[stop-imf] Petifor: Malawi Forced to Dance to World Bank/IMF Tunes

[Robert Weissman]

MALAWI FORCED TO DANCE TO WORLD BANK/IMF TUNES

In a BBC interview, the President of Malawi said the government 'had
been forced (to sell maize) in order to repay commercial loans taken out
to buy surplus maize in previous years'. President Muluzi said the
International Monetary Fund and the World Bank 'insisted that, since
Malawi had a surplus and the (government's) National Food Reserve Agency
had this huge loan, they had to sell the maize to repay the commercial
banks'. Today, seven million out of the 11 million Malawians are
reported to be 'severely short of food'.

By Ann Pettifor


Since the ending of the Jubilee 2000 campaign, activists have been
encouraged to divert their energies into other campaigns - around trade,
aid and AIDS. Western development and finance ministers and IMF staff
have breathed a sigh of relief, pleased that the 'crude analysis' of the
debt campaigners has been replaced by debates about trade.

It is of course vital to highlight the double standards of Western
governments; and to pressurise these governments to reverse trade
injustice, increase aid and fight AIDS. But it takes a tragedy like the
one unfolding in Malawi to remind us that debt remains the very lynchpin
of global economic injustice.

How so, you may well ask. Let me explain. Just three months before the
food crisis hit, Malawi was encouraged by the World Bank 'to keep
foreign exchange instead of storing grain'. Why? Because foreign
exchange is needed to repay debts. Creditors will not accept debt
repayments in Malawian Kwachas. Or indeed in bags of maize. Only
'greenbacks' or other hard currencies will do.

One of Malawi's key commercial creditors needed to have their debt
repaid, according to Malawi's president, who in a BBC interview said the
government 'had been forced (to sell maize) in order to repay commercial
loans taken out to buy surplus maize in previous years'. President
Muluzi said the IMF and the World Bank 'insisted that, since Malawi had
a surplus and the (government's) National Food Reserve Agency had this
huge loan, they had to sell the maize to repay the commercial banks'.

So Malawi duly sold 28,000 tonnes of maize to Kenya. Under pressure from
her creditors, led by the World Bank and the IMF, Malawi exchanged maize
- her people's staple diet - for dollars.

Today, according to Action Aid, seven million of the total population of
11 million 'are severely short of food'.

But it is worse than that. Because Malawi is indebted, her economic
policies are effectively determined by her creditors - represented in
Malawi by the IMF. So foreign creditors have set a target for the budget
- and Malawi exceeded this target, and spent more than the IMF deemed
acceptable.

As a result the IMF has withheld $47 million in aid. The UK, like other
Western donors, acting on advice from IMF staff, have also withheld aid.
In the case of the UK, $109 million has been withheld, pending IMF
approval of the national budget.

To add to the humiliation of the Malawian government, the IMF has also
suspended the debt service relief for which she was only recently deemed
eligible - because she is 'off track'.

But it is worse even than that. Under the economic programme imposed by
her creditors, Malawi has removed all farming and food subsidies and
allowed the market to determine demand and supply for food. This has
reduced support for farmers, and put food prices out of the reach of
millions of poor people.

As Oxfam points out in Chapter 4 of its new report, Rigged Rules and
Double Standards, the IMF's major shareholders have not withheld support
from their farmers; and while the IMF has imposed liberalisation on
Malawi, the US and EU have increased protection of their farmers.

Malawi can't fight back. She is far too indebted. Instead she faces
acute suffering and humiliation. And to add insult to injury, it is just
possible, as Oxfam argues, that her creditors will use the opportunity
of her weakness to 'dispose of surpluses and create food dependency'.

The following remark by former US Secretary for Agriculture, Dan
Glickman, illustrates well the US attitude to countries suffering famine
and in need of food aid: 'Humanitarian and national self-interest both
can be served by well-designed foreign assistance programmes. Food aid
has not only met emergency food needs, but has also been a useful market
development tool.' (OXFAM report: Rigged Rules and Double Standards:
Trade Globalisation and the Fight Against Poverty by Kevin Watkins and
Penny Fowler)

Without the debt, it is possible that the people of Malawi could,
democratically, set priorities, or affect the priorities of their
government. One of these could be to protect Malawian farmers and
markets from those who would prey upon their weakness. Malawi might have
been able to do what voters in the world's biggest debtor nation - the
US - can do: put pressure on their government to subsidise food
producers, and protect them from unfair competition from competing
producers.

It is possible that under pressure from the people to ensure food
security, Malawi would not have sold those maize reserves. She might too
be able to model her economy on Western economies - where in a
recession, governments tend to spend more, as a way of stimulating the
economy. Spending more on the health of her people would do for Malawi
what it has done for richer economies: increase productivity and
stimulate growth.

None of this is possible - so long as Malawi is in hock to her foreign
creditors, and subject to their economic interests, programmes and
priorities. Without cutting the noose of debt, Malawi will not be able
to challenge the rigged rules and double standards of IMF creditors; and
she will not be free to spend money to improve the health of her people.

If we care about those seven million people in Malawi, we should be
doing all we can to end the famine and provide food. But we should also
be campaigning for greater economic justice for poor country debtors.
This means liberating them from the structural injustice of
international debt, where creditors play the role of policeman, lawyer,
plaintiff, judge and jury.

That is why we at the New Economics Foundation are working on the
Jubilee Framework - a framework of justice for resolving international
debt crises. A framework that above all else, would involve the people
and democratic institutions of debtor nations - like Malawi - in the
resolution of a debt crisis.

Such democratic participation would, we believe, help to challenge the
corruption that is central to international borrowing and lending; as
well as prevent the recurrence of such crises. Above all, it would
restore policy autonomy to poor nations.  - Third World Network Features

                                                         -ends-

About the writer: Ann Pettifor is the Programme Director at the Centre
for International Finance and Governance and heads Jubilee Research at
the New Economics Foundation, London.
The above article is from www.debtchannel.org . (c) DebtChannel.org,
2002

When reproducing this feature, please credit Third World Network
Features and (if applicable) the cooperating magazine or agency involved
in the article, and give the byline. Please send us cuttings.

                                  *****
Third World Network Features is a unique, reliable, independent features
service, monitoring the world through Third World Eyes, rather than
blindly reproducing the self-serving assertions of the Western media.
The feature service is available by email. We have special low rates for
medium and small newspapers.

Our phone numbers: 91-832-2263305; 2256479
Fax: 91-832-2263305
Email: oib@goatelecom.com

Postal address:
Third World Network Features
Above Mapusa Clinic
Mapusa 403 507
Goa, India