Sri Lanka’s crisis shows how debt is devouring the Global South
Posted by BurstYourBubbles@reddit | anime_titties | View on Reddit | 52 comments
Posted by BurstYourBubbles@reddit | anime_titties | View on Reddit | 52 comments
CLOUDMlNDER@reddit
The 17th IMF package for Sri Lanka... What a dreadful joke. This is how finance capitla devours the world.
Most of the world's population is subject to austerity economics at the moment, 143 of the world's 195 countries as of 2023... 85% of people.
How did this come to be? The first countries to consciously pursue austerity economics were the fascist regimes of the 1930s. And now the whole world does the same!
Are we... Are we run by Fascists? Did we not defeat the Fascists?
Bourgeois governments will cut the throats of their own populace without a second thought. This is why Europeans and Americans fought revolutionary governments so hard. You have to get the corrupt officials in place that will take kickbacks for the blood letting.
Bloodgiant65@reddit
Fascism is when government does not do thing is really the most hilarious inversion of the classic socialism is when government does thing argument. Honestly, in this day and age, it’s refreshing.
CLOUDMlNDER@reddit
The opposite. Austerity is about strengthening the private sector. Throwing the vulnerable to the wolves. It is far from doing nothing. If this reductionism is all you have to contribute, maybe leave off. We are all familiar enough with the corporate bootlicking of the mainstream media.
Bloodgiant65@reddit
I mean, by definition, austerity is when the government reduces social programs and overall spending in order to save money. So yes literally it is inaction, doing less things. No one is being thrown anywhere, they are being abandoned. Or maybe neglected is a better word.
That’s still bad, to be clear. Likely to lead to real human suffering. I mean, certain to, the question is just one of scale. But regardless the outlook is grim for so many people.
But the thing you said is just patently untrue, to the point of being confusing, frankly, how you could even write that. It’s not fascism just because it’s bad. Other bad things exist that aren’t fascist.
CLOUDMlNDER@reddit
Austerity is not a money-saving policy but a money-redistribution policy. Since 2008, public sector services have been cut to deadly effect while trillions have been pumped into the stock market.
Government debt and deficits have grown ginormously since the start of the modern era of austerity. This fact alone leaves your story in tatters.
Purposes of austerity:
1) Transfer of wealth. As the government retreats from service provision, private providers move in, with the help of government subsidies.
2) Consolidation of class power. The worker is made more vulnerable; the state covers the cost of the mistakes of the wealthy.
3) Debt servicing. This is obvious in examples like Sri Lanka. Money "saved" is spent on servicing debt to foreign creditors.
Even taking the most simplistic definition of austerity, which is wrong, to be "the state stops doing things", this is still an action. Deliberately abandoning and neglecting people is an action. It is not neutral or natural.
Do modern politician and technocrats pursue policy similar in form and goal to the fascist era? Yes. Fascism is the violent forcing of the interests of capital over the interests of the people. 1930s Facism used the blunt force of the state. Neoliberal "fascism" uses market mechanisms like IMF enforcers. The shift is from "I will punish you" to "oops now the market will punish you".
Bloodgiant65@reddit
I mean, I don’t know what to say at this point, almost every sentence in that mess was either a lie or at least simply untrue.
That is perhaps the most incoherent definition of fascism possible to formulate, which is saying something, because there are a lot of really bad definitions of fascism out there.
The statement that not acting is itself an action is nonsense.
Your argument about government deficit is a complete non-sequitur.
Your second “reason for austerity” is pulled straight out of your ass, and the first can be much more accurately stated as “to cut taxes”. There are two reasons to cut overall spending, either to service debt, or to cut taxes.
I don’t know why I’m even taking the time to write this, though. It’s not like you’re going to read it.
CLOUDMlNDER@reddit
You're indoctrinated, your story doesn't hold together in the real world. A government pursuing austerity also pursues massive handouts for the private sector and you call it a non sequitur to point that out. This is pure ideology.
My definition of fascism is one of the earliest offered, by the communist Clara Zetkin in 1923. It holds up.
But who are we kidding? You're out of steam, you have only disses. You can't reason out your own position
Bloodgiant65@reddit
I’m the one who is indoctrinated? Yeah, sure buddy. Just go on with your life at this point. It’s not like some deranged socialist was ever going to see reason.
