IMF Loan the Wrong Step for Egypt

IMF Loan the Wrong Step for Egypt


By Hwaa Irfan

Ahram Online reports on expected protests outside the Cabinet building on Wednesday 22 August, 2012 while visit by IMF chief Christine Lagarde discusses a loan that has been in the waiting since 2011 with President Mursi. Many pro-Mubarak regime are blindly in favor of this loan on the basis that it will improve their credit ranking in the world, but basically want easy money. The justifiable protest states that the IMF loan will impoverish the people and threaten Egypt’s political and economic independence, which was already compromised by the loan from pro-U.S. Qatar which has a hand in the slaughtering of Syrians along with pro-U.S. Saudi Arabia via the financing and arming of the rebels in Syria who burn the bodies of downed rebels to hide their nationality! The most recent result of the aid from Saudi, and the loan from Qatar is the expulsion of Syria at a time when U.S. panicks as Syria regains control of the city of Aleppo from rebel forces, just as Egypt is trying to regain Sinai from yet unidentified forces!

The protest calls for a national economic policy according to Ahram Online based on a national economic policy based on independent industrial and agricultural development – the only two natural resources of Egypt.

Egyptian activists have been busy raising awareness about the consequences of taking an IMF loan, but it does not seem to have filtered through to those pro-Mubarak who were willing to accept the loan without a government prior the democratically elected President Mursi – the same responsible for causing national and societal insecurity, and polarizing the country. However, what Mursi has in mind right now, is difficult to ascertain as it does not follow through with his Islamic convictions, and it does not follow through with the process of consultation with other political elements in the country to ensure that the views of the broad-cross section of society is involved.

Once this loan is taken, automatically Egypt’s freedom to determine its direction is sealed, why?

In recent times, Greece has been at the forefront of what has been termed as the European Debt Crisis, which is just another stage along the road of a crumbling capitalism. Jeremey Warner of the British conservative daily, The Telegraph notes:

“In a recent analysis of developments in Greece, the IMF virtually admitted as much, describing with eloquence how fiscal austerity had become self-defeating by undermining all hope of economic growth. Yet in defiance of its own evidence, the organisation concluded that the programme remained on track.”

The question is, is the IMF in defiance of its own evidence, i.e. are we looking at the same evidence if the IMF says it remains on track!

Then we have the U.S. expressing concern about IMF loans to European countries that could/will result in the loss of funds – European countries who are technically speaking more able than developing countries to repay their loans. In practice, very few countries comply with IMF conditions for those loasn, yet, IMF still continues to give loans to these countries, even after canceling prior loans. This is the type of book-keeping that would not balance in anyone’s home or country, and is the basis of the global economic crisis as it began in Wall Street in 2008.

Decisions are political not monetary. The U.S. controls 17.83% of the votes. For main decisions, an 85% majority is required along with the power of the veto. However, this is in the context of the changing role of IMF as a part of global governance. Globalgovernancewatch states:

“… the IMF sees itself as the logical candidate for monitoring “fragilities and security issues,” that dictate the intervention of the IMF and other international organizations and instituting measures, including global taxation, to prevent further “global volatility and other shocks.”

That may seem fair seeming but in whose interests. Globalgovernancewatch also states:

“The Group of Twenty (“G-20”) nations, the new Financial Stability Board (“FSB”), and the International Monetary Fund (“IMF”) are progressing on two fronts: the monitoring and revision of national and regional economic plans to facilitate global economic governance and the pursuit of a financial industry regulatory reform agenda.

In people terms, a very good example of this is the case of France when the French government responded postively to protesting French against Monsanto’s GM corn in March 2012, and the EU responded by telling France they could not ban Monsanto’s GM corn! Sovereignty will become history once global governance takes full control!

In economic terms, this is exampled by a European proposal in 2011 that seems to be in process (Libya, Syria, Iran), and that is for national central banks to recycle funds through the IMF. The result:

“It is an easy solution because bilateral loans coming from the central banks, they haven’t to ask for money from the taxpayer,” European Union President Herman Van Rompuy is reported to have said to Bloomberg in Brussels in December 2011.

In that statement alone one can see where the money comes from, the taxpayer, to the Central Banks, to IMF, and to whoever gets an IMF loan meaning that a taxpayer in once country will be contributing to paying the debt of another country without even knowing!

IMF and Syria.

What is happening in Syria is a result of a long process that began with IMF funding. In 2009, the IMF issued a report commending Syria on its economic reform at a time when the global economy was still in denial about the global economic crisis.

Joyce Chediac for the International Action Center wrote:

“World finance capital and its media mouthpieces appear to be “setting up” the Syrian government”.

The genuine protests that took place in Syria in 2011 was in response to the effect of a 2006 IMF loan. The conditions of that loan led to severe austerity measures, (remember the IMF was commending Syria on its economic reforms). Those reforms let to a freeze on wages, allowing foregin banking, and privatizinng government run industries – the same conditions behind the impending IMF loan to Egypt. The result has been increasing unemployment, and for working and the unemployed increading inflation, increasing costs of living, and deteriorating services and social conditions.

