#IMF Bailout

[kesarijournal]

Pakistan Selections 2024 & its perpetual tightrope destiny

In the grand theater of South Asian politics, Pakistan’s post-election scenario is shaping up to be less of a triumphal procession and more of a high-wire act over a pit of economic despair, political vendettas, and regional brimstone. As the newly minted government takes the stage, one can’t help but admire the audacity—or is it naivety?—of stepping into the limelight where the plot twists rival…

[headlinehorizon]

IMF and Pakistan Reach Preliminary Agreement for $700 Million Bailout Fund

Read the latest news on Pakistan's economic recovery as they secure a much-awaited agreement with the IMF, unlocking $700 million from a $3 billion bailout fund.

[publictaknews]

Pakistan economic crisis: IMF bailout terms 'beyond imagination' - Pak PM

Pakistan Prime Minister Shehbaz Sharif said on Friday that the government would have to agree to IMF bailout terms that are “beyond imagination”, as it grapples with a looming economic crisis. A delegation of the International Monetary Fund (IMF) arrived in Pakistan on Tuesday for last-ditch talks to revive crucial financial aid that has been stalled for months. The government has protested…

[thisisbjoeblog]

Economy 101: Seriously, Is Malaysia’s External Debt As Bad As Sri Lanka?

Economy 101: Seriously, Is Malaysia’s External Debt As Bad As Sri Lanka?

COVID-19 pandemic, public funds mismanagement and corruption have driven some countries into severe external debts that they were unable to recover from and this saw massive public riots that had driven the politicians involved out of their country. One such example is Sri Lanka where the President of the country had fled the country and the country is in a major riot. Image source: BBC (more…)

[bongoideas]

"Our leaders are thieves" - Ghanaians hijack IMF's page with 'negative' requests

“Our leaders are thieves” – Ghanaians hijack IMF’s page with ‘negative’ requests

Some Ghanaians have told the International Monetary Fund (IMF) to deny Ghana’s request for a bailout to cushion the ailing economy. According to the huge number of requests, these Ghanaians have been asking the IMF to consider the incompetence of the NPP government and thus refuse to lend them any money. The Facebook page of the IMF, in particular, has been hijacked with what could be described…

[zvaigzdelasas]

SECRET PAKISTANI ARMS sales to the U.S. helped to facilitate a controversial bailout from the International Monetary Fund earlier this year, according to two sources with knowledge of the arrangement, with confirmation from internal Pakistani and American government documents. The arms sales were made for the purpose of supplying the Ukrainian military — marking Pakistani involvement in a conflict it had faced U.S. pressure to take sides on. The revelation is a window into the kind of behind-the-scenes maneuvering between financial and political elites that rarely is exposed to the public, even as the public pays the price. Harsh structural policy reforms demanded by the IMF as terms for its recent bailout kicked off an ongoing round of protests in the country. Major strikes have taken place throughout Pakistan in recent weeks in response to the measures.

The protests are the latest chapter in a year-and-a-half-long political crisis roiling the country. In April 2022, the Pakistani military, with the encouragement of the U.S., helped organize a no-confidence vote to remove Prime Minister Imran Khan. Ahead of the ouster, State Department diplomats privately expressed anger to their Pakistani counterparts over what they called Pakistan’s “aggressively neutral” stance on the Ukraine war under Khan. They warned of dire consequences if Khan remained in power and promised “all would be forgiven” if he were removed.

17 Sep 23

[probablyasocialecologist]

Global South countries are currently experiencing a debt crisis wherein governments like that of Sri Lanka are unable to service the debts they hold that are denominated in a foreign currency. Such debts began to balloon across the Global South in the aftermath of the oil crises of the 1970s. Following the Volcker Shock—and the accompanying steep rise in interest rates for dollar-denominated debts—countries that held those bonds found themselves in a situation similar to that of today. At that time, Global North governments, acting through the World Bank and International Monetary Fund (IMF), agreed to a series of bailouts conditional on Structural Adjustments Programs (SAPs). SAPs allowed these institutions to intervene directly in the fiscal policy of indebted countries and to implement neoliberal reforms which reduced public spending and opened up economies to transnational corporations. The explicit goal of SAPs was to kickstart growth, as the only means for indebted countries to pay back their loans and to lift communities out of poverty—the implicit goal being the creation of societies mirroring those of their former colonisers. Yet the last forty years have yielded the opposite result: an explosion of inequality both within and between countries and debts at their highest level this century. To understand this trend, we need to recognise that loans to the Global South were never about achieving prosperity; instead, the intention was to reassert neo-colonial control over the decolonising world. Decolonisation reduced the Global North’s access to the cheap labour, energy and raw materials that colonialism had ensured for centuries. Debt relationships between the former colonisers and colonised recreated the conditions for the plunder of the Global South. It turned poor countries into captive markets for companies based in the Global North and created a race to the bottom in environmental and labour standards meant to attract foreign investors. Under this arrangement, indebted countries need to grow their economies to service their debts. Growth relies on exports priced at disadvantageous rates that create ecologically unequal exchange between the Global South and Global North. Economies centred on the export of low-value-added commodities prevent the Global South from achieving full decolonisation. Fortunately, scholars of Modern Monetary Theory have shown that it is not necessary to prioritize growth for the sake of growth before investing in what countries actually need. Instead, what matters is a country’s productive capacity determined by social and ecological boundaries, and here the Global South is far richer than the Global North. To invest in necessary programmes like a Job Guarantee and Universal Public Services, however, countries must first free themselves of colonial currencies and end the cycles of debt that trap them in poverty. Given that stopping ecologically unequal exchange is a cornerstone of degrowth, the need for debt restructuring is clear. The only question is how to achieve this revolutionary reform. 

