President Nyerere’s two major speeches at the Mansion House and at the Royal Commonwealth Society have been widely reported. They concentrated on the debt problems of the Third World. Referring to Tanzania’s terms of trade, he said:
‘Taking 1980 as a base year, import prices had risen to 115.2 by 1984 and export prices to 103.3. In 1982 things were even worse, with import prices at 117.4 of the 1980 figure and export prices at 95.4. In reality this means that resources were transferred from Tanzania to its trading partners, including Britain and other developed countries.’
In a strong attack on the International Monetary Fund, he said: ‘When a country like Tanzania resists terms which it believes would make its economic conditions worse and imperil its social and political stability, it pays a very heavy price. Not only is it denied the foreign exchange injection to which its membership of the IMF ought to entitle it, and not only does it come under heavy pressure from its creditors and donors, it also has to continue paying foreign exchange to the IMF at its time of crisis.
For example, Tanzania’s foreign exchange difficulties began to become serious in 1978, yet between 1978 and 1984 it has made a foreign exchange payment to the IMF of 50.2 million SDR’s*. It cannot even get into arrears on these payments – they have to take priority over purchases even of food, or minimum oil requirements. For if payments are not made when due, continued negotiation about a new Agreement is suspended, and also it is designated as bankrupt by all other trading and financial partners.
What all this amounts to is an increasing tendency towards a kind of international authoritarianism. Economic power is used as a substitute for gunboats (sometimes- as in the case of Nicaragua- it is used as an addition) in enforcing the unilateral will of the powerful. The sovereign equality of all nations is ignored, as is the future stability of the world as a whole.
* A Special Drawing Right (SDR) is the Fund’s official unit of account. Its value is determined by reference to a basket of currencies.