CLOUDMlNDER@reddit
You can't explain simultaneous austerity and massive corporate bailouts because your story doesn't hold up. You aren't look closely. What is left are only disses. You're conditioned, spasming like a dead frog prodded with an electric wire
maliciousprime101@reddit
Idk if I’m just a stupid pleb but this just seems like such an insane goal to demand.Barely any stable governments these days are running surpluses so why is asking an economically collapsed nation to turn around a surplus realistic?
Nevarien@reddit
Is this the famous debt trap they talk so much about?
BurstYourBubbles@reddit (OP)
Nonsense, only China could do that
No_Fox@reddit
Chinese Debt : 😡🤬🤮
Western Debt: 😍😘🥰
Beliriel@reddit
Nah fuck the IMF. But let's not glorify China with their 99year land grabs too much.
Turgius_Lupus@reddit
China has never forced austerity measures when their belt and road partners default.
The purpose of the IMF is to keep the undeveloped world undeveloped.
Beliriel@reddit
Nah China just goes "oh this thing is now ours".
Turgius_Lupus@reddit
Give a single example. And no, a 99 year lease in exchange for 1.1 billion to pay western bond holders is not a "yoink, this is ours now." That's called restructuring, re-negotiating and refinancing.
Beliriel@reddit
Hambantota Port in Sri Lanka
BendicantMias@reddit
Ironically this was offered by the Sri Lankan govt., not demanded by China. In fact Sri Lanka is a terrible example of 'debt trap diplomacy' overall, as only about 10% of its debt is owed to China. They owe Japan about as much, yet you don't see the usual suspects screaming about that. The vast majority of its debt, about half of it, is owed to international bondholders i.e. the private sector not govts. - the majority of which tend to be western btw. And those are the people who really extract their pound of flesh, as they typically provide shorter term finance with higher interest rates than govts. do.
Vinterlerke@reddit
Here's a blog post that debunks the myth of Chinese debt trap diplomacy in Africa as well: https://yawboadu.substack.com/p/the-future-of-the-chinese-belt-and The author is a Western-educated Ghanaian researcher.
Turgius_Lupus@reddit
*Tapps the sign*
BendicantMias@reddit
Chinese loans operate basically like commercial loans from any business. And the How China Lends study shows they typically just renegotiate the debt, not go 'yoink' the collateral. And even if they do that, it's one asset of the nation, and temporary at that. Meanwhile IMF loan terms basically take over the whole nation by dictating its economic (and often other) policy for years.
Vinterlerke@reddit
Relevant article:
The IMF’s Bottomless Bottom-Line Cruelty https://www.currentaffairs.org/news/2022/02/the-imfs-bottomless-bottom-line-cruelty
glymao@reddit
Debt traps definition is to lend someone money KNOWING they can't pay it back. Then you control them.
The UK, leading the rest of the Paris Club countries, lent money to its newly independent colonies at 11-15% interest. No way on earth a country is paying that back and the UK knew it. Even France didn't have the heart to pull something that vicious.
IMF was created to soften and legitimize the Paris Club's debt trapping.. IMF isn't even really debt trap per se. And China ofc isn't debt trapping anyone.
FeijoadaAceitavel@reddit
IMF pushes for privatization and austerity to weaken global South countries. This has been a thing for decades.
Tricky_Weight5865@reddit
Im not trying to defend the IMF here, but what should countries with obscene amounts of debt do then? Just pile more and hope they somehow manage to outscale it? What if it doesnt work?
Winjin@reddit
Btw Greece recently paid off their IMF debt, I wonder if it was similarly "expensive"
They're doing surprisingly good
CrazyBelg@reddit
Greece is doing suprisingly good partially because of the extreme austerity implemented by the government, and partially because they have gone back to the old bread and butter, leeching off the EU.
Winjin@reddit
From what I've read, they've paid off the IMF and are on the way to pay off the EU too.
One of the bad things they had to do was additional work hours though. But still beats being the poorest country in the bloc
Mithrantir@reddit
I don't know where you heard the second part about additional work hours, but it's simply not true.
What Greece is doing is hitting hard on the black economy that was running rampant in the country, and was siphoning about half of the annual GDP.
SpirosNG@reddit
Greece is not doing good, AFAIK it's not even at pre-crisis levels, not even counting how many things have been badly privitised or sold off.
maliciousprime101@reddit
True,I am aware of it.Greece and Uruguay have been successful in getting out of a debt pit.Although Greece did have pretty much all of Europe band together to pull it out the muck,same can’t be said for Sri Lanka.
DickBlaster619@reddit
Budget surplus will reduce their debt. Normal countries don't run budget surpluses but debt ridden ones like Sri Lanka (and UK) must, for which there's only 2 options- austerity or taxation.
