IMF and the Arab Spring: Will Neoliberalism Make A Come Back in Africa?

Originally published at naiforum.org on February 14, 2012

Before the Arab spring started in Tunisia a year ago, the country was packaged as an IMF success story, reforming taxes to support businesses while shifting the tax burden to the poor. Tunisia’s system was structured to diminish the power of citizens in order to sustain a repressive regime, with the family of the dictator benefitting excessively from this form of economic ‘success’.

The poverty innate to the IMF’s “best model”, Tunisia, cannot as has been suggested be solved by paper rights aiming to integrate poor people into a rotting ‘formal’ economy locked up by political and military elites.The same is true in Egypt, where repression by the post-Mubarak military against progressive democrats has worsened. The re-emergence of political Islam in the Middle East and North Africa, especially Tunisia where progressives do have influence over economic policy, requires new narratives.We need to hear more from Tunisians, Egyptians, Nigerians and so many others about how underlying causes of revolt, especially inequality and neoliberalism, can fuse opposition from diverse traditions.

When International Monetary Fund (IMF) managing director Christine Lagarde visited Tunis recently, the stage was set for the next ideological battle over the progress of democratic revolutions.Before the Arab spring started in Tunisia a year ago, the country was packaged as an IMF success story. In 2008, dictator Zine El Abidine Ben Ali was embraced by Lagarde’s predecessor, Dominique Strauss-Kahn  (also a former Minister of Finance in France):”Economic policy adopted here is a sound policy and is the best model for many emerging countries.”In 2010, the IMF celebrated Ben Ali’s commitment ”to reduce tax rates on businesses and to offset those reductions by increasing the standard Value Added Tax (VAT) rate,” which hurts poor people most. The IMF advised the tyrant to ”contain subsidies of food and fuel products”.While squeezing the poor, the IMF diplomatically turned a blind eye to widespread corruption by Ben Ali and his wife’s notorious Trabelsi family, the two families’ extreme level of business concentration, the regime’s reliance upon murderous security forces to defend Tunisian crony capitalism, and the hedonistic lifestyle for which Ben Ali’s clan had become famous.The informal sector is vibrant in Tunisia―about half the size of the formal Gross Domestic Product―while shirking the 18 per cent VAT rate. The pressure is intense for authorities to bring survivalist home-production businesses into the net. But the legacy of high-risk pro-dictatorial neoliberalism is courageous popular resistance.

On her African safari, IMF’s Christine Lagarde also visited Nigeria, waxing effusive about president Goodluck Jonathan’s planned fuel subsidy cuts: ”I was extremely impressed with the energy and pace at which he wants to transform the economy”.

However, the IMF has long urged Nigeria’s government to remove the fuel subsidy, which costs a reported $8 billion a year. The result of this ‘reform’ was nearly Tunisian in scale: a national popular struggle, ‘Occupy Nigeria’, that shook the country to the point of Jonathan’s overthrow before civil society – the trade unions – called off protests, agreeing to a government fuel price concession.

The Third World’s most celebrated neoliberal is probably Peruvian economist Hernando de Soto. He blames the series of revolutionary uprisings in North Africa on limited access to capital. His is proposing formal recognition of property rights of the houses and land where poor people live, to be used as collateral for credit to develop their businesses.

In an interview last year, de Soto told us, “Bouazizi immolated himself in a terrible suicide because he never got a right to the land his house was built on, which could have been used for credit to develop his business, for example, to buy a truck”.

But one fatal flaw in his argument is that microcredit, often an unregulated industry, rendering the poor bankable through high interest rates, can just as easily add to the woes of ordinary people, amplifying the deeper economic contradictions. Moreover, Tunisia’s system was structured to diminish the power of citizens in order to sustain a dictatorship, with an estimated 17 per cent of one major Tunisian bank in the hands of Ben Ali’s son.

Thus, the poverty innate to the IMF’s best model, Tunisia, cannot be solved by paper rights aiming to integrate poor people into a rotting ‘formal’ economy locked up by political and military elites.

The same is true in Egypt, where repression by the post-Mubarak military against progressive democrats has worsened. The majority of parliament represented by Islamic parties is not yet sufficiently powerful to support the democrats – if that is their wont. The re-emergence of political Islam in the Middle East and North Africa, especially Tunisia where progressives do have influence over economic policy, requires new narratives. The revolutionary alliance in several countries between political Islam and democratic civil society, against Washington-backed dictators, has not yet ended.

In a speech last December, Lagarde attempted to co-opt the ideas of the Arab Spring. Speaking of the Tunisian fruit-seller Mohamed Bouazizi, whose suicide by immolation set off the uprising, she asked: ”Who could have predicted that his tragic death would herald a whole new Middle East? Who would have foreseen that this act of desperation against a violation of human dignity would ignite a flame that would eventually illuminate the entire region, toppling governments and leading to mass awakening of social consciousness?”

But for Lagarde, the awakening was dangerous: ”This is naturally a risky and uncertain period. It is a period when hard choices must be made, when post-revolutionary euphoria must give some way to practical concerns.”

Her concern was partly about Tunisia, where yesterday she seemed to be making progress. ”It will be important to manage this difficult transition in an orderly way. And here, I want to pay tribute especially to the people of Tunisia, who are going through a smooth and inclusive process of transition. Just as Tunisia provided the first spark of the Arab Spring, so now can it light the path forward for other countries in the region.”

Will that light include the kinds of subsidy cuts and privatization strategies her institution backed in pre-revolutionary Tunisia? After all, said Lagarde in her December speech praising the Arab Spring: ”We are offering the best policy advice possible. We will provide financial help if requested. And with our technical assistance, we are helping countries build better institutions for a better world. Some examples: We are helping Egypt make its tax system more equitable. We are helping Libya develop a modern system of government payments. We are helping Tunisia improve its financial sector. And we are helping Jordan with fuel subsidy reform.”

Then Jordan will surely follow Nigeria in protest. But in Tunisia the pitch is insidious; interim prime minister Jebali has commended “the IMF’s active and constructive support to Tunisia’s economy particularly after the revolution.”

But Jebali’s former advisor, and current spokesperson of the ruling Al-Nahda party, Said Ferjani, later offered a different view during a talk in Durban, South Africa: ”The IMF was bad in describing Ben Ali as a model.”

Although he conceded there were no plans to cut ties to the IMF, ”We won’t be in a situation where we will be blackmailed by anything. Across Africa they pushed for privatization of the safety net. We will never listen to such things. We will not accept anything that compromises our national interest. The poor people of Tunisia are the prime priority for us because at the end of the day those are our people and we will not bow to any pressure or any kind of policies that would exacerbate the plight of the poor people. The IMF can say what they want but we will do what is right for our people. It’s the aim of our revolution.”

If the likes of Lagarde continue their visits to African capitals, then we need to hear more from Tunisians, Egyptians, Nigerians and so many others about how underlying causes of revolt, especially inequality and neoliberalism, can fuse opposition from diverse traditions.

Patrick Bond is a director at the Center for Civil Society (UKZN) in South Africa, and author of Looting Africa (Zed Books, London).

Khadija Sharife is a correspondent for The Africa Report magazine and author of Tax Us If You Can (Pambazuka).

Leave a Reply

Your email address will not be published. Required fields are marked *