“The big bankers of the world, who practise the terrorism of money, are more powerful than kings and field marshals, even more than the Pope of Rome himself. They never dirty their hands. They kill no-one: they limit themselves to applauding the show.” ― Eduardo Hughes Galeano
Nigeria, the 5th top exporter of crude oil with 2.4m barrels produced a day (2007 figures), cut its state fuel grant to its citizens overnight. On January 9th, a nationwide strike commenced in Nigeria to reinstate the fuel subsidy, followed by series of daily protests in which 2 civilians were killed today (Jan 10). The subsidy cut had been debated for the past 2 months but despite the very vocal opposition from the people, the government went ahead and announced its removal on, of all days, the first day of 2012.
Now, the current case in Nigeria, as all socio-economic crisis’s, contain external factors (the internal being corrupt government officials). The ruling external factor here, as in most countries in the Global South (or the ‘
third world’, a filthy term which generates the feeling that they, are not like ‘us‘), is called neocolonialism. Though Nigerian President Goodluck Jonathan asserted that the cut then will allow infrastructure and social development programmes to flourish with the $4-8 billion saved, this appoints the very question of then why Nigeria, containing the tremendous wealth of 2.4 million barrels of crude oil production a day, has barely any infrastructure and stable electricity in the first place. What is even more alarming is the fact that Nigeria with such resources, must now invest £4.2bn annually in their refineries, because Nigeria believe it or not, imports oil. It’s like bringing sand to the desert.
Prior to oil production, which surged after the 1970s, agricultural production was the largest export sector for Nigeria. After the country became a largely oil-intensive economy, the agriculture sector took a back seat, giving the front seat, to The Bretton Woods institutions; the International Monetary Fund (IMF) and World Bank. Herein, is where the problem begins.
The IMF is made up from its 185 member countries, each of whom contributions quota of resources to the organisation in proportion to their economy, which in definition determines their percentage of voting rights and the amount of resources to which they can have automatic access. A one dollar one vote system if you will. The U.S as would be expected, is the largest shareholder of 18%. Germany, Japan, France, U.K and the US combined, control about 38%. The way this all ties in with Wall Street is well, the interests of bankers, investors and corporations from industrialized countries are essentially put above the needs of the world’s poverty stricken, working class majority. Including their own countries.
Since the debt crisis of the 1980′s, the IMF has assumed the role of ‘bailing’ out countries with collapsing economies with its emergency loans. But of course, like all business contracts, in order for a country to receive the crippling hand of the IMF, there are terms and conditions which appear as new policy reforms in the given state. In essence, it is a global financial mafia. Usually, when you fail a payment to a loan shark they break a leg and a few ribs. Fail an IMF or World Bank payment, they will virtually gut your entire economy or send over US special forces to exact their gallon of blood from your whole population.
The World Bank works a little different but nevertheless is IMF’s brother. It started off as the International Bank for Reconstruction in post war Europe as well as development in the rest of the world. It is mainly for development, such as assisting infrastructure, transportation, education and so forth. The World Bank resources, as opposed to the IMF, come from its issue of bonds in the capital markets. These bonds are backed up by guarantees provided by the governments who belong to the institution. Already, it is obvious that it is a more complex system with internal affiliates, such as the International Development Assosciation (IDA), International Finance Corporation (IFC), and the Multilateral Guarantee Agency (MIGA). World Bank assistance again, comes with strings attached regarding the economy, however the IMF is essentially the debtor nations financial advisor. The IMF isn’t the primary a lending institution as is the Bank, though it may seem as such. It is first and foremost an overseer of its members’ monetary and exchange rate policies and a ‘guards’ of the code of conduct. The World Bank, is more of a fund, and the IMF is more of a bank.