[manorpunk]

At the heart of every work of speculative fiction is a “what if,” a divergence which demarcates the line between worlds: what if aliens made contact with us? What if we suddenly had access to supernatural powers? The heart of Manorpunk 2069 is this: “what if it just keeps going like this?”

It is the most difficult question of all, because things quite clearly cannot keep going on like this, and my bravery in tackling this question directly shows why all other spec fic authors besides me are cowards, and probably reactionary.

That was a joke. Spec fic authors are not automatically reactionary. Authors of alternate history fiction definitely are, though. “Ohhhh what if the South won the American Civil War” oh you mean what if the Southern planter class survived and continued to enforce a program of white supremacy and oppression? Why I can hardly imagine such a world.

That was also a joke. My apologies. I am speaking to you as Manorpunk’s figurative father, and being a first-time dad, I cannot help being mawkish and overwrought, showing off baby pictures and trying to guess whether the audience is overcome with a new depth of emotion or simply trying to stifle a yawn.

In any case, I am here to give you the short version:

A series of crises known uncreatively as the Polycrisis struck America in the 2030s: climate change-fueled natural disasters, crumbling infrastructure, the final hollowing-out of the federal government, and the biggest goddamn real estate crash you’ve ever seen.

You can argue whether the real estate crash was the ‘biggest’ or ‘most important’ of the Polycrisis’s constituent parts, but in any case, it was the kicking-in of the rotten door that was America’s economy, and things just kinda… stopped working. Power became decentralized and regionalized, first to whoever could guarantee basic services and infrastructure (because neither the federal government or corporate finance sector had any will or ability to do so), soon coalescing into a half-dozen or so regional power blocks.

Oh, there were a couple more failed wars. Well, just one, really. There were the “IMF Wars” from 2035 to 2037, where the IMF and World Bank were forcibly removed from sub-Saharan Africa by “Chinese-supported Sankarist rebels,” which is how America referred to a democratically-elected government, but that wasn’t really a war-war.

China did give them a fuckton of support though, by the by. The 2030s looked like a hopeful time for the global south, as America fell apart and China hadn’t swallowed the world whole yet.

Speaking of which - at this point you may be asking yourself, “but where is the contingency? Where is the Innocent? Where is our Caesar, our Napoleon, our great Hegelian figure who holds the moment in his hand like a fly trapped in amber?”

Turns out it was Xi Jinping.

Yeah. Sorry.

As you might imagine, China was getting pretty sick of America dicking around. The American economy was collapsing so furiously that it was starting to threaten the export market for Chinese manufacturing. And, y’know, there was the Taiwan War.

Shit, right, the Taiwan War. It was hardly a war - China sank a couple US vessels, the US realized they had fallen too far behind on military tech and tactics, war’s over. The real fight, everyone knew, would be at the bargaining table.

What happened next goes by many names - the Great Bailout, The Reverse Marshall Plan, America’s Bride Price, The Gweilo Divergence, and “using the barbarians to control the barbarians” - a reference to the Self-Strengthening Movement of the Qing Dynasty. That one’s a thinker.

Anyway, China basically bought America. Second Cold War: over, winner: China, victory: flawless. As a fun footnote, the Great Bailout was finalized on September 4, 2039 - the 200th anniversary of the First Opium War.

It was more complicated than that, obviously - it was a tangled mess of playing musical chairs with corporate boards, merging and splitting and shuffling around. A controlled flood of investor money. The tactics were similar to how they had taken - right, I almost forgot, Russia was basically a Chinese protectorate at this point, and China did a similar economic shuffle to Russia after the Russo-Ukraine War.

Anyway! Short version, the timeline has made it to the 2040s and China just sort of swallowed the world whole. Tune in next time to see how that goes!

