24 Oct 1996 00:25:17 -0400 (EDT)
24 Oct 1996 00:25:05 -0400 (EDT)
24 Oct 1996 05:55:10 +0200 (GMT+0200)
Date: Wed, 23 Oct 1996 15:44:14 -0400
From: Patrick Bond <pbond@wn.apc.org>
Subject: (Fwd) Re: Update: Anti-IMF strategic info... -Reply
Sender: pbond@wn.apc.org
To: SA.gossip.fiends@wn.apc.org
Reply-to: PBOND@wn.apc.org
Ok, what the heck.
So many of you allegedly wanted this (plus the bonus, at the end,
of our reply to Alec Erwin, to appear in this week's Mail and Guardian),
that it saves wear and tear to get it out to all.
Feedback warmly welcomed. Next stage is a strategic paper on where
we've come from in the last year's worth of civil society campaigns,
including no lock-out clause in the constitution (+); anti-privatisation
(+/-); removing corporations from the Bill of Rights (-); disciplining
banks on interest rate increase (+); humanising UNCTAD (-); and now
making Camdessus miserable (+). Coming soon: defending the RDP (-).
***
STATEMENT BY THE
Campaign Against Neoliberalism in South Africa
On the South African visit by
IMF Managing Director Michel Camdessus
16 October 1996
As members of popular organisations and activists of the
Democratic Movement, we have come together to launch a
"Campaign Against Neoliberalism in South Africa" and, in
particular, to express apprehension at the visit (17-19
October) by the Managing Director of the International
Monetary Fund, Michel Camdessus. Neoliberalism is the
"free market" approach to economic and social policy that
large banks, corporations and their allies in the IMF,
World Bank, World Trade Organisation and Northern
governments are insisting all countries adopt.
Camdessus' brief South African tour was recently announced
by Finance Minister Trevor Manuel: "We have invited him
to extend the good relations that we have with the IMF...
He wants to have discussions with the trade union
movement, student organisations as well as the normal
constituency such as business people and government
leaders."
The background for the visit includes a history of IMF
support for apartheid, including loans of more than US$1
billion to the South African regime during the late 1970s
(in the wake of financial panic caused by the Soweto
uprising) and early 1980s (when the gold price collapsed
and the regime was most urgently in need of external
monetary support). From exile, the ANC condemned the IMF
for propping up apartheid. The IMF then assisted the
regime with its increasingly neoliberal economic policies
during the late 1980s, and designed South Africa's Value
Added Tax during the early 1990s, leading to mass popular
protest. In 1993 the IMF granted a large loan which
included secret "conditionalities" that ensured that a
democratic South Africa would not waver from inherited
undemocratic economic policies, as well as informal
conditions that the new government retain the National
Party Finance Minister and Reserve Bank governor.
Against this background of hostility to democratic
aspirations and development, we must make the following
points about the Camdessus visit:
1. The Finance Ministry's attempt to establish "good
relations" with the IMF follows its promotion of a
macroeconomic strategy in June 1996 which bears an uncanny
similarity to the IMF's 11 new "principles for economic
success," also termed the "11 Commandments." The Growth
Employment and Redistribution strategy -- emphasising cuts
in government expenditure (particularly "consumption"
expenditure which will threaten social services),
continuing high real interest rates, export-led growth and
trade liberalisation, privatisation and permission for
increased capital flight from South Africa -- mimics the
free-market, monetarist policies that across the world
favour the interests of powerful conglomerates and banks
at the expense of workers, the poor, women, youth and
other marginalised social forces. The warm reception
received by the SA delegation to the IMF/World Bank Annual
Meeting in Washington earlier this month follows months of
close collaboration in designing SA economic and
development policy, marking a fundamental departure from
policies outlined in the Reconstruction and Development
Programme. The fact that just four months into the new
strategy, some of the economic model's most crucial
variables -- job creation, the exchange rate, interest
rates -- have dismally failed to meet government targets,
is both a reflection of the more general bankruptcy of
IMF-style orthodox policies and a reminder that the
strategy must be completely renegotiated with government's
major popular constituencies.
