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IMF’s hidden hand a factor in ongoing political crisis

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Picture: EPA – A South Sudanese child cries as he is weighed at the Kakuma refugee camp in Kenya. More than 15,000 people have fled Sudan since fighting broke out in Khartoum last month, says the UN’s International Organisation for Migration, with around a thousand arrivals registered a day. The consequences of liberalisation policies and practices are a key cause of rising poverty, food insecurity and crisis in Africa, says the writer.

By Dian Maria Blandina

Sudan is experiencing its fourth week of conflict between two military factions, which has caused the death of more than 700 people. Sudanese civilians have fled the capital and the country altogether while the fighting continues with no end in sight.

Commentators have focused on the military factions and ethnic conflicts. A reductive explanation has been given for the food crisis in Sudan, such as the economic crisis, climate change and the Ukraine war. The significance of macroeconomic policies and the institutions that promote them at the root of the crises tend to be overlooked.

The International Monetary Fund (IMF) imposed liberalisation in Sudan, particularly in the agricultural sector, to promote exports. Liberalisation means removing any barriers to trade and eliminating obstacles to foreign investment while reducing the size and power of the government to regulate the economy.

Orthodox economics is the ideology of the rich and powerful. Poor countries trying to develop, like Sudan, cannot afford a regime of free trade. Sudan should have been left to develop its agricultural sector to serve its own people first.

Seeing Sudan in the news, it’s hard to imagine that it was once destined to be the “breadbasket of Africa”. Indeed, Sudan is not only rich in oil and minerals but also arable land. As explained in Oxfam’s 2002 report, rapid agricultural liberalisation was a key cause of rising poverty and food insecurity in Africa. The consequences are experienced to this day. Liberalisation policies are also eerily similar to extractive practices in the colonial era; in this case, turning Sudan into the world’s farm while the people starve.

Back then, there were also local and not-so-local businesses and politicians who facilitated the colonial powers to extract Africa’s riches and exploiting its labour force. Sudan has a diverse population of more than 600 ethnic groups speaking 400 languages, with Islam being the predominant religion. The country has experienced two civil wars, three coups d’état, and a 30-year military dictatorship under former president Omar al-Bashir that ended in 2019, following an uprising. A transitional government was established under prime minister Abdalla Hamdok, but it was fragile, and in October 2021, the military dissolved the government and placed the prime minister under house arrest, leading to protests and violent crackdowns that have resulted in more than 100 civilian deaths and many more injuries.

The IMF has long been involved with Sudan. To date, Sudan has undergone at least 11 IMF programmes in between civil wars and conflicts. Between 1979 to 1985 alone, under Jaafar Nimeiri’s regime, there were five IMF loan programmes in Sudan. Outside the programmes, the IMF maintained counsel to the government, giving policy advice that would “help” Sudan’s creditworthiness and access to the international market.

From the start of their relationship, Sudan has been in a weaker position. Highly ambitious development projects in the 1970s combined with years of ill-advised investments, left the country in a severe deficit and with no bargaining power against international institutions and foreign powers. The IMF dealt with Sudan in an autocratic manner, handing down conditionalities and expecting the Sudanese government to implement them with no care of how it was done.

An unusual feature of the IMF-Sudan relationship was that Sudan was almost always expected to conceive and implement austerity on its own, prior to receiving loans. The IMF also dealt with Sudan harshly, cutting off credit and aid at the slightest sign of non-compliance or policy disagreement, and imposing increasingly severe terms. The dynamic was so perplexing that scholars used Sudan as a case study to understand the power struggle in IMF programmes.

IMF “riots” took place many times in Sudan throughout the 1970s and 1980s, because of cuts in subsidies and currency devaluation, which made basic commodities expensive. For a large and diverse country divided by factions like Sudan, such policies quickly turned to social unrest. One of the protests in 1985 led to a coup d’état when the military intervened.

Scholars have studied social unrest during IMF programmes over the past 40 years and found a correlation with coups d’état. The IMF programmes create winners and losers among common people and regime elites, leading the “losing” elites to put up a new leader who is more likely to reject conditionalities unfavourable to their interests. Sudan’s diverse nature and complex historical context have contributed to internal conflicts in the country.

Adding the IMF’s push for foreign investments has created a situation where foreign actors have their own interests at stake, further complicating matters and making Sudan a hotbed for geopolitical struggles and power plays. In 2012, anti-austerity protests brought thousands of people to the streets of the capital, Khartoum. Citizens were angry over the fuel subsidy cuts imposed by the IMF, combined with rising inflation, and called for Bashir to leave the presidency. Clashes ensued.

It also led to another coup d’état attempt which failed. Still, the IMF pushed for subsidy cuts, demanding the government “communicate the shortcomings of price subsidies and the urgency of the need for reform”. It noted that cuts should be implemented gradually, while also acknowledging that “given the unstable political conditions, (subsidy reform) should be launched ahead of any further price increase”.

Subsidies may just be a numbers game to the IMF, but for the people, it is a social contract that lets them know that the government takes care of their well-being, especially in times of crisis. Protests continued into 2013 and a violent crackdown ensued, with a death toll of up to 230. The present conflict in Sudan has its roots in December 2018, when Bashir ended subsidies on fuel and wheat, again, in accordance with the IMF’s recommendations.

This time, the coup against Bashir was successful. But the protests and violent crackdowns continued until after the military took over, once again costing hundreds of lives before, finally, a compromise was reached, and a transitional government was formed. Given the track record, it was a surprise when the civilian prime minister Hamdok entered into another IMF programme in 2021 when it was supposed to be turning over a new leaf.

Subsidy cuts began in 2020 prior to the signing of the agreement while the country was battling the Covid-19 pandemic and facing other challenges. Since October 2021, the Sudanese people have protested against the military takeover, at the cost of hundreds of lives. On the surface, the “international community” seemed to punish the military coup by suspending aid and debt relief but, on the ground, the military regime was given a seat at the negotiating table, and perhaps even a position of priority in dictating the “peace terms”.

On the other hand, the demand from the people had been clear all along that they wanted justice, an end to the military regime, and, most importantly, a restructuring of Sudan’s economy so that the needs of the people could be served. A real transformative process can begin only by first understanding the root causes of the people’s discontent, for example, by acknowledging that the military elites brutalise dissent and control most of Sudan’s natural resources which they use for themselves and foreign actors. It is crucial to ensure that civil society organisations are given a priority seat at the negotiating table so that the voices of the common people can be heard and taken into account.

The article was first published in Peoples Dispatch