40_Thousand_Hammers@reddit
And neither of those will be enough for IMF because they want total control of your country.
Apprehensive_Emu9240@reddit
It has its roots in how western nations handled their own finances. A famous example is Britain running a budgetary surplus in the 19th century after debt/gdp reached 200+%. You may mention colonialism in this, which would be correct, but at the same time the British people also suffered immensely. Charles Dickens famously wrote stories about poverty among the common people.
arostrat@reddit
But reddit told me it's the Chinese that are colonizing poor countries using loans.
giboauja@reddit
The problem with the IMF is they're a bank not a charity. Theyre basically the bank of last resort, if your getting money from them your basically fcked anyway. Your just desperately trying to stave off economic collapse.
These countries need help with no strings attatched, but that just isnt what the IMF is. I guess in theory they're probably supposed to be "experts" at economic reform, but many of these countries have corrupt institutions (political and economic) hamstringing positive change to start with.
Its likely no reform will go as planed without addressing corruption. Even then all of this is assuming the IMF even knows what the fck they're doing. Which true or not, very few people believe they do.
CLOUDMlNDER@reddit
When you take into account the countless interventions by Western powers to remove national leaders pursuing economic models unaligned with the Washington Consensus... Nkrumah, Lmumba, Allende, Sankara, Mossadegh, Keita, Jagan, so many more... Whose successors implemented austerity under IMF terms... It becomes clear that the IMF is more than a bank. It is a brute creditor, a thug policy maker for Western Imperialism.
OG Imperialism shafted much of Asia, Africa and South America, leaving them underdeveloped (in Walter Rodney's words) and poor. When they needed a hand the West was there again to bind them up in debt, and to coup or plane bomb or dissolve in acid any leader who refused to sign on the dotted line. This is why the US fights so hard for DEMOCRACY - this is referring to BOURGOIS DEMOCRACY; the venal assholes who climb that greasy pole are easily bought off.
There is a book where an agent of this system lays out the gory details: CONFESSIONS OF AN ECONOMIC HITMAN by John Perkins. Washington Bullets by Vijay Prashad tells the CIA side, leaning heavily on open archives. Killing Hope by William Blum lays out the anti-communist (fascist) agenda.
FUZxxl@reddit
Could it perhaps be that these economic models are what caused the economic crisis? If these alternative models work, surely Sri Lanka wouldn't need the help of the IMF?
The IMF is the “Help, I can't fix this myself” button. And of course pressing this button comes with the IMF demanding that you change your policies away from those that caused all these problems. So no surprise here.
Beat_Saber_Music@reddit
Many of the people you mentioned like Allende or Mossadegh lost power because they failed to secure power. Mosaddegh alienated all the democracy supporters with his electoral manipulation (stopping the count so the rural vote was ignored) and in the alienated also the monarch. Mosaddegh could've remained in power if he actually had the army/police on his side, as Castro did. Same thing with Allende, he lost power because the military was not on his side. All the US/Britain in these cases did was throw minimal fuel and some sparks on what would in any case be an inferno quite likely. These countries had agency, as evidenced by no covert action by the US working in Cuba, or the US military being unable to save South Vietnam or Afghanistan when they lacked the basis to endure on their own.
Iran's shah who seized power from Mosaddegh nationalized the British oil like Mosaddegh tried to do and had no isdues because he actually had support which mattered within Iran, which then eroded due to mismanagement of the economy.
kitti-kin@reddit
It seems like a flaw of the US and UK that their governments are apparently vultures eternally circling any prey they deem weak.
It seems a significant omission to leave out that under the Shah "nationalisation" gave western oil companies 50% ownership of Iran's oil production. I would say that is not actually what Mosaddegh was trying to do.
CLOUDMlNDER@reddit
The user above ignores the point being made, that leaders were deposed and replaced with those who would sign the correct documents.
Part of the Pinochet thing was the crushing austerity mapped out by the Chicago boys. Mossadegh's Iran was too messy to get international financiers involved; he demanded loans from the US but refused to make concessions while threatening to let the country fall to communists. Like you say, his successor cut a 50/50 profit sharing deal with the British and cleared the way for Washington to involve itself.
They talk about:
... But alternate histories need not apply. What happened happened. The actual history of actual events is that foreign actors intervened to bring crises on in third world countries that furthered their own interests.
giboauja@reddit
Ok, but I don't have a time machine. I can't fix what happened in the past. I even said these countries need no strings attached aid, while also acknowledging their currently insufficient institutions.
