FREQUENTLY ASKED QUESTIONS ABOUT GLOBALIZATION
AND ALTERNATIVES

"We spent a lot of time talking about Africa, as we should. Africa is a nation that suffers from incredible disease."--George W Bush after meeting with the leaders of the European Union, Gothenburg, Sweden, June 14, 2001

From 1960 to 1980, income per person grew 34% in Africa. Then the IMF and neos took over. Disaster happened even though though the share of export in total GDP increased from 17% to 21% between 1970 and 1990. Trade did not create growth.

The World Bank finally admitted in 1994 that "adjustment alone is not adequate for long-term sustainable development."

Though Africa is starting to recover (especially for the rich), income per person in sub-Saharan Africa is still 20% less than before the neos took over.

Neoism entrenched

"African economies are already the most open in the world" says Taoufik Ben Abdallah, of Environmental Development Action in the Third World (ENDA). Africa is close to "no society" as imagined by Margaret Thatcher - Africans tend have a low opinion of government, and many consider, for example, cheating on taxes to be acceptable. Wrote a Zairian teacher: "When we ask young pupils what they want to be later on, they invariable answer that they want to become big businessmen, politicians (in Zaire that means "dictators") or music and sports stars...so they can give everyone orders, make a lot of money and do very little work...If asked "why do you cheat and swindle others", many reply straightforwardly, "because we are Zairians"".

In 1965 Joseph-Desire Mobutu began his brutal and corrupt dictatorship. (For more on Mobutu, see Why is the third world in debt) He has been on good terms with the USA, except for a period from his 1973 "Zairianization" (when he decided that foreign owned factories should be owned by Zairians, ie, himself) through the human-rights oriented Carter presidency, until the Reagan Administration.

Mobutu with Bush senior

With the end of the cold war and election of Clinton, support for Mobutu ended.

_Zaire: a country study_, by the US Library of Congress (sources include the neo _Economist_) blames the Zairian debt on "overambitious...grandious industrial projects" without mentioning that the World Bank had been recommending just that sort of thing. In fact, the World Bank loaned $375 million between 1984 and 1986 alone.

It says that IMF reform (which during its time was praised in the media) was "undercut" by "rampant corruption that caracterized the regime" . Why corruption supposedly had no effect before the IMF is not explained. It also brings up the question of why IMF tolerated corruption, while not tolerating such "misguided" policies like education. A nun wrote in 1984: "The teachers are furious. They only earn 300 - 350 a month, yet a sack of flour costs 740. A family can live for two weeks on one sack if they only eat once a day."

After descibing the collapse of the Zairian economy, The Library of Congress points out that "the public-service sector was no longer operational" without mentioning that that was exactly the sort of "reform" that the IMF wanted. Even the roads were in essence privatized: "local residents and enterpreneurs, religious groups and some large companies have attempted to maintain some roads but with limited success nationwide". (P189) Independent unions had been outlawed all along.

The same paragraph that points out that manufacturing fell from 9% of GDP in 1981 (before the IMF) to 1% in 1987 also says that "liberalization of economic policies in the late 1980s, however, resulted in an increase in production in some fields". In short, the IMF is given credit for putting bandages on the wounds it inflicted. But then, manufacturing had "virtually ceased by 1992 in the wake of general economic chaos", which seems to be an act of God, because the IMF and its policies are not mentioned this time.

Various rebel groups aimed to overthrow Mobuto, including one that dreamed of "agricultural co-operatives...equipped with a dispensary, maternity clinic, nursery school, playing fields, movie theater, market, and a branch of the national savings bank. It is unclear how this socialist paradise in rural Zaire would be financed." Certainly not those who helped Mobutu buy his European Castles, then approves of 50% military spending. In short, socialist paradise can be funded the same way as fascist hell.

Resistence

Resistence of the IMF (rather than just of Mobutu) began with student protest in Feburary 1989. Though many students were killed, eventually their demands of affordable transportation were met. In May 1990, between 30 and 100 student protesters were massacred.

Eventually the IMF gave up on Zaire.

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Since the mid-60s Morrocco followed World Bank and IMF advice, using dams, tractors and chemicals to modernize agriculture - for 10% of the land, mostly owned by rich landowners. Their wealth was expected to "trickle down" to the small farmers. It did not. In fact, while Morocco was following IMF advice, debt rose from 18% of GDP in 1970 to 110% of GDP in 1984.

Between April 1979 and May 1981 prices rose 86% for flour and 100% for milk. By 1984 basic food prices were up 133% from 1979, and bread riots were stopped only by killing hundreds.

In order to get loans and debt relief from the IMF, Mosambique had to "liberalize" its cashew processing industry. The result was that modern factories were closed because they could not compete with Indian child laborers who shell the Cashews by hand. The IMF destroys factories and then calls its opponents luddites.

Cashews are grown by small family farms, so when prices fell by half the results hit hard.

In February 2000 even World Bank president James Wolfensohn realized the disaster, and watered down his policy. Time will tell if it is too little, too late.