 “The Syrian state once brought electricity to every town, but … can no longer afford the social contract of taking care of people’s needs,” wrote the New York Times on April 30.

Wrote Chediac

“The Syrian government could protect itself from imperialist destabilization by reversing this economic attack on the workers, whose support constitutes Syria’s best strength. Measures could include reversing the liberalization of the economy by barring the penetration of foreign capital; reinstating state ownership of electricity, communications and other key industries; prioritizing food production; and restoring subsidies. This would win back those elements of the population who are protesting, restore their faith in the government, and make sure there is no fertile soil for imperialist destabilization”.

That is easier said than done, especially when one’s financial means have been undermined. In most countries (Most meanign not aware of any)  that recieve IMF loans have to divert their economic resources away from services, away from food, health, and education in order to survive or forget about the conditions of the loan, if one does not bring corruption into the picture, and corruption is always present when easy money is present.

However, another plan was in the making that has been on the tables since 1957 when U.K’s Harold Macmillan and the U.S. President Dwight Eisenhower approved a CIA-MI6 plan to stage fake border incidents as an excuse for an invasion by Syria’s pro-western neighbours, which did not go ahead then becuase they did not have pro-Western neighbors in the Middle East. Now they do with the help of a zionist driven media and the militarization of Syrian rebels who have usurped the initial protests, ransaking and destroying hospitals (35 hospitals, 143 health centers and 277 ambulances), murdering people on mass, and even equipped with up to date thermobaric weapons recieved via Turkey, along with arms and recruits hence their burning of rebels that have been killed. The question is never asked who is really behind the killings, it is automatically assumed that it is Assad, and that those fighting are actually revolutionaires. No one barked at the 30,000 Libyans killed by NATO and rebels with mass graves and survivors to prove, but in the meantime, people are sufferinf badly for the blind belief that what started as an Arab Spring in Syria, has continued to be an Arab Spring in Syria.

This is the upshot of an IMF loan in a country that has more natural resources than Egypt. Until Egypt looks at what it really has in order to rebuild itself, and wake up to the global economic crisis which is a result of corruption throughout the system that taxpayers all over the world are paying for, Egypt should not accept aid in any form until it knows it can repay it without having to pay a very high price in return. It means any Egyptian government subject to pay that loan will have no freedom to make any changes for the benefit of the country and the people, in other words it will be buisness as usual!

The argument now amongst pro-Mubarak regime supporters falls to tit-for-tat: why is the Muslims Brotherhood accepting the loan when they rejected when former Prime Minister Al Gazouri was in power? They forget in their argument that Al Gazouri’s cabinet was not an elected government, but a transitionary government placed in position by the former Head of SCAF, General Tantawi. As a transitionary government all the power was with SCAF, and besides, as a transitionary government they were not entitled to place the burden of the loan on a population that did not vote for them, regardless of what the now disbanded parliament would say.

Another argument amongst pro-Mubarak regime supporters rests on the fact that unwittingly Egypt was a founding member of the IMF back in 1945, and as such are entitled to their quota of U.S$6bn. But why pay interest for it with a set of IMF conditions that dictates the way in which the country should be run?

Egypt then was still very much under occupation by British troops. 1945 witnessed the coming to a close of WWII when the IMF and the World Bank was established shaping the  international system of currency and finance. Central Banks of all countries as private not public establishments adopted the Federal Reserve system replacing what was under sovereign jurisdiction i.e. the printing of national currencies, bonds, and IOU’s for private banking cartels in exchange for money – that is making money out of nothing (i.e. debt) by means of usury/riba. That interest until today continues to flow in one direction with the exception of Cuba, Iran, Syria, and N. Korea, and up until last year, Libya. That direction means the wealth of the people, via the private Central Banking system flows towards the global financial elite, thus impoverishing the makers of the real wealth.  That has been the system for 67 years, and is the reasoon why developin countries remain in a state of development or revert to a state of underdevelopment.

Although the U.S$4.5bn loan has been aggreed, and accepted with a program in place that has not been made apparent to the Egyptian people, President Mursi has not applied his legislative powers, a power reclaimed as president from SCAF, but is rightly the responsibility of the disbanded parliament who represent the people. Egyptian media (pro-Mubarak tool) is hoping to convince the people to accept the loan, but there is no measure of acceptance beyond the vote,a vote that will take place in the form of parliamentary elections once the Constitution can be agreed upon and put to referendum. President Mursi has not withdrawn the amount to facilitate the program. A country in need can bleed if it rushes into taking a step,a step that if all goes wrong will be on Mursi’s head.


“Egyptian activists call for protest against IMF loan Wednesday”.

Kelly, J.M. “G-20 and IMF Officials Institutionalize Economic Global Governance.”

Neuger, J.G. “Euro Central Banks Seen Providing Up to $270 Billion via IMF.”

Thacker, S.C. “The High Politics of IMF Lending.”

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