BUILDING A NEW WORLD
WITHOUT the World Bank and IMF
By Achmad Ya’kub
Deputy of Campaign and Policy Studies
Federasi Serikat Petani Indonesia (FSPI)*
email:
The World economic system change in post 2nd world war causes a shift in world’s political and economical elements. The transnational actors such as international organization and multinational corporations are expanding. They start to take big parts in the field of world politic and economy. International organizations such as the World Bank (WB), the International Monetary Fund (IMF) and the World Trade Organization (WTO) become the new regime of global politics and economy, which is signified by many countries ratifying roles forced by these institutions. These rules are a vehicle of the international institutions to penetrate and even to control county. They also control role in multilateral forum.
In earlier, these organizations began to push a universal model in global economy development and growth through neo-liberal creed, which focuses on the sake of economic growth. However, that creed is actually an exploitation-based-development paradigm. As the results, the world economic system becomes unequal. Of course, it has to be criticized. The statistics discovers that the G8 countries group (the world’s richest countries) represents 85% of the world GNP and control 75% of the world trading. Meanwhile, the number of people live under the $1/day standard of poverty continually increases all over the world.
This exploitation occurs in several ways, from debt to trade. For debt way, the WB and IMF are not only as creditors, but further controllers of monetary and even government policy of debtor country, while the WTO controls global trade. It has been widely known that southern countries such as those in Africa, Latin America and Asia are debtor countries. By tight controlling government policy and regulation as requirement from WB and IMF. It causes many problems for indigenous people’s living around the world.
In the other words, debt becomes new face of colonialism over poor and developing countries. IMF’s programs such as the Structural Adjustment Program (SAP) has those countries to tighten up their national budget—a threat for indigenous people’s constitutional rights. The other recipes also bring negative affects toward people and environment, like radical deregulations, trade and tariff liberalizations, and privatization. In the other hand, assistances and ‘developing’ programs of the WB are always in compliance with IMF’s programs. For the sake of ‘development’, over 40.000 contracts are handed down to private corporations related to the implementation of the loans. Behind the scene, an enormous nature resource-suction is happening and ploy over 70 poor and developing countries in a never-ending cycle, the debt trap.
For instance, Indonesian peasants have been in misery because of the WB’s and IMF’s intervention in agrarian regulations, which oppress them; The WB project of development in Thailand, Sri Lanka, and Bangladesh does not affect for common wealth, yet oppresses them. The Philippines are still debtor, such a heavy burden for their economic lives.
Ecological Debts
The term of ecological debt is raised in the 1992 Rio conference related with the declining of ozone layer. The concept mainly focuses over the environmental damages. In advance, it starts to grow in the context of monetary, development and trade brought by neoliberalism policy. Therefore, the Rio de Janeiro World Conference also concerned on the environment damage and global nature changes. Most of human and environment degradations are contributed by the unsustainable development pattern by the WB and IMF—which mentioned earlier. It also affects the exploitation process, thus the aspects of preservation and people’s livelihoods are neglected. Recently, many people sue that the ecological debts must be paid by the oppressor—mainly the WB, IMF, those modern and transnational countries.
Regarding with the ecological debt, the debt, in Indonesian case, is believed as the problem source of the unjust natural resources distribution mostly happens in poor countries and developing countries. In agrarian context, it certainly eternalizes the unbalanced structure of agrarian resources, particularly lands. Following is Graphic 1 showing developing of foreign debt of Indonesia
Graphic 1: Indonesian foreign debt commitment (recapitulation), edited from Koalisi Anti Utang
After all these years, within the debt and the resource-suction process, exploitation and
development often become disadvantageous for people in debtor countries. In this case, the multinational and transnational companies joined in the WB development contract and grasped excessive profit from the project and capital cycle. Bechtel, Exxon, Halliburton, Thames, Monsanto, and other companies are extensively free to exploit and destroy the environment in poor and developing countries.
Colonization by debt since 1990s caused environmental degradation, that we can measure up with the fact that there are a lot of exploitations—both in natural resources and agriculture sector. If we see the degradation in natural resources and agrarian sector more focused from environmental view, actually what happened in grass-root level—people’s suffering—socially and culturally are worse than we can imagine.
In addition, land—which is peasants’ main agrarian resource—is deprived of them for dam construction projects such in Kedungombo. The infrastructures development facilitated by these international institutions convert people’s land into airports, roads, highways, etc. Thousands hectares of lands in Indonesia are lost due to these operations, and peasants lost their livings over and over again. Water is controlled by private companies, mainly in rural areas and the water-springs occupied for bottled mineral water companies. Water resource becomes limited, and peasants back to live in misery.
Crime against humanity by World Bank and the IMF
Debt problems and oppression over peasants, in this case, are some of the long-term plans of LAP I (Land Administration Project I) project, which has begun in 1995. That is a collaboration of the WB and other organizations such as IMF and ADB in a huge project called Country Assistance Strategy for Indonesia proposed by The WB Director Council in April 1994.