[zersk]

lol. lmao even

[theculturedmarxist]

In their February paper, “US Dollar Primacy in an Age of Economic Warfare,” presented at the West Point Symposium on “Order, Counter-Order, Disorder” Michael Kao and Michael St. Pierre argue for using a stronger US dollar as geopolitical leverage:

Not only are the effects of interest rates hikes magnified in other countries due to a myriad of structural and idiosyncratic economic fragilities previously discussed, the confluence of wide USD adoption with cyclical USD strength … make the USD a potent geopolitical lever masquerading as a domestic fight against inflation. National Power lends the USD dominance in adoption, while an opportunistic fight against inflation lends the USD cyclical strength for geopolitical leverage.

The US and US-led institutions are already trying to sideline China in countries struggling to make debt payments. And these efforts are likely to continue as interest rates rise and more countries in the Global South are unable to repay loans. A recent UNDP paper stated that 52 developing countries are suffering from severe debt problems.

China is the world’s largest bilateral creditor, and this is especially true for countries that are part of Beijing’s Belt and Road Initiative and/or for countries that possess strategically important natural resources. Washington estimates that Chinese lending ranges from $350 billion to a trillion dollars.

In recent years, western officials and media have ratcheted up criticism of China’s lending practices, claiming Beijing is putting its boot on the neck of countries, holding back their development, and is seizing assets offered as collateral.

Deborah Bräutigam, the Director of the China Africa Research Initiative at the Paul H. Nitze School of Advanced International Studies, has written that this is “ a lie, and a powerful one.” She wrote, “our research shows that Chinese banks are willing to restructure the terms of existing loans and have never actually seized an asset from any country.”

Even researchers at Chatham House admit there’s nothing nefarious about China’s lending, explaining that it has instead created a debt trap for China. That is becoming more evident as nations are unable to repay, largely due to the economic fallout from the pandemic, the Nato proxy war against Russia in Ukraine, inflation, and rising interest rates.

These confluence of events hitting developing countries are entangling China  in multilateral talks that include US-backed institutions like the IMF. Beijing’s preference has always been to try and tackle debt repayment issues at a bilateral level, typically by extending maturities rather than accepting write-downs on loans.

But US Treasury Secretary Janet Yellen and company continue to parrot the talking point that China’s lending is harming countries, and in countries unable to repay their international debts, the West and China are increasingly at odds.

Back in 2020, the G-20 countries created the Common Framework for Debt Treatments to provide relief to indebted countries, which included “fair burden sharing” among all creditors. Beijing’s reluctance to agree to such burden sharing is illustrated by the case of Zambia.

Zambia became the first African country to default on some of its dollar-denominated bonds during the Covid-19 pandemic when it failed to make a $42.5 million bond payment in November 2020.

More than a third of the country’s $17 billion in debt is owed to Chinese lenders. Zambia worked out a deal with the IMF for a $1.3 billion bailout package but can’t access the relief until its underlying debt is restructured – including Chinese debts. But the IMF prescription for Zambia is a blow to Beijing. Here are some details of the arrangement from The Diplomat:

Zambia will shift its spending priorities from investment in public infrastructure – typically financed by Chinese stakeholders – to recurrent expenditures. Specifically, Zambia has announced it will totally cancel 12 planned projects, half of which were due to be financed by China EXIM Bank, alongside one by ICBC for a university and another by Jiangxi Corporation for a dual highway from the capital. The government has also canceled 20 undistributed loan balances – some of which were for the new projects but others for existing projects. While such cancellations are not unusual on Zambia’s part, Chinese partners account for the main bulk of these loans…

While some of these cancellations may have been initiated by Chinese lenders themselves, especially those in arrears, Zambia may not have needed to cancel so many projects. Since 2000, China has canceled more of Zambia’s bilateral debt than any sovereign creditor, standing at $259 million to date.

Nevertheless, the IMF team justified the shift because they – and presumably Zambia’s government – believe that spending on public infrastructure in Zambia has not returned sufficient economic growth or fiscal revenues. However, no evidence is presented for this in the IMF’s report.

Zambia will also cut fuel and agriculture subsidies. So instead of infrastructure investment and social spending, the country gets austerity. The IMF deal also relegates China to the backseat, as it allows for 62 concessional loan projects to continue, only two of which will involve China. The vast majority of the projects will be administered by multilateral institutions and involve recurrent expenditure rather than infrastructure-focused projects.

Despite all the evidence to the contrary, Yellen on a trip to Zambia in February warned that Chinese lending “can leave countries with a legacy of debt, diverted resources, and environmental destruction” and called out Beijing for being a “barrier” to ending the major copper producer’s debt crisis and noted that it had “taken far too long already to resolve.”

