DEVELOPMENT: IMF Should Disappear, Castro Tells South Summit

By Patricia Grogg Reprint | | Print |

Patricia Grogg

HAVANA, Apr 13 2000 (IPS) - Cuban President Fidel Castro Wednesday told dozens of heads of state and government meeting in Havana that the International Monetary Fund (IMF) should disappear and be replaced by a multilateral entity offering the global economy true stability.

Addressing delegations of the 133 countries of the developing South linked by the Group of 77 (G-77), Castro blamed the IMF for a “lack of foresight” and “clumsy handling” of the latest global crisis, which broke out in June 1997.

Castro maintained that the conditions set by the IMF paralysed social development policies while creating serious internal problems for governments and making it impossible for them to obtain resources at their time of greatest need.

“It is vitally important for the Third World to bring about the disappearance of this sinister institution, and the philosophy it represents, and replace it with a body that would regulate international finance and operate on democratic foundations, without anyone holding the right of veto,” argued the president.

The IMF, along with the World Bank and countries of the industrialised North, pulled together a multibillion dollar rescue package for the southeast Asian countries in which the 1997 international meltdown first began. Nevertheless, the crisis later spread to Russia, Latin America and the Caribbean.

Many experts have attributed the crisis to the deregulation and opening of Asia’s markets – previously praised for their fast economic growth – to short-term speculative capital.

According to Castro, the nations of the South need a multilateral entity that would not “exclusively defend rich creditors, that would not set meddlesome conditions, and which would allow financial markets to be regulated, in order to curb unbridled speculation.”

He suggested a tax of at least one percent on speculative financial transactions, which would permit the creation of a fund with more than one billion dollars a year designed to promote the “real, sustainable and integral” development of poor countries.

Castro outlined his proposal at the inaugural session of the meeting of heads of state and government of the so-called South Summit, which opened Wednesday after two days of work by foreign ministers and other officials and experts. A total of 122 G-77 members have sent official delegations to this week’s gathering in the Cuban capital.

Developing countries must join together and cooperate if they want to survive, said the president, who likened planet earth to a ship in which 85 percent of the passengers are “packed into insalubrious holds, suffering from hunger, illness and desperation.”

If the boat runs into an iceberg, as it appears set to do, “we will all sink,” warned Castro.

In the past two decades, industrialised nations – “especially the United States” – as well as transnational corporations and the IMF have designed an economic world order “hostile” to progress by developing nations, he charged.

“What we need is a Nuremberg to judge the economic order that they have imposed on us, which every three years kills more men, women and children of hunger and preventible or curable diseases than World War II killed in six years,” he maintained.

Castro thus alluded to the trials held by the victors in the German city of Nuremberg after World War II (1939-45) to try war crimes and human rights abuses committed by Adolf Hitler’s Nazi regime.

The Cuban president also warned that the more than 2.5 trillion dollars in foreign debt owed by developing countries was one of the biggest hurdles for development, and “a time-bomb set to explode” under the foundations of the global economy during some future economic crisis.

The huge foreign debt, the servicing of which consumes a full 25 percent of the export earnings of the developing South, is one of the chief concerns of the G-77 leaders who are keen to come up with a lasting solution that would also tackle the structural causes of the problem.

In Castro’s view, it is more clear today than ever that the debt is not an economic, but rather a political, problem which requires a political solution.

“We cannot continue ignoring the fact that the solution to this problem will have to come basically from those who have the resources and power to resolve it: the rich countries,” he said.

After reiterating his long-standing argument that the debt is nonpayable, the president said the resources needed for an “in- depth solution” were not that big if compared to the 800 billion dollars a year spent by creditor countries on weapons and soldiers.

Globalisation is, according to Castro, an objective reality, which if restricted by the “straitjacket of neo-liberalism” tends to spread poverty, violations of national sovereignty and an “every man for himself” mentality amidst unequal competition in the markets.

In his view, liberalisation of trade has consisted of the unilateral elimination of protectionist instruments by the South “without reciprocation by the North.”

Commodities, which account for more than half of the export revenues of 67 developing nations, remain “the weakest link” in world trade, he added.

Other key issues on the agenda of the South Summit, which will end Friday with the signing of a final declaration and action plan, are North-South relations, globalisation, knowledge and technology and South-South cooperation.

Attending the summit, the first held by the 36-year-old G-77, are 42 presidents and prime ministers, 13 vice-presidents and deputy prime ministers, and 67 foreign ministers, as well as high- level officials from a number of multilateral institutions.