Time to Bury the IMF
It was a fitting metaphor as Dominique Strauss-Kahn, managing director of the International Monetary Fund (IMF) was arrested on charges of assault, attempted rape and sexual abuse. The charges were brought after Strauss-Kahn allegedly assaulted an African woman from Guinea, who worked as a housekeeper in a hotel in New York City. The image of Strauss-Kahn in handcuffs was fitting insofar as this is the image that should be presented of the entire international financial system that is anchored in the Bretton Woods Institutions. For over 60 years, these institutions (the IMF and the World Bank) raped citizens of the world, especially the citizens of the poor countries, on behalf the United States and the top capitalist nations in Europe. The IMF has been a front for the lords of finance of Wall Street in the USA, and the linkages between the IMF/Wall Street and the US Treasury ensured that the poor of the world subsidised the US military. As junior partners in the imperial chain of domination, the Europeans worked with the Wall Street-Treasury alliance to ensure that despite presenting arguments about free market competition, agriculture in Europe and the USA was subsidised. In pursuit of the alliance of financial rapists and economic terrorists, it was an unwritten rule that the managing director of the IMF should be a European.
The current French finance minister is campaigning hard to become the next managing director and has received the support of an institution that is as moribund as the IMF, the Group of 8 (G8). It is a measure of the disrespect that the capitalists have for Africa that they could propose Christine Lagarde as the candidate to be the next managing director. France has been at the forefront of the massive plunder of Africa by European states, and the IMF has been complicit in this plunder. France continues to be a safe haven for the money stolen from Africans by African kleptocrats and Western elites and corporations. The IMF has assisted in granting immunity to Europeans and North Americans for crimes of economic rape against Africans.
Many in France who call themselves socialists have been in denial about the rape of Africa. Instead of supporting activists such as Eva Joly who have been exposing the fraud and corruption of France in Africa, these ‘socialists’ are claiming that Strauss-Kahn was set up. A former culture minister Jack Lang described the treatment of Strauss- Kahn as a ‘lynching’ that had ‘provoked horror and aroused disgust’. Clearly, these members of the French socialist confraternity do not understand the real lynching that is part of the racist structure of western capitalism. Indeed, this moment of the prosecution of the French-born high priest of the IMF over the allegations of physical sexual assault of an African is an opportune moment for persons who have been affected by the decades of economic rape perpetrated by the IMF around the world to call for the dismantling of the Bretton Woods system and set about the establishment of a new international financial architecture dedicated to repairing the planet earth and for the reconstruction of livelihoods.
There were some commentators in parts of the BRICS (Brazil, Russia, India, China, and South Africa) countries who were calling for the new managing director to be recruited from the ‘developing’ countries. Such a proposal is only one expedient for prolonging the life of the IMF when regional institutions are springing up in Asia and Latin America to disengage from the Bank. In fact, the pervasiveness of regional currency projects and the moribund stature of the Bretton Woods global financial architecture challenge Africans to remove the present crop of wheeler-dealers who pose as leaders, and to create a new leadership in order to get serious about the consolidation of the African Monetary Fund. Such seriousness will strengthen the local forces all over the world that have been campaigning against the IMF and for the creation of a new financial system.
SLOW DEATH OF THE BRETTON WOODS SYSTEM
The Bretton Woods financial architecture, which gave birth to the IMF and the World Bank, is predicated on the strength and dominance of the US dollar, the US financial system and capitalist ideology of free market. But the slow death of the IMF began after the ending of the fixed rate regime that had been established at Bretton Woods in 1944. When the system of fixed exchange rates ended in 1971, the US dollar was no longer backed up by gold but by the military might of the USA. Previously, the US hid behind the idea of trilateralism, meaning cooperation in the management of the global system with Europe and Japan. It was in this period when the US established the meetings of the G-7 in 1976. After the rise of Ronald Reagan, the US capitalists opted for the military management of the international financial system. This was most graphic after the Plaza Accords of September 1985, when Ronald Reagan literally told the Germans and Japanese that they had to support US financial hegemony because the US had troops stationed in their countries. Following the fall of the Soviet Union in 1991, the Russians were invited to these G-7 meetings and the group was then called the G-8. The US capitalists moved in to dismantle the Soviet economy and paved the way for a new regime of looters and money launderers in Russia. These barons of Russian capitalism were integrated into an international system that supported the dollar.