The US effort to sideline China in Zambia comes at the same time that Washington is trying to tighten control over resources in the region. Note that back in December the US signed deals with the Democratic Republic of Congo and Zambia (the world’s sixth-largest copper producer and second-largest cobalt producer in Africa) that will see the US support the two countries in developing an electric vehicle value chain.

Beijing is insisting that multilateral lenders also accept haircuts on loans rather than just China being expected to do so. This is a position that most debtor nations agree with. On the other side, the IMF and its partners are worried that its bailout money would merely go to Chinese creditors – many of which are state banks that are increasingly troubled by bad debts.

Gong Chen, founder of Beijing-based think tank Anbound, says that if countries are unwilling or unable to repay their debts to China, it would be devastating:

Widespread debt evasion and avoidance would have a significant impact on China’s financial stability,” he said, “and we are concerned that some countries may try to avoid paying back their debt by utilizing geopolitics and the ideological competition between East and West.

Yellen and company tried to apply more pressure on Beijing at the recent G20 meeting of finance officials in India, but that fell flat on its face much like the West’s efforts to hijack the meeting and turn it into a roundtable on Russian sanctions.

Meanwhile, Zambia has halted work on several Chinese-funded infrastructure projects, including the Lusaka-Ndola road, and canceled undisbursed loans in line with the IMF prescription for its debt problem.

Chinese companies are now attempting to work around these roadblocks by shifting more toward public-private partnerships. For example, a Chinese consortium is now planning to build a $650 million toll road from the Zambian capital to the mineral-rich Copperbelt province and the border with the Democratic Republic of the Congo.

The situation in Zambia does not bode well for other nations needing debt relief, as the delays while the West and China clash mean more pressure on government finances, companies and populations.

And if the West’s primary goal in offering debt relief is to sideline Beijing, as it appeared in Zambia, then that will mean a drastic scaling back of infrastructure projects replaced by austerity. From Sovdebt Oddities:

More broadly, as noted by Mark Sobel, the current international financial architecture is ill-equiped to deal with a major recalcitrant creditor benefiting from outsized (geo)political leverage. While it remains illusional to insulate sovereign restructurings from geopolitical considerations, there is a risk that they would turn into a game of chicken between China on the one hand and the IMF and Paris Club on the other hand. The problem being that if none of the players yields, it will just mean more economic and social hardship for the debtor country stuck in the middle.

Sure enough, the same situation is playing out in two nations that are key points on China’s Belt and Road project: Pakistan and Sri Lanka.

Here is Islamabad’s debt situation, courtesy of Pakistani economist Murtaza Syed at The International News:

For each of the next five years, Pakistan owes the world $25 billion in principal repayments. It will also need at least $10 billion to finance the current account deficit, bringing total external financing needs to $35 billion a year between now and 2027. We have foreign exchange reserves of just $3 billion. For each of the next five years, the government needs to pay 5 percent of GDP to service the debt it owes to residents and foreigners. Our total tax take is only 10 percent of GDP.

Around fourth-fifths of this external debt is owed to the official sector, split roughly evenly between multilaterals (like the IMF, World Bank and ADB) and bilaterals (countries like China, Saudi Arabia and the United States). The remaining one-fifth is commercial, again roughly evenly split between Eurobond/Sukuk issuances and borrowing from Chinese and Middle Eastern banks. By region, we owe roughly one-third of our external debt to China and 10 percent to the old-boys network of the Paris Club, which includes Europe and the US.

Additionally, last year, the Pakistan rupee plunged nearly 30 percent compared to the US dollar. All indications are that the IMF is using bailout negotiations to pressure Pakistan to move away from China and revive its partnership with the US. Some background from WSWS:

Former prime minister Imran Khan’s government was promptly removed in April 2022 after he reversed IMF-demanded subsidy cuts in the face of country-wide protests. Khan had previously implemented two rounds of some of the toughest austerity in the country’s history. In the final year of his government, Khan shifted the country’s foreign policy towards a closer alliance with Russia and deepened ties with China, prompting concern and anger in Washington.

Sharif’s Muslim League (PML-N) and the People’s Party (PPP) assumed power in a coalition with the approval of the military, long the most powerful political actor in the country and the linchpin of the alliance between the Pakistani bourgeoisie and US imperialism. The express aim of the new government was to implement IMF austerity, which it has done.

The IMF-prescribed austerity imposed by Pakistani elites also targets Beijing.  China is Pakistan’s largest single creditor as the country is perhaps the most important country in China’s Belt and Road plans because it would provide China with a potential corridor to the seaport at Gwadar on the Indian Ocean. The supply line would reduce the distance between China and the Middle East by thousands of miles via insecure sea lanes to a shorter and more secure distance by land. Beijing’s spending in Pakistan reflects this, as the $53 billion China has spent on the Belt and Road Initiative (BRI) in the country is tops of all BRI countries.

