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Uncovering the financiers of the genocide

Ten years ago, beginning on 6 April 1994, more than one million Rwandans were massacred in a three-month bloodbath. The dead were mainly Tutsis, the minority ethnic group in Rwanda who made up about 14 percent of the then eight million population.

May 1, 2004
9 min read

While the pernicious role played by Western governments, along with the impotence of the UN to stop the killing, has been well documented in progressive circles, the central part played by the main international financiers of the Habyarimana regime – the IMF and World Bank – is barely known. At a time when Western leaders are again shedding “crocodile tears’ over Africa’s poverty, Eric Toussaint uncovers the policies imposed by these international financial institutions (IFIs) and how they accelerated the process that led to genocide

Background to Rwanda

IMF and World Bank: laying the foundations of genocide

The story of Rwanda is incomplete without examining the role of international lenders. When the developing world debt crisis broke out in the early 1980s, the IMF and World Bank suddenly jettisoned their policy of active lending, and instead began preaching austerity. Everywhere, that is, except Rwanda. To a country with an extremely low level of indebtedness, Washington began lending large sums. Rwanda’s foreign debt increased 20-fold between 1976 and 1994, from $49m to more than £1 billion. Most of this growth took place after 1982.

Evolution of Rwanda external debt and distribution in per cent by creditors

|   | 1980 | 1990 | 1995 | 2001 |

| Millions dollars | 150 | 664 | 970 | 1.163 |

| IMF/WB creditors | 60.4 | 81.6 | 83.6 | 87.2 |

| Bilateral creditor | 34.6 | 17.9 | 16.2 | 12.8 |

| Private | 5.0 | 0.6 | 0.2 | 0 |

|   | 100.0 | 100.0 | 100.0 | 100.0 |

Source: World Bank, GDF 2003

The loans came with a clear purpose – to “encourage’ Rwanda’s fuller integration into the global economy by helping to develop its coffee, tea and tin-exporting capacities, to the detriment of crops destined for domestic consumption. The Habyarimana regime channelled a significant share of export earnings and loans into its own coffers. However, this increased dependency on the global market rapidly led to devastation in the mid-1980s upon the collapse of world prices. And when the US broke up the coffee cartel in the early 1990s, the Rwandan economy lost its main source of hard currency, leaving economic ruin. Export earnings declined 50 per cent between 1987 and 1991 and famine spread throughout the countryside.

With the collapse of coffee and tin prices, the personal enrichment of the Rwandan elite now increasingly relied on embezzling foreign aid. A few weeks before the Tutsi-led RPF launched its October 1990 offensive, the Rwandan authorities agreed to implement an IMF-World Bank Structural Adjustment Programme (SAP) beginning in November. One of the first measures was a 67 per cent devaluation of the Rwandan franc. In exchange, the IMF offered quick disbursing loans to enable the country to maintain the flow of imports. The result was a meteoric rise in the price of imported goods – petrol nearly doubled in price. Public spending was also cut in line with SAP conditions through wage freezes and dismissals in the public sector. These savings, as well as earnings from the domestic sale of imported goods, were re-directed into army salaries.

But military spending, which tripled between 1990 and 1992, was also directly boosted through IFI loans. Thanks to a flawed accounting system that allowed Rwanda to present old invoices for imported goods, the regime was able to finance massive arms purchases subsequently used in the genocide. Between 1990 and 1994, Rwanda’s main arms suppliers were France, Belgium, South Africa, Egypt and China. China also provided 500,000 machetes. Egypt – whose joint minister of Foreign Affairs responsible for African relations was none other than Boutros Boutros-Ghali – granted Rwanda a $6m interest-free loan in 1991 to purchase arms for its infantry divisions. When the genocide got under way, France and the British firm Mil-Tec provided arms to the rampaging army via the Goma airport across the border in Zaire – violating the 11 May 1994 UN embargo on arms sales to Rwanda.

The IMF and World Bank sent several expert delegations during this period, predictably purring about the positive features of Habyarimana’s austerity policies. Nonetheless, they also threatened to suspend credit unless military spending stopped increasing. The Rwandan authorities, however, manoeuvred their way around these restrictions. Lorries imported for army use were put on the transport ministry’s account; a significant share of the petrol used for militia and army vehicles was put on the health ministry’s account; and so on.

When the IFIs finally suspended lending at the beginning of 1993, they neglected to freeze the large sums of money held in accounts in foreign banks, which the regime used to buy arms. In this way, the Washington-based institutions failed in their duty to monitor how loan money was being used. They should have suspended credit in early 1992 when it became clear that the money was funding military spending. They should have alerted the UN. From 1991, human-rights organisations had been reporting and condemning the massacres that paved the way to genocide. By continuing to provide financing until early 1993, the IMF and World Bank systematically helped the dictatorship prepare that genocide. They did so because that regime was an ally of the US, France and Belgium.

