Candidate assessment: Is Manuel the man to manage the IMF by Patrick Bond
May 24, 2011 3 Comments
imfboss has invited candidate assessments from civil society voices in the home countries of the candidates to head the IMF. Throughout the process we will be posting these here for your benefit.
By Patrick Bond, University of KwaZulu-Natal Centre for Civil Society, South Africa
The world’s most predatory financial institution had until last Thursday a managing director nicknamed “The Seducer,” who talked left, evoking John Maynard Keynes, and walked right, imposing austerity on the Third World, including now Ireland, Greece and Portugal.
Useful though that was to world financial elites, Dominique Strauss-Kahn’s notorious misogyny allowed the powers behind the International Monetary Fund (IMF) to ditch him with little hesitation once rape charges by a vulnerable hotel cleaner last Saturday began to stick. Raising the prospect of a consensual-sex defense worthy of Jacob Zuma, superstar lawyer Benjamin Brafman stupidly remarked, “The forensic evidence, we believe, are not consistent with forcible encounter.”
South Africa’s Trevor Manuel is apparently being seriously considered as Strauss-Kahn’s replacement, in competition with conservative French finance minister Christine Lagarde, British political failure Gordon Brown and other emerging-markets personalities. (A “Europeans Only” sign always graced the IMF director’s door, but surely that can change?)
As BBC’s Richard Quest remarked in a ringing endorsement on Tuesday, Manuel is the only Third World candidate with the gravitas to confront the world’s leading finance ministers. He chaired the IMF Board of Governors in 2000, as well as its Development Committee from 2001-05. He was a member of Tony Blair’s 2004-05 Commission for Africa, and chaired the 2007 G-20 summit.
Manuel was appointed UN Special Envoy for Development Finance in 2008, headed a 2009 IMF committee that successfully advocated a $750 billion capital increase, and last year served the UN’s High Level Advisory Group on Climate Change Finance. Even in absentia, Manuel was last month made co-chair of the UN’s huge Green Climate Fund. He argued that up to half its $100 billion anticipated annual turnover be sourced from controversial emissions trading, i.e. “the privatization of the air”.
No one from the Third World has such experience, nor has anyone in these circuits such a formidable anti-colonial political pedigree, including several detentions as one of Cape Town’s most important anti-apartheid activists. Yet despite occasional rhetorical attacks on “Washington Consensus” economic policies, Manuel has been excruciatingly loyal to the IMF cause.
Even before taking power in 1994, he was considered a World Economic Forum “Global Leader for Tomorrow”, and in 1997 and 2007 Euromoney magazine named him African Finance Minister of the Year. No wonder, as in late 1993 he persuaded Nelson Mandela to repay apartheid-era commercial bank debt against all logic, then negotiated an $850 million IMF loan that straightjacketed Mandela’s presidency.
As trade minister from 1994-96, Manuel liberalized imports, demolishing the clothing, textile, footwear, appliance and electronics sectors, as he drove tariffs below what even the World Trade Organisation demanded. After becoming finance minister in 1996, Manuel imposed the “non-negotiable” Growth, Employment and Redistribution policy (co-authored by World Bank staff), which by the time of its 2001 demise had not achieved a single target aside from inflation.
Manuel also removed exchange controls, cut the primary corporate tax rate from 48 percent in 1994 to 30 percent five years later, and allowed the country’s biggest corporations to move their financial headquarters to London, thus ballooning SA’s current account deficit. That in turn required such vast financing inflows that SA’s foreign debt soared from the $25 billion inherited from apartheid to $80 billion fifteen years later.
At that stage, with the world economy teetering, The Economist magazine named SA the most risky of 17 emerging markets, and the government released data conceding that the country was much more economically divided than in 1994, overtaking Brazil as the world’s most unequal major country.
“We are not in recession,” Manuel quickly declared in February 2009. “Although it sometimes feels in people’s minds that the economy is in recession, as of now we are looking at positive growth.” In reality, at that very moment the economy was shrinking by a stunning 6.4 percent (annualized), and indeed had been in recession for several months prior.
More than 1.2 million jobs were lost in the subsequent year. But in October 2008, just as Strauss-Kahn told the world to try quick-fix state deficit spending, Manuel sent the opposite message to his impoverished constituents: “We need to disabuse people of the notion that we will have a mighty powerful developmental state capable of planning and creating all manner of employment.”
This echoed a 2001 statement to the Sunday Independent: “I want someone to tell me how the government is going to create jobs. It’s a terrible admission, but governments around the world are impotent when it comes to creating jobs.”
Governments under the neoliberal thumb are also impotent when it comes to service delivery, and thanks partly to his fiscal squeeze, municipal state failure resulted in more protests per capita against local government in Manuel’s latter years as finance minister than nearly anywhere in the world.
Still, remarked Manuel in his miserly 2004 budget speech, “The privilege we have in a democratic South Africa is that the poor are unbelievably tolerant.” In 2008, when Patricia DeLille begged that food vouchers be made available, Manuel replied that there was no way to ensure “vouchers will be distributed and used for food only, and not to buy alcohol or other things.” He also opposed a Basic Income Grant.
Disgust for poor people extended to AIDS medicines, which in December 2001 aligned Manuel with AIDS-denialist president Thabo Mbeki in refusing access: “The little I know about anti‑retrovirals is that unless you maintain a very strict regime … they can pump you full of anti‑retrovirals, sadly, all that you’re going to do, because you are erratic, is to develop a series of drug‑resistant diseases inside your body.”
Instead of delivering sufficient medicines and money to the health system, schools and municipalities, Manuel promoted privatization, even at the 2002 Monterrey global finance summit: “Public-private partnerships are important win-win tools for governments and the private sector, as they provide an innovative way of delivering public services in a cost-effective manner.”
In spite of neoliberal ideology’s disgrace, Zuma retained Manuel and his policies when choosing a cabinet in 2009, though rather ironically sidelined him to a new “planning” ministry without staff. Five months later, Congress of SA Trade Unions president Sdumo Dlamini called Manuel the “shop steward of business” because of his “outrageous” plea to the World Economic Forum’s Cape Town summit that capital fight harder against labour. The National Union of Mineworkers termed Manuel’s challenge “bile, totally irresponsible.”
Manuel also disappointed feminists for his persistent failure to keep budgeting promises. Former ruling-party politician Pregs Govender helped introduce gender-budgeting in 1994 but within a decade complained that Manuel reduced it to a “public relations exercise”.
Former ANC member of parliament Andrew Feinstein records that the finance minister knew of arms-deal bribes solicited by the late defense minister Joe Modise. Feinstein testified (without challenge) that in late 2000, Manuel surreptitiously advised him over lunch, “It’s possible there was some shit in the deal. But if there was, no one will ever uncover it. They’re not that stupid. Just let it lie.”
Nevertheless, the myth of Manuel’s financial wizardry and integrity continues, in part thanks to a 600-page puff-piece biography, Choice not Fate (Penguin, 2008) by former spokesperson Pippa Green, a book subsidized by BHP Billiton, Anglo American, Total oil and Rand Merchant Bank.
After all, recent politico-moral and economic scandals by World Bank presidents Robert Zoellick and Paul Wolfowitz (whom in 2005 Manuel welcomed to the job as “a wonderful individual . . . perfectly capable”) confirm that global elites are already scraping the bottom of the financial leadership barrel.
Yet a candidacy to replace Strauss-Kahn may get Manuel a strong endorsement from local eco-social justice advocates weary of fighting him, and losing. Kick him upstairs, please?
(Patrick Bond is with the University of KwaZulu-Natal Centre for Civil Society: http://ccs.ukzn.ac.za )