2. Many had feared a steady drift away from the social
justice values and redistributive policies expressed in
the RDP and their replacement with neoliberal principles
and programmes. Reflecting this, some government officials
-- particularly in the Finance Department and Reserve Bank
-- appear to now entirely ignore the RDP warning that "the
IMF, World Bank and GATT affect our neighbours and South
Africa in different ways. In the case of our neighbours,
they were pressured into implementing programmes with
adverse effects on employment and standards of living...
Relationships with international financial institutions
such as the World Bank and IMF must be conducted in such
a way as to protect the integrity of domestic policy
formulation and promote the interests of the South African
population and the economy. Above all, we must pursue
policies that enhance national self-sufficiency and enable
us to reduce dependence on international financial
institutions" (1.4.17, 6.5.16).
3. In most developing countries, the IMF and World Bank
have come to direct economic policies and have thus
undermined national sovereignty largely through the
leverage they enjoy as creditors. This has not been the
only mechanism for exerting leverage in South Africa, and
indeed the neoliberal influence over economic and social
policy has often occurred in the absence of ongoing
lending. Perhaps just as importantly, the IMF and World
Bank have the ability to psychologically influence
prospective foreign investors, in a context in which
foreign investment is incorrectly seen by a small group of
government policy-makers and advisors as the overarching
factor for economic growth. Since the 1980s, South Africa
has succeeded in attracting merely large amounts of "hot
money" foreign investment into speculative stock and bond
markets (leading to subsequent bouts of currency
volatility), with virtually none of the direct foreign
investment that might challenge existing monopolistic
conditions, transfer technology, or create jobs and
products for consumption in the local market. We believe,
therefore, that the move towards close relations with the
IMF, premised upon attracting what the Minister of Water
Affairs correctly termed the "mythical foreign investor,"
should be viewed with alarm by all those in South Africa
committed to sustainable, people-centred development. This
is especially so when we consider the role the IMF and the
World Bank have played elsewhere.
4. Across the Third World, Structural Adjustment
Programmes imposed by the IMF and World Bank to obtain the
repayment of foreign debt have led to famine,
environmental destruction, and the dismantling of health,
education, infrastructural and social welfare programmes.
These programmes nearly always include the same set of
measures: currency devaluation, decontrol of exchange
rates, higher interest rates, financial deregulation,
trade liberalisation, privatisation, wage cuts, reduction
in the public service through budget cuts and massive
retrenchments, labour market deregulation, and the like.
The social costs -- typically including large increases in
the prices of basic goods and food, intensified poverty,
deterioration of public services, and rising unemployment
-- are nearly always borne by those people, especially
women and children, who never received any benefits from
the borrowings. Structural Adjustment Programmes have also
made small economies vulnerable to transnational
corporations that exploit cheap labour (often imprisoned
in union-free export processing zones devoid of health and
safety regulations with wages that sink to US$1 per day)
and that dump toxic wastes and poisons produced in the
rich industrialised countries.
5. Debt repayment has become an important mechanism for
transferring wealth from the people of the South to
financiers of the North. According to the United Nations,
developing countries paid US$1,662 trillion in debt
servicing between 1980 and 1992. This amount is three
times the original amount owed in 1980. Yet in spite of
the above transfers the total Third World debt still
stands at over US$1,3 trillion. It is not commonly known
that the Third World has repaid almost a trillion dollars
of principle over and above US$771 billion in interest. In
Sub-Saharan Africa the ratios of foreign debt to Gross
National Product rose from 51% in 1982 to 100% in 1992,
and of foreign debt to total exports from 192% in 1982 to
290% in 1992, a period during which the Third World debt
crisis was allegedly resolved. The external debt of the
Third World has become an eternal debt and stands as the
largest immediate obstacle to growth and sustainable
development. It is therefore crucial that progressive
forces in South Africa add their voice to the calls made
internationally to cancel Third World debt as the first
step towards building equitable and just relationships
between and within different parts of the world. The
meagre gold sales belatedly proposed by Camdessus to help
finance extremely limited debt relief -- and only for
those countries which religiously adopt the IMF's 11
Commandments -- are far too little, far too late, and it
is a reflection of the exploitative character of Northern
political leadership of the IMF that even these gold sales
were not approved at the last meetings.