The World bank and IMF in reality are economic hit men for the former colonial powers who operate the business of institutional neoliberal colonialism. The IMF and the World Bank, provides loans knowing full well they possess the required military power (say from the US, UK, France..) to have the debtors pay their loans, but the loans and their conditions are so extortionate and immobilising, they know the money will not be paid off. As a matter of fact, they don’t want the loans paid off. What they want, what they need, is the pearl in the shell. What they want is the debtor nation to open up their country’s natural resources to be plundered by foreign banks and multi-national corporations (as done in Nigeria, Argentina, Kenya, Mexico and countless others) which are in bed with the IMF and World Bank.
Now the conditions are infact ‘structural adjustment policies’ (SAPs). These are supposedly designed to ensure debt repayment and are more or less immediate measures to reduce inflation, government expenditure, and government deregulation to: privatise national assets; cut spending on education and health; eliminate basic food and transportation subsidies; devalue national currencies to make exports cheaper; in other words, the installation of neo-liberal policies. In Mexico for example, when the debt crisis hit in the mid-1980′s and Mexico announced it was unable to repay loans in 1982, the IMF and World Bank were already at the door. The primary policies that were introduced were reduced public spending, privatisation of most state-owned enterprises, trade liberalisation and the removal of barriers to foreign investment. The World Bank suggested that privatising certain health services could provide a solution to this problem. However, the majority of Mexican citizens could not even begin to afford any type of private healthcare, and in respect nutritional deficiencies tripled infant mortality rates in the 1980′s. In 1994, Mexico was plunged into an economic crisis after a rapid devaluation of the peso. The main factor that led to this crisis, was the massive amount of debt built up as a result of practices brought about by SAPs such as; the liberalised financial sector; which included fee free lending/borrowing rates, as well as the elimination of banks’ reserve requirements. Banks were hastily privatized, oftentimes without proper regard as to the new shareholders and/or bank officials. And so today, Mexico currently owes the greatest amount of loan, leading the debtor league at number one, closely followed by Greece and Iceland.
“Brilliant theorists of economics do not find it worthwhile to spend time discussing issues of poverty and hunger. They believe that these will be resolved when general economic prosperity increases. These economists spend all their talents detailing the process of development and prosperity, but rarely reflect on the origin and development of poverty and hunger. A a result, poverty continues.” ― Muhammad Yunus
The IMF and World Bank have to deconstruct agriculture and industrial production, basically any sector which are the components of a self-sustaining economy, and focus on export induced growth instead. Also known as, ‘cash crops’: grown for money than for food. Take Kenya’s green beans for instance. It is only produced to be exported to Europe, majority of its cultivated land is used to produce one type of crop as a commodity to be sold at forced low prices (set by the Global North of course), and inevitably ending up with nothing to eat. So what can they do? They import food (at a high cost). Now, an estimated 2.4 million of Kenyans face food insecurity for 2012. Nigeria has to import oil. Uganda has to import food. Iraq has to import dates. Haiti has to import rice. And every single one of these countries prior to foreign invasion and colonialism had hundreds of years of farming dates, rice, beans. This is the dependency effect. Yes, the IMF and World Bank, are the white masters on the field, and this time they don’t even need a whip.
“I spent 33 years and four months in active military service and during that period I spent most of my time as a high class muscle man for Big Business, for Wall Street and the bankers. In short, I was a racketeer, a gangster for capitalism. I helped make Mexico and especially Tampico safe for American oil interests in 1914. I helped make Haiti and Cuba a decent place for the National City Bank boys to collect revenues in. I helped in the raping of half a dozen Central American republics for the benefit of Wall Street. I helped purify Nicaragua for the International Banking House of Brown Brothers in 1902-1912. I brought light to the Dominican Republic for the American sugar interests in 1916. I helped make Honduras right for the American fruit companies in 1903. In China in 1927 I helped see to it that Standard Oil went on its way unmolested. Looking back on it, I might have given Al Capone a few hints. The best he could do was to operate his racket in three districts. I operated on three continents.” ― Smedley D. Butler, War is a Racket: The Anti-War Classic by America’s Most Decorated General