[mgj-discuss] WB/IMF Trashed Colombia

[Robert Weissman]

Baltimore Sun 4/4/02

World Bank, IMF Threw Colombia into Tailspin
By Tony Avirgan

 As the United States drifts deeper into the Colombian quagmire of drugs
and war, policymakers need to take a new look at the problems of
poverty, joblessness, and hopelessness that have made that country such
a trouble-spot.

And, if they explore how unemployment in Colombia almost doubled from
10.5% in 1990 to 19.7% in 2000, they will find a surprising pair of
culprits: not drug kingpins, leftist guerillas or right-wing death
squads, but the World Bank and the International Monetary Fund, which
sponsored draconian “economic reforms” that damaged the nation’s
industries and agriculture. The policies promoted by these international
lenders, including privatizing many industries and public services,
eliminating subsidies of all kinds, raising interest rates, and cutting
public services, thrust the economy into a tailspin and wiped out tens
of thousands of jobs.

  A new report by the Medellin-based Escuela Nacional Sindical (ENS) for
the Global Policy Network (www.gpn.org) paints a grim picture of where
Colombia stands and how it got there. The devastating rise in
unemployment has its roots in a series of economic reforms initiated,
with World Bank/IMF guidance, in 1990 to meet the demands of
globalization. In exchange for an IMF structural adjustment loan in
1999, Colombia agreed to privatize many industries and public services,
eliminate subsidies, increase tariffs for public services, raise
interest rates, downsize the public sector, and open up the nation’s
economy to world competition.

Some Colombian officials feared the effects of a rising tide of imports.
But World Bank and IMF economists assured them that job gains in export
industries would more than make up for the inevitable job losses in
domestic industries. As in other countries throughout the world,
however, these assurances proved empty and Colombia now imports far more
than it exports and unemployment has soared.

 Colombia’s once vital agricultural sector, which previously met the
nation’s needs and exported the surplus, has been devastated. “The
country has ceased to be self sustaining, choosing to import what it
once exported,” the ENS report says. Colombia now imports more than 6
million tons of food annually while two million acres of arable land lie
idle.

 The industrial sector has suffered a similar fate as a massive influx
of imports has swamped medium-sized and small businesses. This decline
has, in turn, triggered a sharp reduction in the number of salaried
workers – from 37.1% of the population in 1992 to 30.7% in 2000.

 Virtually the only part of the Colombian economy that has expanded is
the least stable and productive for the economy as a whole. This is the
vast "informal" sector, which includes, at one end of the spectrum,
legitimate but low-paying self-employment such as street vending and, at
the other end, drug trafficking.

 As a result of World Bank and IMF-sponsored policies, per-capita income
in Colombia has plunged from $2,716 in 1997 to a current level of
$1,890. Between 1997 and 2000, the percentage of Colombians living in
poverty rose from 50.3% to 60.0%.
“When people have a choice of seeing their family starve or breaking the
law, laws against drug cultivation mean nothing and some people will
take up arms” argues Jose Luciano Sanin of the ENS.

The United States should not be surprised by the increase in drug
cultivation and trafficking and it is not a stretch to hold the World
Bank, despite its programs to promote alternative crop production, and
IMF at least partially responsible.