Crimes of Globalization: Rwanda After its independence in 1962, Rwandas relations with its former colonial powers and international financial donors became exceedingly complex. The catastrophic impact of structural adjustrnent policies dictated by the lMF and World Bank, along with the fall in coffee prices on the global market (a fall linked to the policies of the institutions and the International Coffee Organization), played a key role in establishing the socio-economic context within which the Rwandan crisis emerged. As often occurs in heavily indebted countries undergoing additional economic stressors or near collapse, the Habyarimana regime requested help from the intemational arena. It accepted the IMFs/WBs proffered structural adjustment program The With Strategy Change plan was adopted and almost immediately a 50 percent devaluation of the Rwandan franc was carried out in November of 1990. The devaluation was posited as the key to boost coffee exports by increasing the purchasing power of international trading partners. The plunge of the Rwandan franc triggered severe inflation within the Rwandan economy. Outstanding external debt increased by an additional 34 percent between 1989 and 1992. Import prices soared, yet the price at which coffee was bought from local producers was frozen by the IMFs structural adjustment program (SAP) requirements. In June 1992, the IMF ordered a second currency devaluation; prices for fuel and consumer essentials rose again. With trade liberalization and the deregulation of grain markets as recommended by the SAP, cheap food imports and food aid from the other countries were destabilizing the few local markets that had managed to sustain themselves. The entire agricultural system was pushed into crisis as a result of t h ~ austerity measures and sinking civil service salaries. These policies inevitably exacerbated the overarching climate of insecurity. Like the poorest sectors of the urban population, these destitute farmers became a permanent reservoir of recruits for the Interahamwe militia and the army. The fall of the market in the late 1980s also corresponded with the political disintegration of the Habyarimana regime. In tum, massive social discontent from the devastating economic conditions was channeled by the regime s hardliners into implementing their plan for genocide. (For a more detailed account of the Rwanda genocide and Rwandas history, sec also Mullins and Rome [200sj and Prunier [1995]). By 1990, Rwanda was in a pervasive crisis. The Rwandan crisis of the early 1990s becarne a spectacle of donor roundtables in Paris, broken ceasefire agreements, and failed peace talks. Initiatives were closely monitored and coord nated by lite economic donors in a tangled web of conditions (Toussaint 20o4). When the fighting between the RPF and lit e regime started, millions of dollars of balance-of-payments aid from multilateral and bilateral sources came pouring into the coffers of the Rwandan Central Bank. Earmarked for commodity irnports, a sizeable amount of these loans were diverted toward the acquisition of military hardware. After October 1990, the Rwandan Armed Forces expanded from 5,000 to 40,000 men, requiring a sizeable influx of outside money to pay the new recruits. The new recruits were drawn from the urban unemployed who had dramatically increased since the collapse of the coffee market in 1989. Thousands of youths were also drafted into the civilian militia. The stage was set for the upcoming genocide. International financial institutions became: wary of such large military expenditures and demanded that the regime decrease military spending. At the same lime, however, they allowed the regime to account for the sums loaned by the WB and the IMF by presenting old invoices based on a flawed accounting system for all imported goods (Toussaint 1999). By using invoices versus receipt-based accounting for imported goods, the dates and amounts were easily altered. This strategy allowed the regime 10 finance massive arms purchases thal would later be used in the 1994 genocide. For example, trucks imported for the army were put on the Transport Ministry, account, and fuel used for militia and army vehicles was recorded on the Health Ministries , account (TousaainI 2004). When the IMF and WB suspended lending at the beginning of 1993, they failed to freeze the large sums of money held in accounts in foreign banks, which the Habyarimana regime used to buy more arms. The WB and lMF had knowledge of intelligence and NGO reports from within the country that indicated that ethnic hostility between the Hutus and Tutsis had increased and genocidal rhetoric had become more amplified. While the WB eventually did respond by suspending lending in early 1993, military usages of international funds began in 1989, specifically in the financing of troop increases. The WBs delay in responding to the Rwandan governments misuse of funds allowed for the development of a military hardware and personnei infrastructure that facilitated the 1994 genocide. Actions such as these indicate how, through acts of omission, the institutions failed in their duty to monitor loan money. Further, the full democratization of Rwanda envisaged by the IMF, WB, and the 1993 Arusha accords was impossible due to the widespread impoverishment of the population. Instead, the ohjetctives of democratiza_ lion and inter-ethnic sollidarity were subsumed to the demands of realpolitik, which meant meeting the conditions of good govemance by intemational finance lenders and Habyarimana. The installation of a multiparty coalition govenment under the trusteeship of Rwandas extemal creditors fueled the various political factions within the regime, leading to the assassination of Habyarimana- the oft cited trigger of the genocide. Clearly the international financial institutions did not intend to produce the Rwandan civil war and the 1994 genocide. However, the austerity rneasures combined with the impact of the lMF-sponsored devaluations contributed to impoverishing the Rwandan people at a time or acute political and social crisis. The deliberate manipulation or market forces destroyed economic activity and people lI livelihood, fueled unemployment, and created a situation or generalized famine and social despair that enhanced the growing, though constructed through colonial and religious leaders, ethnic divisions (Toussaint 2004).
Posted on: Sat, 15 Mar 2014 23:31:41 +0000
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