Yet many of the BRI plans are unrealized, and Pakistan’s current economic situation makes it unlikely they’ll be finished anytime soon. China has dramatically scaled back investment, which fits with its more cautious approach to BRI projects. Meanwhile, decades-high inflation, economic mismanagement, and last year’s biblical floods have led to Islamabad burning through its foreign exchange reserves in order to make debt payments. The US blames China.

“We have been very clear about our concerns not just here in Pakistan, but elsewhere all around the world about Chinese debt, or debt owed to China,” US State Department Counselor Derek Chollet told journalists at the US Embassy in Islamabad after he met with Pakistani officials in February.

Additionally, Cholett said Washington is warning Islamabad about the “perils” of a closer relationship with Beijing.

According to the Times of India, many Pakistani officials have come around to the US way of thinking and are also blaming the China-Pakistan Economic Corridor Project (CPEC), a $65 billion network of roads, railways, pipelines, and ports connecting China to the Arabian Sea,  for worsening the country’s debt crisis. From Indian Express:

Pakistan expanded its electricity generation capacity under the China-Pakistan Economic Corridor Programme (CPEC) but the expansion came at a high cost both in terms of high returns guaranteed to the Chinese independent power producers (IPPs) and the expensive foreign currency debt. Pakistan has been unable to make the capacity payments to IPPs under the long-term power purchase agreements with the electricity sector debt rising to a staggering $ 8.5 billion.

Last December, the government agreed to repay this debt in installments. However, this may have displeased the IMF, which had expected the government, in August 2022, to renegotiate the purchase power agreements. Pakistan tried to renegotiate but the Chinese refused.

The IMF extended the current program on the condition that it would not go to the Chinese IPPs. More from Nikkei Asia:

Observers say Pakistan’s handling of the electricity issue is likely to irk China, noting that Sharif’s government committed to the IMF to reopen power contracts without taking the Chinese companies into confidence. Pakistan has also reneged on a promise to set up an escrow account to ensure smooth payments to Chinese IPPs.

The IMF is demanding that Pakistan rationalize payments to the Chinese IPPs in line with earlier concessions extracted from local private power producers…

The IMF now wants Pakistan to negotiate an increase in the duration of bank loans from 10 years to 20 years, or to reduce the markup on arrears owed to Chinese IPPs from 4.5% to 2%.

Notably, the IMF appears to have been less willing to make concessions than the previous 22 times Pakistan has sought its support since 1959. Oddly enough Beijing is pushing for a deal between Islamabad and the IMF, and China recently extended a $2 billion loan to Pakistan. From the Middle East Institute:

It is interesting to note, for example, that Chinese officials reportedly urged Islamabad to repair ties with the IMF — if true, an indication that Beijing regards resumption of the Fund’s lending program as key to mitigating Pakistan’s risk of default.

It is also revealing that Pakistan seems keener to take on new financing from China than China may be to furnish it. Even as the economy wobbles under a heavy debt burden and other acute challenges, Pakistani officials have sought support from China to upgrade the Main Line 1 (ML-1) railroad, a project which, if not undertaken, they claim could result in the breakdown of the entire railway system.Yet, the IMF wants Pakistan to rein in CPEC activity. And China’s own domestic economic challenges and priorities might make it hesitant to respond to Islamabad’s appeals. On the other hand, the ML-1 project might meet Beijing’s more exacting standards and increasing emphasis on “high quality” BRI infrastructure projects.

The recent rapprochement between Iran and Saudi Arabia could leave Pakistan out in the cold and even more reliant upon the US. From Andrew Korybko:

With the Kingdom likely to focus more on mutually beneficial Iranian investments than on dumping billions into seemingly never-ending Pakistani bailouts that haven’t ever brought it anything in return, Islamabad will predictably become more dependent on the US-controlled IMF. China will always provide the bare minimum required to keep Pakistan afloat in the worst-case scenario, but even it seems to be getting cold feet nowadays for a variety of reasons, thus meaning that US influence might further grow.

About that, last year’s post-modern coup restored American suzerainty over Pakistan to a large degree, which now makes that country a regional anomaly in the geopolitical sense considering the broader region’s drift away from that declining unipolar hegemon. The very fact that previously US-aligned Saudi Arabia patched up its seemingly irreconcilable problems with Iran as a result of Chinese mediation reinforces this factual observation. Pakistan now stands alone as the broader region’s only US vassal.

Pakistan is not only the most highly indebted to China of its BRI partners, but along with Sri Lanka, is also among the largest recipients of Chinese rescue lending. The ruling elite Pakistan is increasingly concerned that the social crisis could spiral out of control and result in something similar to what happened in Sri Lanka last year when a popular uprising toppled the government.

