You've come to an old part of SW Online. We're still moving this and other older stories into our new format. In the meanwhile, click here to go to the current home page.

The IMF-World Bank loan sharks:
Prescribing poverty

April 23, 2004 | Page 8

LEE SUSTAR looks at the struggle today against the terrible twins of international finance--the International Monetary Fund (IMF) and the World Bank.

THE GLOBAL loan sharks of the International Monetary Fund and World Bank are gathering in Washington, D.C., on April 24 and 25. The IMF and World Bank are dominated by their biggest shareholders among the governments of the richest countries--the U.S., Europe and Japan.

The two institutions exist primarily to finance loans to Third World countries. But the loans are tied to "structural adjustment" programs that require privatization, deregulation, cuts in social spending and labor "flexibility"--the free-market agenda known as "neoliberalism."

During the East Asian economic crisis of 1997-98, the IMF enforced economic policies dictated by the U.S.--including cuts in food subsidies for the poor in Thailand, Indonesia and other countries--to ensure that international bankers would get their money back. Outrage over the IMF's policies spurred the global justice movement in the late 1990s--and the IMF became the focus of a 20,000-strong protest in Washington in April 2000.

Since then, the IMF has changed its rhetoric, but not its policies. In Argentina, which defaulted on its $141 billion debt in 2002, the IMF recently forced the government to repay a $3.1 billion loan as a condition for future "assistance."

This, despite the fact that half of Argentina's urban population lives under the poverty line and one in four live in what the government calls "extreme poverty"--in a nation that once had a standard of living comparable to some European countries. The IMF's stranglehold was one important factor in the December 2001 uprising that forced four presidents to resign in a period of two weeks.

The World Bank is sometimes seen as more liberal than the IMF--but this a myth. Thus, the Bank's Highly Indebted Poor Country (HIPC) initiative has provided debt relief for only 11 of 42 eligible countries. And even this aid is dependent on IMF-approved "professional-grade macroeconomic management, more open markets and support a stable environment for the private sector," according to the Council on Hemispheric Affairs.

There is one country where the U.S. government does want to forgive an "odious debt"--Iraq, now that Washington is ruling that country. No such proposals are forthcoming for the poorest countries that have repaid their external loans four times over since 1982.

That debt--some $1.6 trillion--is only about 5 percent of the world's total, and could be easily written off. But bankers and bureaucrats in the U.S., Europe and Japan are determined to use the debt to bolster their imperial power--until the worldwide resistance is strong enough to break their grip.

- - - - - - - - - - - - - - - -

is president of the Brussels-based Committee for the Abolition of the Third World Debt and author of the 1999 book, Your Money or Your Life: The Tyranny of Global Finance.

THE IMF and the World Bank are confronted with a very huge crisis. You have had a huge battle in the IMF between the U.S. and the European powers over who will be the new managing director. You also have what we saw at the [failed World Trade Organization] meetings in Cancun--a rebellion on the part of Third World countries, who want to intervene in the selection of the managing director of the IMF.

On the question of Iraq, we have to say that the decision of the IMF and World Bank to lend money to the interim government of Iraq is illegal. Once there is a withdrawal of U.S. troops, a new government in Iraq will never accept the debt reclaimed by the World Bank and the IMF.

In Latin America, one of the main preoccupations of the IMF and the Bank is the reluctance of Argentina to put in practice all of the demands of the IMF--and the decision in December 2001 to stop all payments to private creditors. Argentina has asked private creditors to give a reduction of 75 percent to the external debt of Argentina. That's a big thing.

And the IMF and World Bank consider very dangerous the possibility that there may be a front developing against them between Argentina, Brazil, Venezuela and maybe Bolivia. I am pessimistic in relation to that, because [President Néstor] Kirchner of Argentina represents a capitalist government, and [Brazilian President Luíz Inácio "Lula" da Silva] is on a very neoliberal trend.

We have to combine the energy of the antiwar movements and the anti-Free Trade Area of the Americas and anti-World Trade Organization movements. It's also important for people who understand the militarism of U.S. imperialism [in Iraq] to get involved in this movement. They are part of the same system.

One pillar of imperialism--the IMF and World Bank--is fragile because of the internal crisis, the issue of Argentina and the protests. I think we have to work together to put pressure on the IMF and the Bank to increase their crisis--which would have an important impact on the crisis of neoliberalism.

- - - - - - - - - - - - - - - -

is coordinator of both the Convergence of Movements of the Peoples of the Americas and the Colectivo de Organizaciones Populares (COP) in the Dominican Republic. The COP played a leading role in mobilizing for general strikes last November and again in January after an economic collapse sent prices soaring. This month, Victor was part of a tour of social movement leaders across the U.S. sponsored by 50 Years Is Enough, the global justice network that campaigns against the IMF and World Bank.

THE FIRST expression of protest against the IMF in the Dominican Republic dates from 1983. A protest began in the streets against the increase of the price of food and necessities, and against the terms of the government's agreement with the IMF.

The protests ended when the government negotiated aid from the United States. But these were conditioned on institutional reforms and cuts in social spending--in health, education, housing and water, among other things.

In response, in April 1984, there were marches, pickets and mobilizations at the national level. For three days, all the communities in the country protested in the streets in the same way we later saw in Argentina at the end of 2001.

The demand was to break with the IMF and to lower prices--and to recover what had been negotiated away by the government and plundered by business. These kinds of struggles were seen later in Venezuela in 1987, in Argentina in 1989, and again in Argentina in 2001.

In various countries in the Americas, we've seen struggles with the same basic characteristics of the movement in 1984 in the Dominican Republic. This is all the result of the application of neoliberal policies--the IMF, NAFTA and more recently, the Plan Puebla-Panama [a U.S. proposal for a Mexican and Central American free trade area].

In the Dominican Republic, there are many similarities between the 1984 struggle and that of today. But today, it's much more difficult. The people are much poorer.

There is more development--but there's a difference between development and progress. There is big development in the hands of foreign interests--tourist hotels, agro-industry and other business that serve up cash to the multinational corporations.

Since 2000, neoliberal policies have become crueler and more savage. In Bolivia and Ecuador, new governments [taking office following popular rebellions] have followed policies that are similar, if not identical.

It's the same with Lula in Brazil and Kirchner in Argentina. That's why we're visiting the U.S. in conjunction of the 60th anniversary meetings of the IMF and World Bank. We're here to talk not only about the struggles in the Dominican Republic but also the other struggles against neoliberalism, such as NAFTA and the FTAA.

Home page | Back to the top