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Sandbox Liberals Practice Damage Control: World Bank and IMF

The IMF and the World Bank are not self-critical. With their conditions on developing countries, therse two institutions crafted the economic structures that led to today's disaster. The world economy functions according to the rules of power and profit logic.

World Bank and IMF want to solve a problem they caused

By Daniel Stern

[This article published 4/23/2008 is translated from the German on the World Wide Web,  http://www.uni-kassel.de/fb5/frieden/themen/Armut/hunger.html.]

The protests against high food prices continue worldwide. In the middle of April 2008, 20,000 textile workers near Dhaka (Bangladesh) wage street battles with the police. They protested against their low wages that didn't allow them to buy enough food. For days thousands gathered in the South African city Polokwane to demonstrate against the soaring prices for food and energy. The South African union alliance Cosatu plans more actions and warns of rioting. Hunger revolts have already occurred in different African and Arab states. In Caribbean Haiti, a furious mob even stormed the presidential palace. Rime minister Jacques Eduardo Alexis resigned.

If all these protests had run peacefully, they would hardly have reached the headlines of the international press agencies and the front pages of local newspapers. Like the demonstrations in South Africa, they would have been ignored or noted in a marginal column. The soaring grain prices would have dominated the reporting on the stock market pages.

On the occasion of their annual meeting in Washington, the World Bank and the International Monetary Fund (IMF) emphasized in April 2008 the seriousness of the situation. Before running television cameras, World Bank president Robert Zoelick lifted up a two-kilo sack of rice to show that a poor family in Bangladesh would have to spend half of their daily income for this rice. A "New Deal" is necessary to manage the food crisis. Zoelick alludes to the state intervention methods with which President Franklin Roosevelt countered the great economic depression in the 1930s.

However Zoelick is not a new Roosevelt. He merely appeals. The "international community" should provide 500 million francs of food relief by May 1. This is necessary but hardly helps in the long term. Such cries are not new. Like the declarations of intent of heads of state, they will increase assistance for the third world. These declarations are rarely fulfilled.

In the thought model of Robert Zoelick and his colleague Dominique Strauss-Kahn from the IMF, the present crisis is not a system crisis. This crisis arises because everything is not functioning smoothly in the "free world market." Charitable campaigns are launched with warnings about "false incentives" - that is, state subsidies for food. Levying export tariffs or stabilizing prices governmentally is also taboo.

The IMF and the World Bank are not self-critical toward their own policy. With their conditions on developing countries, these two institutions crafted the economic structures that led to today's disaster. In 1995, Haiti had to lower its import tariff for rice from 35 to 3 percent on pressure from the IMF. As a result, rice imports rose 150 percent in nine years. Three-quarters of the rice sold in Haiti today comes from the US and is subject to the price fluctuations of the world market. Local rice farmers are impoverished or have given up.

As a return favor for credits, the country has to surrender a part of its food sovereignty to join the world market. Tariffs are bad and "international competition" is good, according to the credo of the liberal ideologists. Every country should produce what it can produce best. So free trade is ultimately to everyone's advantage. However the world economy functions according to the rules of power and profit logic. Since the US and Europe believe they must reduce their dependence on the oil states, they subsidize the production of bio-fuels - whether this suits their own ideology or not. The argument that this is an ecological act is eye-wash. The supply of basic staples for persons and animals becomes scarce. This shortage leads to higher prices.

Profiteering occurs on the commodity markets where higher prices are set in disregard of future sustainability. That is "free trade" and system-conditioned. High prices would then motivate production of the desired goods. That is the wishful thinking of sandbox liberals. What may still function with shoes, clocks and cell phones will not remove hunger or misery in the case of basic foods. Agricultural production cannot be changed from one day to the next.

Whoever uproots farmers through "structural adjustment programs" ensures they will leave the countryside and move to the city. The expropriator should not think they will immediately begin to grow wheat or rice with better market prospects.

from: Schweizer Wochenzeitung WOZ, April 17, 2008

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