Davison Budhoo, a prominent economist from Grenada, created
a worldwide sensation when he resigned from the IMF in 1988 in
disgust over what he called the Fund 's "increasingly genocidal
policies." He is author of Enough Is Enough, and Global Justice:
The Struggle to Reform the International Monetary Fund. Budhoo
is Executive Director of the Bretton Woods Reform Movement
(BWRM), which is spearheading a campaign against IMF / World Bank
structural adjustment programs.
1994 marks the 50th anniversary of the founding of the World Bank
and the International Monetary Fund at Bretton Woods, New Hampshire.
But as the North congratulates itself and celebrates, the South
and its three billion poor will tear out their hair in rage. For
the operations of these agencies there have been catastrophic.
Instead of development and favorable adjustment, the Third World
today is in an accelerated spiral of economic and social decline.
That decline is linked directly to the World Bank and the International
Monetary Fund.
IMF-World Bank structural adjustment programs (SAPs) are designed
to reduce consumption in developing countries and to redirect
resources to manufacturing exports for the repayment of debt.
This has caused overproduction of primary products and a precipitous
fall in their prices. It has also led to the devastation of traditional
agriculture and to the emergence of hordes of landless farmers
in virtually every country in which the World Bank and IMF operate.
Food security has declined dramatically in all Third World regions,
but in Africa in particular. Growing dependence on food imports,
which is the lot of sub-Saharan Africa, places these countries
in an extremely vulnerable position. They simply do not have the
foreign exchange to import enough food, given the fall in export
prices and the need to repay debt.
Basic conditionalities of the IMF-World Bank include drastic cuts
in social expenditures, especially in health and education. According
to the UN Economic Commission for Africa, expenditures on health
in IMF-World Bank programmed countries declined by 50 percent
during the 1980s, and spending on education declined by 25 percent.
Similar trends are evident in all other Southern regions.
IMF-World Bank programs come with other requirements. Governments
are generally forced to remove subsidies to the poor on basic
foodstuffs and services such as rice and maize, water and electricity.
Tax systems are made more repressive, and real wage rates are
allowed to fall sharply -- in Mexico during the 1980s, the real
wage rate declined by over 75 percent. Today, in that country,
a family of four on the minimum wage (and over 60 percent of the
employed labor force is on the minimum wage) can buy only 25 percent
of its basic needs.
With IMF-World Bank-inspired devaluation come inflation and increases
in the prices of all imported foodstuffs. Removal of price controls
domestically leads to sudden increases in the prices of commodities
used by the poor. Big increases in interest rates cause bankruptcies
in domestically owned small businesses and further unemployment.
Removal almost overnight of trade restrictions throws domestic
industries into disarray and liquidation and compounds unemployment.
Dismantling foreign exchange restrictions allows the elite classes
to export funds overseas, carte blanche, as capital flight, thus
worsening the balance of payments. Privatization of all government
owned productive enterprises as an ideological prerogative of
the IMF-World Bank is an incalculable loss.
Even on the basis of objectives established by the IMF-World Bank
themselves, SAPs have not been successful. An internal study within
the IMF completed in 1988 reveals that the 40-odd programs implemented
between 1983 and 1987 failed in their objectives of enhancing
economic growth, reducing fiscal and balance of payments deficits,
lowering inflation and stabilizing or decreasing external debt.
Subsequent programs, as the United Nations Development Program
(UNDP) and UN Economic Commission for Africa have shown, have
failed even more dismally in relation to IMF-World Bank self-imposed
objectives.
Anti-People
But the greatest failure of these programs is to be seen in their
impact on the people. Using figures provided by the United Nations
Children's Fund (UNICEF) and the UN Economic Commission for Africa,
it has been estimated that at least six million children under
five years of age have died each year since 1982 in Africa, Asia
and Latin America because of the anti-people, even genocidal,
focus of IMF World Bank SAPs.
