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5 August 2002

WORLD BANK/IMF FORCES A FAMINE ON MALAWI

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AgBioIndia Mailing List
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05 August 2002

Subject: World Bank/IMF forces a famine on Malawi

The Great Bengal Famine of 1943, in which some estimated 1.5 to 3 million people perished, was caused because the then colonial masters thought it prudent to export food rather than to feed the poor and hungry. We all know this. We all know the sordid politics of food that forces some people to behave as murderers. We do sometimes wonder at the kind of people that used to live in that era who didn't feel any compassion and regret at the sight of millions of people dying for want of food.

That cruel class of humans exists in every generation. And if you don't believe us, just read the analysis below.

More than 7 million people in Malawi are faced with a spectre of famine. Not because of shortage of food, but because the World Bank/IMF had forced the Malawi government to sell 28,000 tonnes of maize to Kenya, to earn dollars to repay its loan commitment. There can be nothing more shameful and inhuman than this.
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WORLD BANK/IMF FORCES A FAMINE ON MALAWI

http://www.debtchannel.org/views/opinion/

By: Ann Pettifor
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[Q U O T E    O F    T H E    A  R  T  I  C L E]
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"President Muluzi said the IMF and the World Bank "insisted that, since Malawi had a surplus and the (government's) National Food Reserve Agency had this huge loan, they had to sell the maize to repay the commercial banks.""
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Since the ending of the Jubilee 2000 campaign, activists have been encouraged to divert their energies into other campaigns - around trade, aid and Aids. Western development and finance ministers and IMF staff have breathed a sigh of relief, pleased that the "crude analysis" of the debt campaigners has been replaced by debates about trade.

It is of course vital to highlight the double standards of western governments; and to pressurise these governments to reverse trade injustice, increase aid and fight Aids. But it takes a tragedy like the one unfolding in Malawi to remind us that debt remains the very lynchpin of global economic injustice.

How so, you may well ask. Let me explain. Just three months before the food crisis hit, Malawi was encouraged by the World Bank "to keep foreign exchange instead of storing grain" (see Action Aid's report on this). Why? Because foreign exchange is needed to repay debts. Creditors will not accept debt repayments in Malawian Kwachas. Or indeed in bags of maize. Only "greenbacks" or other hard currencies will do.

One of Malawi's key commercial creditors needed to have their debt repaid, according to Malawi's president, who in a BBC interview said the government "had been forced (to sell maize) in order to repay commercial loans taken out to buy surplus maize in previous years". President Muluzi said the IMF and the World Bank "insisted that, since Malawi had a surplus and the (government's) National Food Reserve Agency had this huge loan, they had to sell the maize to repay the commercial banks."

So Malawi duly sold 28,000 tonnes of maize to Kenya. Under pressure from her creditors, led by the World Bank and the IMF, Malawi exchanged maize -- her people's staple diet -- for dollars.

Today, according to Action Aid, 7 million of the total population of 11 million "are severely short of food".

But it's worse than that. Because Malawi is indebted, her economic policies are effectively determined by her creditors -- represented in Malawi by the IMF. So foreign creditors have set a target for the budget -- and Malawi exceeded this target, and spent more than the IMF deemed acceptable. As a result the IMF has withheld $47 million in aid. The UK, like other western donors, acting on advice from IMF staff, have also withheld aid. In the case of the UK $109 million, has been withheld, pending IMF approval of the national budget.

To add to the humiliation of the Malawian government, the IMF has also suspended the debt service relief for which she was only recently deemed eligible -- because she is "off track."

But it's worse even than that. Under the economic programme imposed by her creditors, Malawi has removed all farming and food subsidies and allowed the market to determine demand and supply for food. This has reduced support for farmers, and put food prices out of the reach of millions of poor people. As Oxfam points out in Chapter 4 of its new report, "Rigged Rules and Double Standards" the IMF's major shareholders have not withheld support from their farmers; and while the IMF has imposed liberalisation on Malawi, the US and EU have increased protection of their farmers.

Malawi can't fight back. She is far too indebted.

Instead she faces acute suffering and humiliation. And to add insult to injury, it is just possible, as Oxfam argues, that her creditors will use the opportunity of her weakness to "dispose of surpluses and create food dependency". The following remark by former US Secretary for Agriculture, Dan Glickman, illustrates well the US attitude to countries suffering famine and in need of food aid:

"Humanitarian and national self interest both can be served by well-designed foreign assistance programmes. Food aid has not only met emergency food needs, but has also been a useful market development tool". (OXFAM report: "Rigged Rules and Double Standards: Trade Globalisation and the Fight Against Poverty" by Kevin Watkins and Penny Fowler)

Without the debt, it is possible that the people of Malawi could, democratically, set priorities, or affect the priorities of their government. One of these could be to protect Malawian farmers and markets from those who would prey upon their weakness. Malawi might have been able to do what voters in the world's biggest debtor nation - the US - can do: put pressure on their government to subsidise food producers, and protect them from unfair competition from competing producers.

It is possible that under pressure from the people to ensure food security, Malawi would not have sold those maize reserves.

She might too be able to model her economy on western economies - where in a recession, governments tend to spend more, as a way of stimulating the economy. Spending more on the health of her people would do for Malawi what it has done for richer economies: increase productivity and stimulate growth.

None of this is possible - so long as Malawi is in hock to her foreign creditors, and subject to their economic interests, programmes and priorities. Without cutting the noose of debt, Malawi will not be able to challenge the rigged rules and double standards of IMF creditors; and she will not be free to spend money to improve the health of her people.

If we care about those 7 million people in Malawi, we should be doing all we can to end the famine and provide food. But we should also be campaigning for greater economic justice for poor country debtors. This means liberating them from the structural injustice of international debt, where creditors play the role of policeman, lawyer, plaintiff, judge and jury.
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Ann Pettifor is the Programme Director at the Centre for International
Finance and Governance and heads Jubilee Research at the New Economics Foundation.

(c) DebtChannel.org, 2002

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'Asked if people were going "too far" by saying that gene-altered humanitarian exports were part of a strategy to spread the crops around the world, Harl [Neil E. Harl, a professor of economics at Iowa State University] said: "I'm not sure that is going too far." ' - Starved for Food, Zimbabwe Rejects U.S. Biotech Corn, Washington Post, July 31, 2002

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