Neo liberalism in Sudan; a brief

Definition:
“”Neoliberalism” the term now used to describe the transformations capitalism underwent at the turning point of the 1970s and 1980s. One salient fact was the decision by the U.S. Federal Reserve Board to allow interest rates to rise as much as the fight against inflation required. But this emblematic action whose consequences were dramatic for large portions of the world population, can only be understood one of many components of a change whose principal trait was restoring many of the most violent features of capitalism, making for a resurgent, unprettified capitalism.”
Neoliberalism is the expression of the desire of a class of capitalist owners and the institutions in which their power is concentrated, which we collectively call “finance,” to restore in the context of a general decline in popular struggle the class’s revenues and power, which had diminished since the Great Depression and World War II. Far from being inevitable, this was a political action.
One remarkable aspect of neoliberalism is that the dominant role of finance in neoliberalism is not without precedent in the history of capitalism. For this reason, neoliberalism may be described as the reestablishment of the domination of nance a er a period of retreat.
The global context of neoliberalism:
The postwar global economic system was struck by major crises during the seventies. A U.S. currency crisis threatened to upend the role of the dollar as the reserve currency. The role of the dollar as the reserve currency was in part predicated on the U.S. having two thirds of the world’s gold reserves after World War II as different countries deposited gold in the U.S. as payment for their defense during the war. The dollar was pegged to gold at one dollar per 35 ounces of gold, and the other currencies were pegged to the dollar at the Bretton Wood’s conference which saw to the establishment of institutions like the IMF. During the seventies, the U.S. no longer had the majority of the world’s gold reserves, and it found that it could no longer sustain the role of being the world’s banker. In addition, the U.S. deficit was ballooning primarily as a result of its overseas military adventures, particularly the war in Vietnam which was bleeding it dry. Another factor that contributed to the U.S. deficit was the programs that the U.S. put in place placate certain segments of the working poor and, thereby, prevent them from being radicalized in a time where it was experiencing massive waves of civil unrest.
It is said that empires collapse if they go into deficit! That belief in the context of the Cold War is what drove high ranking officials in the U.S. government to figure out a way around the deficit problem as well as the currency problem. When it was setting up the postwar global economic system in the Bretton Wood’s conferences, the U.S. understood the importance of having its currency as the reserve currency to its hegemony over the global markets.
Another major crisis that took the world by surprise in the 70s, and sent the world economies (particularly the western economies) reeling was the oil price shock of 1973. King Faisal wanted to pressure the west (specially the U.S.) which was dependent of its cheap oil because it was supporting Israel in its war against the Arab countries that had part of their territories occupied by Israel during the 1967 war. After the oil blockade was lifted following a resolution of the conflict with Israel, the increased oil prices continued and that generated huge financial surpluses in the coffers of the Gulf monarchs.
The postwar global economic system was on track to fail at delivering the compound rates of growth (and profits) characteristic of the capitalist mode of production, because, of the regulations built in in the Keynesian model that was dominant at the time of high taxation rates, strong government employment programs, (high) expenditure on public programs, and strong financial regulations to prevent the recurrence of another Great Depression. Also there was a rising labour movement. The U.S. currency crisis and the oil shock created a combination of price inflation, stagnant growth and labour unrest, all of which exacerbated the already declining rates of profits and productivity growth.
To resolve these crises the gold standard was abandoned, and in its stead the U.S. ensured the continuation of the dollar hegemony through the petrodollar where it forced the major oil producers to sell their oil only through the dollar. Also, the Keynesian regulations were abandoned, and as a result the financial genie was unshackled, the labour unions were broken and industries were outsourced to countries where huge reserves cheap labour were available and many workers were laid off. Free movement of capital [and profits] were prioritized over workers’ rights. The taxation of corporations and the wealthy was greatly reduced. Governments started to cut back on their public spending, and privatize public services.
Historical Context of Neoliberalism in Sudan:
Naomi Klein says that the policies of Neoliberalism are so unpopular that they needed crises and states of emergencies to be implemented. To highlight this point of the importance of crises and states of emergencies to the implementation of neoliberalism to the neoliberal gurus themselves she quoted Milton Friedman:
“Only a crisis — actual or perceived — produces real change. When that crisis occurs, the actions that are taken depend on the ideas that are lying around. That, I believe, is our basic function: to develop alternatives to existing policies, to keep them alive and available until the politically impossible becomes the politically inevitable.”