And that is just the tip of the iceberg. Even more pervasively,
these programs have created economic, social and cultural devastation
whenever and wherever they are introduced. The prestigious and
highly Northern-oriented UNDP has determined that some 1.2 billion
people in the Third World now live in absolute poverty (almost
twice the number ten years ago), over half of sub-Saharan children
are starving or malnourished, 1.6 billion people in the Third
World are without potable water and well over two billion are
unemployed or underemployed. In some countries of Africa, infant
mortality rates are double what they were ten years ago, before
SAPs were widespread.
Recently, UNDP reported (in its 1992 Human Development Report)
that, mainly because of inherent inequities built into SAPs, the
income gap between rich and poor in the Third World doubled in
the course of the 1980s. Today, the richest fifth of the world
(including most of Europe and North America) receives 150 times
more in income than the poorest fifth (located almost exclusively
in the South). "This [disparity] was a big shock to me,"
said the Chief Adviser to UNDP at a press conference. "I
had never expected a ratio of 150 to 1; perhaps 40 to 1."
In scathingly cynical terms, the Report concluded that "the
World Bank and the IMF should be the buffer to protect developing
countries, but their recent record shows that they have become
institutions for recycling debt, not recycling resources."
On the environmental side, millions of indigenous people have
been driven out of their ancestral homelands by large commercial
ranchers and timber loggers. Several millions more have been displaced
by massive dams that benefit primarily elite classes and transnational
corporations. Both types of activities were approved and financed
by the IMF-World Bank. It is now generally recognized that the
environmental impact of the IMF-World Bank on the South has been
as devastating as the economic and social impact on peoples and
societies.
These policies, which are really the outpouring of a new and savage
push for instant and highly unjust expropriation of the resources
and economic sustenance of the South, must be brought to a halt.
How can this be done? Three possible lines of approach can be
suggested.
The first is to abolish these institutions. This is the view taken
by independent researchers (such as Susan George and Walden Bello)
and by human rights organizations (such as PROBE lnternational
and the Peoples' Tribunal on IMF-World Bank Crimes against Humanity,
Berlin 1988). Senior officials of the Swedish official aid agency,
SIDA, have also suggested this. While abolition is fully justified,
it is unrealistic to think that it will happen. The governments
of the North will never agree to abolition, simply because these
institutions are too important to them as instruments to achieve
their economic and political objectives. This has been proven
over and over again by the Group of Seven [France, Germany, Italy,
Canada, Japan, England and the U.S.] who, at every meeting, enhance
rather than diminish the powers of these bodies.
A second possible way out is to let the World Bank and the IMF
continue to operate, but to control them through the creation
of a special UN agency. This is the solution put forward by the
UNDP in its 1992 Report. The difficulty with this solution is
that the UN today, like the IMF-World Bank themselves, is under
the total control of a small clique of Northern countries. The
form may change, but the substance of the policies of major industrialized
countries in relation to the South, as expressed in the operations
of the IMF-World Bank, will remain the same.
The third possible solution is for peoples and countries to force
change on the institutions, by confronting them with irrefutable
evidence of their gross injustices, inequities and contradictions.
In this respect, several things can be done immediately. There
are, for instance, various Articles of Agreement in the constitutions
of the World Bank and IMF that have not been implemented at all,
simply because implementation would have improved the position
of developing countries vis-a-vis the staff of the IMF and World
Bank. In this regard, there is provision for a conflict resolution
body to intervene in cases of conflict of a technical nature between
management of the institutions and member governments. These Articles
should be made operational immediately. Also, the IMF Council,
as defined in the Articles of Agreement to mean a Peoples' Parliament
within the management structure of the institution, should be
established forthwith. This would not only serve to help democratize
the institution, but would create a meaningful checks-and-balances
mechanism against abuse. There should also be created a Third
World Watchdog Committee, comprising highly qualified technical
people, to help developing countries in their negotiations with
the institutions. Leaders of the industrialized world have much
to ponder and do about the IMF-World Bank, apart from preparing
50th Anniversary celebrations and handing out more accolades and
power to their staff. But the most likely outcome is that, as
always, they will do nothing.
50
Years Is Enough
IMF,
World Bank, Structural Adjustment