In my opinion, many people don't realize the IMF is basically a bank, not a government charity. It's important to understand that, when the IMF asks for these bonkers goals. Because of course they do, when they lend money, they want it back. Since the country almost certainly can't do that without radical reform the expectation is radical reform.
However, my point was to imply that they (IMF) are generally not trusted and an initial focus should be on institution reform and charity, These being more appropriate methods to help these countries out of their hardships.
I don't mention imperialism, because this isn't a history class where I want to add unnecessary layers of complexity to convince people to create positive change. Certainly because it runs the risk of being viewed as tribal and thus may get the people, who need to actually hear this, to check out.
So i don't know, maybe just consider your standing on a soapbox virtue signaling against someone who, more or less, agrees with you. I don't know what your point is other than to actually end any conversions about this while hoping we comment how caring and smart you are.
CLOUDMlNDER@reddit
>In my opinion, many people don't realize the IMF is basically a bank, not a government charity.
The role of the IMF is to squeeze countries, like the role of the Beast Rabban was to squeeze Arrakis. I don't know what you mean by bank. The IMF is a society-crusher. The assholes who sign off on IMF deals know this already, they can see it in the Ts & Cs. The history reveals this.
>Many of these countries have corrupt institutions
You left that point hanging. Whoopsie! Corrupt third world countries effed themselves up again! But history reveals the corrupt institutions were installed by imperialists, often over the bodies of nationalist revolutionaries.
History also reveals your proposed institutional reform to be absolute bunk. Any useful reform catches a Washington Bullet.
We don't agree with one another, your take is naive and not useful.
giboauja@reddit
Sure whatever you say.
CLOUDMlNDER@reddit
Damn straight whatever I say
giboauja@reddit
Sure
Previous_Knowledge91@reddit
Think of it like this:
The IMF is like a personal trainer who demanded a sick and obese person to cut food intake and put hours of cardio exercise in order to lose wight.
Countries go to IMF when they are in bad shape. IMF would agree to help (read: lend money) on several conditions. Depending on the exact circumstances, a recipe of actions will be dispensed by the IMF. If and only if the country in question follows the recipe will the aid fund be disbursed.
In most cases, the recipe contains painful government policy such as reducing social benefits (eg. pension, healthcare, subsidy) and increasing revenue (higher tax).
Let's take Indonesia as a example:
In late 1997, realizing that a massive banking/currency crisis is looming , President Soeharto eventually made a plea to the IMF.
For the next few years, Indonesia dutifully followed the painful IMF recipe which include abolishing fixed exchange rate, closing 16 insolvent banks and deregulating agriculture business.
Most Indonesians who lived through this particular period will remember skyrocketing food prices and disappearing jobs, as well as general anxiety about what future holds for them.
Fast forward 10 years, Indonesia’s economy emerged from devastating crisis, rising like a phoenix from the ashes. Living standard returned to pre-crisis level with healthier economic structure.
Indonesia even repaid fully the IMF loan in 2006, earlier than the scheduled 2010.
But should the credit goes to IMF?
Some economists believe that IMF involvement is important in establishing structure and discipline, just like a personal trainer does to the above sick and obese man.
However, at the end of the day, it is the hard work of the people in the country itself that turn things around.
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PreviousCurrentThing@reddit
Is the bot that posts the articles broken?
VintageGriffin@reddit
Only the global South though?
According to this map above 100% debt to GDP is being experienced by a lot of countries of the global West as well, global South just doesn't have the exorbitant privilege of printing their own reserve currency and exporting the resulting debt and inflation across the rest of world, or to their neighbor in case of EU.
Debt isn't devouring financially irresponsible spendthrifts, just victims of predatory IMF loans.
Massive-Cow-7995@reddit
IMF? Here was i thinking China was the one debt trapping nations.
In all seriousness, this can really gut not the Sri Lanka's economy, but society itself, forcing nations into heavy austerity especially poor nations can destroy services many rely on to survive and bring violence and decadence thay can last lifetimes.
I am no expert on economics nor the exact situation of Sri Lanka but i believe it just goes to show that treating nation states as entities akin to companies that can "borrow" and predict what their "spending and revenue" from other international actors is a fools errand, its not that states cant take on debt but ultimally what debt controlers are nothing but either people who have a interest in seeing you succed so will be willing to basically give you money for free or will make impossible demands to have their money back plus profits.