IMF/World Bank

The revolt in the Arab world is not just about getting rid of authoritarian leaders and dictators. It is also about ending economic injustice and exploitation.

The media would have us believe that the popular discontent is solely due to the dictatorships and repression in the Arab world. But there is more to it than that. A lot of the disenchantment is also the result of people’s hopes being crushed by an exploitative economic system that undermines essential public services, reduces nations to little more than sweat-shops, and concentrates wealth in the hands of a wealthy elite and their well-connected or crony corporations.

After what’s been happening in Egypt, I thought I would draft a memo to dictators and authoritarian leaders around the world to give them some free and unsolicited advice.

Inspiring photo of the day: Egyptian Christians protecting fellow Muslim protesters who were praying at Tahrir Square earlier today - Photo credit: ShawkattRaghib via twitter

Dear Mr Dictator/Authoritarian Leader

Recent events in Egypt, Tunisia, Yemen and elsewhere must be giving you sleepless nights or making you feel terribly uneasy.

May I offer a few tips so that you don’t see similar eruptions in your own countries:

Do not suppress dissent

Allow your people sufficient avenues and outlets to express their frustrations, anger, complaints and criticism. You don’t want their anger and frustration to be pent up. Think of these avenues as built-in safety valves. In this respect, free media and a functioning Parliament have a big role to play. Don’t forget to free up the state-run media as well. Get rid of all repressive laws, especially detention without trial, and bring back democracy quickly before it’s too late. Liberate your people!

By now, we are gradually becoming familiar with the poverty, unemployment (especially among youth) and income inequality in Egypt that seems to be fuelling the protests. But what is less well known is that Egypt, like Tunisia, had only recently been viewed as an ‘economic miracle’ after it wholeheartedly pursued standard IMF/World Bank ideas.

(Follow the ‘one million-strong’ gathering in Cairo ‘live’ over Aljazeera here.)

It’s funny that Hillary Clinton now says that Egypt has to”‘reform”. Only in August 2010, the Wall Street Journal reported that Egypt had become Washington’s economic favourite. And last year, the World Bank, in its ‘Doing Business 2010’ report gushingly (and embarrassingly) applauded Colombia and Egypt as the “top global reformers in four of the past seven years”. I kid you not. How wrong can you get? Unless they meant reforms to profit a small minority of the business elite.

Such IMF/World Bank ‘structural adjustment’ policies include privatisation, subsidy cuts, market ‘liberalisation’ and deregulation. Sound familiar?

The IMF’s call for Malaysia to expedite a goods and services tax (GST) and slash subsidies is part of its larger – and now widely discredited – neo-liberal agenda. The IMF itself is struggling for relevance now as many developing countries especially in Latin America have shunned its advice after seeing the damage done to the national economies of that continent.

The neo-liberal agenda, part of the “Washington Concensus”, is to cut taxes for the rich and the corporations, slash subsidies on social spending, and promote privatisation of essential services or “user-pay” models that benefit large corporations, including MNCs.

The GST is a regressive tax that will hurt the poor, who are now outside the income tax bracket. If a tax on spending is introduced, the poor will bear a disproportionately higher tax burden (in terms of their spending compared to their income) than the rich.

The comments by the head of the European Commission delegation to Malaysia, Thierry Rommel, have triggered a storm a controversy with a lot of attention focused on the New Economic Policy. He said the rationale for expressing his concerns over the pro-bumiputera affirmative action policies was in relation to FTA negotiations between the EU and Asean.

It is the first time that the negotiations for the EU-Asean FTA have been highlighted in the media. And they signal disagreements behind closed doors over how to resolve NEP-related issues so that the FTA can be signed.

Non-Malays and opposition leaders who have welcomed Rommel’s remarks are missing the point. To be sure, the NEP has many serious flaws, but it has also been a major stumbling block in the negotiations for FTAs, not only with the EU but also with the United States. FTA negotiations with the United States, for instance, have been bogged down over key issues such as NEP policies on government procurement and whether it should be open to foreign firms.

This impasse could be a blessing in disguise and buy us a little time. In this piece for the Herald in February, I argued that an FTA deal with major developed nations/blocs such as the United States, Japan and the EU would lock Malaysia into a system that promotes neo-liberal economics – liberalisation, deregulation and privatisation. And once we sign those agreements, we would be effectively throwing the key away.

