Meet the New Head of the IMF - Who Is Rodrigo Rato?

19 June 2004 by Vicente Navarro

Vicente Navarro is Professor of Public Policy at Johns Hopkins University, USA and Pompeu Fabra University, Spain. He can be reached at: navarro at

Rodrigo Rato has been appointed as the new managing d\irector of the International Monetary Fund IMF
International Monetary Fund
Along with the World Bank, the IMF was founded on the day the Bretton Woods Agreements were signed. Its first mission was to support the new system of standard exchange rates.

When the Bretton Wood fixed rates system came to an end in 1971, the main function of the IMF became that of being both policeman and fireman for global capital: it acts as policeman when it enforces its Structural Adjustment Policies and as fireman when it steps in to help out governments in risk of defaulting on debt repayments.

As for the World Bank, a weighted voting system operates: depending on the amount paid as contribution by each member state. 85% of the votes is required to modify the IMF Charter (which means that the USA with 17,68% % of the votes has a de facto veto on any change).

The institution is dominated by five countries: the United States (16,74%), Japan (6,23%), Germany (5,81%), France (4,29%) and the UK (4,29%).
The other 183 member countries are divided into groups led by one country. The most important one (6,57% of the votes) is led by Belgium. The least important group of countries (1,55% of the votes) is led by Gabon and brings together African countries.
. I have read the biographical notes and references to his career that have appeared in the New York Times, the Washington Post, the Los Angeles Times and other major papers in the U.S., and nowhere have there appeared those key elements of his biography that could shed light on his economic policies. As I have written about in a previous article (The US Media’s Double Standard. The Case of Mr. Aznar, Friend of Bush, CounterPunch, August 21, 2003), one of the most unsettling developments in the main stream U.SUS media is their right wing shift. For example, the US press saluted Mr. Aznar, past president of the Spanish government, as a “great friend of the U.S.” (confusing, as usual, the U.S. government with the U.S. population), without once making reference to his fascist past and current ultra-right wing positions. The same is happening now with Mr. Rodrigo Rato, Mr. Aznar’s Minister of Economy, who is responsible for the dismantling of the Spanish welfare state.

Mr. Rato is of the ultra-right . While in Aznar’s cabinet, he supported such policies as making religion a compulsory subject in secondary schools, requiring more hours of schooling in religion than in mathematics, undoing the progressivity in the internal revenue code, funding the Foundation dedicated to the promotion of francoism (i.e., Spanish fascism), never condemning the fascist dictatorship, and so on. In the economic arena, he dramatically reduced public social expenditures as a way of eliminating the public deficit of the Spanish government, and was the person responsible for developing the most austere social budget of all the governments of the European Community.

The elimination of the deficit in the Spanish government’s budget has had an enormous social cost. The Spanish welfare state (public transfers like pensions, and social services such as education and health services) had been very limited, due to forty years of fascist dictatorship. Franco was known not only for his enormous repression—for every political assassination carried out by Mussolini, Franco killed 10,000—but also for his non-existent social sensibility. As a consequence, when Franco died IN 1975 , the percentage of the population with poor education (less than six years of schooling) was the highest in Europe (84per cent), and the public social expenditures (the funds to support the welfare state) were extremely low (14 per cent of GDP GDP
Gross Domestic Product
Gross Domestic Product is an aggregate measure of total production within a given territory equal to the sum of the gross values added. The measure is notoriously incomplete; for example it does not take into account any activity that does not enter into a commercial exchange. The GDP takes into account both the production of goods and the production of services. Economic growth is defined as the variation of the GDP from one period to another.
), much lower than the average in Continental Europe (22 per cent of GNP Gross National Product
The GNP represents the wealth produced by a nation, as opposed to a given territory. It includes the revenue of citizens of the nation living abroad.
). This deficit of eight points was reduced after the establishment of democracy, (and very much under the social democratic governments, 1982-1993), to reach only four points in 1993. In that year, Spain spent 24 per cent of the GNP in public social expenditures, while the EU-15 average was 28 per cent. In 1991-93 there was a fight within the socialist party that ended with the victory of the so-called social-liberals (the equivalent of the Democratic Leadership Council of the U.S.). One of its leaders, Solbes, (later the person in charge of fiscal austerity in the EU-15 as European Commissions for Economics and Financial Affairs) took over the Ministry of Economy of the social democratic government and inaugurated a whole series of cuts in social expenditures that led to the socialist party’S defeat in 1996, at the hands of Aznar’s Popular Party.

Rato then became the new Minister of Economy. During his tenure as Minister (1996-2004), the pensions and health expenditures were cut even more savagely than during the Solbes period of 1993-1996. In pensions, for example, Rato increased the Spanish deficit of pension expenditures per capita relative to the EU-15 average by 21per cent and the deficit of public medical care Care Le concept de « care work » (travail de soin) fait référence à un ensemble de pratiques matérielles et psychologiques destinées à apporter une réponse concrète aux besoins des autres et d’une communauté (dont des écosystèmes). On préfère le concept de care à celui de travail « domestique » ou de « reproduction » car il intègre les dimensions émotionnelles et psychologiques (charge mentale, affection, soutien), et il ne se limite pas aux aspects « privés » et gratuit en englobant également les activités rémunérées nécessaires à la reproduction de la vie humaine. expenditures to the EU-15 average by30 per cent. The consequence of these policies is that Spain, rather than catching up with the EU-15, has been losing ground quite dramatically. Today, the deficit of social expenditures of Spain compared with the average of the EU-15 (measured as percentages of the GNP) is the same as when Franco died. At the practical level, these policies have come to mean that the average time of a visit to the doctor in the National Health Services is only six minutes; that a 14 year old student in a public school has the academic knowledge of an average 13 year old student in the rest of the EU-15, that Spanish pensions are the lowest in the EU-15; that the percentage of children 0-3 years old in attendance at public child care centers is only 8 per cent, the lowest in the EU-15; that the level of temporary work (called “shit work” by the trade unions) in Spain is the highest in the EU-15, 35 per cent of the labor force, and a long etcetera of other social problems. The quality of life of the popular classes (working and middle class) has indeed declined during these social austerity years, as dictated by Mr. Rato.

Mr. Rato (and Mr. Aznar) has paraded triumphantly around the EU-15, claiming that Spain is in the top of the league because it is the first member of the EU-15 to reach the stability pact, i.e., public deficit zero. And non other than Blair’s Minister of Economy, Gordon Brown, became Rato’s main advocate for the IMF position. Nowhere mentioned is the enormous costs this “success” has had on the quality of life of average folks in Spain. And these are the same policies that Mr. Rato is going to follow in the IMF, policies that have caused enormous pain and harm to the Spanish people, and will now be implemented world-wide. Nowhere, however, have the mainstream media reported on such important dimensions of Mr. Rato’s tenure as Minister of Economy of Spain. Quite remarkable!



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