In a predictable show of power and arrogance, the International Monetary Fund (IMF) ‘recognized’ the Somali government last month and will begin giving its economic advice or, to be more accurate, its demands. The restoration of the relationship between the IMF and Somalia seems to be a cause for celebration. It should not be. Although this development might appear to symbolize progress and the resurgence of the Somali state it is simply the normalization and acceptance of hegemonic power relations. It is the continuation of the status quo, a status quo that will hurt Somalia’s future as it has hurt and continues to hurt many African nations.
It is appalling to realize that after decades of well documented evidence proving the devastating effects of IMF economic policies, that in 2013, many African countries willfully continue to implement IMF dictates. Poor countries of the Global South are either unwilling or unable to disentangle themselves from the web of deception and dependence that is the IMF. In 1988, 25 years ago, an IMF economist named Davison Budhoo wrote a scathing resignation letter expressing his anger and disgust at the policies of the Fund. He particularly focuses on how the institution committed statistical fraud in order to ram through neoliberal policies that brought tremendous economic hardship to Trinidad and Tobago. Many of those neoliberal policies and structural adjustment plans that Budhoo condemned two decades ago are exactly the same ones being peddled to the Global South today. Such policies include devaluing the currency, privatization of public services, and cutting subsidies to vital commodities. As far-fetched as this may sound, this letter should be required reading for all African heads of state.
But if looking to the primary sources of history is inconvenient President Hassan Sheikh Mohamud of Somalia need only to look to the experiences of present day African countries to plainly see the negative effects of IMF reforms. In Malawi, President Joyce Banda has significantly devalued the country’s currency and removed subsidies from major commodities spiking up the costs of living in a country where close to 50% live below the poverty line. This has understandably caused widespread protests and strikes. All this, to secure a three year loan of $157 million from the IMF. A great article by Elliot Ross dispels any myths of the ostensibly philanthropic aims of the Fund’s work. The relationship is first and foremost a business transaction in which “Malawi is to be sold as an attractive investment opportunity…[since] encouraging FDI is the fundamental objective of the IMF reforms.” Engaging with the IMF is a way to increase competitiveness in global markets even at the cost of the public interest. Tunisia has also been entrapped by the IMF’s lucrative and predatory loans which has yielded to similar socio-economic problems for ordinary Tunisians. The country is in the final stages of signing a deal for a 1.7 billion dollar loan from the IMF. In Egypt, the IMF has had a harder time in concluding a 4.8 billion dollar loan agreement due to the country’s reluctance to implement structural reforms. In a post-revolution country already wracked by civil unrest, Egyptian politicians fear that these fiscal measures, which hurt the poor the most, will trigger a backlash from the public. The IMF’s interventions run counter to the spirit of the revolution and the will of the people who desperately seek democratic, social and economic justice. Although religion and identity politics are very real challenges to post-revolution Egypt and Tunisia, an equally potent yet ignored threat is that of IMF imposed austerity and neoliberalism.
The vicious cycle of paying off debt by receiving new debt on the condition that harmful, foreign dictated reforms are imposed on struggling populations is illogical and dangerous. The IMF’s unequal power relationship with African countries and others in the Global South attests to nothing else but the continued neo-imperial forces that plague the globe. It is a form of “global coloniality” in which:
peripheral nation-states and non-European people live today under the regime …imposed by the United States through the International Monetary Fund, the World Bank, the Pentagon and the North Atlantic Treaty Organization (see for example Lander, this issue). Peripheral zones remain in a colonial situation even though are not any longer under any particular colonial administration.
The president of Somalia should heed all the historical and present signs of the dangers that the IMF brings to a revitalized Somalia. Rebuilding a fair, just and equal Somali society in which the public interest comes first is inimical to the IMF. Somalia and the rest of Africa should cease and desist all ties with these financial institutions and instead, strengthen ties with one another.