IMF is not a good Samaritan (2)

By T.J. Addati

This is the second of two articles on the role of the International Monetary Fund (IMF) and World Bank in the global economy.

JAKARTA (JP): In all fairness to these institutions, there is one important respect in which countries may appear to be strengthened after receiving their assistance: the Gross National Product (GNP) has sometimes risen significantly after the conditionalities and the structural adjustments have been made. The same will probably be true in Indonesia.

Here is an example of how this can work. Small farmers growing food for local consumption is meaningless in the global context. But squeeze small farmers off their land to make room for large agribusiness projects growing interesting crops for export -- that is good business, that kind of agriculture makes money, that will raise the GNP in a way small farmers growing food for local consumption never will.

Never mind that farmers are driven off their land, family life is damaged, the backbone of small villages are broken, more people have to move into already unprepared and overcrowded urban areas, local crops eaten by local people are increasingly scarce (even to the point of famine in several countries), unemployment increases and salaries for those who are employed are driven down.

All of this combined with increased urban overcrowding, less available or affordable food and cutbacks in government health clinics predictably produces higher rates of infant mortality, malnutrition and preventable disease.

Rates of domestic violence rise, more children and teenagers enter the sex industry, crime rises, and police have to become ever more coercive in order to control ever more numbers of desperate people. The effects operate about the same way in just about all industries catering to local people, because local industry is not the point. Domestic economy for domestic consumption does not profit multinational corporations, but cheap labor manufacturing goods for export does.

Given the deepening poverty and the competition for any kind of job, people will be happy to take factory jobs for little pay, no benefits, poor working conditions, and no job security whatsoever.

A country with its national economy in order, a self- sufficient, self-reliant, self-contained country would be of no interest to the IMF or the World Bank, for it could not be obliged to send all of its surplus wealth out of the country to service its debt.

The whole point for the IMF is for Indonesia to maximize profit in every possible industry and then be obliged to send every bit of it abroad to service its debt. Look at Nicaragua. Double-digit growth for the past several years and every bit of the profit sent out of the country to service its debt. Look at Mexico. Under the IMF all of the profits from its oil-export revenues went abroad until the debt was paid. If you have a problem meeting a payment, not to worry, they will extend to you another kind of loan to tie you over. And don't worry about that increasing your debt stock. That is the point. These institutions are not interested in you paying off the principle on these loans. The idea is to keep you paying the interest, and paying to perpetuity, and to keep you dependent.

That is where food aid comes in. Food aid is a big business, although "aid" is a misnomer because it would lead one to believe that it is a gift. Agribusiness concerns all over the developed world lobby their governments for a piece of the action. Most food aid consists of heavily subsidized, surplus or poor quality grain, meat, or dairy products, which companies hope to dump on poor countries. It's profit for them, makes the donors look good, and has the added advantage of further undercutting and weakening local agriculture and destroying national food security.

If a country can be encouraged to become dependent on food aid, all the better for international agribusiness, banks and corporations. Food has to be imported from places eager to sell it, lots of companies make money along the way, and the debt stock is increased if new borrowing has to be made to pay for it. In fact new borrowing is probably already taking place just to keep up to date on payments.

All of this and worse has happened practically everywhere these institutions have operated and it is a scandal of global proportions. It is in essence a two-decade-long massive movement of wealth from poor and needy countries to the richest institutions on the planet, already awash with cash, and needful of nothing.

If you cannot help but wonder why this much misery and injustice isn't one of the chief preoccupations of the mass media, remember that the mass media is yet one more component of the vast corporate world, now more powerful than many governments.

The same corporate executives and corporate lawyers who sit on the boards of multinational corporations and transnational corporations, also sit on the boards of the great press institutions and the huge mass media organizations. They are there to ensure that the news and information you receive is compatible with corporate interest. Just in America alone there are more than 170,000 people employed in public relations firms and policy institutes, not to mention tens of thousands of others in government and military bureaucracies, spending billions of dollars a year to shape and spin the news and information you receive, and to omit or disparage anything deemed unsuitable or undesirable.

In just the public relations sector alone, this is 40,000 more people than work as actual news reporters. At this point in time, for example, between 40 percent and 50 percent of the news and information found in the Wall Street Journal, or practically any other media outlet, originates with government and corporate public relations departments. The scale and influence of this industry, wholly dedicated to perpetuating whatever myths are convenient at any particular time, is constant, unrelenting and pervasive.

It will come as no surprise to Indonesians to hear that in every country of the world finding groups of people willing to support the interests of the great international banks, corporations, and assorted financial institutions is easy. The business elite in Indonesia, as in virtually every territory and country on earth, has always been willing to support business interests above the interests of the people. They in turn are surrounded by a large class of professional and technical staff and their families, who while not rich and powerful themselves, have become by virtue of their education, relationships, professions, friendships, employment, and lifestyle, supportive of these interests.

After all, they have much more in common with friends from university, business schools, engineering schools, professional schools, either here or abroad, involved in the same types of businesses and subscribing to the same types of theories, than they have with rice-farmers, kampong dwellers, factory workers, and of course, indigenous peoples of the forests. Certainly these professional classes and allied personnel throw their lot in with the business elite and support all of this. After all, it is their support.

Nonetheless, the lessons of 50 years of IMF and World Bank activity are obvious. The gap between the richest 20 percent of countries and the poorest 20 percent of countries has doubled in the last two decades. Much can be gleaned from their own figures, reports and statistics. While the World Bank has cleaned up its act somewhat in recent years, it took it 40 years for it to realize that its aid never reached the poor and that its projects were environmentally destructive.

The IMF, on the other hand, is full of hubris, ideology, and power, and is unlikely to notice or acknowledge the fact that never in the history of the earth has so much misery and injustice been perpetrated on so many people all over the world, all at the same time. And it is said that the only thing worse for poor people than the IMF is war.

Window: Nonetheless, the lessons of 50 years of IMF and World Bank activity are obvious. The gap between the richest 20 percent of countries and the poorest 20 percent of countries has doubled in the last two decades.