For many activists within Sudan and its diaspora, the IMF is a neoliberal powerhouse, implementing exploitative policies that extract land, resources and wealth from developing countries in exchange for money that goes to the governing elite.
Many in the international community see the International Monetary Fund as a necessary entity that provides countries with much-needed aid. However, for many activists within Sudan and its diaspora, the IMF is a neoliberal powerhouse, implementing exploitative policies that extract land, resources and wealth from developing countries in exchange for money that goes to the governing elite. On February 15, 2014, a week of talks between the International Monetary Fund’s deputy director of Middle East and Africa and government officials in Sudan ended. The finance minister, petroleum minister and governor of Central Bank discussed debt relief and economic reforms. The IMF promised “to provide the requested technical assistance and support to the productive sectors” to encourage investment, declaring that the success of the program would directly “tackle Sudan’s external debt issue.”
Sudanese activist Muzan Alneel describes the IMF policies as a “systematic and well-studied approach to keep Sudan as well as other developing countries from rising to their potentials.” For the past few years, the IMF has been pushing Sudan to discontinue its fuel subsidies. When the Sudan government did that last September, protests that left over 200 civilians dead spread exponentially. Muhammad Osman, who participated in those protests, says, “the more the IMF and Sudan treat democratic and economic reforms as separate agendas, the more we are likely to witness a greater civil unrest in the near future.”
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Protesting Austerity Measures and Fuel Subsidy Cuts
On June 16, 2012, hundreds of students met on the streets in Sudan to protest austerity measures that President Omar al-Bashir would officially announce at the end of the week. The protests continued for weeks, and by the beginning of July, the anti-austerity protests would include over a thousand people in the capital, Khartoum. Citizens – angry over the fuel subsidy cuts and rising inflation – would call for Bashir to leave the presidency. Clashes ensued. Tear gas was shot into large crowds. The economic hardships were clear: reports say that food and fuel prices doubled after the June cuts.
On July 25, 2012, almost 20 days after the mass protest, the IMF urged “Sudan [to] press ahead with reforms to ensure its economic stability” and “welcomed the country’s recent moves including scaling back its subsidies and devaluing its currency.” Ignoring the effect of cuts on the majority of the population, they wrote “the mission welcomes the difficult but important efforts made by the Sudanese authorities in recent weeks.”
Only three months later, on November 5, 2012, the IMF urged the government to cut fuel subsidies further, reporting “the removal [of fuel subsidies] would deliver substantial gains to Sudan.” The IMF called the subsidies “inefficient and inequitable” and “fiscally costly.” Later on, when the Fund discussed Sudan’s debt situations and encouraged them to “continue making payments to the Fund … and to increase them as their payment capacity improves,” it became clear where the Fund would rather have government spending go.
The publication asserted that “subsidies are a passive approach to social protection and do not induce poor households to pull themselves out of poverty through their own efforts.” This bootstrap ideology ignores the exploited working-poor experience in Sudan – most often in industries and by companies cheered on by the IMF. The IMF, acknowledging the government’s concern about unrest, reassured it with the claim that “most subsidy reforms occur without major civil unrest.” It was an assertion that did not take into account the history or current microeconomic situation in Sudan and proved incorrect in Sudan’s case a year later.
On September 17, 2013, President Bashir made a speech in which he announced the complete removal of fuel subsidies. When the subsidies were lifted a week later, reports noted that both food and gas prices nearly doubled. Alneel wrote, “We are talking about families with no savings whatsoever, living on daily salaries, who have to adapt with a rise in prices that caused, for example, the same amount of onion that used to be 3 pounds in the beginning of the year to reach over 30 pounds now.” That day, the streets of Khartoum swelled with thousands of protesters – the largest protests of austerity measures in recent years. A protester who spoke to VICE said they were “starving” and “didn’t have anything to eat that morning.” Reports from Kharthoum said gas stations and other signs of wealth were going up in flames.
