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Archive for January 10, 2012

IMF Orders African Governments to Remove Fuel Subsidies

NewsRescue published on January, 1, 2012:

Christine Lagarde visited Nigeria to meet President, Goodluck Johnathan in December 2011

Joining Guinea, Cameroon, Ghana and Chad, Nigeria on New Years day removed fuel subsidies in accordance with an order from the IMF (International Monetary Fund). This created a jump in the price of automobile fuel from about 65 Naira per liter to 140Naira per liter overnight, Sunday. This brings fuel/gas prices in Nigeria to about the same price it is in the US, though lower than many European nations.

Nigerians used to pay about $1.51 / gallon, the European average is about $5-6.00/gallon, while the US average is $3-3.70/gallon. While other oil producing nations, like Venezuela, Kuwait and Saudi Arabia are about $0.12, $0.78 and $0.91 respectively. This hike in fuel prices was compelled on African Nations by the IMF due to supposedly rising global oil prices and the Europe recession.

Trying to invoke an “African Spring”?

Christine Lagarde ordered the governments of Nigeria, Guinea, Cameroon, Ghana and Chad to relinquish fuel subsidies

The Managing Director of the International Monetary Fund (IMF), Christine Lagarde visited Nigeria to meet with the President, Goodluck Johnathan in December 2011 to drive home this directive. This move invites frustration on African nations which comparatively escaped the “Greed” Wall street recession that has been marauding and collapsing European and Middle Eastern economies, with resulting hardship, riots and Government change, including the popular “occupy” riots still plaguing the United States and other European nations, the August 2011 “Robin-hood” riots of the UK,  the collapse of Greece economy, that likewise affected the Middle East with the “Arab Spring” revolutions. This IMF induced chaos in Africa is like the IMF induced riots in 1997 in Indonesia during the Asian financial crisis.

Related: NewsRescueHow The IMF-World Bank and Structural Adjustment Program(SAP) Destroyed Africa

The meeting with Goodluck Johnathan was not just coincidental. Analysts believe it was predetermined. The IMF has been canvassing for the removal of subsidy among African countries. View Meeting images provided by IMF

This pronouncement has seen governments in Nigeria, Guinea, Cameroon, Chad and Ghana moving to cut state subsidies on fuel.

Yesterday, Ghana cut subsidy and it was learned that the development was due to pressure from the IMF to do so because of rise in the price of crude.

CBN governor Sanusi, Minister of Finance, Ngozi Iweala and IMF boss, Christine Lagarde

The Chief Executive Officer of Ghana’s National Petroleum Authority (NPA), Alex Mould said the cumulative effect of the rise in crude oil prices this year and the about 5.7 percent depreciation of the cedi meant a 25 percent increase in cedi terms in the cost of procuring crude oil and petroleum products since January. For instance, the IMF has urged countries across West and Central Africa to cut fuel subsidies, which they say are not effective in directly aiding the poor, but do promote corruption and smuggling.

Related: NewsRescue- 01/06/2012- Nigeria Targeted For Destruction: Gordon Duff, US

 

The price change will see the cost of Liquefied Petroleum Gas (LPG) increase by 30 percent while petrol and diesel will go up 15 percent at pumps in Ghana. Mould said Ghana has spent about 450 million cedis on fuel subsidies in 2011.

Ghana’s Minister for Finance Kwabena Duffour said the removal of subsidies would have a positive impact on Ghana’s economy. Duffour said: “Subsidising fuel is not sustainable. It is the right thing to do so we can sustain our fiscal consolidation.”

This is the same music that the protagonists of subsidy removal in Nigeria, like the Coordinating Minister of Economy and Minister of Finance, Ngozi Okonjo-Iweala; the Minister of Petroleum, Diezani Alison-Madueke and the Governor of Central Bank of Nigeria (CBN), Sanusi Lamido Sanusi are singing.

While Sanusi insisted that the economy would breakdown if the subsidy is not removed, Ngozi said Nigerians would be better off without subsidy. Ghana’s subsidy removal yesterday confirmed people’s speculations that Western powers are behind the move to stop subsidy. Development in Ghana has also gone to confirm that the Nigerian government would boycott the public outcry on subsidy removal and go ahead to remove.

There is no provision for subsidy in the 2012 budget proposal submitted by President Goodluck Jonathan. The Nigerian National Petroleum Corporation (NNPC) has said that from next year they would not pay for subsidy because there is no provision for it in the budget.