6. With equal dismay, we learn through the press that the
World Bank is now on the verge of making its first loan to
South Africa since 1967. The Bank has, since 1994, offered
advice to several key ministries charged with implementing
the Reconstruction and Development Programme, as well as
contributing to the Finance Ministry's Growth, Employment
and Redistribution plan. The Bank's own Commandments
differ little from the IMF's, and it is no surprise that
government's underperforming infrastructure, land reform,
and housing policies all follow directly from Bank advice.
The Bank has apparently now sold Minister Manuel a US$67
million loan to improve the competitiveness of South
African firms, a dubious proposition in view of the Bank's
notorious, self-confessed tendency towards overoptimism
regarding Third World exports. Consistent with the RDP,
the South African government should renew its previous
self-reliant policy of avoiding World Bank loans. And
given its record to date, the Bank should close its
Johannesburg office and cease dispensing its unpopular
neo-liberal economic and social policy advice.
7. In the light of the near-universal failure of IMF and
the World Bank policies in the developing world, we wish
to urge extreme caution upon Finance Minister Manuel.
Rather than naively providing Camdessus legitimacy to sell
IMF policies to critics in trade unions and social
movements, Minister Manuel should take up the mantle of
leadership by using IMF and World Bank platforms to call
for the cancellation of Third World debt, including the
inherited US$18 billion apartheid foreign debt. Indeed
Manuel should be using these opportunities to call for the
democratisation and transformation of the World Bank and
IMF into agencies which serve the interests of poor people
and workers, rather than continually undermining our
constituencies for the benefit of international banks and
corporations.
8. If Camdessus is really interested in meeting critics,
he should make himself available for a publicly televised
debate through which the concerns raised here can be made
directly to the IMF Managing Director, as well as to
Minister Manuel. Indeed, we are convinced that the only
good that can come of Camdessus' visit is a transparent
discussion of the enormous costs of IMF policies. Those
policies are being adopted under the "home-grown" rubric
in South Africa, and it is therefore crucial for our
citizens to understand how many other countries have also
surrendered their economic sovereignty to the IMF and
World Bank, and the enormous financial and social costs
they pay as a result. Finally, it is crucial for all
progressive, democratic South Africans to record their
determination that the IMF not recolonise our country, our
continent and developing countries across the world.
***
CANSA has been established to help identify, arrest and
eradicate the cancer of neoliberalism that increasingly
threatens to reverse South Africa's socio-economic
transformation. Beginning with dozens of prominent members
from progressive groups in civil society, the campaign
intends to recruit support from trade unions, non-
governmental organisations, students, community-based
organisations, women's and youth groups, environmental
organisations, churches and other democratic forces. It
will encourage and provide resources to supporters for
domestic and international efforts to challenge
concentrations of economic power and to promote people-
centred development. For more information, contact Stiaan
van der Merwe at 011-339-7253 (fax 403-1485) or Zaida
Harneker at 011-339-1811 or 837-6071 (fax 339-8084).
***
Signatories to the
Campaign Against Neoliberalism in South Africa
Individual endorsements:
(Individuals sign in their own capacity; organisations are
listed for identification purposes only, not as endorsers;
list updated to 17 October.)
