforms, the Fund has increasingly approached questions of accountability through the framework of its anticorruption strategies. Tackling accountability is a recent development in the Fund’s policy: while it recognized corruption as a problem in the early nineties, it has only slowly developed the policies and strategies to combat it. Indeed, this emerging policy framework stems from the growing recognition – at the IMF as well as more broadly in international policy circles – that macro-economic reform will not be successful in countries plagued with systemic corruption.
Framed as AML/CFT (Anti-money Laundering/Combating the Financing of Terrorism), the Fund’s strategies include a host of prospective and retrospective accountability mechanisms, including increasing transparency and recommending the establishment of anti-corruption commissions. However, countries with entrenched corruption often have corrupt or ineffective judiciaries, and this makes the credible enforcement of the rule of law difficult. The Fund’s primary strategy to combat corruption is thus to try to strengthen institutions through technical assistance and advice. Only in a small number of cases has the IMF made the adoption of anti-corruption measures a formal condition of its programmes. In theory, this reflects a holistic approach that includes both incentive structuring (through, for example, the threat of effective prosecutions) and the gradual change of social values. But changing values is challenging and takes time; the effect of any individual solution is difficult to gauge.
The IMF’s experience with prosecutions has been mixed. In some cases, such as its interventions in Kenya in the early 1990s, prosecutions of high-level officials derailed the overall recovery programme. In other IMF programmes, such as in Indonesia in the late 1990s, prosecutions (overseen by an independent commission staffed by trusted civil society organisations) helped the country to regain political and economic stability by establishing the credible threat of the rule of law. The success of prosecutions as a strategy is variable and depends on many case-specific factors, including the strength of the judiciary, the independence of the body conducting the prosecutions, and the degree to which civil society is involved.
Combating corruption is not the same as punishing the perpetrators of serious crimes against humanity, but as recently argued by Bo Rothstein and Aiysha Varraich (2017), both are rooted in the conceptions of justice that underpin democratic public life. Although the accountability policies associated with Transitional Justice (prosecutions, amnesties, truth commissions, public apologies) are more often associated with the humanitarian crises than economic crises, the need to restore credibility and legitimacy in government through accountability is important for rebuilding public trust. The IMF is currently reviewing its primary policy framework, the 1997 Guidance Note on governance.