Who are the bosses in Africa

The development also negates the IMF’s saying that it does not tailor policies for any country to follow, but only provide technical supports. But during the visit of Lagarde to Nigeria, she said, “I came here primarily to listen to our African members, and to find out how we can better tailor support to countries in this region in the current difficult global environment.”

Nigeria is indeed in serious economic problem. For instance, the value of the currency has been devaluing against major foreign currencies. The official value of naira against dollar is currently 156 to a dollar and at the Bureau De Change, it goes for 165 against the dollar.

The governor of central bank, Sanusi sometime this year faulted the IMF for suggesting that the value of the naira be devalued to protect further depreciation of the foreign reserves. However, the governor bowed to pressure and got the naira devalued. It is the same pressure from the Western powers that is pushing the government to remove fuel subsidy.

In Nigeria, removal of subsidy would necessarily lead to hike in fuel pump and such hike would trigger increment in the price of other commodities and services. It is already been speculated that by next year, when subsidy might have been removed, Nigerians would have to pay as high as N140 per litre of petrol. The price is currently N65 per litre.

What this means is that Nigerians should gird up for tough times next year. This is because any increase in the price of fuel would push the cost of production in the manufacturing industry up.

Also, cost of transportation would go up and even operators of Small, Medium Scale Enterprises would not be able to continue in business because most of them relied on generators to power their machines and generators are powered by fuel. Some civil society organizations and organized labour are urging Nigerians to come out and protest subsidy removal. The question is, can Nigerians occupy the “Three Arm Zone” as Americans “Occupied” the “Street.”

Subsidy removal is turning out to be another Bretton Woods Institutions’ anti-peoples’ policy. It is a neo-liberal agenda developed by those in authority. It is not a popular idea but that of the ruling power. It is becoming a dominant idea because in every political setting, the dominant idea is the idea of the ruling power.

Now that the government is bent on removing subsidy from fuel against people’s outcry, the question to ask is if this is the “Fresh Air” that President Goodluck promised Nigerians during his campaigning? – source

Under IMF Hegemony

Also, Nile Bowie wrote at Global Research on January 6, 2012:
[Lagos Dissents Under IMF Hegemony; Nigeria: The Next Front for AFRICOM
The IMF and US African Command (AFRICOM) Join Hands in the Plunder of the African Continent

On a recent trip to West Africa, the newly appointed managing director of the International Monetary Fund, Christine Lagarde ordered the governments of Nigeria, Guinea, Cameroon, Ghana and Chad to relinquish vital fuel subsidies. Much to the dismay of the population of these nations, the prices of fuel and transport have near tripled over night without notice, causing widespread violence on the streets of the Nigerian capital of Abuja and its economic center, Lagos. Much like the IMF induced riots in Indonesia during the 1997 Asian Financial Crisis, public discontent in Nigeria is channelled towards an incompetent and self-serving domestic elite, compliant to the interests of fraudulent foreign institutions.

Although Nigeria holds the most proven oil reserves in Africa behind Libya, it’s people are now expected to pay a fee closer to what the average American pays for the cost of fuel, an exorbitant sum in contrast to its regional neighbours. Alternatively, other oil-producing nations such as Venezuela, Kuwait and Saudi Arabia offer their populations fuel for as little as $0.12 USD per gallon.

While Lagos has one of Africa’s highest concentration of billionaires, the vast majority of the population struggle daily on less than $2.00 USD. Amid a staggering 47% youth unemployment rate and thousands of annual deaths related to preventable diseases, the IMF has pulled the rug out from under a nation where safe drinking water is a luxury to around 80% of it’s populace.

Although Nigeria produces 2.4 million barrels of crude oil a day intended for export use, the country struggles with generating sufficient electrical power and maintaining its infrastructure. Ironically enough, less than 6% of bank depositors own 88% of all bank deposits in Nigeria. Goldman Sachs employees line its domestic government, in addition to the former Vice President of the World Bank, Ngozi Okonjo-Iweala, who is widely considered by many to be the de facto Prime Minister.

Even after decades of producing lucrative oil exports, Nigeria has failed to maintain it’s own refineries, forcing it to illogically purchase oil imports from other nations. Society at large has not benefited from Nigeria’s natural riches, so it comes as no surprise that a severe level of distrust is held towards the government, who claims the fuel subsidy needs to be lifted in order to divert funds towards improving the quality of life within the country.