Excerpt From The 1982 Preface of: Friedman, Milton. “Capitalism and Freedom.”
It took a military dictatorship that took power in a bloody coup in Chile in 1973 to implement the first neoliberal experiment that the world has ever seen. And, it took a military dictatorship to usher in the neoliberal era in Sudan as well. Just a few days after the anniversary of the May Coup and the commencement of the nationalization ceremonies by the attendance of Jamal AbdelNasser, Nimeiry received an executive by the name of Roland Woodunlop from the Lonrho corporation on the 3rd of June 1970 where he expressed his intention to get loans from the World Bank. But, it was not until 1978 that Sudan received its first loan from an international financial institution. Of course, the loan from the IMF came with strings attached as the role of IMF was changing during the 70s as African countries were gaining independence and were trying to find their way in the global markets. The conditions of the loan were: stabilization, liberalization, deregulation, and privatization, that is to say the structural adjustment of the neoliberal doctrine. The implementation of such harsh policies is meant evoke some resistance from the population which was why Nimeiry introduced Sharia laws in 1983 to discipline the population and whip it in the shape that best served the needs of the newly implemented neoliberal doctrine. However, the implementation of the neoliberal project was briefly interrupted 1985, because of the uprising. These unpopular neoliberal policies were what sparked the waves of protests and strikes that culminated in an uprising that overthrew Nimeiry. Following Nimeiry’s overthrow, a military council took power for a year until elections were held. The elections brought al-Sadiq al-Mahdi’s coalition government to power. Prime Minister al-Mahdi was wary of resuming the neoliberal program. Nevertheless, under international pressure al-Mahdi’s coalition resumed the neoliberal program in 1987–1988 and that kicked off a wave of protests and strikes that threatened the neoliberal program in addition to the upper classes and the ruling elite. The neoliberal project and the upper classes were in jeopardy and that is were the Islamist coalition come in.
The Islamist coalition amassed its political and economic might primarily as a result of the global forces that reshaped much of the world during the 1970s crises. During the 70s, the postwar global economic system was dismantled in response to a ballooning U.S. deficit that created a dollar crisis which was worsening as it was playing in with other elements. Of those elements, we previously mentioned, a profitability crisis in the U.S. (and the advanced industrial western countries), the war in Vietnam, as well as (LBJ’s) ambitious programs for the poor. Another one of the global forces in question that was instrumental in forming the Islamist movement in Sudan, that is of particular interest to us here, is the 1973 oil price shock that generated huge financial surpluses in the coffers of the Gulf monarchs. The response to those inextricably linked crises of the 1970s globalized production processes, and transformed trade and financial flows.
The huge financial surpluses of the Gulf monarchs that were accumulating as the higher oil prices continued, were redirected as loans through international banks to national development plans that ultimately failed as was the case in Sudan. The results were/are, Sudan accumulated huge mountains of debt, and some of those petrodollars formed the foundations on which Faisal Islamic Bank along with the other of Sudan’s Islamic banks were built. Those Islamic banks laid out the groundwork of the Islamist movement which in turn used their economic power to form an alliance between Islamists, financiers, and security men. The Islamist coalition led a military coup that propelled Omar al Bashir to power in June 1989 ousting al-Sadiq al-Mahdi’s coalition government, and putting an end to the burgeoning civil unrest and strikes whose intensities were increasing, after in 1987–1988 al-Sadiq al-Mahdi’s coalition government pushed through an austerity program amidst international pressure. [–For context, it is worth mentioning that the 1985 uprising against Neimeri’s regime was largely caused by the austerity package of the IMF’s structural adjustment program that his government implemented.–]
In 1992, against the backdrop of threats of expulsion from the IMF, the Sudanese ambassador to Washington best explained the mandate of the Islamists’ National Salvation Revolution (the coup) of June 1989, by expressing Sudan’s commitments to the IMF board:
“The Government of Sudan has adopted a radical and far reaching program of economic reforms aimed at freeing up the economy, bringing down inflation, and creating a climate conducive to the revitalization of the private sector. This has included the dismantling of all controls on prices, investment and trade; the elimination of virtually all budgetary subsidies — implicit and explicit; the lifting of most restrictions on external transactions; the adoption of a unified floating exchange rate; and the launching of a wide-ranging program of privatization.”