by Najma Sadeque
As long as people believe that building an economy mainly requires foreign loans and investments, or that money is intrinsically wealth in itself, we are condemned to remain dependant, manipulated and exploited indefinitely.
Most former colonies are in the same boat. The main culprits are IMF and World Bank, but the fact remains it takes two to clap hands. Someone has to agree to onerous and unacceptable conditions. And those responsible have throughout been our financial ministers and advisors, generally not knowledgeable enough, nor concerned about how the predatory global financial system works – or how the domestic system could be made to work for everyone’s benefit.
Even more suspect is that the public is not informed about basic money principles as a measure and facilitator for exchange, an understanding which could easily be introduced at the middle or high school level. Instead, a universal culture was deliberately furthered to make believe that money operations were something beyond the comprehension of ordinary people and to be left only to ‘experts’ to be trusted and followed blindly.
This has effectively assisted governments and foreign moneylenders in maintaining secrecy over financial matters, and entrenched the environment of arbitrary, irresponsible, undemocratic – and frequently dishonest – financial behavior. How else can countries so rich in natural resources and wisdom — which supported entire peoples for thousands of years, and which enriched exploiting colonizers for two to five hundred years — become so quickly impoverished after World Bank and IMF started intervening in their economies? Even western countries not using their services have been fooled by the overarching global financial cabal – which in turn controls World Bank and IMF and have their fingers in the Central Banks of almost all countries. Only recently has civil society started reacting towards change.
If the World Bank were truly a ‘development’ and not commercial bank, that goal should have been achieved within a couple of decades, and then automatically disbanded itself. IMF may have survived since its stated purpose was to oversee and facilitate balance-of-payments – juggling the many different currencies of many countries while they produced and calculated in their own, but needed to be ensured fair exchange against others when they exported and imported.
This was ‘resolved’ by the introduction of a ‘universal’ currency – not a neutral one that belonged to no one country, and overseen perhaps by the UN – but by the US-imposed dollar. Weakened by war or colonization, neither the European countries nor the former colonies had the stomach to object. That enabled the US, through the World Bank and IMF of which it is the biggest shareholder – no other country comes anywhere close – to control most of the world through the control of their money.
Since 1970 when the dollar ceased to be backed by gold, its global financial control should also have ended. Besides, bilateral and partial barter trade continues with less hassle. Yet the world continued accepting dollars worth little more than the paper they are printed on, yet able to buy high-value goods. — Simply because no one could stand up against the unspoken US military menace.
The financial decision-makers of most indebted countries — whose minds were appropriated by World Bank’s Economic Development Institute where country finance ministers, state bank governors and other ‘experts’ were routinely brainwashed – became entrapped in psychological and technical lockup. They no longer knew how to extricate themselves, or were unwilling to lose the wealth and power that came from their overpaid ivory-tower positions if they revolted.
Today, the World Bank and IMF remain as undemocratic, unaccountable and non-transparent as the worst dictatorship. It is World Bank’s loans given mostly to non-representative or corrupt governments that lack transparency and accountability. These further ‘development’, if any, for the elite and vested interests, based on western technology – often obsolete or damaging — and values, not necessarily in keeping with local needs and capacity. Stolen billions are siphoned off to Swiss and other offshore banks. Borrowing from IMF with which to pay off compound interest installments, recurs.
Not for nothing, usury was always forbidden by all major religions, although some found a way around it while Muslim countries simply ignored the practice on the grounds that as borrowers from foreign institutions, they had no choice …. which is not true. — While corruption relies on secrecy.
What could country advisors and planners have done? it may be asked. Plenty. For over four decades, countries have export-oriented their natural resources and value-added production to earn value-less dollars. Yet countries need no foreign exchange except to purchase needed foreign equipment and expertise which they lack and simply cannot produce for themselves.
Somewhere along the line when World Bank ran out of giant projects such as dams to finance. Being limited to less than 200 countries as clients, they began to penetrate other ‘development’ sectors such as health, education, sanitation, and so on, which need no foreign exchange whatsoever. As shockingly, ignorant or crooked governments accepted, indebting us further. — Although social projects and public goods cannot bring in profits with which to repay debt. They instead needed to separate everyday domestic economic transactions with a separate, non-convertible domestic currency to do the job. It’s hardly surprising why they didn’t.
The greatest evil came with IMF and its structural adjustment policies in the 80s – forcing governments to hack social sector expenditures while piling on loans for the same, unduly raise taxes for the masses while lowering them as incentives for the rich, and ultimately forcing privatization of public enterprises. Utilities and communications which enjoy monopoly or captive markets have been the most popular pickings worldwide, sold off at a fraction of real worth with which to pay off huge debts. Where did IMF get this right to fire-sale sovereign country assets? It gave this right to itself. Privatization of public goods is simply re-colonization, but will only fuel further Talibanization whether in protest or excuse for criminal self-employment.
Now the entire focus of government is on selling off our remaining major state enterprises, rather than on domestic financial alternatives to get our strangled economy running again. It warrants suo moto notice and national resistance since it will leave little or nothing to build on.
Recently Hungary asked IMF to get out of its country – forever. The difference from Pakistan is that Hungary first paid off its odious debt. We just compound it. A moratorium couldn’t have been worse as the poor lack adequate food and money anyway. But it would have bought us necessary time to get back on our feet.
This article was published in The Nation on 9 October, 2013