Gillian Addison, Group for Environmental Monitoring
Asghar Adelzadeh, National Institute for Economic Policy
Chris Albertyn, Environmental Justice Networking Forum
Jenny Albrecht, Foundation for Contemporary Research
Stephanie Allais, South African Students' Congress
Mercia Andrews, Trust for Christian Outreach and
Education
Brian Ashley, Alternative Information and Development
Centre
Marjorie Billing, New Women's Movement
Patrick Bond, National Institute for Economic Policy
Debby Byrne, Transport and General Workers' Union
Phiroshaw Camay, Cooperative for Research and Education
Madode Cuphe, Masifundise Education Project
Lungi Daweti, Centre for Democratic Communications
Art de Langa, Society for New Economics
George Dor, National Institute for Economic Policy
Rita Edwards, Trust for Christian Outreach and Education
Greg Hussey, South African Health and Social Welfare
Services
Godfrey Jack, South African National Civic Organisation
Martin Jenson, Trade Union Library and Education Centre
Dot Keet, University of the Western Cape Centre for
Southern African Studies
Cecil Kganakga, National Community Radio Forum
Wolfgang Kistner, Ecumenical Advice Bureau
Oupa Lehulere, Khanya College
Charley Lewis, Cosatu Information Technology Unit
Hassen Lorgat, Public Services International
Bobby Maake, Cosatu Information Technology Unit
Ernest Maganya, Institute for African Alternatives
Jabu Mahlangu, Centre for Democratic Communication
Maxwell Malan, End Racism and Sexism through Education
Althea MacQuene, International Labour Resource and
Information Group
Andre Marais, Alternative Information and Development
Centre
Frank Meintjies, Initiative for Participatory
Development
Ronnie Mokwatsane, Masifundise Education Project
Yves Monten, Rural Development Services Network
Dickson Motha, South African Plantation and Agricultural
Workers Union
Lumke Mtimde, National Community Radio Forum
Victor Munnik, Environment and Development Agency Trust
Nirmala Nair, Trust for Christian Outreach and Education
Neil Nair, South African Municipal Workers Union
Beyers Naude, Ecumenical Advice Bureau
Neil Newman, Alternative Information and Development
Centre
Hugh Noble, University of South Africa
Roseline Nyman, National Labour and Economic Development
Institute
Roben Penney, Environmental Monitoring Group
Tebogo Phadu, RDP Council
Alex Pongolo, Masifundise Education Project
Mark Povey, Development Research Institute
Kgagelo Ramodite, National Health and Allied Workers
Union
David Sanders, University of the Western Cape Public
Health Programme
Vishwas Satgar, National Labour and Economic Development
Institute
Ighsaan Schroeder, Khanya College
Selby Shezi, National Institute for Economic Policy
Fiona Tregenna, South African Students' Congress
Molefe Tselo, Ecumenical Service for Socio-Economic
Transformation
Stiaan van der Merwe, Ecumenical Advice Bureau
Lou Wilkins, Cosatu Information Technology Unit
***
CANSA Statement in The Mail and Guardian, 25/10 issue:
According to Trade and Industry Minister Alec Erwin
("Erwin slams loan critics," M&G Business Mail, 18-24
October), "our policies are consciously designed to
prevent the possible pitfalls of a World Bank loan and the
effects they've sometimes had on other economies."
Are they? The newly-launched Campaign Against
Neoliberalism in South Africa -- which has already been
endorsed by activists and leaders in nearly every major
social movement (church, community, environment, NGO,
student, trade union, etc) -- remains deeply concerned.
After all, conditions on the last International Monetary
Fund loan -- $850 million purportedly for drought relief
(though the money became available in early 1994, 15
months after the drought ended!) -- included cuts in the
budget deficit that are already digging deep and painfully
into social programmes.
As for the World Bank, says Erwin, "their influence is
negligible; second, we've put in place policies designed
to prevent the detrimental effects that some of their
projects might actually have... We often use World Bank
expertise and feel sufficiently experienced not to be
threatened."
What preventative policies are those? In reality, the Bank
role has already been extremely detrimental, and even
experienced government policy-makers often appear
overwhelmed by bad advice, as just a few examples
illustrate:
Two Bank economists and the Bank economic model were
utilised in the June 1996 macroeconomic strategy -- which
aside from its pro-corporate bias has already, after just
four months, bombed with respect to 1996 predictions for
job creation, interest rates and the strength of the rand
(three of the strategy's most crucial targets).
In 1994-95, the Bank's deputy resident representative
led an infrastructure planning team whose proposals will
-- unless policy is changed dramatically -- soon reduce
the lot of the urban poor and low-paid workers to pit
latrines, water taps within 200 meters and no electricity,
instead of the decent sanitation and household water and
electricity "lifeline" supply promised in the RDP.