Due to haggling between the West and China, Sri Lanka has been waiting since September to finalize a bailout after a $2.9 billion September staff level IMF deal. And yet many of the recommendations in the agreement have already been implemented—to disastrous effect.

The country is dealing with its worst economic crisis since independence in 1948, including a shortage of reserves and essential items. In February, the IMF said Sri Lanka’s bailout package was set to be approved as soon as the country obtained adequate assurances from bilateral creditors, i.e., China.

Beijing now appears ready to meet more of the IMF’s demands, although details have yet to be released. In a letter in January, the Export-Import Bank of China offered a two-year debt moratorium, but the IMF said that wasn’t enough. According to Reuters, total Sri Lankan debt to Chinese lenders totals roughly 20 percent of the country’s total debt.

Sri Lanka is another focal point of the BRI due to its geographical position in the middle of the Indian Ocean. China’s goal was to transform the country into a transportation hub as much of its energy imports from the Middle East and mineral imports from Africa pass through Sri Lanka. Beijing has already achieved much of these goals. For example, in 2017 a 70 percent stake of the Hambantota port was leased to China Merchants Port Holdings Company Limited for 99 years for $1.12 billion.

The West blames China’s BRI initiative in Sri Lanka for saddling the country with unsustainable debt, but is that really the case? Political economists Devaka Gunawardena , Niyanthini Kadirgamar, and Ahilan Kadirgamar write at Phenomenal World:

The problems associated with the IMF’s policy package have been caught in geopolitical rhetoric. The US alleges that Sri Lanka is the victim of a Chinese debt trap. In fact, Sri Lanka is in an IMF trap. The structural consequences of over four decades of neoliberal policies have exploded into view with the receding welfare state, a ballooning import bill, and investment in infrastructure without returns, all of which relied on inflows of speculative capital. Framing Sri Lanka’s crisis within a narrative of geopolitical competition obscures the core dilemmas of the global economy. Will the evident breakdown force a reckoning with the present order, or will it be used as an excuse to inflict more suffering?

Thus far, it looks like the latter.

[allthebrazilianpolitics]

Brazil and Argentina to start preparations for a common currency

Other Latin American nations will be invited to join plan which could create world’s second-largest currency union

Brazil and Argentina will this week announce that they are starting preparatory work on a common currency, in a move which could eventually create the world’s second-largest currency bloc.

South America’s two biggest economies will discuss the plan at a summit in Buenos Aires this week and will invite other Latin American nations to join.

The initial focus will be on how a new currency, which Brazil suggests calling the “sur” (south), could boost regional trade and reduce reliance on the US dollar, officials told the Financial Times. It would at first run in parallel with the Brazilian real and Argentine peso.

The attractions of a new common currency are most obvious for Argentina, where annual inflation is approaching 100 per cent as the central bank prints money to fund spending. During President Alberto Fernández’s first three years in office, the amount of money in public circulation has quadrupled, according to central bank data, and the largest denomination peso bill is worth less than $3 on the widely used parallel exchange rate.

However, there will be concern in Brazil about the idea of hitching Latin America’s biggest economy to that of its perennially volatile neighbour. Argentina has been largely cut off from international debt markets since its 2020 default and still owes more than $40bn to the IMF from a 2018 bailout.

Continue reading.

[dukuzumurenyiphd]

In the Global South the wages of the working poor are intentionally low. IMF programs, economic bailouts of neocolonial governments, drive the already low wages to extremely depressed levels.

[news-of-the-day]

3/21/23

French President Macron's government barely survived a no-confidence vote. Although he is still standing and his reforms pushed through, he's pretty unpopular now and it's going to be difficult to get any work done after this.

The IMF approved a $3B bailout to Sri Lanka. It's been in dire straits economically for over a year and people have been protesting due to lack of necessities. IMF wanted to make sure Sri Lanka overhauled its debt before issuing the bailout, finally giving the nation a much-needed lifeline.

Support staff (bus drivers, special education assistants, cafeteria workers, etc.) for LA public schools went on strike for three days after talks failed with the district. The teachers' union asked its members to join in solidarity.

A video was released showing seven sheriff deputies and three hospital staff piling on top of Irvo Otieno, resulting in him smothering to death. The ten people involved were charged for his death.

1) Le Monde 2) WSJ 3) LA Times 4) Washington Post

[mariacallous]

TUNIS, Tunisia—Tunisian President Kais Saied’s clampdown on both political opponents and undocumented Black migrants has accelerated in the past weeks, turning Tunisia into a country that has become unrecognizable from the one that gave birth to the Arab Spring revolutions that swept the region in 2011.

