Johann Hari: Serial rape a shameful tradition for the IMF

International Monetary Fund Managing Director Dominique Strauss-Kahn. Photo / Getty Images

Opinion

Sometimes, the most revealing aspect of the shrieking babble of the 24/7 news agenda is the silence.

Often the most important facts are hiding beneath the noise, unmentioned and undiscussed.

So the fact that Dominique Strauss-Kahn, the former head of the International Monetary Fund (IMF), is facing trial for allegedly raping a hotel maid is, rightly, big news. But imagine a prominent figure was charged, not with raping a maid, but starving her to death, along with her children, her parents, and thousands of other people.

That is what the IMF has done to innocent people in the recent past. That is what it will do again, unless we transform it beyond all recognition. But that is left in the silence.

To understand this story, you have to reel back to the birth of the IMF. In 1944, the countries that were poised to win World War II gathered in a hotel in rural New Hampshire to divvy up the spoils. With a few honourable exceptions, like the great British economist John Maynard Keynes, the negotiators were determined to do one thing. They wanted to build a global financial system that ensured the money and resources of the planet were forever hoovered towards them.

They set up a series of institutions designed for that purpose, and so the IMF was delivered into the world.

The IMF's official job is to ensure poor countries don't fall into debt, and if they do, to lift them out with loans and economic expertise. It is presented as the poor world's best friend and guardian. But beyond the rhetoric, the IMF was designed to be dominated by a handful of rich countries - and, more specifically, by their bankers and financial speculators. The IMF works in their interests, every step of the way.

Let's look at how this plays out on the ground. In the 1990s, the small southern African country of Malawi was facing severe economic problems after enduring one of the worst HIV-Aids epidemics in the world and surviving a dictatorship. Malawi had to ask the IMF for help. If the fund had acted on its official role, it would have given loans and guided the country to develop in the same way that Britain and the United States and every other successful country had developed - by protecting its infant industries, subsidising farmers, and investing in the education and health of its people.

That's what an institution that was concerned with ordinary people, and accountable to them, would look like. But the IMF did something very different. It said it would provide loans to keep the country functioning only if Malawi agreed to the "structural adjustment" the IMF demanded.

It ordered Malawi to sell off almost everything the state owned, and to slash spending on the population. It demanded Malawi stop subsidising fertiliser, even though it was the only thing that made it possible for farmers - most of the population - to grow anything. It told the country to prioritise giving money to international bankers over giving money to the Malawian people.

So when in 2001 the IMF found out the Malawian Government had built up large stockpiles of grain in case there was a crop failure, it ordered them to sell it off to private companies at once. The IMF told Malawi to get its priorities straight by using the proceeds to pay off a loan from a large bank, which the fund had told it to take out in the first place, at a 56 per cent annual rate of interest. Malawi's President protested and said this was dangerous. But he had little choice. The grain was sold.

The banks were paid. The next year, the crops failed. The Malawian Government had almost nothing to hand out. The starving population was reduced to eating the bark off the trees, and any rats they could capture. The BBC described it as Malawi's "worst ever famine".

There had been a much worse crop failure in 1991-2, but there was no famine because then the Government had grain stocks to give out. At least 1000 innocent people starved to death. At the height of the starvation, the IMF suspended US$47 million ($57.6 million) in aid because the Government had "slowed" the market "reforms" that had led to the disaster.

ActionAid, the leading provider of help on the ground, conducted an autopsy into the famine. It concluded that the IMF "bears responsibility for the disaster".

Then, in the wreckage, Malawi did something poor countries are constantly instructed by Western governments to never do. It told the IMF to get out. Suddenly, free to answer to its own people rather than foreign bankers, Malawi brought back subsidies for the fertiliser, with a range of other services to ordinary people. Within two years, the country was transformed from a beggar to being so abundant it was supplying food aid to Uganda and Zimbabwe.

In the history of the IMF, this story isn't an exception: it is the rule. Whenever I travel across the poor parts of the world I see the scars from IMF "structural adjustment" everywhere, from Peru to Ethiopia. Whole countries have collapsed after being IMF-ed up - most famously Argentina and Thailand in the 1990s.

Some people claim Dominique Strauss-Kahn was a "reformer" who changed the IMF. Certainly, there was a shift in rhetoric after he took over in 2009, but detailed study by Dr Daniela Gabor of the University of the West of England has shown the substance is business-as-usual.

Look at Hungary. After the 2008 crash, the IMF lauded it for keeping to its deficit target by slashing public services. The Hungarian people responded by kicking the Government out and choosing a party that promised to make the banks pay for the crisis they had created. It introduced a 0.7 per cent levy on the banks. The IMF went crazy. It shrieked that it would cause the banks to flee from the country.

The IMF shut down its entire Hungary programme to intimidate them. But the collapse predicted by the IMF didn't happen. Hungary kept pursuing sensible moderate measures, instead of punishing the population. It imposed taxes on retail, energy and telecoms, and took funds from private pensions to pay the deficit. The IMF shrieked at every step, and demanded cuts for ordinary Hungarians instead. It's the same old agenda, with the same old threats, imposed from El Salvador to Pakistan to Ethiopia. It is not only DSK who should be on trial.

It is the institution he has been running. There's an inane debate about who should be the next head of the IMF, as if we were discussing who should run the local milk board.

But if we took the idea of human equality seriously, and remembered the people who have been impoverished, starved and killed by this institution, we would be discussing the establishment of a Truth and Reconciliation Commission - and how to disband the IMF entirely and start again.

If DSK is guilty, I suspect I know how it happened. He must have mistaken the maid for a poor country in financial trouble. Heads of the IMF have, after all, been allowed to rape them with impunity for years.

- INDEPENDENT