Prevention is more complex than cure
The IMF has begun to stress prevention of crises rather than their cure and the new US administration agrees. But that raises numerous imponderables. Should the stress of prevention be on incentives to countries to behave responsibly or on building sound international financial architecture? And if the goal is to seek out better ways of forecasting impending crisis, does the IMF have the legitimacy to release market-moving information of this sort?
The Bush administration started off by singing very much in tune with the chorus coming from IMF precincts in Washington. The refrain since Horst Köhler took over as IMF managing director 17 months ago has largely been that crisis management is out and measures that prevent crisis are in.
As US Treasury secretary Paul O'Neill told the Council of the Americas in May: "I've been saying to them [Köhler and World Bank President James Wolfensohn] that I think you're important to the future but you're not going to be in it unless we can figure out a way to spend more of your energy and resources on things that we've decided to take the initiative about instead of things that we've been forced to react to."
That may be a laudable aim, but can IMF officials make it work? The Clinton administration put big IMF-led bailouts at the forefront of its economic policy, to an extent not seen from any previous US administration.