The Russians opted to join the international capitalists instead of joining voices with the G-77 (Brazil, India, China, Malaysia, Mexico, South Korea and other countries) to change the rules of the system where the US dollar had a preeminent place in the international political system as a reserve currency. A major concession was made in 2008 after the fall of the US investment houses and the details of the depression had become too obvious to be covered. A hastily convened meeting of the G-20 was held in November 2008, following the collapse of the Lehman Brothers investment bank and subsequent daily fear of an international financial collapse.
Throughout the years of the Bush administration (2001-2009), the principal questions related to the future of the International Monetary Fund (IMF) and the special status of the dollar was placed on the back burner by the brazen military adventure of the US. At the start of the Bush administration the crisis of the US economy had become a threat to the IMF itself, to the point where the IMF cautioned the US on the unsustainability of the debt and deficit. During the Bush administration, the New York Times published a report on 8 January 2004, revealing that the ‘IMF Warns That U.S. Debt Is Threatening Global Stability.’
15 September 2008 exposed to the world the hollowness of the US financial system and the duplicity of the neoliberal ideologues that have been campaigning for free markets. When Lehman brothers collapsed and there was the meltdown of the system, the US government did not go to the IMF but unilaterally pumped more than US$25 trillion into the financial system to maintain US imperial hegemony. Today, as the figurative rape of Third World economies is now reinforced by the actual rape and sexual assault from the high priest of the IMF, capitalist forces inside the United States of America nervously balance at the apex of this international political crossroads with a mode of economic organisation and a consumer led form of economics which is creating insecurity in all parts of the globe.
The international contamination from this crisis in the United States has elicited anxiety in all parts of the world. Whether it is the ruminations of the oil producing states of the Gulf Cooperation Council on the creation of a single currency, or the energetic efforts to establish the Bank of the South in Latin America, there are differing measures by states who seek protection from the volatility of the depression and possible impact on the dollar as the currency of world trade. The rising competitors of Asia are seeking ways to reduce their deposits held in dollars in favor of the new financial arrangements in order to limit their exposure to the toxic economic conditions of the USA. Chinese leaders, in particular, have been organising currency swaps to limit their exposure to the dollar while some sections of the Chinese leadership are calling for a tricolor currency system anchored in the Dollar, the Euro, and the Chinese Renminbi (Yuan).
Under the subtle yet clear dominance of the German bankers and the German rulers, the European Union has sought to strengthen the economic integration of Europe as one pole of the competition with the US-based capitalists. However, the crisis of the financial system has intensified resistance from European workers who are opposing the austerity measures proposed in order to pay banks while people suffer. In the midst of these protests in Europe, US strategists are wishing for the collapse of the Eurozone so that the Euro does not immediately become an alternative to the collapsing dollar.
Of all the regional initiatives to challenge the US economic dominance, it is in Latin America where there is an explicit statement that the initiative of the Bank of the South contains a vision ‘to liberate the region's countries from IMF, World Bank and Inter-American Development Bank (IBD) control that condemn millions to poverty.’ The region of Latin America was one space where the crystallisation of popular forces (women, youth, shack dwellers, environmentalists, peace activists, indigenous persons and anti- racist forces) forced through counter proposals to begin to break with dollar hegemony. Within Latin America, the radicalisation of the electorate brought to the centre of power parties and leaders who see the Bank of the South as one step towards economic and political integration in that region. This vision is articulated in the creation of the Bolivarian Alternative for Latin America and the Caribbean. It is not by accident that France’s candidate to head the International Monetary Fund travelled to Brazil to drum up support for her bid, but her hosts are still on the fence about whether to back the European candidate or throw their weight fully behind alternative proposals, including supporting a contender from the developing world.
In terms of regional alternatives to the IMF, the area where the break is most urgent is in Africa where there is tremendous wealth in the midst of appalling pauperization. Like the ruminations of the Gulf Cooperation Council, there is currently an effort by the African Union (AU) to establish a single currency. In Africa, there had been a long tradition of opposition to the policies of the colonialism and neocolonialism, crowned with the end of apartheid in 1994. Though outnumbered by a class of complicit leaders, African spokespersons such as Julius Nyerere had called for a dismantling of the institutions of international capitalism. Nyerere was quite outspoken when he asked, ‘Must we starve our children to pay our debts?’ It was in Tanzania where there was the most determined opposition to the policies of the IMF.