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Kenya

The IMF arrived in 1975. The minimum wage had dropped 42% by 1984. In 1983 average real wages were worse than in 1964.

July 2000: the IMF resumes lending to Kenya with a US$198 million PRGF loan in return for "structural reforms, civil service reform [and] privatisation" .

May 2000

Nairobi: A peaceful demonstration calling for debt relief and an end to IMF conditions is attacked by police who "broke up the protest with clubs and tear gas, violently hauling marchers into a waiting vehicle" . 63 protesters, including 13 nuns and 2 priests, are arrested. There are several injuries, including children and an Islamic sheik (priest).

August 2000

President Daniel Arap Moi complains that the conditions imposed by the IMF and World Bank for their new aid programme to Kenya are too harsh: "We have been paying our debts for the past nine years but have not received anything in return."

The IMF senior advisor for Africa, Jose Fajgenbaum, says "the reporting requirements attached to the aid package were normal. They were the same as had been expected of Kenya as part of previous IMF aid programmes."

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IMF overview

The IMF grants US$10.6 million credit on 25 October 1999 under ESAF.

15 May 2000

Protests opposing IMF conditions are dispersed with tear gas.

December 1999-January 2000

The first democratic election in Nigeria made no difference, as the elected president continues the unpopular IMF-advised policies, such as deregulating the oil sector and raising petrol prices (in a a nation that exports oil, of all places).

Kwesi Owusu, Head of the Jubilee 2000 Africa Initiative, says, the IMF "are now hell bent on squeezing the last drop of blood out of a new democratic government that is struggling to restore social and economic stability".

When protesting workers march on Aso Rock, where they are attacked by armed police. Gani Fawehimi, a lawyer and human rights activist, says, "It is sad and ironic that Obasanjo's regime, which was brought into power by democratic process, is now unleashing autocratic violence"

June 2000

The Government continues with the IMF fuel price hike, and Nigeria is crippled with a general strike. Several deaths are reported.

July 2000

The Nigerian House of Representatives adopts a non-binding motion urging the federal government to suspend all activities in respect to the IMF loan.

On 4 August 2000, the IMF approves a stand-by credit worth US$1,031 million for Nigeria's 2000-01 economic programme. Even though Nigeria is obviously struggling to build a stable democracy, the IMF says "An acceleration of the implementation of structural reforms is urgently needed...there should be no delays in this urgent task".

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The IMF has complained about the "high level of the minimum wage vis-a-vis Paraguay's major trading partners" yet called for the minimum wage of Paraguay to be lowered, instead of raising the wage of its trading partners.

June 2000

As the government plans to privatize water, telephone services and railroads, protests erupt. In Asuncion, over 20 people are injured and five arrested as riot police attack them with truncheons. The capital is nearly shut down by protest.

Investors have not rewarded South Africa for choosing democracy and ending apartied. Unemployment is high, about 35%.

16 April 2000

Protest outside the meeting of IMF and government officials.

One of the protesters, Trevor Ngwane, a city councillor from the Soweto township, says, "Many of those debts were used to buy weapons and suppress the people during apartheid. So we are paying twice for it - once with our lives, and now with an inability to fund critical social services."

August 2000

South Africa's Finance Minister, Trevor Manuel, says that the main challenge for developing countries is to create an alternative model to global trade and financial institutions such as the World Bank and IMF. Manuel is chair of the 2000 Annual Meetings in Prague and says he will use the opportunity to help the cause of developing countries.

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About 90 to 95% of Zambias foreign exchange comes from copper. The IMF-World Bank said this was fine, and that copper had a good future. In 1975 the copper market collapsed - in the 80s copper sold for a third of its price in 1966. Each Zambian ended up owing 600$ in a country with a GDP of $470 each.

The IMF began "adjustments" in 1981.

In 1985 the price of corn meal jumped 50% (while 2.5 million bags of corn were rotting in the countyside), bread 100% and bus fares 70%. Incomes had fallen 44% since 1974. Industry was operating at less than half capacity - a strange strategy for paying back debts.

The IMF granted a three-year ESAF loan worth US$349 million on 26 March 1999 on the condition that "the Government will increase reforms in the areas of privatisation, public service, and monetary and banking supervision" . On 27 July 2000, the IMF approves an additional US$13.2 million PRGF loan.

26 April 2000

Scores of protesters, demanding an end to IMF SAPs, are dispersed by armed riot(ing) police in Lusaka, Zambia's capital, after trying to picket the hotel were IMF and government officials are meeting. Organised by a leading civil society group, Women for Change (WfC), the protesters blame the IMF and World Bank for continued poverty in their country. "The IMF are killing us, especially women and children," says Emily Sikazwe of WfC. In a separate report, Sikazwe explains, "If you want to see the impact of structural adjustment on Zambia go to the University Teaching Hospital" , the capital's largest hospital. The conditions are awful, she says, and the wards are full of BIDs (Brought In Dead). She goes on to explain how IMF and World Bank privatisation policies have resulted in more than 60,000 people losing their jobs and 420,000 falling into destitution.

