IMF path to ventilator

Tthe state of Pakistan is on a fan. I am not saying this; I am only quoting the leadership of the current despotic government that is spreading this narrative. Even if the state of Pakistan is on a fan, it is now very evident that the ‘economic hitmen’ who promised treatment of all its economic diseases are getting ready to take a flight and instead allow someone else to perform this difficult job. The entire country knows that we suffer not from economic disease but political infections requiring more political than economic treatment.

This weak government of opportunists which can easily be compared to a gangster regime in any dysfunctional state anywhere in the world has no clue on how to turn around the deathly sliding economy of this country. So, instead of presiding over ‘state death’ the news is that the regime may finally call for early elections and leave the job of state cure to an interim government. This too is so far conditional because the free-riding party — the PPP — seems to be in no mood to give up on scavenging what remains of this state. The state needs an economic bailout but would it be coming through IMF?

IMF has a history but over 130 countries that have been recipients of IMF have their history as well. For many of them their history is dated before and after IMF in the sense of how Japan has a history of before and after the atomic bombing or India has a history of before and after the arrival of PM Modi on the political scene. Ours is also a before and after IMF history and this talk of us being on fans has got much to do with how we got into this IMF trap. Historically, the IMF helped secure and stabilize the economies of Western countries devastated by the world war. In 1948 it gave over $100 billion to the Western European countries that were impacted by the war, even France and Britain borrowed from the donor agency. We talk about the UNSC veto but we hardly ever talk about the absolute veto the shareholders of the IMF enjoy and the US tops that list.

IMF would not have faced any criticism if it had continued to perform a similar role that it performed to retreat the sliding Western European economies after the war. It didn’t do that, there is a significant change in how IMF has exploited the underdeveloped world and how countries that were IMF recipients found themselves exposed to political and financial crises.

IMF creates conditions and unlike in the western world, the loans that it provides to the rest of the world have strings attached. The IMF assumption of attaching these strings is that the very reason that a country ends up taking IMF assistance is that country’s inappropriate handling of the economy. IMF then gives its own solutions and some of the crises that the recipient countries have experienced have been because of these IMF-given solutions. In 1976 protests erupted in Argentina when it froze wages. In 1981, Mexico was asked to remove the government subsidies on food which resulted in a general strike. Nigeria experienced unrest in 1988 when it was asked to remove subsidies on petrol. Riots broke out in Indonesia and Egypt in the late 90s as both governments were asked to remove food subsidies. Overall, a study of 135 countries reveals that accepting money from IMF has never contributed to the creation of income equality but has significantly increased income inequality. why?

To the readers who want to understand the current neo-colonial concept of how liberal imperialism has replaced western imperialism and how these liberal imperialists have their sponsored elite in every underdeveloped country, I recommend reading two books — The New Age of Empire by Kehinde Andrews and Confessions of an Economic Hit Man by John Perkins. The colonial logic on which the Western Empire was founded was the logic of exploitation, wealth, power, inequality and white supremacy. The logic of the current World Empire being led by the US is still built on the same old logic but under a different guise and setting.

The current neo-colonial system of liberal internationalism is the same system of western imperialism only rebooted to lead in controlling the world through geo-economics rather than geopolitics and the lead and pivotal role in this critical function is performed by IMF. For me, the critical point while dealing with IMF is not to lay emphasis on understanding theory or practical but on understanding history.

It is never the purpose of IMF to solve the problems of the recipient countries, its only purpose is to secure the Western interest that it represents. That IMF works on sound economic principles is a myth and a fairytale. In an old international system led by geopolitics, we had the concept of MIC (Military Industrial Complex) defining the relationship between a developed country’s military and the defense industry that supplied it. Both influenced policymaking and thus the world continued to witness the supply of arms, violence and war. In the new international system led by geo-economics, we have the FIC (Financial Industrial Complex) that comes with poor advice.

Our before and after IMF history is pretty clear. We must do everything we can to get hold of our financial future. Why over 130 countries have undergone an IMF program and suffered because IMF stands to make so much money on the exuberant interest rates it charges when it signs them up. All this talk of being on the ventilator is because we chose the easy option provided by IMF. Like all easy options, the IMF option also comes with a cost. Our problems are more political than financial. To carve out the right financial path we need to first reconstruct a sound, corruption-free and sustainable political path. Such a political path can only be followed by a people’s representative government and not by a hired regime of gangsters.

Published in The Express Tribune, May 15th2022.

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