Although the International Monetary Fund is run by the United Nations, it has been accused of being one of the instruments the United States uses to control the world economically. In his book “Confessions of an Economic Hit Man,” John Perkins confirmed this fact. Perkins was tasked with shaping economic plans for Third World countries through mega projects that these countries could not afford. The plan was to make the country resort to global finance institutions to get a loan and end up being unable to pay it off. The United States uses this advantage to control Third World countries politically and economically.
When the Organization of Arab Petroleum Exporting Countries OAPEC announced an oil embargo on the United States, oil prices were significantly increased while the budget of Venezuela doubled four times, turning the country into a fertile place for economic hit men who wanted to control it economically.
International banks offered huge loans to Venezuela to improve its infrastructure and build skyscrapers. With the collapse of oil prices, Venezuela drowned in debts, making the country vulnerable to the control of hit men. When Hugo Chavez took over in Venezuela, he resisted US hegemony. The US had no choice but to get rid of him after the economic hit men realized that they could not control or handle him. However, the events of 911 made the US forget about Venezuela and focus more on garnering global support to fight fake terrorist threats in Afghanistan and to invade Iraq.
The IMF promotes privatization under the guise of economic reforms and describes privatization as the most efficient solution to the economic crises Third World countries continue to face. These reforms will not improve a nation’s economy but will disrupt it because the private sector will not be able to contribute to the vital projects. Moreover, privatization causes various problems, such as increasing the number of the unemployed and minimizing job opportunities, as well as causing great disparity among the incomes of members of the public. This will have a negative social impact in the long run.
A glaring example of failed privatization implemented at the recommendation of the IMF took place in Tanzania. In 1985, the IMF asked the government to reduce commercial obstacles and government programs and to sell the industries owned by the government. By 2000, healthcare services were no longer free and neither was education. The rate of school enrollment decreased to 66 percent while the illiteracy rate increased 50 percent. Per Capita GDP declined from $309 to $210 between 1985 and 2000.
Russia survived the economic crisis it experienced after the collapse of the Soviet Union. It succeeded not because it implemented IMF recommendations but because it did the opposite. According to a BBC report broadcast in 1999, Russia secured IMF loans amounting to $20 billion, but it did not implement the recommended reforms. The IMF was forced to give Russia more loans in order to convince it to pay back the old loans.
Some Arab countries insist on implementing privatization and taking loans from the IMF despite such negative results. All evidence indicates that these loans or privatization plans can lead to the downfall of a country. The question is: Will these countries face the same fate as those that were destroyed by IMF policies?