This project was finally realized and originally planned for five main objectives, such as: (1) continuing economic growth by macro-economic stability, (2) supporting the expansion and competition between private sectors, (3) fostering poverty eradication, (4) increasing public sector management, and (5) supporting environmental management into beneficial sectors. The main objective is to accelerate the process of land certification, as this main agenda will significantly contribute the private sector objectives through: (a) equitable and efficient basic preparation for land market, (b) increase in private investments by decreasing the risks of capital spending, (c) mobility in monetary resources by making the lands as collaterals (credit guarantees), and (d) arrangement for opportunity of related industries to grow, particularly in surveys and mappings.
Moreover, it is significantly said that the main objective of land administration project began in 1995 is for the rapid, efficient, and equitable-like land markets development and to reduce social conflicts over lands by acceleration of land certification process. This project is still continued until the year 2000, and will be continued with the Land Administration Project II in 2001 not longer than six years in period. But since the early 2004, the government and the WB have been preparing a new-advance project called Land Management Policy Reform Project.
The WB projects definitely change the land into pure commodity. The equitable and efficient land market realization by oppression and land certification cause agrarian lands -which were mostly fertile and productive- functionally changed into industrial, real-estate, commerce area, etc. Land conversion objects in this era mostly are of indigenous people’s, traditional, and collective-farming land (see, Graphic 2 below).
Graphic 2: land conversion since 1994
Land conversion has cornered peasants, and then farmland becomes smaller and smaller—even many lose their land. The case is quite complex, and it happened to trigger conflict between peasants and investors (in Indonesian case it could be government or private sector). Investors keep forcing to take over the land from peasants. Almost 2000 agrarian cases recorded in Indonesia since 1970-2006. If we can count the social cost of this marginalization process, it could be so huge—from lost of livelihoods to death victims.
Total cases / Missing / Arrested / Injured or refuging / Dead1.753 cases / 40 people / 76 people / 7034 people / 11 people
Table 1 : Agrarian case and peasants’ victim from Federasi Serikat Petani Indonesia (FSPI) to year 2006, data from FSPI and Konsorsium Pembaruan Agraria (KPA)
Such abolition of land as the main agrarian resource raises a chain reaction for Indonesian people’s livelihood—particularly agriculture sector. It has been well known that the majority of Indonesian farmers are small farmers and peasants, with the land owning below 0.5 hectares (see Graphic 3 & 4). This condition has been stagnant and even worse since a long time ago. Indonesian independence in 1945 did not make any difference in land distribution for farmers. Even when Indonesian Basic Agrarian Law 1960—which rules land redistribution and the implementation of agrarian reformation for farmers’ benefit—was established, land regulation and implementation of land reform has not been legalized. In the other hand, loans and intervention by creditor organizations like the WB and the IMF make the condition even worse.
In fact, lands in Indonesia relatively very suitable for agrarian sector—and Indonesia have already been famous as an agrarian country. About 46% of the working-ages formally registered as farmers, meanwhile the numbers of Indonesian farmers is about 60% of the total population—mostly live in rural areas. But the oppression from the WB and the IMF, particularly since the 1990s, makes Indonesian farmers more oppressed, loosing lands, jobs, and economically oppressed by frenzy consumption and production costs. Nevertheless, most of Indonesian farmers stay poor and oppressed. The number rapidly increases as the IMF debts and the WB ‘development’ oppression projects continue.
Graphic 3: the number of small farmers and peasants in Indonesia
Graphic 4: the average of farmers’ land owning in Indonesia
We all are familiar of the fact that IMF’s recipes are (1) liberalization, (2) privatization, and (3) government’s policy deregulation. Followed by tight money policy, this generic recipe has made Indonesian people fall into deeper marginalization. Table 2 shows Structural adjustment loan from IMF, World Bank and ADB.
In order to pay US$ 43 billion bail-out in 1997, Indonesia have to re-establish balance of payment and implement policy reform, especially in public sector. This thing is interrelated somehow to subsidy cut, privatization of state-owned corporation and expansion of private sector. Some of the IMF’s generic recipe and World Bank are enclosed in documents called Letter of Intent (LoI), and are obligatory to be implemented by government of Indonesia.
Amount / Matters / CreditorUS$ 1 billion / Policy reform support loan / World Bank
US$ 500 million / Policy reform support loan II / World Bank
US$ 600 million / Social safety net adjustment loan (SSNAL) / World Bank
US$ 300 million / Water resources structural adjustment loan (WATSAL) / World Bank
US$ 50 million / Land administration project I / World Bank
US$ 60 million / Land administration project II / World Bank
US$ 64 million / Land management policy and development project (LMPDP) / World Bank
US$ 43 billion / Bulog’s controlling task, reduction of agricultural commodity tariffs, decision to reduce rice import tariff to 0%, state-owned corporation financial information reform, intellectual property rights / IMF
US$ 400 million / Power sector restructuring program / ADB
US$ 300 million / Health & nutrition sector development program / ADB
US$ 320 million / Community & loan government support sector development program / ADB
US$ 300 million / Deregulation & small and medium enterprise support program / ADB
US$ 200 million / Corporate governance of state-owned companies support program / ADB
Table 2: Structural adjustment loan from IMF, World Bank and ADB (edited from Khudori, Neoliberalisme Menumpas Petani, 2004 and other sources)
From the package believed as panacea to the multi-dimensional crisis that occurred in Indonesia in 1997, fact said that after the program ended, there is almost no significant improvement to Indonesian political economy—especially in agriculture sector. In the other hand, what happened is unlikely the opposite, around 22 million Indonesian people—especially those who live in rural area—suffer more because implementation of the program.
