The Real Motives of the World Bank and the IMF
Condensed from an interview by Greg Palast
As a former member of Bill Clinton's
cabinet as Chairman of the President's council of economic advisors and the
former chief economist for the World Bank, Joe Stiglitz had access to
information, which was not available to outsiders. The World Bank fired Joe
Stiglitz in 1999 for his apparent dissent of the bank’s economic policies on
globalization. He had come to realize that the political ideology of his
employer had gone rotten and he was now ready to “spill the beans” regarding
some of the bank’s dubious activities. The word is that he was not allowed to
go quietly into the night as US Treasury Secretary, Larry Summers, was demanding
a public excommunication of Mr. Stiglitz for having made his views known to the
public.
In a recent interview with The London Observer and BBC TV’s Newsnight,
some of the real, often hidden workings of the IMF, World Bank, and the bank’s
51% owner, the US Treasury were revealed. Also, documents marked
“confidential”, “restricted”, and “ not otherwise (to be) disclosed
without World Bank authorization were brought to light. One such document
entitled “Country Assistance Strategy” outlined the assistance strategy for
every poor nation, designed, says the World Bank, after a careful, in-country
investigation. But, according to insider Stiglitz, the bank’s staff
“investigation” consisted of a close inspection of each nation’s five-star
hotels. It ends with the Bank’s staff meeting some begging, pleading finance
minister who is handed a “restructuring agreement” pre-drafted for his
“voluntary” signature. Each nation’s economy is individually analyzed,
then, says Stiglitz, the bank hands every minister the same, exact four-step
program.
Step One is Privatization – which Stiglitz says could be more
accurately labeled “briberization”. National leaders, using the World
Bank’s demands to silence the local critics – happily flogged their
electricity and water companies for a 10% commission to be paid into a Swiss
bank account for simply shaving a few billion off the sale price of their
national assets. (Control ends up in the hands of a few and, ultimately, the
monopolization of these essential assets leads to higher costs for consumers.)
Step Two of the “rescue” plan is “Capital Market Liberalization”.
In theory, capital market deregulation allows investment capital to flow in and
out. Unfortunately, as in Indonesia and Brazil, the money simply flowed out and
out. Stiglitz calls this the “Hot Money” cycle as cash comes in for
speculation in real estate and currency, and then flees at the first sign of
trouble. A nation’s reserves can drain in days or hours and when that happens,
to seduce speculators into returning a nation’s own capital funds, the IMF
demands these nations raise interest rates to 30%, 50% or more. The results are
predictable, demolished property values, crippled industrial production and
empty national treasuries.
At this point, the IMF drags the gasping nation to Step Three; Market
Based Pricing, a fancy term for raising prices on food, water, and other
essentials. This leads, predictably, to Step Three and a Half, what Stiglitz
calls the IMF riot.
When a nation is “down and out, the IMF takes advantage and squeezes
the last pound of flesh out of them. They turn up the heat until the whole
cauldron blows up,” as when the IMF eliminated food and fuel subsidies for the
poor in Indonesia in 1998. The people rioted, but there were other examples –
the Bolivian riots over water prices in 2000 and this February (2001), the riots
in Ecuador over this rise in cooking gas prices imposed by the World Bank. (It
is almost as though the riots were part of the plan)
One such “plan”, the “Interim Country Assistance Strategy” for
Ecuador stated with cold accuracy that “social unrest” was expected. The
secret report notes that the plan to make the US dollar Ecuador’s national
currency has pushed 51% of the population below the poverty line. The World Bank
“Assistance” plan simply calls for facing down civil strife and suffering
with “political resolve” – and still higher prices.
The IMF riots cause more panic and the flight of capital out of the
countries and the ultimate bankruptcy of governments. (Look at recent events in
Argentina). Foreign corporations also take advantage of these situations
by buying up remaining assets at fire sale prices.
A pattern soon emerges. There are lots of losers and one clear winner,
the Western banks and the US Treasury making big bucks off this crafty
international scam. Stiglitz told a story of his early days at the World Bank.
He met with Ethiopia’s newly elected president and the World Bank and the IMF
had ordered Ethiopia to divert aid money to its reserve account at the US
Treasury which, pays a pitiful 4% return, while the nation borrowed US dollars
at 12% to feed its population. The new president begged Stiglitz to let him use
the aid money to rebuild the nation, but no, the loot went straight off to the
US Treasury’s vault in Washington.
Now Step Four of what the IMF and the World Bank call their “poverty
reduction strategy.” Free Trade as designed by the WTO and the World Bank.
Europeans and Americans are kicking down the barriers to sales in Asia, Latin
America and Africa, while barricading their own markets against Third World
agriculture. In the past, the West used military blockades to force open
markets. Today, the World Bank can order a financial blockade, which is just as
effective – and sometimes just as deadly.
Stiglitz is particularly annoyed over the WTO’s intellectual property
rights treaty, which, he says, condemns the people to death by imposing
impossible tariffs and tributes to pay pharmaceutical companies for branded
medicines. “They don’t care if the people live or die.”
The IMF, World Bank and the WTO are interchangeable masks of a singled
governance system. They have locked themselves together by what are called
“triggers.” Taking a World Bank loan for a school “triggers” a
requirement to accept every “conditionality” – they average 111 per nation
– laid down by both the World Bank and the IMF. In fact, Stiglitz says the IMF
requires nations to accept trade policies more punitive than the official WTO
rules.
Stiglitz says that World Bank plans are devised in secrecy and driven by
an absolutist ideology and are never open for discourse or dissent. Despite the
West’s push for elections throughout the developing world, the so-called
“Poverty Reductions Programs undermine democracy.” These programs simply
don’t work. Black Africa’s productivity under the guiding hand of the IMF
“structural assistance” has gone to hell in a handbag. Only one nation has
managed to avoid a similar fate. Botswana told the IMF to “take a hike”.
According to Dr. John Coleman, former MI 6 agent in Britain, the international bankers met in Williamsburg, Va. in 1983 to work out a strategy to prepare the United States for a total disintegration of its banking system. This planned event, The Ditchley Plan, was to stampede the U.S. Senate into accepting control of the monetary and fiscal policies of the IMF and World Bank. The plan called for the IMF and the World Bank influence to be broadened so that it could influence Central Banks of all nations including the U.S. and Canada (See Bank of Canada) and guide them into the hands of a One World Government Bank.
Reading this revealing testimony and looking at what is happening in
Canada, one has to wonder if the same fate awaits us. The pressure is on to
privatize, our social programs are in a mess, our dollar is being purposely
driven into the tank and our economy is hanging on by a
thread. The so-called free trade agreements are showing themselves to be
anything but free or fair and the nation’s debt continues to grow as more and
more of our citizens slip under the poverty line. Canada is falling prey to this
monster and we better take notice before it is too late, otherwise, we will
experience what many of these other third world countries are going through at
present.