As with previous protests, Twitter users pushed the hashtag #SudanRevolts to raise awareness. After an internet blackout in Sudan, there were reports and YouTube videos of security forces shooting live ammunition at protesters. Photographs spread on Twitter showing 20-year-olds soaked in blood. The deadly crackdown by the government only increased the size and number of protests. On September 29, Sudan’s Doctors Syndicate said 210 protesters had been killed, most of the bullets taken out of the chest and head. Another 700 protesters and activists were arrested; many taken from their homes and detained in unknown locations.
Protesters called for the ouster of President Bashir and were keenly aware of the IMF’s involvement in the subsidy cuts. As Alneel says, “the NCP is strictly following [the IMF]. One cannot genuinely oppose the NCP’s economic policies, yet somehow consider the IMF’s acceptable.” Two weeks after the Doctors Syndicate report, the IMF issued a press release commending Sudan for bravely removing fuel subsidies. The release “welcomed progress made by Sudan, including the recent implementation of difficult reform measures,” and “called on Sudan to maintain the reform momentum [and] continue to the technical work.” Girifna, a Sudanese Youth Movement that had a huge internet presence during the protests, issued a response to the release, demanding the IMF not “subsidize Sudan genocide.” The response accused the meeting of “totally ignoring the current political environment as well as the long-term economic and political governance crisis resulting in the NCP’s rule.”
Subsidy Cuts’ Effect on Citizens and Industries
Both the IMF and government refused to acknowledge the effect the subsidy elimination would have on both average citizens and many of Sudan’s important industries.
Both the IMF and government refused to acknowledge the effect the subsidy elimination would have on both average citizens and many of Sudan’s important industries. The subsidy eliminations affect all moveable commodities and the consequent rise in food costs means most families are able to eat only one meal a day, according to Oxfam’s Humanitarian Coordinator. To put Alneel’s example in perspective, consider the cost of a food item rising from 3 pounds to 30 pounds (0.50 to 5 USD) in one year where the average person makes approximately 26.25 USD a week, and where 44 percent live on less than two dollars a day. Alneel says the subsidy cuts and raised cost of living is “rapidly pushing more and more of the middle class into [poverty].”
In January 2014, a Food Security Outlook report described the significant food deficits on a household level were “likely due to poor harvest, conflict and rising prices.” In the report, they projected the number of people who are food insecure in Sudan to reach four million by April. With unemployment rising and the government declaring it plans to cut more subsidies, some analysts anticipate another uprising.
The subsidy removal also affects livelihoods in one of Sudan’s most important industries. The agriculture industry, heavily fuel dependent, employs 80 percent of Sudan’s population. Subsidy removals increase the costs of moving goods and using machinery, most of which need fuel to run (e.g., tractors). As Magdi El Gizouli, Sudanese analyst and fellow at Rift Institute explains, agricultural producers in Sudan will “need a greater capital of investment for productions and they will need much more money to transport their goods.” The effect on the domestic market will arise in “any production inside the country becom[ing] uncompetitive compared to what you can import into Sudan. So imported goods will have a greater advantage than [the] local production.” Ultimately, the removal of fuel subsidies will push out the smaller, local producer and result in the loss of livelihoods.
Land Grabbing and More Misconceived IMF Recommendations
Although, occasionally the Fund may express concern about average citizens in its documents, its recommended action-steps always focus on outside actors at the expense of both the smaller local producer and the worker.
The fuel subsidy removal isn’t the only IMF “recommendation” that pushes the local producer out of the market. Although, occasionally the Fund may express concern about average citizens in its documents, its recommended action-steps always focus on outside actors at the expense of both the smaller local producer and the worker. The IMF is essentially pushing Sudan into “a global capitalist system,” says El Gizouli, “but on very disadvantaged terms. Terms that do little to benefit the domestic producer.”
The IMF’s recommendations to make Sudan suitable for foreign investments usually mean facilitating land grabs away from Sudanese farmers into the hands of foreign oligarchs.
The IMF’s recommendations to make Sudan suitable for foreign investments usually mean facilitating land grabs away from Sudanese farmers into the hands of foreign oligarchs by “lifting judiciary’s oversight over land sales, reforming land relations, and in allowing foreign investors to grab as much land as possible,” according to El Gizouli.
