A non-member of the IMF speaks
Source Louis Proyect
Date 01/05/17/23:51

>From Fidel Castro's address to the South Summit, April 12, 2000

If Cuba has successfully carried out education, health care, culture,
science, sports and other programs, which nobody in the world would
question, despite four decades of economic blockade, and revalued its
currency seven times in the last five years in relation to the US dollar,
it has been thanks to its privileged position as a non-member of the
International Monetary Fund.

A financial system that keeps forcibly immobilized such enormous resources,
badly needed by the countries to protect themselves from the instability
caused by that very system that makes the poor finance the wealthy, should
be removed.

The International Monetary Fund is the emblematic organization of the
existing monetary system and the United States enjoys veto power over its

As far as the latest financial crisis is concerned, the IMF showed a lack
of foresight and a clumsy handling of the situation. It imposed its
conditioning clauses that paralyzed the governments social development
policies thus creating serious domestic hazards and preventing access to
the necessary resources when they were most needed.

It is high time for the Third World to strongly demand the removal of an
institution that neither provides stability to the world economy nor works
to deliver preventive funds to the debtors to avoid their liquidity crises;
it rather protects and rescues the creditors.

Where is the rational and the ethic of an international monetary order
which allows a few technocrats, whose positions depend on the American
support, to design in Washington identical economic adjustment programs for
implementation in a wide variety of countries to cope with specific Third
World problems?

Who takes responsibility when the adjustment programs bring about social
chaos, thus paralyzing and destabilizing nations with large human and
natural resources, as was the case in Indonesia and Ecuador?

It is of crucial importance for the Third World to work for the removal of
that sinister institution, and the philosophy it sustains, to replace it
with an international finances regulating body that would operate on
democratic bases and where no one has a veto right. An institution that
would not defend only the wealthy creditors and impose interfering
conditions, but would allow the regulation of financial markets to arrest
unrestrained speculation.

A viable way to do this would be by establishing not a 0.1% tax on
speculative financial transactions as Mr.Tobin brilliantly proposed, but
rather a minimum 1% which would permit the creation of a large
indispensable fund -- in the excess of one trillion dollars every year-- to
promote a real, sustainable and comprehensible development in the Third World.

The underdeveloped nations external debt is amazing not only because it is
terribly high but also due to its outrageous mechanism of subjugation and
exploitation and the absurd formula offered by the developed countries to
cope with it. That debt already exceeds 2.5 trillion US dollars and in the
present decade it has been increasing more dangerously than in the 1970s. A
large part of that new debt can easily change hands in the secondary
markets; it is more dispersed now and more difficult to reschedule.

Once again I should repeat what we have been saying since 1985: the debt
has already been paid if note is taken of the way it was contracted, the
swift and arbitrary increase of the interest rates on the US dollar in the
previous decade and the decrease of the basic commodity prices, a
fundamental source of revenue for developing countries. The debt continues
to feed on itself in a vicious circle where money is borrowed to pay its

Today, it is clearer than ever that the debt is not an economic but a
political issue, therefore, it demands a political solution. It is
impossible to continue overlooking the fact that the solution to this
problem must basically come from those with resources and power, that is,
the wealthy countries.

The so-called Heavily Indebted Poor Countries Debt Reduction Initiative
exhibits a long name but poor results. It can only be described as a
ridiculous attempt at alleviating 8.3% of the South countries total debt;
but almost four years after its implementation only four countries among
the poorest 33 have reached the complicated process simply to condone the
negligible figure of 2.7 billion US dollars, which is 33% of what the
United States spends on cosmetics every year.

Today, the external debt is one of the greatest obstacles to development
and a bomb ready to blow up the foundations of the world economy at any
time during an economic crisis.

The resources needed for a solution that goes to the root of this problem
are not large when compared to the wealth and the expenses of the creditor
countries. Every year 800 billion US dollars are used to finance weapons
and troops, even after the cold war is over, while no less than 400 billion
go into narcotics and one additional billion into commercial publicity
which is as alienating as narcotics; this is to mention just three examples.

As we have said before, sincerely and realistically speaking the Third
World countries external debt is unpayable and uncollectable.

In the hands of the rich countries, world trade is already an instrument of
domination, which under neoliberal globalization will become an
increasingly useful element to perpetuate and sharpen inequalities as well
as a theater for strong disputes among developed countries for control over
the present and future markets.

The neoliberal discourse recommends commercial liberalization as the best
and only formula for efficiency and development. Accordingly, all nations
should remove protection instruments from their domestic markets while the
difference in development between countries, no matter how big, would not
justify separation from the only way offered without any possible
alternative. After hard negotiations in the WTO, the poorest countries have
been conceded a narrow time difference for full access to that nefarious

While neoliberalism keeps repeating its discourse on the opportunities
created by trade openings, the underdeveloped countries participation in
the world exports was lower in 1998 than in 1953, that is, forty-five years
ago. With an area of 3.2 million square miles, a population of 168 million
and 51.1 billion US dollars in exports during 1998, Brazil is exporting
less than The Netherlands with an area of 12,978 square miles, a population
of 15.7 million and exports for 198.7 billion that same year.

Trade liberalization has essentially consisted in the unilateral removal of
protection instruments by the South. Meanwhile, the developed nations have
failed to do the same to allow the Third World exports to enter their markets.

The wealthy nations have fostered liberalization in strategic sectors
associated to advanced technology where they enjoy enormous advantages that
the deregulated markets tend to augment. These are the classic cases of
services, information technology, biotechnology and telecommunications.

On the other hand, agriculture and textiles, two particularly significant
sectors for our countries, have not even been able to remove the
restrictions agreed upon during the Uruguay Round because they are not of
interest to developed countries.

In the OECD, the club of the wealthiest, the average tariff applied to
manufactured exports from underdeveloped countries is four times higher
than that applied to the club member countries. A real wall of non-tariff
barriers is thus raised that leaves out the South countries.

Meanwhile, in international trade a hypocritical ultra-liberal discourse
has gained ground that matches the selective protectionism imposed by the
North countries.

The basic commodities are still the weakest link in world trade. In the
case of 67 South countries such commodities account for no less than 50% of
their export revenues.

The neoliberal wave has wiped out the defense schemes contained in the
terms of reference for basic commodities. The supreme dictum of the
marketplace could not tolerate any distortion, therefore, the Basic
Commodities Agreements and other defense formulas designed to face unequal
exchange were abandoned. It is for this reason that today the purchasing
power of such commodities as sugar, cocoa, coffee and others is 20% of what
it used to be in 1960; consequently, they do not even cover the production

A special and differentiated treatment to poor countries has been
considered not as an elementary act of justice and a necessity that cannot
be ignored but as a temporary act of charity. Actually, such differential
treatment would not only recognize the enormous differences in development
that prevent the use of the same yardstick for the rich and the poor but
also a historically colonial past that demands compensation.

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