“Hordes of illegal immigrants from sub-Saharan Africa are still arriving, with all the violence, crime, and unacceptable practices that entails,” he told his national security council on Feb. 21. As for those arrested, often without charge, they were simply called “terrorists” and “traitors.”

The conspiratorial thinking that has long defined the novice politician, who came to power in a landslide election victory in 2019, now looks to have spread across much of Tunisia, with the hitherto little-known Parti Nationaliste Tunisien (PNT) leading a campaign flooding Tunisia’s social media with attacks on the country’s migrants.

Elsewhere, newspapers and television channels devote airtime to the latest international and domestic conspiracies intended to destabilize Tunisia. All the while, gaps on supermarket shelves remain, and the long-promised International Monetary Fund (IMF) bailout of the country’s economy is as distant a prospect as ever.

Outside the International Organization for Migration building in Tunis,, a makeshift village of tarpaulins and blankets—which has grown over the last few months—is now strained to breaking point, as more undocumented Black migrants from across Africa compete for space.

Stories of evictions are the norm. Accounts of attacks with machetes, knives, and beatings are common. Many people speak about the burning of property and the withholding of wages. Before the president’s speech in February, awareness of racism in Tunisia existed but was barely spoken of. Now, it has come to define their lives.

On one street, a young Nigerian couple and their baby nestle under nylon blankets on a makeshift bed, protecting themselves from a bitter wind that blows off the nearby lake. “We’ve been here for almost a week,” said the woman, who asked not to be named. Before that, they’d spent the last few months living in one of the working-class neighborhoods that skirt the capital. “Things are very bad now. No home to stay in. The landlord drives us out. The police and the people harass us in the street. No work, no money. Nothing.”

Asked how she will describe Tunisia to friends in Nigeria, she barely pauses. “I will tell them what I experienced. A lot of Tunisians are very good, but many”—she pauses—“are very bad.”

Saied’s crackdown on internal critics and opposition figures had already drawn international criticism before his racially charged broadside against Tunisia’s vulnerable community of undocumented Black migrants on Feb. 21. He accused them of participating in a plot to change the demographics of Tunisia, echoing the so-called great replacement conspiracy theory popular with the European and American far right and that has inspired a number of racist killers around the globe. Saied’s claims have already won the approval of French far-right politician Éric Zemmour. However, to what degree Saied is motivated by cynicism and whether he believes these theories remain unknown.

The number of Black migrants, just like the number of white migrants—who include Western aid workers, development officers, and a large number of Libyans living in the capital’s northern suburbs—is impossible to determine with any accuracy. All told, there are thought to be around 21,000 Black migrants overall in Tunisia; many of them, through Tunisia’s opaque bureaucratic systems, are without the correct paperwork—meaning that establishing legal residency is almost impossible.

As such, accommodations are often arranged informally, through friends or with pliant landlords, and income is generated through casual employment, a plight ironically familiar to the thousands of Tunisians who migrate to Europe without paperwork every year.

Any mention of the dissonance between the treatment of Tunisians in Europe and what is meted out to undocumented Black migrants in Tunisia elicits little but frowns in the working class reaches of La Soukra in Ariana, next to the capital. “The EU won’t let them in, so they’re forced back here,” Bassem Khazmi, a fruit and vegetable wholesaler, said of the Black migrants to a translator.

Asked how the relatively small number of undocumented Black migrants compare to the thousands of Tunisians who leave for Europe without paperwork every year, Khazmi swiftly changes the topic.

However, the scale of the violence that followed Saied’s comments has surprised many observers. Testimonies of those impacted are startling. Evictions of Black migrants are widespread, with entire families being displaced across the country. In the last few days, InfoMigrants, a news site dedicated to the issue of migration, reported that four Black migrants were stabbed in the central coastal city of Sfax, while in Tunis, four students reported being attacked after leaving their university residence.

Elsewhere, in many of the country’s cities, gangs of predominantly young men are nightly kicking down doors and dragging Black migrant families into the street, some to watch their possessions burn. Testimonies of those confined to their houses, too scared to emerge for fear of their neighbors reporting them, are legion.

Few people would deny that some underlying racial tension has simmered under Tunisia’s ostensibly progressive surface for some time. However, since the start of February, a campaign calling on Tunisians to report undocumented migrants to the authorities by the PNT—under the leadership of Sofien Ben Sghaïer and recognized as an official party since 2018—has gained both traction and media coverage. In the first 25 days of February, spanning the period before and immediately after the president’s intervention, the Tunisian Forum for Economic and Social Rights told FP that an estimated 1,540 Black migrants were arrested.

