Russia - is the IMF brain dead or just tone deaf?

Just waking up to the news that the IMF is scheduled to visit Moscow next week to conduct its annual Article IV review of the Russian economy.

See IMF media briefing as below.

https://www.imf.org/en/Countries/RUS

The IMF sells its article IV reviews as the regular health check of a member’s economy, see below from the Fund website:

“At the member country level, the regular health check of members’ economies, known as Article IV Consultation, will continue to cover fiscal, monetary, exchange rate, and financial issues. As climate change, digital technology, inequality, and global events such as a pandemic shape a changing world, the IMF’s forward-looking surveillance approach aims to give policy advice to member countries that is even more timely and targeted.”

So clearly while Article IV reviews are about surveillance they are also about providing policy advice to countries as to where they are going wrong on policy and trying to provide advice as how to improve their economic outturns. Inevitably therefore IMF officials, in making the trip to Moscow, will be helping Russia improve its economy and by so doing will be leaving themselves open to being accused of helping Russia in the conduct of the war against Ukraine. Remember here that this is an illegal war (breaking international law) against Ukraine which has resulted in hundreds of thousand of dead and injured and millions of Ukrainians displaced.

I would add here that Russian exchange rate policy specifically now also includes the drive to roll out the ruble, as legal tender, in occupied Ukrainian areas, and to remove the Ukrainian hyrvnia in by so doing.The fact the fund will be advising over exchange rate and monetary policy will again leave the IMF open to allegations of de facto accepting, and indeed sustaining, Russia’s illegal occupation of Crimea, and territories in Kherson, Zaporizhiya, Donetsk and Luhansk.

This is all just staggering in my view and I struggle to understand how IMF staff with any scruples, or moral compass, could square all the above difficulties with getting on the plane to Moscow.

Now the IMF PR department will likely spin this as the IMF just being forced to fulfill its obligations to a member state, Russia. They will highlight that they have delayed an Article IV visit as long as possible - and no such visit having occurred now since the onset of the full scale invasion - and that options to delay are now exhausted. But frankly this is not good enough. Let’s face it, by advising Russia on ways to improve its economy, it is hard to argue against the assertion that the IMF, and those making this trip, would be complicit in helping Russia conduct its war of occupation, colonialisation and genocide against Ukraine.

The irony here is of G7 members and their Western allies trying to weaken the Russian economy, as part of their sanctions efforts, and part of their broader efforts to dissuade Russian from its war against Ukraine, and actually now in the interests of their own defence and national security. Meanwhile, the IMF, through its Article IV process, is helping undermine these very same G7/Western efforts, by advising Russia how to manage through its various challenges.

The IMF looks like it has made its decision, but I would hope key Western shareholders will impart on the IMF management how disgraceful any IMF Article IV trip to Moscow will be and that in so doing it reflects very poorly on the Fund and its management.

For my part I will be carefully looking at the names of those IMF officials jetting off to Moscow and will make sure I will be limiting my own interaction with them in any professional way in the future, and would hope others do the same.