South Africa: IMF Can Only Bring Misery

Last Friday, Horst Koehler, newly-appointed head of the International Monetary Fund, received a hostile response from the anti-privatisation forum, Jubilee 2000, the campaign against neoliberalism and the South African Communist Party. We are trained to be hospitable in the African tradition, but this was a fair exception.

The Anti-Privatisation Forum includes two campaigns. The first is the anti-Igoli Forum which opposes Johannesburg's "iGoli 2002" plan to privatise our city. The second is the Wits University Crisis Committee, which opposes a similar strategy, "Wits 2001," which has led to massive job losses and the decline of arts education at South Africa's main university.

The campaigns oppose the privatisation of social goods, like water and education, that in a just society should be under the control of communities, workers and students. The unity of our struggles is all the more urgent in view of this week's Urban Futures Conference, at which the powers behind iGoli 2002 and Wits 2001 are hoping to showcase the sale of our city and our university.

If Horst Koehler thought his visit to South Africa would be widely applauded, he should know that workers, community activists and students in Johannesburg have been protesting his institution for many years.

The last such visit by an IMF leader was in October 1996, when Michel Camdessus came to meet workers, community activists and students, as requested by finance minister Trevor Manuel. But our leadership in Cosatu, Sanco and Sasco boycotted the meeting on grounds that the IMF would do harm to South Africa.

The subsequent events in East Asia, which shamed Camdessus, proved that a firm stand against the IMF was correct. We know that firsthand in our country and our continent, where for more than two decades people have suffered immensely, due to IMF interference.

The IMF made billions of dollars of loans to apartheid South Africa during the late 1970s and early 1980s. Our allies in the Jubilee 2000 South Africa movement have demanded that these loans, which were repaid by South African society during one of the most repressive, bloody periods in our history, now in turn be the basis for reparations by the IMF to a democratic South Africa.

During the late 1980s, when the apartheid regime began to sell state assets to white-owned conglomerates and raised interest rates to the highest levels in our history, the IMF was prodding it to do so. The IMF consistently argued that South African workers were overpaid, and that South Africa should implement a Value Added Tax to shift the burden of tax payment further to lower-income people. The apartheid regime generally followed this advice and was applauded by the IMF for doing so.

In December 1993, the IMF granted a US $750 million loan (about R5,1 billion) which was purportedly for drought relief. Actually, the drought had ended eighteen months earlier. The loan carried conditions such as a lowered budget deficit to prevent a new government spending more on social programmes, and lower wages for civil servants. These conditions have subsequently become government policy in the form of Gear. The loan was a secret agreement, only leaked to the business press in March 1994.

Again and again in Southern Africa and across the Third World the IMF's free-market economic advice and conditions on loans have been disastrous. These disasters have led to a profound crisis of legitimacy for the Washington institution. Former World Bank chief economist Joseph Stiglitz wrote in the April 2000 New Republic magazine that the IMF is populated by "third-rate economists."

One reason for the IMF's crisis of legitimacy is the control exercised by the US government. This power is based on ownership of 18% of the IMF's shares, enough to veto anything the US disagrees with.

The IMF remains a profoundly undemocratic institution, whose economic policies have been roundly condemned for the misery caused throughout the Third World and especially in East Asia, Russia and Latin America when "emerging market crises" occurred during 1997-99.

The IMF's fraternal institution, the World Bank, has had an especially obnoxious role in Johannesburg. Bank staff were responsible for a 1995 infrastructure policy which recommended low standards and high prices for household water and electricity, even though the Reconstruction and Development Programme mandated the opposite. Bank staff recommended that low-income households be not given flush toilets but instead use pit-latrines, without considering the public health risks of excrement leaking into Johannesburg's water table through its dolomitic rock.

When a similar scheme was established in Winterveld in 1991, hundreds of people got cholera as a result.

The Bank also promoted privatisation of municipal services across the country. In Johannesburg, it took the lead on research to promote a one-sided, pro-corporate perspective on iGoli 2002. It is no wonder that the Johannesburg privatisation plan has been renamed "E.Coli 2002".

For all these reasons, the visit of Horst Koehler and the ongoing role played by the World Bank in Johannesburg represent very serious dangers to poor and working-class people and the environment.

When 30,000 people joined in protest against these institutions, in their hometown Washington DC in April, it was clear they were not listening to us but we all are surprised by how quickly they have followed us back to Johannesburg to do their damage. They must not be allowed to arrange the junk-sale of our university, our city, our country and our continent.

Trevor Ngwane is a Johannesburg councillor and Wits master's degree student, while George Dor is chairman of the campaign against neoliberalism in South Afric. Both are affiliated to the Alternative Information and Development Centre in Johannesburg.

• 194 World Financial Institutions