The One Global Institution Behind Unrest in the Arab World? The IMF

The IMF’s logo on top of civil unrest (Rami Khoury/Al Bawaba)

• Bread riots broke out against throughout the Arab world
• The IMF is behind much of the policy recommendations leading to civil unrest
• It has a long history of relying on state-sponsored violence to realize its economic goals
• Millions of working and middle class families are being priced out of their own future

By Ty Joplin

When Sudan’s government drastically rose bread prices by slashing subsidies earlier this year, the decision to do so was seemingly done overnight with little thought for its consequences.

“The British Embassy and Foreign Office felt sidestepped by the announcement, and in fact it seems the decision about wheat subsidies was even made overnight, with our Embassy staff finding out about it via a hastily scanned image shared over WhatsApp, which they at first thought was a hoax,” says a source familiar with the matter.

“The subsidies move was taken with very little caution or consultation.” Immediately after the move became known, thousands took to the streets in protest and were brutally repressed by Sudanese police forces.

Countries in and around the Arab world have begun 2018 by repeating a grim pattern: pushing policies that make life more expensive then violently repressing any resistance. One report from Chatham House fellow Dr. Claire Spencer predicts that 2018 will be the year of civil unrest across the region.

In early Jan., both Sudan and Tunisia lifted key subsidies on bread, which immediately drove up the price of the staple good and produced massive demonstrations. Both regimes arrested hundreds, and in Sudan’s case, tortured many detainees. Both regimes were responsible for deaths.

Governments in the Middle East and North Africa have consistently cut subsidies for key goods like gas and bread, despite the predictable backlash. Each time it has happened, the cost of living has gone up, and discontent resurfaces. The most dramatic example is the Arab Spring, partially driven by the rise of bread prices and the general cost of living.

One organization is behind much of these sweeping policy changes: the International Monetary Fund, or the IMF.

The IMF has, a matter of course, recommended to governments that they end subsidies, limit the scope of the state, and open themselves up to a global market. Without fail, such policies are dutifully implemented, and then resisted by the people they affect the most. Much of the time, authoritarian regimes use violent tactics to muzzle critics of the policies.

In a time where democracy is assumed to be flourishing as the only viable political system, consistently un-democratic policies are being pushed in equally un-democratic ways.

Neoliberalism and the IMF

The International Monetary Fund headquarters in Washington D.C (AFP/FILE)

At its most basic level, the IMF is an international banking organization that lends developing countries money on the condition that such countries adopt policies that the IMF feels stimulate economic growth and sustainability the best.

In the IMF’s own words, “The IMF’s primary purpose is to ensure the stability of the international monetary system — the system of exchange rates and international payments that enables countries (and their citizens) to transact with each other.” Another one of its stated core goals is to make the state as small as possible so it cannot meaningfully intervene in the economy.

In practice, this means all-but eliminating the public sector, welfare programs, and government subsidies.

Neoliberalism, or the belief that a market functions best with as little interference as possible from outside factors like governments, is the philosophy behind the IMF and forms the backbone of its policy recommendations.

The IMF is intricately tied into a web of neoliberal policy makers and advisors, including top advisors to several dictatorships including Chile’s Pinochet — an infamous ruler who led the government of Chile from 1973 until 1990. During that time, he transformed a socialist economy into a neoliberal dream of open markets using a mix of government cuts and military force.

What pushed Pinochet to radically alter Chile was the influence of his economic advisors, who put the neoliberal philosophy of the IMF into practice. In the years to follow, the IMF would press neoliberal policies onto tens of countries, prying them open to global competition while shutting down as much of the states as it can in the quest to achieve ‘pure markets.’

Decades of the IMF and Civil Unrest

Protesters demonstrating during Egyptian bread riots (AFP/FILE)

The IMF’s policies are often implemented violently.

When Pinochet and his economic advisors seized power, they wasted no time in opening up Chile’s economy to global competition, inviting in foreign investors, and taking on loans from external entities like the IMF.

The privatization of the state and the ending of welfare programs drove prices of goods up and flattened Chile’s economy. Many protested but Pinochet, being a military strongman, immediately and decisively suppressed critiques of his programs.

Pinochet had over 3,000 killed, and had more forcibly disappeared and tens of thousands tortured. Hundreds of thousands were exiled and about a million fled from Chile in the time Pinochet ruled. Nothing could interrupt Chile’s emergence onto the global scene, even if it meant millions were priced out of the middle class.

Consistently, the IMF has called on governments to eliminate bread subsidies in the name of austerity and ‘tighter monetary policies.’ Many times, this has led to protests, which become violent and are then crushed.

In the Middle East, IMF and IMF-inspired policies resulted in nearly identical backlashes.

