Starved by the IMF


By Yves Engler

October 9, 2003

Commentators, from the left and right, on the recent WTO ministerial meetings in Cancun seemed fixated on the harm wealthy nations' farm subsidies are having on the world's poor. The tone of these pundits has been such that one could be convinced that European, Japanese, Canadian or U.S. farm subsidies were the root of all the poor world's problems. The Guardian, for instance, bellowed, "there is only one way to address the growing gulf between rich and poor countries: abolish agricultural subsidies.

Yet when the World Bank and International Monetary Fund held their recent annual meetings in the United Arab Emirates, what happened to the media's concern?

But it's the IMF/World Bank, not the WTO, that's been pushing poorer countries for the past 20 years to re-structure their economies towards exporting agricultural products. Similarly, it's the IMF — knowing full well rich countries wouldn't reciprocate — that has, on numerous occasions, compelled poor countries to eliminate their agricultural price stabilizers or subsidies. The Wall Street Journal reports that in the poorest region of the world, "the [World] bank has long prodded poor African governments to privatize their agriculture sectors and abandon any type of farming subsidies." Commodity boards that fixed producer prices and collected farmers' produce have been destroyed and the task handed over to an incapable or unwilling private sector.

For example, in the 1990s, the IMF/World Bank pushed the reorganization of Burkina Faso's agricultural sector, so the government provided new seed varieties and other support services to cotton farmers to increase yields for export. Cotton production increased from 117,000 tonnes in 1993/94 to approximately 400,000 tonnes in 2001/02. The result? Burkina Faso has an abundance of cotton, the price of which is very low because of massive U.S. subsidies, but an insufficient quantity of food, so people starve.

In the early 1990s, Zambia agreed to IMF structural adjustment programs incorporating wider-ranging changes to its economic system than those undertaken by any comparable African country at the time. The structural adjustment programs included a shift from subsidized agriculture and controlled food prices to "market-determined" food pricing, privatizations, freeing the exchange rate and all the rest of the neo-liberal basics. Not coincidentally, in the past year a quarter of Zambians have come under the threat of famine.

That the IMF/World Bank pushes this sort of neo-liberal restructuring, no matter what the human toll, is not surprising. Michael Phillips of the Wall Street Journal explains that "the World Bank [is] the main tool the wealthy nations have to influence economic policies in the poor ones." The voting structure of these institutions, unlike the formal WTO structure, is heavily skewed towards richer nations. In fact, at the recent meetings the "majority world" countries tried, to no avail, to change these institutions' anti-democratic one-dollar, one-vote structure (capitalism's real core principle). So the U.S. still has the largest share of World Bank votes and, along with Japan, Germany, France and England, controls approximately 46 percent of all votes — some 4.5 times their share of the world's population. The numbers are similar at the IMF but, in addition, the U.S. effectively has a veto in that institution.

The IMF/World Bank's antagonism towards the state as a food guarantor and their promotion of an agricultural export model is in line with neo-liberal globalization's general antagonism towards community self-dependence. Central to neo-liberal ideology is the supremacy of the global capitalist marketplace, which the move towards cash crops by IMF/World Bank-adjusted countries reinforces. A practical reason (from capitalism's viewpoint) is that export earnings increase countries' foreign currency reserves so that they can repay external debts. An African nation's agricultural self-sufficiency offers little in the way of profit-making opportunities for banks or other multinational corporations.

Perhaps then, we should question the motivation of those who claim agricultural subsidies are the problem. When World Bank president, James Wolfensohn complains that "these [agricultural] subsidies are crippling Africa's chance to export its way out of poverty" we should ask what country has ever escaped poverty by depending on agricultural exports? Dependence on commodity production has, in fact, always been a recipe for underdevelopment. No country, with the possible exception of Hong Kong — a very special case — has, in fact, ever "developed" through free trade. Throughout the history of capitalism it has always been already-developed economies that have sought to impose "free trade" on militarily weaker or less-developed parts of the world.

Egyptian author, Samir Amin, has a much better explanation of how agricultural subsidies should be understood. "Let us be perfectly clear: the Americans and the Europeans, like every other country or group of countries, have the right to formulate national or collective policies. They have the right to protect their industries and their agriculture, and they have the right to institute income-redistribution measures to meet the demands of social justice. Certainly, too, the controversies surrounding existing or possible policies within these societies, and the methods of resolving them, are a fundamental feature of democratic government. However, to argue for the dismantling of the edifice supporting such rights in the name of some hypotheses of abstract liberal economic theory that have no bearing on the realities on the ground is another matter entirely.

"Should we, for example, demand that the industrialized nations reduce their levels of education and training, or their capacities for research and development, so as to bring them into harmony with less-developed countries on the grounds that their advantages in those domains have given them a competitive edge in world trade?

"Regretfully, the strategy for which the nations of the South have opted, which is to let the North set the rules of the liberal game, makes no sense. Nevertheless, this is the strategy that the World Bank and others have advised us to adopt, perhaps precisely because it is ineffective, and will never be effective, since liberalism in economics exists nowhere apart from in the imagination.

I would alter his sentence to read: "the strategy that the IMF/World Bank have 'advised' them to adopt is precisely because it is ineffective and will never be effective. Economic liberalism has a long history of being a cover for naked greed.

As Amin states, agricultural subsidies are mainly a domestic issue. Canadians may say we're giving an excessive amount of money towards industrial farmers and not enough to stabilize small-scale organic farming or alternatively we may say our health care system needs the money. But that's a matter to be discussed based upon internal priorities, not something to be pursued on the basis of achieving "free" market principles.

To be fair to organizations such as Oxfam and others on the left who railed against farm subsidies, there was some good that came of it. Discussion about rich countries' subsidies pointed out the contradiction between what rich nations say in terms of economic liberalism and what they do. Likewise, highlighting the fact that North American governments give more to their countries' cattle than they do in aid to the world's poor says something about our societies' priorities.

Nevertheless, the fact that segments of the left seem to believe that agricultural subsidies are a significant cause of world poverty is disconcerting. The fact that some of these groups' policy prescriptions consist of reinforcing economic liberalism is more disturbing. It tells us how effective neo-liberal propaganda has been. Even many progressive people can only see the world through its lens. Perhaps it's time for a new lens.

More Information on the International Monetary Fund
More Information on the World Bank
Information on Agricultural Subsidies

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