The European rescue of the Washington Consensus? EU and IMF lending to Central and Eastern European countries

The global financial crisis has transformed the relationship between the International Monetary Fund (IMF) and the European Union (EU). Until the crisis, the IMF had not lent to EU member states in decades, but now the two organisations closely coordinate their lending policies. In the Latvian and Romanian programmes, the IMF and the EU advocated different loan terms. Surprisingly, the EU embraced 'Washington Consensus'-style measures more willingly than did the IMF, which much of the contemporary literature still portrays as an across-the-board promoter of orthodox macroeconomic policies. We qualify this stereotypical characterisation by arguing from a constructivist perspective that the degree of an organisation's autonomy from its members depends on the interpretation of its mandate. IMF staff viewed the Fund's technical mandate as an opportunity to react rather flexibly to the challenges of the latest crisis. By contrast, European Commission, as well as European Central Bank (ECB), staff interpreted the vast body of supranational rules as necessitating stricter adherence to economic orthodoxy. Thus, IMF lending policies were more flexible and, at least on fiscal issues, also less contractionary.