Engineering social conflict

For the genocide to be perpetrated, the regime needed more than a blueprint and military hardware. It also required an impoverished, desperate population, ready to do the irreparable. Between 1982 and 1994, the majority of the rural population – the vast majority of Rwandans – suffered such immiseration. While import prices soared, the price at which coffee was bought from local farmers was frozen on IMF orders. Destitute coffee farmers and the poorest sectors of the urban population became a permanent reservoir of recruits for the army and the dictatorship’s extremist youth militia, the Interahamwe. Meanwhile, a tiny section of the population had grown fabulously rich. In 1982, the wealthiest 10 per cent of the population took in 20 per cent of rural revenues; in 1992, they took in 41 per cent; and by the beginning of 1994, 51 per cent.

The catastrophic social impact of policies dictated by the IMF and World Bank, and the fall in coffee prices on the global market (a fall linked to the policies of the Bretton Woods institutions and the USA), played a central role in the Rwandan crisis. The massive social discontent was channelled by the Habyarimana regime into implementing its plan for genocide.

Rwanda after the genocide

Even after the fall of the dictatorship in July 1994 and despite the full knowledge of what had happened among international elites, Western governments and the Washington institutions continued their destructive policies in Rwanda as if nothing had happened. A number of the genocide’s key leaders were received by the French president and with the help of the French army set up the head office of the Banque Nationale du Rwanda in Goma. Until August 1994, the Banque disbursed funds to repay debts for previous arms purchases and to buy new arms. Private banks (including Belgolaise, Générale de Banque, BNP and Dresdner Bank) accepted payment orders from those responsible for the genocide and repaid those who had financed it.

In 1994, Rwanda’s foreign debt had reached nearly $1 billion, all amassed by the Habyarimana regime. In legal terms, this fitted perfectly the definition of “odious debt’: a financial obligation incurred by a despotic power to strengthen its own regime and repress the population. Consequently, the new Rwandan government should have been totally exonerated from paying it off – as recently suggested by the US in post-Saddam Iraq. But without the slightest justification, the IMF and World Bank refused, threatening to cut off funding if the new government persisted with this line. Instead, new loans were offered along with a promise of future debt cancellation if Rwanda kept quiet about the aid the IFIs had provided to the Habyarimana regime. Washington also demanded that the new Rwandan government limit the number of public-sector employees to just 50 per cent of the number agreed upon before the genocide. Deplorably, the new government complied.

The consequences of accepting this blackmail have been pernicious: continued structural adjustment with its disastrous social and economic consequences, and an increase in foreign debt. Initial financial assistance provided by the US and Belgium simply went towards repaying the Habyarimana regime’s debt arrears with the World Bank. Since then, Western financial aid has barely trickled into the country, despite the urgent need to rebuild its infrastructure and provide for the more than 800,000 refugees on its soil since November 1996.

Agricultural and industrial productions are yet to recover their pre-genocide levels. In 1996, the World Bank estimated that 85 to 95 per cent of Rwandans lived below the threshold of absolute poverty. There has also been a significant increase in the number of households run by women: from 21.7 per cent before the genocide to 29.3 per cent now, with peaks of 40 per cent in some districts. Their situation is particularly disturbing in view of the profound discrimination against women regarding issues like inheritance, access to credit and property rights. Even before the genocide, 35 per cent of women heads of households earned less than 5,000 Rwandan francs ($17) per month; the corresponding figure for men was 22 per cent. In the education system, only 65 per cent of children are enrolled in primary schools and no more than 8 per cent in secondary schools. Finally, despite high adoption rates, between 95,000 and 150,000 orphans remain without families through the potent cocktail of the genocide and AIDS.

By complying, the Rwandan government has gained “good pupil’ status in the eyes of the IMF, World Bank and the government creditors cartel known as the Paris Club. Since August 1998 it has also become an accomplice to Anglo-American efforts to weaken neighbouring Democratic Republic of Congo by taking part in the military occupation and plundering its natural resources. Yet the odious $1 billion debt left in 1994 has increased by about 15 per cent, despite Rwanda undergoing a “structural adjustment’ programme for the past 14 years. The IMF and World Bank together hold nearly nine-tenths of this foreign debt, the rest being owed bilaterally.

Ten years after the genocide, it is time for Rwandan citizens to be freed from the burden of the debt and from the dictatorship of the Bretton Woods institutions.Eric Toussaint is an historian and political scientist, president of CADTM (Committee for the Abolition of Third World Debt), member of the International Council of the World Social Forum, and of the scientific committee of Attac France. He is the author of Your Money or Your Life!: tyranny of global finance (Pluto Press, London, 1999); and co-author, with Damien Millet, of The Debt Scam: IMF, World Bank and the Third World debt (VAK, Mumbai, 2003). For more information, see: www.cadtm.org

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