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In Protest of the IMF and World Bank

Philippe C. Larochelle

Some of you may recall seeing on TV late last November some hullabaloo in Seattle about protesters opposing the “free trade” policies of the World Trade Organization.

In all the coverage of the Seattle protests, what was probably most consistently lacking was an understanding among the general public of the policies of the WTO, and why so many people from around the world were opposing them. This made the few screen shots of the “young anarchist revolutionaries” (as they were called by the media) vandalizing the local Starbucks all the more effective in dissuading public opinion from the issues the protests were attempting to bring to public discourse. Average news viewers could have easily assumed that the protests were dominated by a band of young troublemakers who had no stated opposition to the WTO and its policies, but rather just saw a prime opportunity to cause some havoc.

The truth of the situation was far from this. Ninety-nine percent of the tens of thousands of people who took part in the protest performed exclusively non-violent measures of resistance and were often met by very harsh police responses. They were not simply rounded up like sheep by a couple of expert organizers to struggle for a cause they knew nothing about. Rather, they were individuals that, for the most part, had a conscientious understanding of WTO policies and had formed their own opposition to them.

Pointing out this discrepancy in the portrayal of the Seattle protests is important now, because soon a similar action will commence in Washington, D.C. to protest the policies of the International Monetary Fund and the World Bank at a conference taking place April 16th. It is very possible that a similar portrayal could be put forward, leaving the public in the dark about the most important question that should be addressed: why are these protests occurring in the first place?

In order to give the members of the MIT community a clearer picture of the situation, here is a summary of the policies of the IMF and World Bank.

The IMF and World Bank are international financial institutions that were formed at the economic conference held at Bretton Woods, New Hampshire in 1944. The International Monetary Fund is a worldwide financial institution created to regulate an international monetary system based on convertible currencies to facilitate global trade while leaving sovereign governments in charge of their own monetary, fiscal, and international investment policies. The World Bank was established to help finance the reconstruction of war-torn Europe and the development of poorer nations.

Hearing the initial descriptions, one wonders why there is such opposition to these institutions. Regulating currencies and helping poorer countries develop seem like positive and necessary goals. The opposition that has been mounting is in response to the kind of development that these institutions have been promoting over the past couple of decades. “If the WTO is the corporate rule-maker in the global economy, then the IMF and the World Bank are the institutions that push Third World nations into that system,” explains Mike Prokosch, who coordinates the Globalization project at United for a Fair Economy, an organization that works for economic justice.

Today, the IMF and World Bank adopt policies promoting the neo-liberal development of distressed economies worldwide. If an appeal is made to the IMF or World Bank for a loan, the IMF will agree grant it if a government agrees to sign a “structural adjustment agreement.” This is a guideline given to nations by the IMF for the past two decades and is to be followed by troubled Third World economies. Its main elements are:

Monetary Austerity: Control the money supply of the country in such a way that internal interest rates will rise to whatever is needed to stabilize the local currency.

Fiscal Austerity: Increase tax collections and reduce government spending dramatically (mostly in social spending).

Privatization: Sell public, state controlled industries to the private sector.

Financial Liberalization: Remove restrictions on the inflow and outflow of international capital as well as restrictions on what foreign businesses and banks are allowed to buy, own, and operate.

These structural adjustment programs (SAPs) have had a decisive effect on the health, living conditions, and environment of developing countries. Cutting social programs forces populations already desperate for meager levels of medical care into an even worse situation. The most striking impact of such policies is apparent in sub-Saharan Africa. The fulfillment of an SAP in Zaire in 1984 mandated that the government cut more than 80,000 teachers and health care workers. Similar cuts were seen in Senegal, where from 1980 to 1993 the number of people per nurse in that country rose more than six times, from 1,931 to 13,174.

Through the SAPs the IMF also mandates that the countries it loans money to increase exports, in order to insure that they have enough money to pay back their IMF loans. According to the American Lands Alliance, a Washington-based environmental group, the IMF-sponsored drive toward export-oriented growth has become a lead factor in the destruction of developing nations’ ecosystems. In Indonesia, the ALA states that policies favoring the production of cash crops for export have caused “rampant forest destruction with no end in sight.”

The impacts of IMF-World Bank policies deserve more analysis and explanation. Good resources to look up include <,> <,> <,> and <> Hopefully, with this new insight into the reasons behind the protest, you will view the coverage of the Washington events with a more discerning eye.

If after becoming more informed about these issues, you feel strongly enough to join the other MIT students who are going down for the protest, travel arrangements are available on <>

Philippe Larochelle is a member of the Class of 2003.