From ordinary folks in Bamako in Mali to the shack dwellers of South Africa, there are social forces opposing the looting of African resources and calling on the working poor to ‘fight against all manifestations of injustices, and protect their human dignity by direct action.’ Scholars who have been theorising the interconnections between gender, care and economics have been able to shatter neo-classical, Marxist and liberal understanding of economic relations that excluded the labour power of women. These challenges from the grassroots women are most evident in the rapidly growing societies that have internalised the idea that neoliberal economic practices form the basis for prosperity. Women of the global South have however been the most forthright in their articulation of the multiple forms of oppression that emanate from the structural adjustment policies of the IMF. Gloria Thomas-Emeagwali’s book, ‘Women Pay the Price of Structural Adjustment in Africa and the Caribbean’, represented an explicit exposure of the interconnections between racial, economic and gendered exploitation. Her work and those of other African women could be drawn upon to contextualise the actions of Dominique Strauss-Kahn.
The metaphorical economic rape that the peoples of Africa and the global South have endured for decades is now not only manifesting in the literal sense with Strauss-Kahn’s actions; it is also no longer limited to the Third World as it spreads across Western societies, in form of austerity measures that have sparked off resistance. By the start of 2009, the demonstration effect of the youth rebellion in Greece was inspiring strikes and protests from Guadeloupe in the Caribbean to Iceland and Ireland. By the time of the outbreak of the revolutions in Tunisia and Egypt, international capitalism was on the defensive. With Strauss Kahn caught, literally, with his pants down, the nervousness of capitalism has led to a closing of ranks behind the French candidate to pre-empt serious discussions of the restructuring of the IMF.
This is the current climate of opposition to neoliberalism and to the Bretton Woods austerity measures in which there is the discussion on the successor to Strauss Kahn. The British Guardian had summed up the new developments on 31 January 2009: ‘Europe’s time of troubles is gathering depth and scale. Governments are trembling. Revolt is in the air.’ No less a person than Mervyn King, governor of the Bank of England encouraged workers in the United Kingdom to rise up and protest against the bankers. He said that he was surprised the ordinary people were not angrier with the banks. King said that people made unemployed and businesses bankrupted during the crisis had every reason to be resentful and voice their protest. He told a Treasury select committee that the billions spent bailing out the banks and the need for public spending cuts were the fault of the financial services sector.
We will add that behind the financial services industry is the IMF.
EUROPE FEARS THE DEATH OF THE SYSTEM
With each passing day there are clear signs of the depth of the international capitalist crisis. Austerity measures to save banks in Europe have intensified resistance by workers, youths and students. Inside the USA, the debt ceiling has now placed the US system in a precarious state while the treasury secretary, Timothy Geithner (a member of the Board of Governors of the IMF) fiddles the books to postpone the need for tough decisions to rein in the system where the US can spend a trillion dollars on the military while schools and hospitals are starved of funds. Economists, financiers, journalists, policymakers, politicians and speculators draw attention to the fact that the entire international financial system is now in its death throes. Whether it is the warnings of George Soros who continuously cried that, what we are going through is the crisis of the ‘gigantic circulatory system’ of a ‘global capitalist system that is … coming apart at the seams,’ or economists and activists from the south, there are voices that have made it clear that capitalism is going through a defining moment.
A former chief economist of the IMF, Simon Johnson, argued that the financiers are now using their influence to prevent precisely the sorts of reforms that are needed. Johnson, who wrote about the ‘Quiet Coup’ in relation to the political power of the bankers and financiers in the United States, observed later in his book, ‘13 Bankers: The Wall Street Takeover and the Next Financial Meltdown’, that the financial oligarchs cannot halt the rush to a new financial meltdown. The question is whether societies all over the world, especially Africa are ready for alternatives when this meltdown takes place.
According to Johnson, ‘What we face now could, in fact, be worse than the Great Depression—because the world is now so much more interconnected and because the banking sector is now so big.’ On the complexity and depth of the crisis, Simon Johnson is not alone. Writing in the London based Financial Times on 8 March 2009, Martin Wolf held that:
‘It is impossible at such a turning point to know where we are going. In the chaotic 1970s, few guessed that the next epoch would see the taming of inflation, the unleashing of capitalism and the death of communism. What will happen now depends on choices unmade and shocks unknown. Yet the combination of a financial collapse with a huge recession, if not something worse, will surely change the world. The legitimacy of the market will weaken. The credibility of the US will be damaged. The authority of China will rise. Globalisation itself may founder. This is a time of upheaval. Technical arguments abound in relation to the necessity for regulation of the financial markets but these interventions fail to grasp the political nature of the depression and the need for a fundamental break with the social production of wealth by the majority and the accumulation by a few.’