In 1977, hundreds of thousands of Egyptians took to the streets to demonstrate against the government raising prices of bread following recommendations and promises of loans by the IMF and affiliated World Bank.

The rioting killed almost 100 and injured over 500. In Tunisia a few years later, its president, Habib Bourguiba, sought a loan from the IMF which was given on the condition that he cut government spending and subsidies. He complied, and decided the will of his people who were protests en masse against him, was counter-productive to Tunisia’s opening to global markets.

Bourguiba sent the riot police, and killed about 150 protestors. In Egypt and Tunisia, those who protested were those most affected by the cuts to spending.

Later, the Arab Spring protests revolved around a combination of corrupt governments and a rise in bread prices that became unsustainable for the precarious working and middle classes of the Middle East and North Africa. The IMF, tone-deaf to this issue, immediately recommended austerity measures to governments to cut spending even more for countries like Egypt, Tunisia and Algeria.

“This failure to appreciate the revolutions as a rebellion not just against local dictators, but against the global neo-liberal programme they were implementing with such gusto in their countries,” says Austin Mackrell in The Guardian at the time, “is largely a product of how we on the western left have been unwitting orientalists, and allowed the racist ‘clash of civilisations’ narrative to define our perceptions of the Middle East.”

Doomed to Repeat

Egyptian riot police (AFP/FILE)

The IMF has said it is changing its policies to encourage more stability and peaceful economic transitions. However, if the recent instability in Tunisia, Jordan and Sudan are any indicator, then it appears the IMF’s attempts at internal reform have already failed.

In June, 2016, the IMF posted a report online entitled, “Neoliberalism: Oversold?” where several of its experts come to the conclusion that the organization, after decades of sparking violence and fueling despotic claims to power, may not be as democratically oriented as it thinks itself to be. The report posits that “Instead of delivering growth, some neoliberal policies have increased inequality, in turn jeopardizing durable expansion.”

According to Brendan Meighan, a consultant at the World Bank and an economic analyst focused on the Middle East, the IMF has “softened its approach in recent years.”

Nonetheless, the IMF recommended to Tunisia to cut its bread subsidies and cut the public sector again to meet a loan $2.9 billion loan condition sparked widespread demonstrations. In response, Tunisian riot police arrested hundreds and killed one.

In Sudan, bread prices doubled after the government removed subsidies for the good. Predictably, thousands to the streets, and hundreds were arrested, including journalists and activists. The government used lethal force, tortured many dissidents and even confiscated the papers of opposition news outlets.

While claiming the IMF has reformed itself, it concludes its report with a re-evaluation of Pincohet’s dictatorship, which it typically heralds as a great example of a politician decisively determining the future of his country.

The report quotes economist Joseph Stiglitz, saying that Pinochet’s Chile “is an example of a success of combining markets with appropriate regulation.” No mention is made of the thousands who disagreed with Pinochet on the exact vision of Chile’s future, which was foreclosed to those who were priced out of it or killed.

One part of the government the IMF has never advocated to cut is its military, which is relied on to enforce its new economic policies on its people, using force if needed.

Though Pinochet’s economic advisors, nearly all of whom were IMF-aligned neoliberal evangelists, convinced Pinochet to privatize much of Chile’s state-run enterprises and cut down the public sector in the name of ‘tight monetary policy,’ Pinochet found room to increase the defense budget massively.

According to Karen Remmer, Professor of Political Science at Duke University, “While total central government spending fell approximately 23 percent between 1973 and 1974, military expenditures increased over 75 percent. By 1978 military expenditures stoody at roughly three times th 1973 level.”

A Future Foreclosed

A Sudanese baker sells bread in Khartoum amidst a wave of protests against rising bread prices (AFP/FILE)

“Policymakers, and institutions like the IMF that advise them, must be guided not by faith, but by evidence of what has worked,” the IMF’s own report says.

However, “Since 2011, despite the fact that there is no evidence whatsoever that the policy recommendations of the international financial institutions actually work and lots of evidence that their failure was a significant factor motivating the uprisings, the IMF and World Bank are back at it again with only cosmetic rhetorical changes in their policy recommendations,” argued Dr. Joel Benin, professor of Middle East history at Stanford University, in an interview.

The IMF’s strict adherence to neoliberal progneses has and will likely continue to necessitate strong-armed enforcements and a further evaporation of the middle and working classes in the Middle East and beyond.

The deployment of state-sponsored violence to enforce the will of the IMF is no coincidence: it is often the only means governments can use to force its people to comply with the IMF’s purish economic vision.

More and more Middle Eastern countries are having to face a choice: take a loan from the IMF to prop up its economy, or develop itself democratically.

Thanks to the feedback loop of IMF policies and violent repression, countries may be only able to pick one.

Originally published at www.albawaba.com on February 27, 2018.