The Bank-designed land redistribution programme, dating
to 1992-93 and endorsed by government in 1994, is yet to
get off the ground largely because it relies nearly
entirely on market forces.
And forceful Bank advice from 1991-94 to limit state
housing subsidies and to trust commercial banks to make
township home loans -- instead of the state and community
agencies advocated in the RDP -- helps explain the present
housing delivery fiasco.
So South African sovereignty in social and economic policy
is already under fierce attack. As a result, the RDP --
which retains the support of most citizens, who still want
to believe government's oft-repeated commitment to
eventual RDP delivery -- appears to have fallen victim to
both the neoliberal macroeconomic plan and Bank sectoral
policy advice.
We think back to July 1993, when Trevor Manuel told the
New Nation, "We will certainly need foreign aid, but not
from the IMF or the World Bank." And we ask, how have
conditions changed so dramatically that policy-makers go
into reverse gear on such basic principles?
In future, can the Bank perform any better to improve
"export competitiveness," the purpose of the proposed $67
million loan? Erwin may have better luck than his
colleagues in "preventing possible pitfalls," but as even
Bank staff admit, their own track record is miserable,
given their intrinsic tendency to generate overoptimistic
market studies in order to promote exports at all costs.
According to Carlos Lopez, a leading United Nations
Development Programme official, "The World Bank figures
are always exaggerated to give a rosy picture of whatever
it is they are involved in."
The Bank, after all, would hardly survive if it had to
itself compete with the private sector. Looking north, 51%
of the Bank's current African projects are failures
according to the Bank's own internal evaluations. An
awesome $20 billion in approved Bank loans to Africa still
have not been disbursed because of the damage that the
Bank and IMF have done to state administrative capacity,
even former Bank Africa director Kim Jaycox has publicly
conceded. Only the largesse of Northern taxpayers, whose
leaders regularly recapitalise the Bank, and the
foolishness of Third World borrowers, keep the game in
play.
South Africa could potentially have a different fate, if
more effective macroeconomic management -- including
relaxing the balance of payments constraint by taxing
luxury goods imports, as the RDP suggested (the only
comparable tax was actually dropped in the last budget) --
reduced both the need for foreign borrowing and if our
vulnerability to "hot money" inflows was reduced (perhaps
through lower interest rates and tightened, not
liberalised, exchange controls, as the IMF had belatedly
recommended after the 1994-95 Mexican currency meltdown).
Moreover, there is plenty of credit creation and financial
liquidity in the South African economy at present -- which
should be utilised for all manner of development projects
-- but the tragedy is that government has yet to implement
the kinds of RDP financial sector reforms that would free
up more resources for productive investment and enhanced
competitiveness, as opposed to stock market and real
estate speculation, conspicuous consumption and capital
flight.
In sum, the neoliberal policy turn is disastrous in
economic and social terms. Politically, it is also
profoundly undemocratic, as pressure from international
and domestic financial institutions pulls the South
African government far from its electoral mandate.
Thus we hope the IMF will cease sending its managing
director here on fruitless missions to sell neoliberal
muti to critics. Broader boycotts, tougher demonstrations,
even more hostile parliamentarians and louder demands for
transparent public debates -- such a request was rejected
by both Michel Camdessus and the Finance Ministry last
week -- will result.
The World Bank should close its Johannesburg office and
release its economists -- with their R700 000 per annum
packages -- to compete for jobs in the private sector.
Government should remember its election mandate and open
the RDP Base Document to page 146: "Above all, we must
pursue policies that enhance national self-sufficiency and
enable us to reduce dependence on international financial
institutions."
And ordinary citizens and organisations of civil society
interested in challenging the drift away from the RDP and
social justice towards neoliberalism should join the
Campaign, by calling 011-339-1811 or 021-448-5197 (or
emailing to aidc@iafrica.com) to endorse our statement and
get involved in activities.
***
Stephanie Allais, Brian Ashley, Patrick Bond, Oupa
Lehulere and Hassen Lorgat are active with the Campaign
Against Neoliberalism in South Africa.