“I don’t know what his motivations are,” Amnesty International’s Amna Guellali said, whe asked if the president’s comments were an effort to distract from his economic failures. “I don’t know if he’s surprised at the level of vigilante violence and xenophobia his words have unleashed … but he’s given the green light to a lot of people’s hatred.”

As the unrest has continued, hundreds of members of Tunis’s predominantly young and educated activist community, largely absent from the country’s street politics since Saied’s power grab in 2021, mobilized over the weekend to voice their solidarity with the country’s Black migrants.

By doing so, many Tunisians found themselves in surprising ideological lockstep with their former opponents among the country’s political parties, who were exercised by the arbitrary arrests of many former legislators when Saied froze parliament and dismissed the country’s prime minister. Whatever their intention, by coming together, they at least present the president with something approaching a unified—if still fragmented—opposition.

What difference that might make is unclear. Saied’s clampdown on the opposition has received widespread international criticism, from the United Nations to the African Union. His response has been to express surprise at censure and remind his critics overseas that Tunisia remains sovereign, risking future isolation and potential penury at a time when the country needs its allies the most.

However, what the president’s vision—either political or economic—for the country might be remains a mystery. As a potentially catastrophic default on Tunisia’s international loans becomes increasingly likely, Saied appears oblivious to the looming disaster. Rather than form a social contract with the country’s principal trade union—the Tunisian General Labor Union, which he will need to introduce the social reform he will likely require—he has expelled the union’s high-profile guest, European Trade Union Confederation chief Esther Lynch, for interfering in the country’s internal affairs during her address to a union rally.

Elsewhere, as negotiations on the IMF’s vital $1.9 billion bailout appear to have stalled, doubts over Saied’s willingness to engage in the international commitments and internal concessions needed to secure the loan are also finding voice.

In their place, he continues to target the “traitors” and “terrorists” of his opposition, accusing them of conspiring to assassinate him and selling out the country to unnamed foreign powers. With every showing, the president’s accusations have grown more idiosyncratic, with one list purporting to be of those conspiring against state security, including French public intellectual Bernard-Henri Lévy.

The scale and ferocity of Saied’s political purges are increasing daily. A growing number of the president’s critics and opponents have all been arrested—many without charge—in just the last few weeks. Those detained include key figures, from the leadership of the National Salvation Front and Citizens Against the Coup—groups dominated by many of the country’s former political parties—to the owner of a popular independent radio station to judges, lawyers, and businesspeople who have all been arrested by a freshly invigorated police force.

Some people have been accused of conspiring in the subsidized food shortages, and some are accused of increasing prices across the country. Others stand accused of plotting with the U.S. Embassy against Saied’s increasingly idiosyncratic rule.

Screenshots of representatives from Citizens Against the Coup, including what appears to be opposition activists Chaima Issa and Jaouhar Ben Mbarek setting up a meeting with the U.S. Embassy in Tunis, have been shared widely on Tunisia’s social media. Both Issa and Ben Mbarek have since been arrested. Issa has been charged with spreading false information; charges against Ben Mbarek are unknown as of time of writing.

In a statement issued to Foreign Policy, the U.S. State Department expressed its alarm that criminal charges against individuals in Tunisia resulting from contact with embassy officials may have led to their detention. The statement said: “A primary role for any U.S. Embassy or diplomat in every country in which we have a diplomatic presence is to meet with a wide array of individuals to inform the United States’ understanding of the different views and perspectives in that country. Tunisian and other foreign diplomats posted to the United States regularly engage in similar meetings.”

Irrespective of the details of any particular meeting, charges and accusations against many of the people now detained strain credulity.

“So much of what he’s saying is ridiculous,” said Hamza Meddeb, a fellow at the Carnegie Middle East Center. “I mean, how can a few individuals in Tunis cause a national food shortage and price rises? However, many within Tunisia’s security services are going along with it. It’s a marriage of convenience. They get to close down the public space while escalating repression across Tunisia. They don’t need to worry about the logic of what the president is saying. It doesn’t matter. This is about power.”

Moreover, with many of those arrested perceived as members of the country’s elite and political classes—whom many citizens blame for their current difficulties—the recent round of arrests is working in tandem with the campaign to scapegoat Black migrants.

“It’s basically an essay in populism,” Meddeb said. It has also unleashed repressed racism.

In Tunis, with the memory of former autocrat Zine el-Abidine Ben Ali still fresh in people’s memory, an old man in the city center openly boasted to a camera that his ancestors had trafficked in slaves.

For many Black migrants, undocumented and increasingly documented, none of it matters. Standing outside the embassy of the Ivory Coast near central Tunis, a family of documented Black migrants are preparing to leave. “Since the president’s speech, it has been very bad,” the father said. Asked if the change in attitudes toward migrants was sudden, he added, “It was like a switch being flipped.”