IMF, Activists’ Financial Foe, Is Also Their Inadvertent Instigator
Image source: Reuters/Yuri Gripas
One had to flee and fled his capital city, two have been buried at the polls, and three others are hanging on by their nails.
Since the beginning of the year, social movements have, via the ballot box, the streets, or both, seen the end of Greece and Ukraine’s leaders, while the presidents of Ecuador, Iraq, Argentina, and Egypt may soon join them out of office..
In each one of these six countries, protestors have faced a single enemy which has ironically become the inadvertent instigator of activism itself – the International Monetary Fund, or IMF.
Set up in 1944 under the Bretton Woods Convention, the IMF has long acted as “lender of last resort” to impoverished countries, but since the early 1980s, the strings attached to the organization’s aid have become a source of discontent multiple times wherever it sets up shop.
A key plank of IMF loan programs is the removal of price controls and subsidies for key products such as bread and fuel, alongside cuts to pensions and spending designed to reduce deficits and increase competitiveness. These reforms though, are often met with opposition by students and professors, who decry education defunding, pensioners, trade unionists, and the poor.
Elected on a socialist programme, Ecuadorian president Lenin Moreno turned sharply to the right while in office and accepted an IMF package in February of this year.
On Friday, he announced an end to 40-year-old petrol subsidies in order to carry out a demand of the IMF. Diesel prices rose 123 percent almost instantly.
By October 8th, Moreno and his entire government had been forced to flee the teargas-choked capital as hundreds of arrests failed to stop a colossal movement of indigenous people, students, and trade unionists in the country’s largest demonstrations in a decade.
Although Ecuador’s government reversed the decision recently and therefore may not be as likely to fall to the streets, Moreno need only look south to see where his fortunes may be headed in the next election.
A $50 billion IMF loan to Argentina’s conservative president Mauricio Macri was immediately met with colorful street protests by teachers’ unions, street vendors, and nearly every other popular sector of society when it was announced last year. A disastrous IMF program in the country had led to the removal of three presidents between 2001-2002, but Macri, who removed price controls on fuel and food, thought this time would be different.
It wasn’t. Macri lost the presidential primaries in August as a result of the backlash and is considered practically guaranteed to face a disastrous defeat in October’s election.
Even a reversal of the price controls has been too little, too late, as demonstrators continue to amass in the streets to call for the IMF’s exit.
But activists in Greece, who last week battled riot police and marched on the capital, as well as Ukraine, have discovered that voting out a leader backing the IMF doesn’t mean voting out the IMF.
Ukrainian president Petro Poroshenko was flattened in May’s elections after imposing IMF-mandated austerity during his years in power after gas prices quadrupled and college students were required to pay for their tuition for the first time. Nonetheless, his successor Volodymyr Zelensky, who beat Poroshenko with over 73 percent of the vote, is trying to apply for more aid from the organization and is imposing many unpopular measures already in preparation.
Greek Prime Minister Alexis Tsipras is another cautionary tale for both Moreno himself and the protestors seeking to remove him, having been elected as a radical leftist like the Ecuadorian president, only to make a complete u-turn in office. He accepted an IMF program which requires Greece to commit to 40 years of austerity and reduced the number of public workers by 30 percent, along with major education and pension cuts.
Tsipras’s party was roundly defeated in early July elections called for by activists, but his successor, Kyriakos Mitsotakis, is even more pro-IMF than Tsipras.
Unlike Moreno, Macri, Poroshenko, or Tsipras, Egypt’s autocratic president Abdel Fattah el-Sisi doesn’t have to worry about elections. That doesn’t mean his own IMF program isn’t giving him headaches.
Over 3,000 people have been arrested in the past two weeks after the biggest protests since the Arab Spring erupted against Sisi’s increases in oil prices and other economic reforms.
Sisi’s government has been so spooked that it is set to conduct a mass trial of children aged 11 to 17 – the biggest prosecution of protestors in the country’s history – for allegedly illegally demonstrating, having “political” materials on their phones, and “misusing” social media apps.
At the same time, Sisi has quietly decided to renege on the price increases in an attempt to shore up his rule.
These protests shouldn’t have come as a surprise, indeed, they were predicted by analysts from Oil Price as early as May on the basis that similar policies had led to the toppling of leaders elsewhere.
Moreno was warned as well, by his predecessor as president, Rafael Correa, who in a speech during his term said:
“We know by heart the recipe of the International Monetary Fund…Eliminating subsidies, lowering wages, mass layoffs, cutting off social benefits…that does not solve anything.”
Add activism and revolt to that mix as an inevitable result.