The IMF, Guinea & France
It’s fascinating when ordinary, highly unlikely people or events become game-changers on a global scale. I covered international trade for The Journal of Commerce newspaper from the mid-1980s to the late 1990s, when the International Monetary Fund solidified its position as the most powerful institution in global trade and finance and changed the trajectory of economic development for more than a billion people.
The IMF came out of the ashes of the Great Depression of the 1930s and World War II, with a mission to stabilize the system of exchange rates and international payments under which countries did business with one another ending the behavior that led to the Depression and war. In the 1980s and 1990s, IMF “structural adjustment” prescriptions, designed to keep developing countries from defaulting on their debts to industrialized nations, devastated the economies of the developing countries. Elimination of food subsidies for the poor; reduced spending on health; education and retirement benefits; currency devaluation; reduced protection of domestic industries; reduction or removal of regulations and standards so as not to encumber multinational investors; sell-off of national assets; low wages — all were part of the prescriptions in exchange for loans and debt relief. Whereas from 1960 to 1980 sub-Saharan Africa’s GDP per capita grew by 36 percent, it fell by 15 percent between 1980 and 2000 under structural adjustment austerity. “We need the World Bank, the IMF, all the big foundations and all the governments to admit that, for thirty years, we all blew it, including me when I was president,” President Bill Clinton admitted in October 2008, during a speech at United Nations World Food Day.
Thirteen years after the birth of the IMF, Guinea, a tiny mineral-laden country in West Africa, did the unthinkable. In a 1958 referendum sponsored by the French government, it voted for immediate and unconditional independence from France, becoming the only one of France’s colonies in sub-Saharan Africa to reject membership in the French Community. The move — enshrined in the statement “We prefer dignity in poverty to affluence in slavery” by Guinea’s then-leader Ahmed Sekou Toure — unleashed a spate of vindictiveness on the part of France that left Guinea in tatters. Not only did France summarily sever all political and economic ties with the country, but, upon their withdrawal en masse, the French also destroyed infrastructure and military equipment and walked away with massive amounts of capital, office files, lightbulbs, telephones, and even the telephone books.
Guinea joined the IMF in 1963 and got its first dose of structural adjustment medicine in 1991.
Late in the day on Wednesday, May 18, 2011, from a cell in Rikers Island, a New York City prison complex with a reputation as one of the bleakest in the United States, Dominique Strauss-Kahn, 62, resigned as the 10th managing director of the IMF following charges that he sexually assaulted, forcibly confined and attempted to rape a housekeeper in his suite at Sofitel New York Hotel. His resignation has heightened calls for a non-European to be placed at the helm of the IMF. Economist, lawyer, former French finance minister, economics professor at the Paris Institute for Political Studies and an influential member of the French Socialist Party, the dashing “DSK” was expected to mount a formidable bid for the French presidency in 2012. His political career and his role at the IMF are now in tatters and France’s political landscape has changed drastically.
Strauss-Kahn’s accuser: a 32-year-old immigrant from Guinea.