IMF’s LoI in 1997 have caused Indonesia’s agriculture sector declined drastically. The fact is until latter, Indonesia have to import rice to fulfill yearly needs of more than 220 million people. The amount is approximately 2 Million Metric Ton (MMT) per year (biggest rice importer in the world). This policy ruled until 2004—and then Indonesia restrictedly impose ban on rice import because escalating-pressure from peasants organization. For sugar, the amount imported around 1.5 MMT (second biggest in the world) per year, or covering 40% national consumption. Then Indonesia also import soybean approximately 1.3 MMT per year (world’s biggest) or covering 45% national consumption. In other hand, import volume for corn is around 1 MMT, peanuts around 800.000 ton, and green beans around 300.000 ton. Meanwhile, do not forget that Indonesia also keep importing fruits, vegetables and others such as apple, orange, pear, potato, onion, etc.
Import tariff was applied 0% (free) in year 1998 according to IMF’s LoI. Later, the policy has been forced because reduction on Bulog’s task (Bulog is the institution responsible to rice logistical and distribution in Indonesia). Before the IMF, Bulog had the duty to serve people as the role imposed by Indonesian government as Public Service Obligation (PSO). But after the PSO is being wiped out in 1998, the damaging impacts are clear: production in grass-root level is distorted, rice import becomes frequent, dependency to outside product, domestic market and price are destroyed, and peasants lose their livelihoods.
YearProduction (1000 tons)Import (1000 tons)
199532.3343.104
199633.2161.090
199731.206406
199831.1186.077
199932.1484.183
200032.0401.512
200131.8911.384
200232.1303.707
Average:
1995-199732.2521.503
1998-200231.8653.373
Source:
Rice production from BPS (Statistical Bureau)
Rice import from The Rice Report
Table: Rice import in Indonesia
From data mentioned above, we can see that after Indonesia’s open market policy after the order of IMF, rice import continues to increase rapidly, from period 1995-1997 only average of 1.5 MMT per year to around 3.3 MMT per year in period 1998-2002.
Peasants’ struggle and alternatives
It is clear with the facts mentioned above that IMF and World Bank have conducted a new form of imperialism. And murder, poverty, process of wiping people right in Indonesia is a form of crime against humanity (according to Rome Statute and Explanation of Article 9 Constitution of Indonesia No. 26/200 about Human Rights Court).
If we analyze more, the amount of debt payment is, in fact, bigger than budget for social service, or 6 times bigger than health budget, almost twice education budget, 11 times bigger than public facility and housing, and 33 times bigger than social insurance. World Bank and IMF’s project are also causing people’s suffering in agrarian sector for making land market and abandoning millions of peasants until they became landless, privatizing water resources, promoting environmental damage, and even losing people’s jobs and livelihoods. This happened because of almost 40% from national spending is allocated for only debt payment for debt institutions like World Bank and IMF.
To uphold people’s sovereignty, first of all we have to get World Bank and IMF out from people’s life. Because it is clear that these institutions have perpetuated poverty, violence, and silent genocide and people suffers because of the negative impacts. For this matter of fact, World Bank and IMF are the main actors of crime against humanity in the world.
Peasants also reject the exercise of neo-imperialism which have done by World Bank and IMF in the name of deregulation, privatization and liberalization in many sectors; such as in agrarian sector and rural life, labor, environment, education, health and other public services.
People also have to struggle to wipe out 100% debt in the third world countries without conditions, and reject new debt from institutions like World Bank and IMF.
The principals to build a new world without World Bank and IMF should better be global and solidarity struggle, and people have to exercise alternatives for development and financial. These practices have been done by people all around the world using local wisdom and on the basis of protection to the people.
Especially for peasants, the movement to implement genuine agrarian reform will be very effective against privatization and liberalization of agrarian resources by World Bank and IMF. As we know that agrarian resources in Indonesia are vital to most of the people. Food sovereignty as a genuine concept and as alternative policy from peasants should be implemented. This is, the matter of fact, in order to struggle against World Bank and IMF’s policy in food sector. Food sovereignty is now implemented in many countries, such as Cuba, Mali, Venezuela, and other countries.
Food and agriculture are fundamental to all people, in terms of both production and availability of sufficient quantities of safe and healthy food, and as foundations of healthy communities, cultures and environments. All of these are being undermined by the increasing emphasis on neo-liberal economic policies—in this case are the ones being forced by World Bank and IMF. Instead of securing food for the people of the world, systems are being promoted that prioritize export-oriented production, increase global hunger and malnutrition, and alienate millions from productive assets and resources such as land, water, fish, seeds, technology and know-how. Fundamental change to this global regime is urgently required.