IMF is not the good Samaritan

By T.J. Addati

This is the first of two articles on the role of the International Monetary Fund and the World Bank in the global economy.

JAKARTA (JP): American folk tradition frequently refers to the "Company Store". On his first day in a new job the hapless fellow and his hungry family are shown into the store, told to take what they need and not to worry about having no money. But the family must pay its bill the following week when the man gets paid. By the time pay day comes around the family needs more food and thus more credit. And then, of course, there is the interest on the first weeks loan.

One way or another, the hapless worker never escapes from his debt to the mill, factory, mine, or whatever kind of company store it was, and is trapped for life. The store was a clever means of relieving the working poor of their meager pay and conveniently repatriated most of their wages back into the company. The sting didn't end there if the worker happened to rent company housing.

When the economic history of the late 20th century is written, the IMF will be portrayed in much the same light -- a clever means for extracting money from poor, subjugated countries and directing it into rich financial institutions, while incidentally keeping the poorer countries in a mire of debt and struggling to meet interest payments.

Make no mistake, while untold thousands of the working poor in America "owed their souls to the Company Store", as the popular song goes, what the IMF is after is not your soul, but your economy -- labor, natural resources, and any spare cash you happen to have lying around.

The IMF is not a charitable organization or an aid agency prepared to rush in and altruistically rescue a struggling country. Whatever its original mandate, it has become an instrument dominated by financial interests with no interest in, or patience with, archaic national borders. Furthermore, it is completely inured to ignoring the aspirations of ordinary people in society. It acts on behalf of people who want their money back, and beyond that they want labor and national wealth in whatever form, and they want it cheap.

The IMF did not gift US$43 billion to Indonesia. If it gets its own way, the money will barely come to rest in this country. The funds are not delivered to Soekarno-Hatta International Airport in suitcases full of cash to be handed out to help the Indonesian people through these hard times. The money is not invested in education, health, public transport, public water projects or loans to small business, with just a little skimmed off the top for our officials.

The money arrives electronically and, if it can be arranged, will quickly leave the same way, back into the waiting arms of creditors, barely leaving a trace of its presence.

The money will not be invested in programs dear to the hearts of ordinary Indonesians. The impact of IMF structural adjustment on education, health care, public transport, public water supply and all other social service systems, will be devastating. This can be seen in as many as one hundred other developing countries around the world who have become involved with the IMF and the World Bank.

Even if the rescue package money was a form of aid, it would not be used for public projects, in which the IMF and the World Bank have little faith. They have a fundamentalist zeal for private property and profit alone. Privatizing health care is more important to them than delivering such a service.

However, there is one area where the IMF believes in just the opposite. It believes in public financing and funding. The crisis in Indonesia was not precipitated by public debt. It was caused by private individuals acting in their own private interest as private lenders and private borrowers, perhaps reckless, greedy and foolish borrowers, but private nonetheless.

That Indonesian society could be knocked back a generation and the last 30 years of progress erased because of the actions of private lenders and borrowers should make us all pause for thought. Ordinary Indonesian people, who had no part in manufacturing the crisis, will pay dearly for this tragedy through their labor and lost aspirations.

Middle class taxpayers in rich countries, who are hardly rich themselves, know nothing of any of this. But they too will pay for it because the IMF uses their tax money to run its operations, and they will never see that money again.

The largest contributor to the IMF's rescue package is the American taxpayer, but very few Americans had a hand in creating our current situation. Most private sector loans were issued by Asians, Europeans and Japanese, who took a chance and lost, but still insist on getting their money back. The IMF has taken their side in this argument, against people who had no part in creating the crisis.

The IMF is against assisting domestic banks and creditors, while insisting that foreign banks and creditors be rescued. Debtors who cannot repay their loans will not be paraded on television sets around the world to let us see who it was that caused all this trouble. Most likely they will retain their comfortable homes, cars and cellular phones, and escape virtually unscathed by this tragedy.

Meanwhile, thousands of Indonesian students will be obliged to drop out of university and tens of thousands of children will have to leave school. Millions of adults will lose their jobs and tens of thousands of elderly people will no longer be able to afford medical care.

At the same time, the IMF and the World Bank will attempt to privatize everything from education to health care and convert private debt into public debt with their conscience untroubled.