Reimagining India's role at multilaterals

The decision by the International Monetary Fund (IMF) to approve a $2.4 billion lending programme to Pakistan while it was engaged in a tense military standoff with its neighbour has been met with concern and disappointment in India.

- DEEPAK MISHRA

Subsequently, in a supplementary note, the IMF admitted that its reputation could be tarnished by any perceived misuse of funds, but it also claimed that "these recent developments do not alter the thrust of the staff appraisal."

The IMF's actions have raised many questions: Why would a multilateral institution, committed to neutrality, make such a move during an active war between its two member states? And more importantly, what steps could India take to prevent similar actions from recurring?

An inconvenient truthThe uncomfortable reality is that multilateral institutions have not always remained impartial. During the Cold War, these bodies often aligned with the interests of dominant shareholders, largely from the Western bloc.

The United States, as the largest donor to the multilateral system, routinely used its influence to channel funding toward its allies while denying support to adversaries.

This trend continued after the Cold War. In 1994, the IMF provided an $18-billion loan to Mexico that served to protect American investors. In 2013, the IMF participated in a massive bailout for Greece, strongly backed by European powers looking to stabilise their own neighbourhood. During the ongoing Russia-Ukraine conflict, multilateral agencies have offered generous financial assistance to Ukraine, while suspending their operations in Russia.