For the past two decades the International monetary Fund has come under intense scrutiny and attack. Its role in stabilizing the economy of a country and dealing with its balance of payment problem has been heavily criticized. The critics have blamed the international organization for its dictatorial and exploitative role and its micro managing and unneeded influence on the economic policies of a country. In this paper I will analyze the role of International Monetary Fund on the economies of the countries and whether its intervention makes the country better off by taking it out of the economic troubles that they are facing or does it further worsen the situation? The paper will further look into the short and long term effects after the intervention of the IMF on the economy of Pakistan.

The International Monetary Fund:

            The worst debt crisis in 1980's that mainly hit the developing countries of Latin America, including Brazil, Mexico, Argentina etc, left the debtor countries entirely devastated and their financial institutions ramshackle. It was followed by a complete chaos in the defaulter countries after the uprising of the people against the policies of their government, which contributed to the collapse of some autocratic regimes such as Brazil's military regime and the Argentine bureaucratic-authoritarian regime(). Economic growth stagnated, incomes dropped, unemployment rose to the peak and high inflation eroded the purchasing power of the middle and lower middle classes. The debtor countries were once again on the doorstep of their creditors to seek new loans to prevent the bankruptcy. The international creditors gave new loans to the ravaged economies but with very strict conditions and obliged the debtor countries to accept the intervention of International Monetary Fund (IMF). As a result, the IMF rose up as an economic police to keep check and balance on the disorganized economies. For the first time IMF intervened in the inner economic and financial policies of a country to make it pay its debts. The role of IMF was to keep the economies of these South American countries functioning by imposing certain conditionalities on the countries so that they could return the loans to their creditors. Structural Adjustment Programs (SAPs) were born as a result of this debt crisis.

            The International Monetary Fund was established on July 22, 1944 originally with 45 members. Today the organization has 187 member countries. The idea behind its establishment was to help in rebuilding the Europe after the World War II. But with the passage of time as the world progressed, its policies changed. According to the organization’s charter, the IMF promotes international monetary cooperation and exchange rate stability, facilitates the balanced growth of international trade, and provides resources to help members in balance of payments difficulties or to assist with poverty reduction (IMF Objectives).The IMF does it through its economic surveillance that keeps track of the economic health of its member countries, alerting them to risks on the horizon and providing policy advice. It also lends to countries in difficulty, and provides technical assistance and training to help countries improve economic management (ibid). But there are different viewpoints about the actual role and purpose of the IMF. The proponents of the policies of the IMF say that it has a positive impact on the overall economy of a country. For example, in the case of Argentina it did recover from its financial crisis of 1980’s when the IMF intervened and in the following decade it showed a tremendous growth (Cavallo 2004). However, the critics of the IMF say that its policies only benefit the elites and corporate industrialists while the poor and the lower socio economic class get suffered. They heavily criticize the reform programs of the organization like “Structural Adjustment Programs (SAP)” in which the Fund gives loan to the countries on harsh conditionalities. Moreover, they argue these developing countries have long paid back their actual loans but due to high interest rates they are still hugely indebted and are dependent on new loans.

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Upon analyzing many cases of violent conflict, some underlying abstract themes can be felt which have a  part to play in the anatomy of violence and conflict. The factors driving peoples into the active realm  from the passive realm are deeper and more complex than how they appear at first. Upon studying the  different forms and occurrences of violence – be it the ethnic, religious and sectarian riots in Karachi or  the racial segregation, prejudice and tensions in Los Angeles – we are left with similar questions: What  drives ordinary people to violence? What is beneath racial, religious, ethnic and sectarian violence? Why  do people of different races, religious beliefs and ethnicities co‐exist peacefully in some societies and  rise up in violent conflict in others? This paper explores the stance that the complex dynamics of identity  and shifts in identity can provide some answers to these questions.

        This paper aims to prove the linkage between identity, power struggles and conflict. Identity is an  individual or group’s sense of being, their perception of self and an awareness of their distinction with  respect to others. Identity dynamics cause people to associate themselves with a group or cause (Ross,  2001). Identity is concerned with judgments about groups and their motives. These groups of people can  have any commonality – religious, racial, ethnic  for example. These identities connect people through  ‘perceived common past experiences and expectations of shared future ones’ (Ross, 2001, 157).  For the  purposes of this paper, identity is thusly defined.  

       This paper aims to show how identity changes with context and how the concept of identity (both  individual and group identity) is not a static one, but a dynamic one.   It is linked to power struggles  between individuals and groups. People create and shift their identities according to situations,  depending on the opposition they are faced with. This strong sense of self leads man to create the  ‘other’ – the different, the opposition. This process of separation then justifies the dehumanization of  the ‘other’ and this is how ordinary people become perpetrators of violence. Conflict between different  groups usually starts with one or both sides feeling deprived or aggrieved in some way. As a group, they  are either being denied economic or political rights, or are being stereotyped to be further disadvantaged in society.  Human beings tend to create identities to support their cause, and they tend  to shift these identities when context changes. An individual never has one single identity, and is never  strongly self aware until he meets with difference or opposition of some kind: ‘Social identity theorists  argue that individuals possess multiple social identities that become salient in different contexts or as  context changes (Bryan, 2008, 1).’
          

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