Make no mistake, the US and EU are not interested in whether the NEP is discriminatory to non-Malays or beneficial for the Malaysian economy. Rather US and EU trade negotiators are more interested in making it easier for giant multinational corporations to enter the country and take control of the local economy, to flood the country with their goods. They want to entrench the rights of American and European investors ahead of the interests of the local economy including the SMEs. Instead of Malaysia becoming self-sufficient and promoting energy and food security, for instance, we will find ourselves increasingly locked into the vagaries of the unsustainable global economic system even as the very planet is threatened by global warming and rising sea levels.

…by signing an FTA, we would be locking ourselves into the global neo-liberal capitalist system and piggy-backing on the United States (and the EU). We would be saying “yes” to a future society ruled by multinational corporations, to a society where the income gap between the rich and the poor will grow even wider.

Crucially, we will deny ourselves the chance to pursue alternative, more independent economic paths or visions. We will deny ourselves the opportunity to move towards “Small is Beautiful” – to decentralise the economy, to create self-sufficiency among local communities, to move towards traditional organic farming instead of large-scale pesticide-driven agro-business ventures.

Instead, we will be locked into a system that promotes economic growth ad infinitum. We will become more and more dependent on rapidly depleting fossil fuels. And when that runs out, we will start playing Russian roulette with nuclear energy. All the while, we will neglect research into cleaner alternative energy sources such as solar and wind power.

Of course, if we sign an FTA and go down the “free market” Malaysia Inc road, we will never question the wisdom of a system of perpetual economic growth that fails to reach the most marginalised communities.

Sadly, our economic planners think economic growth is the solution to all our woes. Even among many opposition politicians, there is this suffocating mindset. There is this glaring inability to think of alternatives to the corporate-led globalisation model that empowers huge firms while dehumanising workers.

At most, the politicians and economists might tinker with this model by trying to add a so-called ethical, humane dimension but they would never think of questioning it.

When we are faced with a water shortage, they ask individual Malaysians to conserve water. But they would never dream of asking corporations and businesses to save water – simply because “it does not compute”. The whole premise of our economic system is based on the assumption that market forces alone will be able to balance a mismatch between supply of and demand for resources through pricing. But what happens when the resources themselves run out or become degraded?

At the end of the day, no matter how much you try to soften a deeply flawed, unjust economic model, the poor will continue to suffer and the earth will continue to be degraded and polluted. That is because the system is oppressive and designed to profit the corporations at the expense of ordinary workers and the environment. The system undermines the dignity of the human being while promoting the interests of capital. It is a system – propped up by corporate propaganda over the media – that is almost totalitarian in its lack of tolerance for dissenting views.

So Wolfowitz goes without being held accountable for his criminal scheming against Iraq.

After I wrote the piece below, an academic friend told me, “Although he did have to step down, it was hardly a fall — guy walks away with that statement about acting in good faith, plus a golden hand-shake of a year’s salary. The girlfriend gets to keep her pay increase and the pension of USD100k.” Well, he has a point.

Still, Wolfowitz’s gone, with his reputation in tatters. And, as an Indonesian activist told me when I was writing this piece, now that Wolfowitz is stepping down, it is time for people around the world to realise that the World Bank’s role is over. ”We must learn from Hugo Chavez that there is no development and democracy with the World Bank,” he stressed. ”I hope it’s not just Wolfowitz stepping down from the World Bank, but the World Bank must now ‘step down’ from our country (Indonesia) and the world.”

PENANG, Malaysia, May 21 (IPS) – Paul Wolfowitz’s fall from grace is symptomatic of the double standards and hypocrisy of the World Bank and strains the marriage between neo-liberal policies and militarism that he embodied, say activists and analysts.

Wolfowitz, an architect of the war on Iraq, finally bowed to pressure after a favouritism scandal involving his girlfriend, ex-bank employee Shaha Riza. He is due to step down as Bank president on Jun. 30, three days after another key player in the aggression on Iraq, British Prime Minister Tony Blair, heads for the exit.

“It’s a humiliating, and, for many, not unwelcome, fall for Wolfowitz who thought he’d found a respectable bolt-hole at the World Bank after his criminal enterprise in Iraq,” said Glasgow-based political scientist John Hilley, who has written on militarism and neo-liberalism. ”Yet, it’s a dark irony that he has gone down for engaging in cheap, nepotistic malpractice while his high crimes, the design and execution of mass terror in Iraq, go unpunished.” Full article: World Bank should go with Wolfowitz – Activists

While attending the Annual Meetings of the Boards of Governors of the International Monetary Fund and the World Bank in Singapore, I soon realised that a slick makeover job, a real PR job, was underway.

