It’s not just Dominique Strauss-Kahn. The IMF itself should be on trial

Johann Hari writes:

Sometimes, the most revealing aspect of the shrieking babble of the 24/7 news agenda is the silence. Often the most important facts are hiding beneath the noise, unmentioned and undiscussed.

So the fact that Dominique Strauss-Kahn, the former head of the International Monetary Fund (IMF), is facing trial for allegedly raping a maid in a New York hotel room is – rightly – big news. But imagine a prominent figure was charged not with raping a maid, but starving her to death, along with her children, her parents, and thousands of other people. That is what the IMF has done to innocent people in the recent past. That is what it will do again, unless we transform it beyond all recognition. But that is left in the silence.

To understand this story, you have to reel back to the birth of the IMF. In 1944, the countries that were poised to win the Second World War gathered in a hotel in rural New Hampshire to divvy up the spoils. With a few honorable exceptions, like the great British economist John Maynard Keynes, the negotiators were determined to do one thing. They wanted to build a global financial system that ensured the money and resources of the planet were forever hoovered towards them. They set up a series of institutions designed for that purpose – and so the IMF was delivered into the world.

The IMF’s official job sounds simple and attractive. It is supposedly there to ensure poor countries don’t fall into debt, and if they do, to lift them out with loans and economic expertise. It is presented as the poor world’s best friend and guardian. But beyond the rhetoric, the IMF was designed to be dominated by a handful of rich countries – and, more specifically, by their bankers and financial speculators. The IMF works in their interests, every step of the way.

Let’s look at how this plays out on the ground. In the 1990s, the small country of Malawi in Southeastern Africa was facing severe economic problems after enduring one of the worst HIV-AIDS epidemics in the world and surviving a horrific dictatorship. They had to ask the IMF for help. If the IMF had acted in its official role, it would have given loans and guided the country to develop in the same way that Britain and the US and every other successful country had developed – by protecting its infant industries, subsidising its farmers, and investing in the education and health of its people.

That’s what an institution that was concerned with ordinary people – and accountable to them – would look like. But the IMF did something very different. They said they would only give assistance if Malawi agreed to the ‘structural adjustments’ the IMF demanded. They ordered Malawi to sell off almost everything the state owned to private companies and speculators, and to slash spending on the population. They demanded they stop subsidising fertilizer, even though it was the only thing that made it possible for farmers – most of the population – to grow anything in the country’s feeble and depleted soil. They told them to prioritise giving money to international bankers over giving money to the Malawian people.

So when in 2001 the IMF found out the Malawian government had built up large stockpiles of grain in case there was a crop failure, they ordered them to sell it off to private companies at once. They told Malawi to get their priorities straight by using the proceeds to pay off a loan from a large bank the IMF had told them to take out in the first place, at a 56 per cent annual rate of interest. The Malawian president protested and said this was dangerous. But he had little choice. The grain was sold. The banks were paid.

The next year, the crops failed. The Malawian government had almost nothing to hand out. The starving population was reduced to eating the bark off the trees, and any rats they could capture. The BBC described it as Malawi’s “worst ever famine.” There had been a much worse crop failure in 1991-2, but there was no famine because then the government had grain stocks to distribute. So at least a thousand innocent people starved to death. [Continue reading…]

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1 thought on “It’s not just Dominique Strauss-Kahn. The IMF itself should be on trial

  1. Christopher Hoare

    I’m sure this article cites a mere fraction of the crimes neoliberalism, the IMF, World Bank, and bankers have committed against the citizens of the Earth. There is hardly a venue large enough to bring all the criminals to trial, but one sees articles like this as the start of the necessary movement toward curbing their power.

    One can see why the leaders of Africa, for one group, are so ready to take up any policy they think will stop western actions, even when they’re wrong. The world’s people need to work together to kill these abominations, not expend their energies on old dissentions. Where is there an official body gathering evidence to be used against these out-of-control monsters? We need fourth-world institutions—those that unite the people of the others in equality.

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