How
the IMF wrecked Jamaica
10 Jul 2007
Thirty
years ago the US and the IMF moved to destabilise Jamaicas
radical government with disastrous consequences for the
population, writes Abbie Bakan
When
Michael Manley and his Peoples National Party (PNP)
were elected in Jamaica for a second term in December 1976,
all who challenged imperialism and racism walked tall.
It
showed that the country backed his refusal to adhere to
the repressive terms demanded by the International Monetary
Fund (IMF). We are not for sale, he announced
to a cheering crowd of 35,000 at the National Stadium in
the capital Kingston.
At
the time, Manley was recognised as the Socialist Internationals
most important representative in the Third World,
according to Caribbean scholar Fitzroy Ambursley.
This
was a test case for both the IMF and the anti-imperialist
movement. The proposed IMF structural adjustment programme
for Jamaica was to be a model for neoliberalism and global
debt negotiations throughout the Third World.
The
story of the rise and demise of Manleys battle with
the IMF is rich in lessons for todays anti-globalisation
movement.
Jamaica
is a tiny island nation in the Caribbean, the home of Bob
Marley, reggae music and the birthplace of pioneering black
nationalist leader Marcus Garvey.
Ever
since Christopher Columbus landed and mistakenly thought
himself in India over 500 years ago, the Caribbean islands
have also been the object of colonialist occupation and
exploitation.
Michael
Manley was a symbol of resistance not only in Jamaica but
internationally. He first came to office in the 1972 election.
Manleys
early years in power saw a number of important progressive
reforms for the population.
The
previous ban on Marxist and Black Power literature was lifted.
Secondary education was made free and accessible, and a
partial land reform policy was enacted.
Provoked
The
foreign-owned electricity, telephone and bus companies were
nationalised.
In
January of 1974, Manleys government announced a plan
to alter the system of tax breaks offered to US and Canadian
bauxite (aluminium ore) companies based in Jamaica.
These
companies mined aluminium for the war industry. The PNP
annulled previous agreements and imposed a production levy
on all bauxite mined or processed in Jamaica.
This
ruling severly provoked the anger of the US and other ruling
classes. A massive, and now well-documented, destabilisation
campaign followed.
Aluminium
and bauxite processing were shifted to other locations.
The levy was claimed to be illegal and contested by the
bauxite companies, which filed actions with the World Banks
international centre for the settlement of investment disputes.
Local
businesses, which had gone part way with Manley on the nationalisation
of foreign businesses, now buckled and found common cause
with their international allies.
Lay-offs
and soaring price increases set off an inflationary spiral
that wiped out previous wage increases. Foreign capital
inflow plummeted, and the CIA became involved with fomenting
local political rivalries.
A
terror campaign was unleashed as young Jamaica Labour Party
(JLP) members found ready access to weapons in a guns-for-ganja
trade.
Sanctions
At
first Manley attempted to hold a steady course.
Fuelled
by popular support among Jamaicas working class and
peasantry, the radical prime minister resisted the terms
of an IMF reform package.
In
the December 1976 election Manley was re-elected in a landslide,
winning 47 of the 60 seats in the parliament.
But
after Manleys refusal to adhere to the terms of the
IMF, the economy was strangled by sanctions while a media
campaign sent a wave of fear among potential tourists.
Lay-offs
increased, interest rates skyrocketed and everything from
soap to canned fish was in desperately short supply.
This
was the limit of social democratic reform. Manley would
soon prove an unreliable ally of the poor and the working
class and there would not be sufficient independent
organisation among the mass of the Jamaican working class
to steer their own course when he started to retreat.
In
1977 Manley announced Jamaicas Peoples
Plan for economic and political reform.
Despite
radical rhetoric, by May of that year Jamaica had accepted
an IMF standby agreement of £38 million
to ease the balance of payments crisis.
The
IMF re-established a line of credit with massive
strings attached.
The
loan was conditional on an attack on the standard of living
of the population. The poorest were hit the hardest, with
a dramatic cut in public spending as the leading edge of
the programme.
As
Jamaica was put to various IMF tests, repeated
failures led to more and more regulation of the islands
domestic economic programmes.
Confusion
and despair spread among Jamaicas population, especially
young students and the poorest sections of workers and peasants.
Political violence and the fortunes of the black market
soared.
By
the election of October 1980, the JLP under the leadership
of Edward Seaga was back in office, and with the largest
margin of victory in its history 52 seats to the
PNPs eight.
Only
a year earlier, revolutions in Grenada and Nicaragua indicated
that there was a growing mood of opposition to the US-dominated
market model in the region.
But
now Jamaica had set a pattern of moving halfway in opposing
the grip of the imperialist market, and then backing down.
The
JLPs Seaga government was welcomed by the US as the
new model of the times. This gave confidence to the likes
of Ronald Reagan and Margaret Thatcher and heralded
the rise of neoliberalism.
At
the end of the eight years of Manleys democratic
socialism, the average income in Jamaica was 25 percent
lower and the cost of living 320 percent higher.
Like
many social democratic governments before and since, Manleys
reformist politics proved incapable of mounting the challenge
needed to halt the force of global capital.
But
at the end of Seagas term, Jamaica had paid out a
total of £443 million to its foreign creditors, including
£176 million to the IMF.
Jamaicas
foreign debt had grown to over £2.2 billion, among
the highest per capita in the world.
It
was in this context that Manley returned as prime minister
to lead another PNP government in 1989.
Poverty
He
had abandoned the left rhetoric of his earlier government.
Instead the market was seen as the triumphant model to pursue.
However, even on the terms set by the IMF, Jamaica had clearly
failed to meet anticipated development goals.
Rather
than economic prosperity, Jamaica endured further decades
of insufferable poverty. Today, even the IMFs own
economists are starting to recognise the problem.
In
a 2006 IMF-commissioned working paper, Public Debt and Productivity:
The Difficult Quest for Growth in Jamaica, author Rodolphe
Blavy struggles with the apparent puzzle of
Jamaicas low growth rates.
He
concludes that perhaps massive debt might have something
to do with it, noting that Jamaica is among the most
indebted countries in the world.
Today
we are in a new period of radical reform in the Global South.
There are certainly many similarities between the politics
of Hugo Chavez and the first government of Michael Manley.
But
there are also differences. Venezuela has far more resources
than Jamaica. The US is a less powerful player relative
to its competitors in the world economy than 30 years ago.
And
if there is a strong, independent movement of workers and
the poor, the forces of resistance may well have a better
chance of staying the course.
But
the history of Jamaicas battle with the IMF makes
it clear that if the grip of imperialism is to be definitively
challenged, it must be replaced with another system based
on very different priorities.
And
it will be the working classes and the poor, not the corporate
bosses, who will have to set those priorities.
Michael
Manley 1924-1997
Norman Manley, Michaels father, was the founder of
the Peoples National Party.
The rival Jamaica Labour Party was founded in 1962 by Michaels
cousin Alexander Bustamante.
Michael Manley won the Central Kingston seat in the Jamaican
Assembly in 1967. He retained this seat in repeated elections
until his retirement in 1992.
Abbie Bakan is the author of Ideology and Class Conflict
in Jamaica: The Politics of Rebellion, which is published
by McGill-Queens University Press.