Multinational Monitor

MAR/APR 2007
VOL 28 No. 2


Big Pharma and AIDS Act II: Patents and the Price of Second-Line Treatment
by Robert Weissman

Manuel Cossa's Story: Mining and the Migration of AIDS
by Stephanie Nolan

Slow on Generics: Bush Policy Saves Lives, At a Premium
by M. Asif Ismail

HIV In Uganda: The Challenges of Getting Pills to Patients
by Richard Kavuma

Building Up Baja: US Suburbanization Comes to the Peninsula
by Dan La Botz


Cry for Action: Shameful Neglect and the Search for Hope in AIDS-Ravaged Africa an interview with Stephen Lewis

Four Million Short: The Healthcare Worker Shortage
an interview with Lincoln Chen


Behind the Lines

Deadly Dictates: The IMF, AIDS and the Healthcare Crisis

The Front
Climate Changing Africa -- African Inequality

The Lawrence Summers Memorial Award

Greed At a Glance

Commercial Alert

Names In the News



Deadly Dictates: The IMF, AIDS and the Healthcare Crisis

The savagery of the global AIDS pandemic is now of similar scale to the worst world-historic public health scourges, the Spanish flu of 1918-1919 and the Black Plague of the 14th century. Twenty-five million people have now died from AIDS-related causes.

The mind-numbing devastation wreaked by AIDS makes it easy to attribute the horror simply to forces of nature. This inclination is a mistake.          

While HIV may have emerged from nature, human intervention — and non-intervention — has fundamentally shaped how the disease has spread, who has been treated, and who has lived and died.          

This issue of Multinational Monitor examines some — but by no means all — aspects of the political economy of HIV/AIDS.
“Big Pharma and AIDS: Act II” explains how generic competition has made the price of lifesaving medicines affordable — and how Big Pharma and the U.S. government are conspiring to defend monopolies and maintain high prices for newer and second-line AIDS drugs.
Stephanie Nolen’s searing portrait of Manuel Cossa and his wife illustrates how the Southern African mining economy — with its patterns of labor migration and division of families — has spread HIV throughout the region.
Former UN Special Envoy for HIV/AIDS in Africa Stephen Lewis explains in an interview how political failures have enabled the virus to ravage Africa and other parts of the developing world.
Dr. Lincoln Chen details the collapse of developing country health systems, and the imperative of reviving the public health sector if the AIDS pandemic is to be tamed.
Particularly in the face of the AIDS pandemic, rebuilding public health systems is an absolute humanitarian imperative. By any standard, this will be an enormous challenge. Developing country public health systems are the victims of long-term malign neglect. AIDS not only makes the need more desperate, it makes the problem worse, by killing off so many health care workers.
These inherent problems make the obstructing role of the International Monetary Fund (IMF) all the more criminal. The Fund is preventing African countries from spending aid monies on healthcare; blocking countries from spending more of their own funds on health; and insisting on fiscal and monetary policies that are undermining countries’ capacity to expand their income and wealth — the prerequisite to sustainably maintaining their own health and social welfare systems.
All of this is a new twist on an old story.
For the last quarter century, the IMF and the World Bank have squeezed economies in the developing world, especially in Africa.
As Multinational Monitor, and many others, have documented ad nauseum, the IMF and the Bank have imposed “structural adjustment” on developing countries — a set of corporate-oriented, market fundamentalist policies including slashing of government budgets, sale of government assets to local elites and foreign corporations (“privatization”), deregulation of the economy, and promoting exports and trade at the expense of local needs.
IMF policies have left shattered economies around the world, consigned untold millions to poverty, and directly and indirectly destroyed social welfare systems, including healthcare and education systems, throughout much of the developing world.
In the last few years, the IMF has seen a remarkable, quiet revolt against its power, influence and policies. Middle-income countries in Asia and Latin America have paid off their debts to the Fund, and announced they won’t borrow from the Fund anymore. That move follows a string of high-profile Fund failures — interventions in economic crises (caused in no small part by IMF recommendations for countries to deregulate their financial systems) made drastically worse by Fund advice.
But most African countries don’t have the resources to pay off their debts to the IMF and other international lenders. They remain stuck in the debt trap, meaning they need new money from the IMF to pay off old loans, or at least the IMF stamp of approval to access capital from other sources. Which means they remain subject to IMF dictates.
Among other barbaric consequences, the IMF’s obsession with conservative financial prescriptions have left the nations worst hit by the HIV/AIDS pandemic unable to mobilize resources — or even to use donated monies — to address the pandemic or other excruciating health needs.
In March, the IMF’s Internal Evaluation Office (IEO) issued a report far more scandalous than anything connected to the Paul Wolfowitz drama at the Bank.
The IEO found that IMF policy was preventing African countries from spending increased foreign aid on its intended purposes. Instead, the IMF was forcing countries to use increases in foreign aid to pay down debts or build currency reserves. Thanks to the IMF, more than 70 percent in increased foreign aid was being diverted, according to the IEO.
Alongside this refusal to let countries spend aid for intended purposes, the IMF has capped countries’ ability to spend more money on healthcare, including to hire more healthcare workers and pay them more. These are the key steps needed to address the healthcare infrastructure problem that almost everyone agrees is now the main impediment to further scaling up treating for people with HIV/AIDS and resuscitating countries’ ability to deliver basic health services to all.
Underlying these restrictions on countries’ ability to spend money to address pressing health needs is an IMF fixation on what it terms macroeconomic stability, by which it means very low inflation rates and no or limited deficit spending. Dressed up in the guise of technocratic economic advice, they are really policy decisions that restrain economic expansion, preventing countries from generating more resources for their own needs.
They are also policies that take no account of the special circumstances of countries facing the HIV/AIDS pandemic.
“The IMF doesn’t know what the hell it’s talking about,” Stephen Lewis insists in the interview in this issue. “It never sufficiently takes into account the damage that is done to a country when you strip the social sectors.”
In other words, failing to invest in healthcare and education not only is immoral, it actually weakens economies. The costs are particularly high when a deadly but treatable disease is ravaging people in the prime of their working years.
Urging an abandonment of these failed policies, this fall more than 100 health and development organizations called on the incoming managing director of the IMF, Dominique Strauss-Kahn, to change course.
The civil society organizations called on Strauss-Kahn to ensure that the IMF:

