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Man has an insatiable thirst for power and is willing to oppress others to attain it.

Since the late


fifteenth century, Western Europeans have embarked on a quest to colonize the world. Their actions
resulted in a few wealthy industrialized nations, fueled by the resources and labor of its colonies. At the
end of World War II, colonialism morphed from its traditional structure to a new one, regarded as
neocolonialism. In lieu of direct political and military control, former colonial powers used financial
means to subjugate developing countries through the International Monetary Fund, or IMF. By issuing
non payable loans, and implementing structural adjustment policies (SAPs) the IMF has been
responsible for keeping the former colonial structure in place.
Initially, the IMF's purpose was to rebuild post WWII Europe and later, other nations. It would
facilitate trade and to make short term loans to those countries in need, thus benefiting the global
economy. Unfortunately, the IMF has morphed into a powerful and treacherous bank that
impoverishes the developing countries. In the 1970s, loans were given freely with low interest rates.
However, in the next decade, the IMF greatly increased the interest rates. Developing countries were
forced to take out more loans, but were only able to receive them if they accepted the conditions of the
IMF's SAPs (Jauch).
There are four fundamental objectives of the SAPs. The first is liberalization, which promotes
the free movement of capital and opens up national markets to international competition. The second is
the privatization of public services and companies (Jauch). Third is monetary austerity, which tightens
up the money supply to increase internal interest rates, stabilizing the currency to the value desired.
And fourth is fiscal austerity, which is the increase of tax collections and reduction of government
spending (Shah)

After the government agrees to these conditions, the IMF restructures the country to the benefit
of a few nations. The IMF consists of 170 member nations, whose power is determined by how much
one contributes. U.S, Britain, Canada, France, Germany, Italy, and Japan hold more than 40% of the

votes (Colgan). As a result, these powerful, industrialized nations have an unbalanced representation,
and the IMF's policies benefit them the most.
The benefits to these nations come at the expense of developing nations, which spiral into
poverty. In order to pay off their large debts, poor countries must export more. But because there are so
many nations being forced into the global marketplace, who export similar crops and commodities, the
price plummets down. This benefits consumers in the West, but provides a strain on the labor force of
the developing nations. (Shah) With the exports becoming less valuable and the nations' resources
poured into paying off their debts, the nation has little money to spend on itself. Money cannot be
devoted to education, health care, industry, or anything that benefits the nation. The nations under loan
are colonized not by armies, but by economic conquest.
One of the policies of the IMF is to allow more imports in and exports more commodities. This
type of trade ensures poverty and dependency of the developing nations. If a society spends 10 dollars
to manufacture a product, the money used to pay for raw materials, construction, labor, and distribution
stay within the borders, and essentially multiplies to add several times more the original $10 to the
GNP. But exporting without first creating the local economy proves disastrous in the long run. There is
little circulation in their own economies and a negligible multiplier effect. Furthermore, the developing
countries sell their commodities for cheap, thanks to the over saturation of the market, and then must
buy finished goods at much higher prices.
Commodity exporting countries are almost by rule poor, especially when they rely on just a few
commodities. More than 50 developing countries depend on three of fewer commodities for over half
of their export earnings. Twenty countries are dependent on commodities for over 90 percent of their
total foreign exchange earnings (Laidlaw) This puts the nation's economy in a fragile position, as its
primary source of revenue is something little in value.
Another problem with commodities is that it encourages unskilled jobs, unlike manufacturing,
which requires skill. If these nations relying on commodities would invest in domestic manufacturing,
they would produce more skilled jobs and enjoy a greater multiplier effect.

Regrettably, this is almost impossible. The nations no money to invest in manufacturing


because the prices of commodities continue to go down. With such a valueless source of revenue, the
nation has no money to develop itself. The nations have to spend a large part of their revenue on paying
back their debt, so that hey have little left to develop their economies.
Many African countries are models of how oppressive the IMF's policies are. For example,
Uganda followed the policies of the IMF, which included privatization, liberalization, and the reduction
of government spending on social services and the army. Because of their adherence to the IMF's
policies, the employment of Uganda plummeted. The nation's formal sector employment dropped to
less than 14% percent of the economically active population, and trade unions lost 60% of their
members since 1990. (Jauch)
Zimbabwe is another African country that has greatly suffered under the IMF. Zimbabwe's
external debts are now at 100% of the GDP, and this is not counting the domestic debt. The value of
exports decreased by 2.7% a year, as opposed to the 9% annual increase before the SAPs were
instituted. In 1995, the IMF forced the government to concentrate on the loan repayments at the
expense of improving their country. As a result, unemployment stands at 50% in some sectors and
only 16,000 jobs are created per year for 222,000 school leavers (Jauch). Zambia is an example of an
African nation that's education suffered. Between 1990 and 1993, the Zambian government spent 35
times more on debt repayment than primary school education (Jauch). With such large levels of
unemployment and under education, these nations are unable to improve.

The developed nations are aware that the IMF's policies will entrench the developing nations in
poverty, because these nations followed a different path to their success. These nations implemented
policies designed to insulate them from the world market. They would impose protective tariffs and
restrict capital flow to increase the stability of the currency (Weisbrot) These nations succeeded
because their governments took active roles to ensure their economies grew by investing in health,

education, and other services. However, the developing nations are being forced to cut back on the
same provisions that have helped the developed countries to prosper in the past (Shah).
The IMF is a treacherous organization that needs to be stopped. They entrap countries in debt,
and develop them in a way that is of benefit to only a few nations. Africa has greatly suffered under
this system, and with an over reliance on exporting commodities, these nations will be mired in poverty.
It is far better for the world to invest in a system that produces a healthy, literate, and skilled global
population, rather than the deplorable system we have today.

Works Cited
1)

Jauch, Herbert. "How The IMF-World Bank and Structural Adjustment Program(SAP) Destroyed
Africa." NewsRescue. N.p., 29 May 2009. Web. 23 Sept. 2014.

2)

Ken Laidlaw, Market Cure Proposed For Third Worlds Battered Farmers, Gemini News Service,
December 4, 2001

3)

Mark Weisbrot, Dean Baker, Egor Kraev and Judy Chen, The Scorecard on Globalization 1980-2000:
Twenty Years of Diminished Progress, Center for Economic Policy and Research, July 11, 2001

4)

Shah, Anup. "Structural Adjustmenta Major Cause of Poverty." Global Issues. N.p., 24 Mar. 2013.
Web. 23 Sept. 2014.