Sudan is one of the top five African countries hardest hit by land grabs, according to the UN Food and Agriculture Organization. Major land acquisitions include one million acres transferred into the hands of American firms and two billion acres transferred into the hands of Saudi Arabian firms. Since 80 percent of the population works in the agricultural industry, land grabs affect a majority and are a hotbed for exploitation. El Gizouli sees land grabs as “expropriation.” He explains, “Land is being commodified with agreement that it just falls to the person with the largest capital. And people are buying and prancing off. Investors come into Sudan and spending billions in payment to the government and then acquiring land and just fencing it off. And then waiting for a better sale possibly or better conditions or some capital investment to produce.”
To understand the connection between the IMF recommendations and the government’s facilitation of land grabs, consider the government’s reasoning for doing so. In almost every document since South Sudan’s secession, the IMF has expressed the need for Sudan’s government to encourage foreign investment in agriculture now that they have lost major oil exports. The government, when asked how it will benefit from giving away two million acres to a notorious Saudi Arabian investor in 2012, declared it believed the “agricultural exports will make up somewhat for the petroleum resources lost to Khartoum with the creation of [South Sudan].” Whether they actually will has yet to be proved and is unlikely. It is even more unlikely that the Sudanese population will see any revenue from it.
Both popular protests and civil conflicts have been waged from the government trying to acquire land to then sell or give to foreign investors. In April 2011, over 800 farmers protested the government seizure of land in Gezira, the state known as “Sudan’s agricultural heartland.” Back again in April 2013, protesters in Khartoum carried out civil disobedience as “they blocked a major road in protest of a sell-off of farmland to Arabian investors,” according to Reuters. And on May 3 of the same year, protesters demanded the government grant them land. On November 2013, two months after the latest fuel subsidy protests, members of Duk County accused county and national politicians of inciting neighboring tribes to grab their land. The resistance is more diverse than just protests. Conflict resulted when the government attempted to seize North Darfur’s Jebel Amir gold mines by arming the Abbala militias, leaving more than 2,000 people displaced.
Land grabs will continue. On February 3, 2014, the government announced the creation of a new national land authority. Minister of Investment Mustafa Osman Ismail acknowledged the entity as “part of the government’s efforts to protect investors and investment projects,” citing the most significant obstacle to investment being “disputes over land ownership.” Those opposing fuel subsidy cuts and the price of living in Khartoum can only grow stronger if they join forces with those protesting against land grabs. With a new authority that will help legalize land grabbing and provide police to crush dissent, such a coalition may be necessary for survival.
Why Is the Sudan Government Following the IMF Framework Word for Word?
The short answer as to why the Sudan government is following the IMF definitively is because it’s broke. The government of Sudan lost most of its future oil revenue and is currently drowning in debt, which reached $47 billion last year. There are many reasons why citizens in Sudan are fed up with the current regime: countless wars, brutal silencing of the press and civil dissent, underspending on education and health care and a complete lack of democratic reforms. The government’s obedience to the IMF is one of many issues, but some see these issues as intertwined.
“The Sudanese government wants to avoid conducting the democratic reforms that could have saved the country enough money to close the budget gap.”
Researcher and journalist Muhammad Osman says the IMF and Sudan’s pairing is a “convenience [that] cuts both ways … the IMF is only interested in spreading free-market policies around the globe. It has no qualms about whether these policies [are] implemented in the context of a genuine democratic environment or a military dictatorship” and “the Sudanese government wants to avoid conducting the democratic reforms that could have saved the country enough money to close the budget gap.” Instead, in the hope of getting debt relief and qualifying for new loans, the Ministry of Finance is following everything the IMF dictates. It is fair to say that the government is in its current economic position for three reasons: its mismanagement of the economy, bad recommendations and encouragement from the IMF and IBRD, and Sudan’s disadvantaged position when receiving loans from developed countries.
