A troubling history of IMF loans around the world
The strings attached to an IMF loan, which officially go by such deceptively innocuous-sounding names as “conditionalities” and “structural adjustment programs,” have in the past created such social chaos across the globe, all the while making claims that it develops the economy of whatever host country it attaches itself to
Police throw tear gas into masses of hungry and angry people, the people retaliate by throwing bricks and Molotov cocktails. The police eventually graduate from batons to guns, from beating unarmed people to shooting them, from forming a phalanx against the people to kidnapping and torturing the people.
Does this spiral of injustice and violence sound like a good economy?
The strings attached to an IMF loan, which officially go by such deceptively innocuous-sounding names as "conditionalities" and "structural adjustment programs," have in the past created such social chaos across the globe, all the while making claims that it develops the economy of whatever host country it attaches itself to.
The IMF is currently in talks with the Bangladesh government about a $4.5 billion loan request which are expected to come with conditionalities, including the removal of subsidies on fuel, fertiliser and electricity, among other things.
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Amidst the effects of the war in Ukraine, the people of Bangladesh are already suffering from spiralling inflation and an energy crisis, the most recent economic injustice being the BPC's fuel price hike that also affected the prices of other basic commodities such as food. If the IMF compels the government to lift subsidies which would naturally lead to price increases, it will only pour gasoline into the raging inferno of inflation.
Since the 1970's, mass protests against the economic hardship created by IMF-imposed "structural adjustment programs" occurred throughout Africa, South America, Central America, the Caribbean, and Asia, all of which have been met with police brutality. Newspapers, magazines, and academic journals from countries under the yoke of the IMF are filled with caustic critiques of the IMF.
Let us take a closer look at a few cases.
In spring 1976, the US-backed Egyptian government negotiated a loan from the IMF in exchange for withdrawing subsidies on food. In summer 1977, the people of Cairo rioted in protest against increased food prices and increased prices of other essential commodities. Insurrectionaries burnt down the Casino nightclub, a landmark of downtown Cairo.
The people of Cairo faced the violence of the Egyptian military, but the people intimidated Sadat enough to cancel the price increases that began the protests.
In 1981, during the midst of its oppressive war against the "tribal" Sahrawi national liberation movement, the US-backed Moroccan government negotiated an IMF loan and the conditions that went with it. The Moroccan government withdrew subsidies on food and prices of basic foods sharply rose.
On 20 June 1981, a general strike was called in the rapidly growing city of Casablanca and everybody came, including thousands of disenfranchised youths from the rapidly growing slums. Insurrectionaries expropriated grocery stores and pharmacies and burnt down banks. The police of Casablanca and the Moroccan military opened fire into crowds, killing an estimated 637 people.
In the aftermath of the Casablanca uprising, the Moroccan state arrested more than 1,000 people and shut down several newspapers. The people of Casablanca failed to win concessions from the Moroccan government.
In 1986, corrupt and authoritarian Nigerian military dictator Babangida negotiated an IMF loan in exchange for adopting a "structural adjustment program." Amidst the decline of the naira, the Nigerian currency, due to the government's revocation of fixed exchange rates, the withdrawal of subsidies on fuel and food created price increases that eventually led to strikes and mass protests beginning in 1989.
Nigerian insurrectionaries burnt down numerous government buildings and banks during the May and June uprisings. Political instability in Nigeria continued for many years, but the people failed to win concessions from the Nigerian state.
Similar scenes of social unrest unfolded in Venezuela and Indonesia, but with wildly different results. In Venezuela, the IMF-imposed withdrawal of subsidies on fuel led to widespread riots in 1989, and eventually to the election of socialist Hugo Chavez as President in 1999. In Indonesia, IMF-imposed withdrawal of subsidies on fuel and food led to a social uprising in 1998 that toppled long-reigning, mass-murdering US-backed military dictator Suharto.
The IMF is headquartered in Washington, DC, the capital of the US. The US is the largest shareholder of the IMF and has the most voting power within the IMF. The US has the most power within the structure of the IMF, with the majority of the power residing in the combination of the US and its allies.
Because the US has veto power in the IMF, the US has de facto ultimate power over all IMF decisions. The rebellion of the people of underdeveloped nations against IMF-imposed austerity measures is never merely against their own government, who are merely brokers or compradors, but against the foreign powers draining wealth from their country.
In his speech for the G77 Summit in 2000, then President of Cuba Fidel Castro said, "The developed countries, particularly the United States, the big transnationals benefiting from such policies, and the International Monetary Fund have designed in the last two decades a world economic order that is hostile to poor countries' progress and that is not sustainable in terms of the preservation of society and the environment. Two decades of so-called neoliberal structural adjustment have left behind economic failure and social disaster."
The burden of the IMF's austerity apparatus falls overwhelmingly on the shoulders of wage-labourers and peasants, not only directly through the rising cost of living and thus the decline in real wages, but also indirectly, since increasing economic desperation means being forced to accept lower wages and worse working conditions.
Moreover, among wage-labourers and peasants, the burden falls more heavily on women and children than on adult men. Increased desperation means increased child labour, child marriages, and human trafficking, not to mention the psychological impact of increasing poverty and intensifying patriarchy.
According to Nigerian economist Sam Aluko, "There is an alternative even to death, which is living. SAP [structural adjustment program] is the kiss of death." By protesting the IMF's austerity apparatus, the people of underdeveloped nations again and again expressed that they are on the side of life against death.
Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the opinions and views of The Business Standard.
