Africa: Time to Bury the IMF

Horace Campbell

2 June 2011

analysis

The demise of the IMF’s former managing director Dominique Strauss-Kahn is an opportunity to dismantle the fund and replace the current financial architecture with one that ‘invests in the repair and reconstruction of livelihoods and the planet’ instead of ‘destruction, dehumanisation, exploitation, and rape,’ writes Horace Campbell.

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 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 becoming 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 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).

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