Global financial institutions… a tool for Western hegemony or to help countries develop?
Video duration 51 minutes 04 seconds
The former Executive Director of the International Monetary Fund, Dr. Muhammad Fneish, asserts that global financial institutions reflect the interests and viewpoints of adults in Western countries, and that the criticisms leveled against them are valid.
According to Muhammad Fneish – who spoke to an episode of “The Story is Rest” program – it is the rich countries that control the International Monetary Fund and the World Bank, and the United States of America, for example, has the right to veto important decisions within the two institutions.
The former Executive Director of the International Monetary Fund cited the correctness of his words about the existence of an agreement that stipulates that the World Bank will be headed by an American figure, while the presidency of the International Monetary Fund will be entrusted to a European figure.
However, Fneish also blamed developing countries that turn to international financial institutions, saying that political elites within those countries bear responsibility for the problems afflicting the economy they run.
The former Executive Director of the International Monetary Fund called for a fundamental change in the two international financial institutions, by reforming their governance, to be more democratic and transparent, and to consider the representation of other countries.
While he criticized the issue of the lack of integration between Arab countries, and revealed that intra-regional trade does not exceed 5%, Fneish said that the questions that should be raised are why the Arab region is less integrated in economic terms compared to global regions? Why is the border between Algeria and Morocco closed?! And why are Arab countries waiting for the miracle of solving their economic problems from abroad, from the International Monetary Fund or the United States of America, to come to them?!
For his part, Kamil Al-Sari, a professor of economics at the Sorbonne University and a former expert at the International Monetary Fund, spoke about the real goals of international financial institutions, and explained how all the debts that countries and major banks lend to countries that have indebtedness should be returned to the creditors.
He referred to a number of measures imposed on countries that request indebtedness, including boosting exports, i.e. abandoning internal productive activities and privatizing the economy, so that public institutions do not become under the control of the state.
Al-Sari stressed – in an interview with the program “For the rest of the story” – that developing countries bear responsibility because of the economic policies they follow, and gave an example of the policies that he said exhausted the economy in Egypt, Morocco and Jordan and led to the bread demonstrations in the eighties and nineties of the last century.
He also stressed the importance of having economic blocs between the countries of North Africa and the Arab Mashreq, and questioned the reason for the conflict between neighboring countries such as Algeria and Morocco, at a time when France and Germany are uniting despite the bloody wars that took place between them in the past.
In response to a question about the limits of change in light of the Corona virus, the professor of economics at the Sorbonne University stressed that there are positive signs that it is possible to think about structured economies and aid to other countries.
The difference between the IMF and the World Bank
It is noteworthy that the idea of establishing the International Monetary Fund and the World Bank came at an international conference held in Bretton Woods, New Hampshire, USA in 1944, and the participants aimed at setting a framework for cooperation and development in the economic field among member states to establish a more stable and prosperous global economy.
The International Monetary Fund is specialized in providing loans to member states to address temporary deficits in their balance of payments. As for the World Bank, it works to support long-term economic development, reduce poverty, and help members reform certain sectors or implement specific projects.
The World Bank has 189 members, while the IMF has 190 members.
The largest borrowers from the IMF are Argentina, Egypt, Ukraine and Pakistan. In the Arab world, the total that Egypt, Morocco, Tunisia, Iraq, Jordan, Yemen and Mauritania borrowed from the IMF during the past ten years amounted to more than 54 billion dollars.