Rather than being the “great equalizer” that many predicted, the Covid crisis has served only to widen the gulf between Global North and Global South. Much of the South—having been forced for decades to slash health budgets in deference to the North’s neoliberal agenda—now faces combined economic and public health crises that threaten the lives and well-being of millions; according to the World Bank, roughly 100 million people have fallen back into extreme poverty over the last year. The “free market” can not and will not reverse this crisis.
With the Robust International Response to Pandemic Act (H.R. 986), the U.S. has an opportunity to help avert further disaster, providing immediate material relief and taking initial, if insufficient, steps toward reversing the damage of decades of neoliberalism.
Introduced by Illinois Representative Chuy Garcia, the bill would make it U.S. policy to support the issuance of 2 trillion in IMF Special Drawing Rights (SDRs). SDRs are unique IMF assets, backed by and exchangeable for international currency, issued at no cost to the U.S. or any other country, with the goal of preventing the depletion of foreign exchange reserves and backstopping liquidity crises. Unlike traditional IMF finance, SDRs come with no policy conditions and would not lock recipients into decades of rigid austerity rules. Instead, recipients would gain the much-needed fiscal space to start rebuilding their economies on their own terms. As such, a major issuance of SDRs is widely supported across the Global South, and has so far largely been blocked by the United States. While recent days have seen movement on a 475 billion SDR allocation—the maximum amount that does not require Congressional approval—this remains a fraction of what’s needed to confront the scale of this crisis.
Beyond supporting the issuance of 2 trillion SDRs, the Robust International Response to Pandemic Act, and its Senate companion bill the Support for Global Financial Institution Pandemic Response Act (S.67), would make it U.S. policy to:
- Support a suspension of all debt service payments to the World Bank and IMF;
- Support the relaxation of “fiscal targets” (i.e. austerity goals) in World Bank and IMF programs;
- Oppose any World Bank or IMF loan with conditions that would cut health spending or otherwise impede Covid recovery;
- Support the redistribution of 1.1 trillion SDRs held by the U.S. to low-income countries; and
- Support an extension of the existing G20 debt moratorium until the end of 2021.
These bills are far from perfect. Undoing the U.S.-led neoliberal world order and ensuring a just global recovery will require radical transformation, not piecemeal reform. But in providing meaningful material relief for millions of people across the Global South while implicitly recognizing and taking concrete steps toward alleviating the catastrophic human toll of neoliberalism, they are well worth our support.
Just a few years ago, passing bills like these would have been unthinkable. But the pandemic has made the usual regime of privatization and austerity much harder to defend. Although the IMF and World Bank are notoriously unresponsive to democratic pressure, the United States has an undue level of influence within them. As socialists in the imperial core, we have a unique obligation to leverage that influence to improve living conditions for the oppressed around the world. We urge all DSA members to organize in support of the Robust International Response to Pandemic Act and its companion Senate legislation, the Support for Global Financial Institution Pandemic Response Act.