Shaping democracy without the chains of Western Capitalism – Why Egypt Ditched the IMF

Why Egypt Ditched the IMF
As Egyptians continue their struggle for social justice and full democracy, there’s one institution they don’t want involved: the International Monetary Fund.
Document Actions – by Mark Engler – posted Jul 15, 2011

On Friday, crowds of protesters returned to Cairo’s Tahrir Square, with independent trade unions calling for the country’s yet-unfinished revolution to continue. The unionists, according to Ahram Online, “stressed the need to achieve social justice, the prosecution of all corrupt figures of the old regime, and the establishment of a full democracy.”

That activists are keeping up street pressure for democratic reforms is a positive sign. And it follows on the heels of another one: the recent, surprise decision by the country’s interim leaders to spurn the International Monetary Fund. IMF economic “guidance” is not new to Egypt, but a hallmark of the Mubarak dictatorship. It is to their credit that Egyptians have thus far chosen to break with this past.

In late June, the BBC reported, “Egypt drop[ped] plans for [an] IMF loan amid popular distrust.” Despite the IMF’s insistence that it was offering financing on favorable terms, the story noted, “many Egyptians were unhappy, feeling it was a betrayal of the protest movement that had denounced the IMF as a tool of imperialism.”

From the beginning of the Arab Spring revolts, many progressive commentators have expressed concern that people in countries such as Egypt and Tunisia might win greater political freedoms but would have their nations’ economic policies hijacked by the international financial institutions. Walden Bello, for one, reflected on pro-democracy transitions in the Philippines, Latin America, and Eastern Europe, and bemoaned a sad pattern:

Even as traditional elites hijacked the resurgent parliamentary systems, the United States and the multilateral agencies subverted them to push through austerity programs that the authoritarian regimes they previously supported had no longer been able to impose on recalcitrant citizenries. It soon became clear that Washington and the multilateral agencies wanted the new democratic regimes to use their legitimacy to impose repressive economic adjustment programs and debt management policies.

In the past decade and a half, as the terrible economic track record of IMF-imposed structural adjustment in the 1980s and ’90s has come to light, neoliberal economic policies have come under assault, and the IMF’s power has substantially diminished. This was especially true prior to the major economic downturn that started in 2008, which, ironically, gave the fund something of a new lease on life. (Ironically, because drives for deregulation promoted by Washington Consensus economists did plenty to spur the crisis in the first place.) …more