Like so many other nations, Nigerian people have suffered from a systematically reduced living standard after being subjected to the IMF’s Structural Adjustment Policies (SAP). Before a loan can be taken from the World Bank or IMF, a country must first follow strict economic policies, which include currency devaluation, lifting of trade tariffs, the removal of subsidies and detrimental budget cuts to critical public sector health and education services.

SAPs encourage borrower countries to focus on the production and export of domestic commodities and resources to increase foreign exchange, which can often be subject to dramatic fluctuations in value. Without the protection of price controls and an authentic currency rate, extreme inflation and poverty subsist to the point of civil unrest, as seen in a wide array of countries around the world (usually in former colonial protectorates). The people of Nigeria have been one of the world’s most vocal against IMF-induced austerity measures, student protests have been met with heavy-handed repression since 1986 and several times since then, resulting in hundreds of civilian deaths. As a testament to the success of the loan, the average laborer in Nigeria earned 35% more in the 1970’s than he would have in 2012.

Working through the direct representation of Western Financial Institutions and the IMF in Nigeria’s Government, a new IMF conditionality calls for the creation of a Sovereign Wealth Fund. Olusegun Aganga, the former Nigerian Minister of Finance commented on how the SWF was hastily pushed through and enacted prior to the countries national elections. If huge savings are amassed from oil exports and austerity measures, one cannot realistically expect that these funds will be invested towards infrastructure development based on the current track record of the Nigerian Government.Further more, it is increasingly more likely that any proceeds from a SWF would be beneficial to Western institutions and markets, which initially demanded its creation.

Nigerian philanthropist Bukar Usman prophetically writes “I have genuine fears that the SWF would serve us no better than other foreign-recommended “remedies” which we had implemented to our own detriment in the past or are being pushed to implement today.”

The abrupt simultaneous removal of fuel subsidies in several West African nations is a clear indication of who is really in charge of things in post-colonial Africa. The timing of its cushion-less implementation could not be any worse, Nigeria’s president Goodluck Jonathan recently declared a state of emergency after forty people were killed in a church bombing on Christmas day, an act allegedly committed by the Islamist separatist group, Boko Haram. The group advocates dividing the predominately Muslim northern states from the Christian southern states, a similar predicament to the recent division of Sudan.

Strategic Forecasting Inc. Regional Map of Africa

As the United States African Command (AFRICOM) begins to gain a foothold into the continent with its troops officially present in Eritrea and Uganda in an effort to maintain security and remove other theocratic religious groups such as the Lord’s Resistance Army, the sectarian violence in Nigeria provides a convenient pretext for military intervention in the continuing resource war. For further insight into this theory, it is interesting to note that United States Army War College in Carlisle, Pennsylvania conducted a series of African war game scenarios in preparation for the Pentagon’s expansion of AFRICOM under the Obama Administration.

In the presence of US State Department Officials, employees from The Rand Corporation and Israeli military personnel, a military exercise was undertaken which tested how AFRICOM would respond to a disintegrating Nigeria on the verge of collapse amidst civil war. The scenario envisioned rebel factions vying for control of the Niger Delta oil fields (the source of one of America’s top oil imports), which would potentially be secured by some 20,000 U.S. troops if a US-friendly coup failed to take place At a press conference at the House Armed Services Committee on March 13, 2008, AFRICOM Commander, General William Ward then went on to brazenly state the priority issue of America’s growing dependence on African oil would be furthered by AFRICOM operating under the principle theatre-goal of “combating terrorism”.

At an AFRICOM Conference held at Fort McNair on February 18, 2008, Vice Admiral Robert T. Moeller openly declared the guiding principle of AFRICOM was to protect “the free flow of natural resources from Africa to the global market”, before citing China’s increasing presence in the region as challenging to American interests. After the unwarranted snatch-and-grab regime change conducted in Libya, nurturing economic destabilization, civil unrest and sectarian conflict in Nigeria is an ultimately tangible effort to secure Africa’s second largest oil reserves. During the pillage of Libya, its SFW accounts worth over 1.2 billion USD were frozen and essentially absorbed by Franco-Anglo-American powers; it would realistic to assume that much the same would occur if Nigeria failed to comply with Western interests. While agents of foreign capital have already infiltrated its government, there is little doubt that Nigeria will become a new front in the War on Terror.]