In recent years, these two global financial institutions have received some bad press for the tremendous damage their policies have had on developing nations.

The PR job required a range of sweeping cosmetic measures. But could such measures really save the Bank and the IMF from their serious image and credibility crisis? No way.

This is the review I wrote for Inter Press Service after the Annual Meetings were over.

‘There’s no doubt in my mind that the Fund and Bank cannot be reconstructed,” said Glasgow-based political scientist and author John Hilley, who has written about neo-liberal militarism, the Fund and the Bank, in e-mailed comments to IPS. ‘‘Both need to be replaced by bodies concerned with people and planet rather than austerity prescriptions and business values.”

Critics said the elite closure and containment of dissident voices in Singapore should serve as a reminder that these bodies cannot be ‘constructively engaged’.

Hundreds of civil society activists were forced to divide their numbers between Singapore, where accredited activists were ‘constructively engaged’ inside the convention centre, and neighbouring Batam in Indonesia, where others held protests and parallel meetings. This divide-and-rule tactic may have weakened the overall impact of the usual civil society protests surrounding such meetings.

‘‘The Singapore meetings really showed how undemocratic the Bank and the Fund were,” said Achmad Ya’kub of the Indonesian Federation of Peasant Unions (FSPI), who was deported after being interrogated for 14 hours in Singapore. ‘‘They lost the very little credibility that they still had.”

The sentiment in some activist circles is that civil society organisations should boycott all future meetings with the Bank. Civil society ‘engagement’ in the consultative process, it is argued, indirectly helps to legitimise the WB-IMF annual proceedings..

Hilley warned that no one should be taken in by the supposedly more benign face of the Bank. ‘‘The Wolfowitz presidency, the IFC’s business agenda and the resolute adherence to growth-based policies are all testament to the Bank’s real priorities,” he said. The IFC (International Finance Corporation) is the private sector arm of the Bank, whose president, Paul Wolfowitz, is widely seen as an architect of aggressive U.S. foreign policy in Iraq and the Middle-East. Full article

When I attended the Annual Meetings of the Boards of Governors of the World Bank and the International Monetary Fund in Singapore, one thing I quickly realised was how even language – the common everyday words we are familiar with – could be hijacked by Big Business to mask ulterior motives. Sugar-coated, benevolent words are used to disguise the mercenary goals of major transnational corporations.

Beware especially when they start talking about “reforms”. Always ask, “reforms” in whose favour: Big Business or the ordinary people? There’s a world of difference between the two.

This is an excerpt from a piece I wrote for the Herald in Malaysia last September:

The eeriness of it all reminded me of Orwell’s “1984” and Big Brother. What struck me most was the ‘doublespeak’ used throughout the annual meetings to hijack ordinary words to serve the hidden agenda of neo-liberal policies.

Thus, there was much talk about ‘poverty eradication’, ‘good governance’ and ‘sustainable development’. This was part of a public relations offensive to mask the fact that the IMF and the World Bank have been pushing neo-liberal policies that hurt the poor and harm the environment. Such policies have benefited large transnational corporations and the private sector instead. For all the talk of poverty eradication, the actual voices of the poor were nowhere to be heard inside the convention centre, save for the activists who articulated their concerns.

Even the word “reforms” has been hijacked. Thus, you are a “reformer” if you are introducing business-friendly policies such as promoting privatisation, weakening regulations on labour and environmental standards, and removing subsidies for essential services such as health care and education. You are not deemed a “reformer” if your economic policies protect workers and the environment over corporate interests.

There was much talk of “good governance’, which according to the Bank’s president Paul Wolfowitz, was broader than anti-corruption. This was the same Wolfowitz who has been widely seen as an architect of aggressive US policies in Iraq and the Middle East.

In a sense, this is no coincidence. Corporate-led globalisation promotes a grab to control and secure scare natural resources and this is essentially what is going on around the world especially in the rush to secure strategic control of oil in the Middle East. It also leads to imperialistic wars (think the “war on terror”); the increase in arms spending by the superpowers, which benefits large US and Europeans arms manufacturing firms; and the push for privatisation – which in turn to leads to an attack on labour, wages and the collective bargaining process.

For all the talk of ‘good governance’, the IMF and World Bank have done business in the past with dictators and corrupt regimes, putting entire nations into debt. This sort of debt is known as ‘odious debt’ because the ordinary people in those borrower nations were not consulted about the loans: the deals are essentially between the international financial institutions and the local elites. And yet, it is the ordinary people who have to bear the brunt of repayment of loans.