International Monetary Fund oppresses poor

Elton Wong

I bet that every mainstream journalist has to take a course on the difference between newsworthy and important. This week, we have a textbook example of these categories.

Take the protests in Washington over the International Monetary Fund (IMF). If you look at all major news sources, they talk about the details of the protests, the police actions, the blocked traffic, the personalities involved and such. Those things are “newsworthy.” But if you want the major media to tell you what the IMF is and what its policies are, you’re pretty much out of luck.

The IMF was founded at the Bretton Woods Conference in 1944. Made up of 177 member nations, its mission is to supply member states with money to help them overcome short-term balance-of-payments difficulties.

No one sane would protest financial aid to developing nations to help them develop their infrastructure and help citizens. Criticism of the IMF centers around program funding and how the interests of rich corporations have been placed before those of developing nations.

Money is available to member nations of the IMF, but voting power, unlike the UN, is based on the contributions of each nation. As a result, the United States has 17 percent of the vote, while the seven largest industrialized nations (the G7) control 45 percent of the vote.

Because the IMF can dictate the terms of development to the nations it lends money to, the imbalance of representation leads to conflicts of interest and misunderstanding. Money is only made available to nations after they have agreed to specific policy reforms in their economies. These reforms often involve giving lots of money to corporations.

Northern companies benefit the most from loans to developing countries because these corporations receive lucrative contracts to “develop” countries in the third world. The IMF basically says “we’ll loan you money to develop, but you have to spend all that money on our corporate friends.”

This is not conducive to the self-reliance, autonomy or well-being of the poor. In India, the IMF has loaned much money to improve health care, but this money has gone to private corporations. According to Dr. Vineeta Gupta, a physician and human rights activist based in Punjab, India, these corporations have made the cost of health care too high for many of the poor.

Channeling loan money into private corporations has also been detrimental to the environment. A 1990 World Bank forestry conservation project in the Cote d’Ivoire put a half-million-hectare rain forest under the management of the same corporations that pillaged the country’s timber resources during two previous decades. This logging project, approved in 1990 under the Bank’s supposedly “environmental” forestry policy, set the stage for the potential displacement of over 2,000 people who depended on the forest.

In the early 1990s, the Bank had initiated a “forest management and protection” project in the West African country of Guinea. The effort turned out to be an initiative to deforest two-thirds of the remaining pristine rain forest in the country. This is not development; this is environmental destruction that benefits companies at the expense of the poor.

IMF is not improving long-term situations in developing countries. The IMF does not understand “development” is meaningless unless it helps the poor become self-sufficient. Giving money to multi-national corporations for poorly conceived projects does not accomplish this.

The IMF does not understand justice. During South African apartheid, the white minority government ran up more than $40 billion in debt to the world bank and IMF. The current democratic government is now forced to repay this money. The black majority of South Africa lived under the oppression of apartheid. Now it must repay the debts the oppressors created while oppressing them.

Privatized corporations have taken this loan money, while cutting off access to water and electricity among the poor.

“Many of those loans were used to buy weapons and suppress the people during apartheid,” said Trevor Ngwane, a city councilor from South Africa who was interviewed by the Chicago Tribune. “So we are paying twice for it — once with our lives, and now with an inability to fund critical social services.”

UNICEF has reported that poor children suffer greatly because the governments of developing nations cannot fund health care programs nor proper agricultural development.

What is the solution? Jubilee 2000 is pushing for industrial nations, the IMF and private creditors to forgive the debt of developing nations who would then be able to grow and provide for their citizens without cutting funds for education and health. This would help them escape the vicious cycle.

Jubilee 2000 has already met with success. Last September, President Clinton announced a 100 percent debt forgiveness to the poorest nations, provided the money go to basic human needs. The rest of the G7 nations have followed suit.

However, because of technicalities and the various strings attached, many nations that desperately need debt forgiveness will not get it. Only certain kinds of debt have actually been forgiven, and only the debt owed the countries themselves, not the IMF, World Bank or the many private creditors.

There is still a way to go. The Jubilee 2000 Web page is Debt forgiveness is the first step towards real development in poor countries and will add immeasurably to healthy human flourishing in the future. The movement deserves all of our support.

Elton Wong is a junior in biology and philosophy from Ames.