1 research outputs found
The European rescue of the Washington Consensus? EU and IMF lending to Central and Eastern European countries
The latest global financial crisis has allowed the International Monetary Fund (IMF) a spectacular comeback. But despite its notorious reputation as a staunch advocate of restrictive economic policies, the Fund has displayed less preference for austerity in recent crisis lending. Though widely welcomed as overdue, the IMFâs shift away from what John Williamson coined the âWashington Consensusâ was met with resistance from the European Union (EU) where it concerned Central and Eastern European (CEE) countries. The situation of hard-hit Hungary, Latvia, and Romania propelled unprecedented cooperation between the IMF and the EU, in which the EU has very actively promoted orthodox measures in return for loans. We argue that this represents a European rescue of the Washington Consensus. The case of Latvia is paradigmatic for the profound disagreements between an austerity-demanding EU and a less austere IMF. The IMFâs stance contradicts conventional wisdom about the organization as the guardian of economic orthodoxy. To solve this puzzle, we shed light on three complementary factors of (non)learning that have shaped the EUâs relations vis-Ă -vis CEE borrowing countries in comparison to the IMFâs: (1) a disadvantageous institutional setting; (2) vociferous creditor coalitions; (3) the precarious eurozone project