There may be no single institution with greater pernicious influence in the world than the International Monetary Fund. Now for the first time, the IMF faces a real challenge to its existence, at least in its current form.
For two decades, the IMF has had a stranglehold on the economies of developing countries, denying them the funding they need to make foreign debt payments and avoid default, unless they enact “structural adjustment” policies.
Structural adjustment can fairly be described as a virulent strain of Reaganomics. The basic idea is make countries open their labor markets and natural-resource riches to multinationals, shrink the size and role of their governments, rely on market forces to distribute resources and services, and otherwise integrate themselves into the global economy.
Structural adjustment policies might include: privatizing government-owned enterprises and government-provided services; slashing government spending; reorienting the national economy to promote exports; lifting trade restrictions, implementing higher interest rates; eliminating subsidies on consumer items such as food, fuel, and medicines; and imposing tax increases.
The IMF’s structural-adjustment ethic has succeeded in diminishing the scope of government in developing countries, and in integrating them into the global economy.
But it has also immeasurably increased suffering in developing countries. In most of the world’s poorest nations where structural adjustment policies have been implemented at the IMF’s behest, poverty has increased, health care systems have collapsed, and income inequality has skyrocketed.
Developing countries that have done well in recent decades, primarily those in Asia, including China, have succeeded by violating central tenets of structural adjustment: They have maintained a strong government role in the economies, and they have protected certain parts of their economies.
But citizens of other developing countries have protested angrily against IMF policies. Riots have broken out after the IMF ordered price subsidies lifted on goods such as bread and gasoline. But because the IMF derives it authority from rich countries, not the poor nations where its policies are most often applied, it has been able to weather these outbursts.
In the last two years, however, momentum against the IMF has grown in more prosperous countries, as well as in the developing world.
Structural adjustment has blown up in the IMF’s face before: Its admitted mishandling of the Asian financial crisis in 1997 and 1998 made the economic contraction there much worse. The structural adjustment agenda further slowed the Asian economies that had already plunged into recession.
This incompetent performance finally sparked widespread criticism of the Fund in the industrialized countries.
Meanwhile, the worldwide Jubilee movement is increasingly winning support for the idea of debt cancellation for the poorest countries.
The IMF has deftly tried to turn these weaknesses to strengths. It adroitly used the Asian financial crisis to win $90 billion in new funding from the rich countries. The Fund needed more money, proponents claimed, to keep the crisis economies afloat.
And the IMF has sought new monies to very modest debt relief through its Enhanced Structural Adjustment Facility (now known as the Poverty Reduction and Growth Facility, an Orwellian twist) — in exchange for countries agreeing to years of closely supervised structural adjustment.
But these jujitsu tactics may be running out of steam. Political momentum against the IMF ratcheted up in recent weeks, when the Meltzer Commission, a bipartisan advisory commission to the US Congress, released its report.
While the members of the commission disagreed on many matters, they agreed on two: First, the IMF (along with the World Bank) should use its existing resources to cancel all debts owed to these institutions by the poorest countries. Second, the IMF should get out of the business of long-term lending — the kind of development loans to which structural adjustment conditions are normally attached.
The report has shifted the terms of debate over the IMF in the United States and the US Congress. Unfortunately, the IMF is only seeking a relatively small amount of new money from the Congress — and if that money goes through, Congress will lose most of its influence over the monetary agency for several years (until the next funding request).
But the shift in policy circles is now being accompanied by a new progressive public protest against the IMF in the United States. On April 16, during the IMF’s annual spring meeting, thousands of demonstrators will take to the streets of Washington, DC to protest the deadly toll of IMF policies.
Infused with the spirit of Seattle that shut down the World Trade Organization meetings, the demonstrators are planning a direct action to shut down the IMF, as well as a massive, permitted rally and march.
Street demonstrations against the IMF in Washington have the potential to awaken people in the United States to the needless suffering imposed by the Fund on people throughout the world, and to mobilize a critical mass of opponents in the country that exercises a dominant influence at the Fund.
Russell Mokhiber is editor of the Corporate Crime Reporter. Robert Weissman is editor of the Multinational Monitor. They are co-authors of “Corporate Predators: The Hunt for MegaProfits and the Attack on Democracy.”
