Pulitzer Prize winner Liaquat Ahamed peels back IMF’s layers

When the International Monetary Fund came to Dublin in 2010, it had an interloper in its ranks. Hanging back a little, Liaquat Ahamed blended in easily. His face suggests a successful financial career and equips him with the look of a man who might actually work for the IMF. What sets him apart is his desire to describe the world of macroeconomics – that and the Pulitzer Prize for history he was awarded in 2010 for Lords of Finance: 1929, the Great Depression and the Bankers Who Broke the World, his book about the 1929 stock market crash.

Money and Tough Love: On Tour with the IMF is an attempt to peel back the structures of the organisation. His participant-observer account does not reveal the psychologies of those in charge but probes the character of the IMF itself.

Ahamed, who lives in Washington DC, was cleared for the task by Christine Lagarde, the organisation's managing director. During his research he spent time with the fund in Washington, at an annual meeting in Tokyo, on a bailout trip to Dublin and on an advisory trip to Maputo, in Mozambique.

Weight of history

Early on, Ahamed glimpses Mario Draghi of the European Central Bank, "a figure of true consequence in this world"; he is collecting his thoughts in a rare moment of solitude, perhaps conscious of the weight of history.

How do IMF staff fare when their policies create austerity and unemployment, dash dreams, and put in place measures that can even drive people to kill themselves? “The typical IMF person says, ‘If we didn’t come with this money, things would be much worse’. That’s the way they justify it to themselves,” says Ahamed.

“They say ultimately it’s up to the government. ‘If they can come up with a set of measures that satisfy us, we will be happy with any alternative that minimises the social damage.’ They have got things wrong. I am not sure they did in Ireland, but certainly in Asia during the 1990s they did. They are acutely conscious they are operating in a fog of uncertainty.”

Ahamed, who describes the IMF as "an international credit union for countries", sketches its evolution from postwar Bretton Woods pragmatism and idealism under the keen mind of a swashbuckling John Maynard Keynes. The goal was to grease the wheels of finance through short-term assistance, as distinct from the concomitantly created World Bank, whose focus was to capitalise war-ravaged nations. (It now attends to long-term assistance of poorer nations.) From early policing of exchange rates and the passing-out of pocket money to France in 1947, the IMF began lending large sums, starting with Italy and the UK in the 1970s as the oil shortage left petrol tanks empty. The annual meeting in Tokyo revolves around "marathon speed-dating sessions" for "economic statesmen". The conference is "a sales convention for global bankers", a networking event, peopled by key players and bank chief executives.

Are IMF employees stressed-out workaholic hedonists, like the popular myth of their Wall Street counterparts? "When they are on mission they work extremely hard," he says. "A typical day is 18 hours. They are not going out at night. In Washington the atmosphere is nothing like that of the stress of an investment bank or even the US treasury or White House. They come in as technocrats. They don't feel the weight of the problem. They have enormous professional pride. They see themselves as international civil servants."

Corrugated roof

In Maputo, where its office has a corrugated steel roof, the IMF comes across as a preventative, advisory body trying to steer Mozambique in the best financial direction. It serves as a broker between the government and the aid community, and functions as a type of ratings agency.

Ahamed’s observations in Dublin are the book’s meatiest. Denied access to the most sensitive troika and Government meetings, he nevertheless offers a cogent account of the crash, crisis and remedial action. “In Ireland it was battlefield surgery. Specifically what you had was two doctors. The Europeans needed the IMF – for expertise – and they felt they needed some political cover, that the IMF had the veneer of objectivity. In the highest levels of the IMF the question was, should we be the second doctor in charge of this operation, knowing that we are not completely comfortable with what the first doctor is doing?”

That cultural and economic invasion is still fresh in many minds. While the meetings took place in the upmarket surroundings of Merrion Square, Ahamed documents the pulse of the city well. Bookshops reveal that short-lived genre in which Irish ideologues competed in self-laceration as part of the national race to beat ourselves up over our boom-time folly.

However, Ahamed avoids explicit socioeconomics. “I got a cab and I must have gone to some poorer sections. Across the river and towards the airport . . . But I ended up mostly focusing on the thought processes behind what the IMF was doing.”

It was a corporate investigation, not a sociological one? “Yes, I was interested in the technical detail of how the bailout was going to operate rather than the nature of the patient’s disease and how he got there.” What place in modern macroeconomics does protest occupy? “If you interpret the Occupy movement as saying ‘during the whole financial crisis, banks and bankers got off too easily’, I think you’d find an enormous number of people in the IMF who would agree. By the time the IMF got involved, the foreign bankers had taken their money and run.

“The Irish Central Bank had borrowed from the ECB to pay off all the foreign bankers who had taken their money out – it was shutting the barn door after the horse had bolted. If you ask the IMF did bankers get a sweet deal out of everything that happened in Ireland, they will say yes.”

Money and Tough Love: On Tour with the IMF is published by Visual Editions