Beware ‘Social Justice’ Promises By International Bankers – OpEd

In these days of dire economic and environmental crisis, with political elites under attack from Athens to Washington, the establishment is desperate for legitimacy. Even International Monetary Fund (IMF) staff now publicly endorse ‘social justice’ at the same time they tighten austerity screws.

Recall the context. The 2008-09 financial meltdown was supposedly solved by throwing money at bankers in Wall Street, the City of London, Frankfurt, Paris and Tokyo. But it didn’t work, and on BBC’s Newsnight last Friday, Robert Shapiro of the Georgetown University Business School blew the whistle on the European debt crisis.

‘If they cannot address it in a credible way I believe within perhaps two to three weeks we will have a meltdown in sovereign debt which will produce a meltdown across the European banking system,’ warned Shapiro. ‘We are talking about the largest banks in the world, the largest banks in Germany, the largest banks in France, that will spread to the United Kingdom, it will spread everywhere.’

Shapiro also happens to be a consultant to the IMF. Facing a new meltdown of reputational confidence, the institution’s panicked press office quickly tweeted, ‘IMF notes Shapiro is not IMF Adviser on European activities.’ Instead, said the IMF with typical blind arrogance, ‘Europe’s growth potential is remarkable. With steady implementation of the right policies, it can be achieved.’

Here in South Africa, we should be paying closer attention because Finance Minister Pravin Gordhan last week offered our tax monies as an emergency US$250 million bailout loan from Pretoria to Brussels via the IMF. This comes on the heels of his US$300 million bailout offer to Swazi dictator King Mswati, in spite of widespread opposition by civil society in Swaziland and South Africa.

What Gordhan explained to national SAfm radio audiences about the European emergency credits last week was chilling, especially because I will never forget the Natal Indian Congress classes on revolutionary politics he gave at the Gandhi settlement in Durban’s Phoenix community a quarter century ago.

SAfm’s Alec Hogg asked, ‘Even if it is only a small amount, relatively speaking, that we are putting in, many African countries went through hell in the seventies and eighties because of conditionality according to these loans. Are you going to try and insist that there is similar conditionality now that the boot is on the other foot, as it were?’

‘Absolutely,’ replied Gordhan, ‘The IMF must be as proactive in developed countries as it is in developing countries. The days of this unequal treatment and the nasty treatment, if you like, for developing countries and politeness for developed countries must pass.’

Gordhan’s call for more proactive nastiness by the IMF and its Brussels allies against the Greek, Spanish, Portuguese and Irish poor and working people, throws African National Congress (ANC) traditions of international solidarity into disrepute. (It is not likely that the neoliberal nationalists running the ANC will do anything about it, unlike their anger at ANC Youth League president Julius Malema who called the Botswanan government a puppet of Washington and called for regime change, thus landing him in a potentially game-changing disciplinary hearing whose outcome we will know in coming days.)

The same attacks are underway in Egypt, where tens of billions of dollars were funnelled to the ultra-corrupt Hosni Mubarak regime from the State Department, Pentagon and IMF/World Bank. In June, the IMF offered a US$3 billion loan to Egypt so that it could repay the IMF and other lenders the interest coming due on Cairo’s US$33 billion foreign debt. A genuinely free democracy would have grounds to default on that debt, because of its ‘Odious’ nature in legal and technical terms.

But as if to whitewash over decades of illegitimacy, acting IMF Managing Director John Lipsky proclaimed on June 5, ‘We are optimistic that the programme’s objectives of promoting social justice, fostering recovery, and maintaining macroeconomic stability and generating jobs will bring positive results for the Egyptian people.’ Added the IMF’s Egypt mission head, Ratna Sahay, ‘Following a revolution and during a challenging period of political transition, the Egyptian authorities have put in place a home-grown economic program with the overarching objective of promoting social justice.’

The following week, Cairo’s military government began implementing a controversial law banning strikes and the finance minister not only promised a continuation of neoliberal policies but cancelled a proposed capital gains tax.

In addition to IMF staff, another man who spent nearly three decades causing immense suffering at the World Bank, Ismail Serageldin, was recently invited to deliver the Nelson Mandela Annual Lecture, which he titled, ‘The Making of Social Justice.’

At Durban High School’s Seabrooke Theatre on Tuesday, at a videoed repeat of his speech, we heard Serageldin calling social justice ‘the foundation of the modern Republic of South Africa… The light shining from South Africa has finally reached the northern part of the continent, where I live.’

Shining light? Does Serageldin – a long-time Mubarrak supporter – not know that inequality, unemployment and environmental devastation have soared since 1994, thanks mainly to Pretoria’s adoption of World Bank and IMF policies?

He may simply not care. In an interview with the NGO Share International a few years ago, Serageldin was asked, ‘The World Bank has received a fair amount of criticism in recent years for its policies toward the poor and the environment. How have those policies changed during your tenure at the bank?’

The answer was as chilling as Gordhan’s: ‘I totally reject the criticism that’s being brought forward against the Bank.’

The follow-up question: ‘One of the most controversial areas of involvement for the Bank has been its structural adjustment programs. Some people argue they hurt the poor by forcing governments to reduce or eliminate subsidies for basic goods in exchange for getting World Bank loans. Is that still something that the bank is involved with?’ Replied Serageldin, ‘Sure.’

Serageldin is best known for his prophetic 1995 statement, ‘Many of the wars this century were about oil, but those of the next century will be over water.’ As if to ensure this would be true, Serageldin became a leader of the water privatisation lobby’s World Water Council. Under his tutelage its main commission aimed ‘to help formulate global water policies.’

The World Bank push to end operating subsidies and privatise water was relentless, with Serageldin’s commission arguing that governments should ‘treat water like any other commodity and open its management to free market competition.’ As he explained in 2003, ‘We pay for food. Why should we not pay for water?’

In Johannesburg as well as Argentina, Bolivia and many other sites, this philosophy ensured the early 2000s witnessed water wars of World Bank projects run by French, British and US multinational corporations against poor people.

If, as it seems, the Mandela Foundation and a Johannesburg audience were fooled by Serageldin, this only makes it more important for us here in Durban, in Egypt and everywhere else to ask tough questions to bankers who talk ‘social justice’ but who walk with a stick that always applies ‘nasty’ economic pain to society’s most vulnerable.

Patrick Bond directs the University of KwaZulu-Natal Centre for Civil Society.