  • Changes policies on foreign aid spending, so that the IMF does not stand in the way of increased spending on health, HIV/AIDS and education.
  • Abandons low inflation and deficit-reduction targets, so that the IMF does not stand in the way of policymakers in developing countries exploring and adopting more expansive fiscal and monetary policy options.
  • Publicly states that it will cease and desist with its demands for wage bill ceilings that prevent the hiring of more healthcare workers.
  • Provide immediate debt cancellation for all impoverished nations without harmful and unnecessarily restrictive policy conditions attached.
Given the scale of the AIDS pandemic, and the considerable rich country donor dollars that are intended to expand investments in healthcare, the IMF is very defensive about these criticisms. In an obfuscatory style long honed by the World Bank, the Fund simultaneously claims that critics’ concerns are misplaced and that it is changing practices to address criticisms.
In terms of the Fund’s pledged changes, it suggests it will no longer impose wage bill ceilings — restrictions on what governments can spend in the healthcare sector, or on overall government spending. But even on this pledge, the Fund maintains that it reserves the right to make such demands when “macroeconomic considerations” necessitate them — exactly the logic that has led to wage bill restraints in the past.
Even more serious is that the Fund remains committed to low budget deficit targets and extremely low inflation rates — a combination that ensures slow growth and very restricted government spending. With this framework, countries will not have freedom to expand health spending even in the absence of wage bill ceilings.
Most worrisome, perhaps, is that the Fund not only denies that it has imposed the complained about policies and that they have had harmful impact, it actually denies that more health spending is needed.
Referring to a report issued by the centrist Center for Global Development, an IMF statement indicated, “We do not share the report’s assessment that the proportion of total government spending devoted to health has not increased as much as it should have.” The statement went on to argue against an African government pledge to spend 15 percent of their budgets on healthcare.
In a saner and more caring world, people — and governments — would just ignore comments like these. But in the world in which we live, the IMF has too much power to be ignored. It must be forced to change.
Although the Fund has shown itself remarkably unbending in the face of repeated policy failure, there is now a real chance to force the Fund to loosen its grip on poor countries’ economies.
Over the last five years, middle-income countries have ended their dependence on the Fund. They have paid outstanding loans, and no longer subject themselves to IMF mandates. This remarkable change has left the IMF with a crisis of legitimacy, not to mention its own fiscal crisis (the interest payments on loans from middle-income countries were a key source of revenue).
Dominique Strauss-Kahn, who comes from the left side of the French political spectrum, takes office as a self-proclaimed reformer with a special interest in low-income countries. Most of his talk about reform has focused on giving developing countries a greater say in the governing process, not on the substance of Fund policy, however.
It is too much to hold out hope that Strauss-Kahn may assist with the transformation of the IMF — he won’t have the power, even on the off chance that he secretly harbors the desire — but he might lessen the harm caused by the institution, and give the world’s poorest countries more policy space.
The ultimate death toll from AIDS, and the health of poor countries, will depend in no small part on how this controversy at the IMF is resolved.

HIV is a vicious killer, yes. But how lethal it will continue to be is largely a policy decision.


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