August 2000

The IMF argues against democracy:

IMF First Deputy Managing Director, Stanley Fischer, says that "It is hard to take bold (read: unpopular) economic decisions in an election year. It is easy to throw away what you have built in five years to achieve short-term gain when the long run needs are very clear." Neos do not believe that the people know best.

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The debt owed by Ugandans is actually owed by Idi Amin (currently living comfortably in Saudi Arabia), a mentally deranged dictator who not only massacred his opponents, but also tortured them himself, and reportedly ate parts of them.

In 1987 a coup by President Museveni set up a one-party parliament. Added to 214 members of parliament are 39 seats for women, 10 for the army and for workers...three.

While it is debatable whether this is democratic, the system ended the devestating tribal warfare of Uganda, resulting in the 15th highest growth rate in the world - which the IMF took credit for, of course.

Big government beats AIDS

The Ugandan government is active in fighting AIDS - 80% of the condoms in Uganda are from the government, increasing usage by a third. The HIV infection rate dropped from 30% in 1991 to 10% in 1999.

In 1998 a fifth of the debt was cancelled. The IMF said it was because Uganda had followed its advice, but they only seemed to figure that out after a decade of growth.

Seeing that IMF austerity measures usually do not involve spending on condoms, it is more likely the IMF looks at who is most successful first, then "discovers" who is following their policy. See the Asian economic crisis for an example of this.

Substainability

Part of the recovery is because it is profiting from the unsubstainable clearcutting and plundering of gold and diamonds in Zaire, funding the brutal civil war there. This sort of unsubstainable growth might bring problems in the future, resulting in the IMF suddenly "discovering" that giving out condoms is against IMF policy.

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While neos try to take credit for Uganda, Tanzania is held up as an example of debt caused by a mixed economy. After all, with a life expectency of 60 years and nearly universal education, something had to be going wrong. That Tanzania has depended on exports such as cotton, (as the neos recommend) and that in a single day in July 1986 cotton prices fell by half, is ignored. Also adding to the debt was a costly war to defeat Uganda under Idi Amin. Following the drop in cotton prices, IMF conditions were agreed to. Cornmeal prices doubled and food riots were put down with more than 30 killed.

September 2000: the IMF presses for higher energy prices, wage "control" (i.e. reductions) and tax reform, causing protest.

Endless poverty among Palestinians is a major reason for the bloody Infadia (uprising), beginning in September 2000 and with no end in sight.

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Not long after Adam Smith published Wealth of Nations, the British rulers in India instituted the "permanent settlement" of 1793.

40 years later the British Enquiry Commission concluded that "The settlement fashioned with great care and deliberation has to our painful knowledge subjected almost the whole of the lower classes to most grievous oppression," leaving "misery" that "hardly finds a parallel in the history of commerce...the bones of the cotton-weavers are bleaching the plains of India."

As for the upper class: Governor-General Lord Bentinck wrote that "the 'Permanent Settlement,' though a failure in many other respects and in most important essentials, has this great advantage, at least, of having created a vast body of rich landed proprietors deeply interested in the continuance of the British Dominion and having complete command over the mass of the people." Masses became impoverished and died, but a few got more money than they needed or deserved - in short, India was the first "economic miracle". Bayly, C.A. (1988) The New Cambridge History of India Cambridge: Cambridge University Press.

Poverty dropped from 53 percent in 1973 to 34 percent in 1990. The IMF took over in 1991 and the rest is history.

Without enforcement of regulations, buildings are built cheaply. Reletively minor earthquakes are massive disasters as a result.

Race to the bottom in action

Arundhati Roy of _Outlook_ writes that at a 'Call Centre College' in Gurgaon on the outskirts of Delhi, "hundreds of young English-speaking Indians are being groomed to man the backroom operations of giant transnational companies. They are trained to answer telephone queries from the US and the UK (on subjects ranging from a credit card enquiry to advice about a malfunctioning washing machine.) On no account must the caller know that his or her enquiry is being attended to by an Indian, sitting at a desk on the outskirts of Delhi. The Call Centre Colleges train their students to speak in American and British accents. They have to read foreign papers so that they can chit chat about the news or the weather. On duty they have to change their given names. Sushma becomes Susie, Govind becomes Jerry, Advani becomes Andy. (Hi! I'm Andy, gee, hot day innit? Shoot, how can I help ya?)

They are paid exactly one-tenth of the salaries of their counterparts in the USA and UK. "

Resistence

More than a million protested the IMF-demanded privatization of power. There have been many other protests, many dispersed violently by police.

When the private Maheshwar dam project started construction without mentioning that 61 villages would be submerged or lose their farmland, 12 families near the site protested. Cement was poured into their water pipes, their standing crops were bulldozed, and the police invaded and kicked them off their farms. Over the last two years, tens of thousands of villagers have nonviolently (re)captured the dam site several times, while being attacked by private police.

In January 2001 150 people were arrested in Bhopal while marching against World Bank and Asian Development Bank policies.

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