These warnings from mainstream commentators seek to divert attention from those in the oppressed South who are calling for the dismantling of the Bretton Woods system and plan for increased taxation of the bankers, especially in the short run with a financial transaction tax.
TIME TO BURY THE IMF
From both sides of the Atlantic there are calls for the breaking up of the big banks to make them more accountable. These calls must be linked to the popular power in the streets to connect the opposition to the banks to opposition to the IMF. During the anti-globalisation protests, connections were made between all forms of oppression. The United Nations World Conference against Racism (WCAR) held in Durban in September 2001 brought to the forefront the need for a repair of the human relations in the process of combating racism in the world economy. In the programme of action, this conference proposed legal measures, educational measures and reparations as one component of a phased program to halt the inequalities and the iterations of warfare. In so far as the proposals of the WCAR challenged the power of the leaders of NATO, the ideas were shelved while the leaders of the USA intensified the militarization of the planet.
Samir Amin grasped the limits of the technical responses to this crisis and correctly grasped the reasons why the Unites States and the NATO powers (called the international community) supported a G20 meeting but opposed the reconvened Durban 2 conference in Geneva at the end of April, 2009. It is in Latin America among African descendants where there is now a movement to link racism clearly with the crimes of capitalism to racism.
The Barack Obama administration in Washington recognised the limitations of the ‘total war’ concept that was embedded in the ‘war on terror’ and has sought a more conciliatory relationship with the rest of the world. This conciliatory approach has not, however, been backed up by a demilitarisation of the globe; and it has not addressed the fundamental inequalities in the international system. In fact, the conciliation, is, in part, aimed at finding new ways to extend the life of the IMF and to maintain the hegemonic position of the dollar. The Obama administration supports a strong military and is therefore committed to supporting the financial oligarchy, irrespective of the social costs to the rest of humanity.
Sixty-five years after the formation of the Bretton Woods institution and in the midst of a new depression, the challenging question for most people, especially those in the exploited world is the issue of whether we have come to the end of the Bretton Woods system. Is it now time for the establishment of the International Bank for Reconstruction and Reparations? This question must be placed on the table in order to reorganise the priorities of activism and to define new goals for the reconstruction of humanity, so that the diminution of the dollar does not engender ‘abrupt, agonizing and brutal change.’
Investment in humans at this period in human history is not an intellectual question that comes out of the right or wrong analysis. It is a fundamental requirement, so that the majority of the 6.9 billion persons on earth can have access to health, food, clothing, shelter and the conditions for generating wealth in a way that will increase the quality of life for all the peoples of the planet.
The collapse of some of the US speculative companies and the current decomposition of the hedge fund and derivatives traders point to the fact that the financial meltdown and bank failures in the USA were not conjunctural or episodic events but reflections of the deep contradictions of the capitalist system. The crisis of the capitalism is systemic and cannot be reformed. Among some South Africans who supported the call for a new managing director from the developed nations, there were calls for Trevor Manuel to be named head of the IMF. Such a proposition diverts attention from the need for a rigorous discussion on the timetable for dismantling the IMF. In this death pang situation, one US strategist called for the Chinese to be co-imperialists with the USA. Zbigniew Brzezinski called for the establishment of a G2 between the USA and China.
Radical environmentalists, feminists and peace activists are building a movement where the needs of humans come before profit and the wellbeing of a small minority. I will agree with those who argue that the IMF and the World Bank should be abolished. There has been a reform discourse for the past ten years but the reform has simply strengthened the position of the Anglo-Saxon capitalists. Strauss-Kahn had been called a reformer and now the world understands what reform looks like for the IMF. It is now time to bury the IMF with the leadership of Strauss-Kahn and build a new financial architecture that invests in the repair and reconstruction of livelihoods and the planet, away from the destruction, dehumanisation, exploitation, and rape that have been the hallmark of the extant architecture.
This article was amended on 3 June to 'The charges were brought after Strauss-Kahn allegedly assaulted an African woman from Guinea, who worked as a housekeeper in a hotel in New York City.'
Horace Campbell is professor of African-American studies and political science at Syracuse University. He is the author of ‘Barack Obama and 21st Century Politics: A Revolutionary Moment in the USA’. See www.horacecampbell.net.