A closer look at Sudan’s debt is revelatory. The majority of Sudan’s loans included a 10 percent or larger compound interest rate. Now, around 80 percent of Sudan’s debt (37.6 billion USD) has been incurred through interest or repayment arrears. Although detailed specifics on the loans are not readily available, most of the loans during the period when the debt was initially incurred were in the form of export credits, wherein Western countries would export a certain number of goods for large development projects. Export credit loans have received well-deserved criticism in recent years for their lack of regulation and unproven effectiveness for the country receiving the loan, despite their effectiveness in racking up host country debt. Usually “driven by purely commercial interests on the part of Northern governments,” the projects’ failures and negative effects on the host country’s population or environment aren’t taken into account. However, what is accounted for are the interest payments, usually around 10 percent or higher, and the short turnaround in which host countries have to pay back. Years later, if the creditor country cancels the debts, the amount of the debt canceled is taken out of the Western country’s aid commitment, redistributing wealth from developing countries back to Western countries (most of the latter of which were once colonized by the former).
Norway is the only country that has admitted to the exploitation consistent in export credit loans. In what many call co-creditor responsibility, Norway noted that “these projects proved to be economically unsustainable, so that government guarantees were triggered and the Norwegian Government became creditor … it is now generally agreed that the Ship Export Campaign was a development failure. As creditor, Norway shares part of the responsibility for the resulting debts.” When Norway admitted this responsibility in June 2006, Sudan held 129.2 million USD of Norway’s ship export debt.
Osman accuses the IMF of “exploit[ing] the debt situation of third world countries, especially the ones struggling with relief efforts, to bring them to adopt free-market policies by promising them qualification for debt relief.”
Osman accuses the IMF of “exploit[ing] the debt situation of third world countries, especially the ones struggling with relief efforts, to bring them to adopt free-market policies by promising them qualification for debt relief.” The IMF’s history in Sudan backs up his claim. All of Sudan’s debt comes from loans in the 1970-80s that were used to fund large-scale development projects expected to bring a large number of jobs or revenue, and for the most part failed. According to economist Dirk Hansohm, The IMF “had encouraged the Sudan actively in pursuing the described capital-intensive and import-intensive development path [and] were not much faster than the national government to recognize or admit the extent of the adverse effects.” Afterwards, the IMF attributed the failures to Sudan restricting trade, government involvement in private sectors, and “over” financing of public goods, before producing a stabilization program for Sudan based on the theory that free markets will bring a sustainable level of production and employment. It ultimately proposed changes that deregulated markets and allowed large farm units, big traders and investors to accrue massive profits at the expense of the original farmers and local producers. The program gave Western corporations avenues to extract resources, exploit human labor and engage in capital flight. This wealth extortion and restoring of power structure led to the persistence of pervasive poverty. Because of these structural adjustment programs that the IMF spread throughout Sub-Saharan Africa, the number of people living in basic poverty almost doubled.
Because of these structural adjustment programs that the IMF spread throughout Sub-Saharan Africa, the number of people living in basic poverty almost doubled.
While negotiating debt relief, Sudan remains in a disadvantaged position. At the Paris Club, “the current system of debt negotiations allows the creditors to set the rules of the game, including … deciding the amounts, terms and conditions of debt restructuring.” Sudan has continued to make a point that they are qualified for the IMF’s Heavily Indebted-Poor Countries Initiative (HIPC), saying they’ve made necessary reforms and have a structural adjustment program (both described above). As long as Sudan’s government continues to appeal to the IMF and similar institutions, the country will be stricken with austerity measures that will maintain an economy gripped with exploitation and high income inequality.
Neoliberal, Neocolonialism or Just Capitalism?
“The colonizers may no longer send their armies – mostly – but they send their consultants and recommendations controlling the economic policies of developing countries and keeping them always at their debt and service.”
Girifna has called the IMF’s involvement in Sudan’s economy “a new form of neocolonialism or imperialism.” Alneel agrees, saying, “The colonizers may no longer send their armies – mostly – but they send their consultants and recommendations controlling the economic policies of developing countries and keeping them always at their debt and service.” Osman, who doesn’t see the IMF in any better light than Alneel, prefers the term neoliberalism, calling it an “agent of a political ideology based on free or unregulated markets.”
But El Gizouli says these political descriptors separate it from its economic counterpart, when they really go hand in hand: “It’s not just the political expression of dominance, be it colonial or imperial, but it’s the economy that gives this credits, that sustains this pattern of dominance. As long as you have that economy, you have that dominance.” What word would he use? “It’s just capitalism, really.”