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World
Bank and the International Monetary Fund (IMF) were born in 1944 with simple,
laudable mandates -to fund postwar reconstruction and development projects (World
Bank), and lend hard currency to nations with temporary balance-of-payments deficits
(IMF). World Bank's and the IMF's 51% owner was then, and still is the US Treasury.
Before
1980, virtually every nation in the Third World was either socialist or welfare
statist. They were developing by locally owned industries built through government
investment and high import tariffs. They increased national government control
and set up new welfare schemes. Per capita income grew 73% in Latin America and
34% in Africa. Socialist and welfare state policies added more than a decade of
life expectancy to virtually every nation. In
the early 1980s, Larry Summers became the World Bank's chief economist, and things
changed. Third World nations, hemorrhaging after the fivefold increases in oil
prices and a similar jump in interest payments, brought their begging bowls to
the IMF and World Bank.
But instead of debt relief, they received "Structural Assistance Plans"
listing over 100 conditions, in return for loans. While the particulars varied,
in every case the rollover of debts was conditional on the removal of trade barriers,
selling national assets to foreign investors, slashing social spending and making
labor "more flexible". The
result: Latin American's growth came to a virtual halt with growth of less than
6% over twenty years. African incomes declined 23%, and in the same period, life
under structural assistance got more brutish and shorter. In fifteen African nations
the total number of illiterate people has risen and life expectancy fallen. In
the recent decades nearly one-fifth of the world population has regressed. HOW
WORLD BANK WORKS Step
1 - Privatization. Rather than object to the sell-offs of state industries, national
leaders in need use the World Bank's demands to silence local critics. They happily
flogged their electricity and water companies, and receive commissions paid to
Swiss bank accounts, -for simply shaving a few billion off the sale price of national
assets. The
US government knows this -and in the case of the biggest "briberization" of all,
the 1995 Russian selloff, the US backed oligarchs' corruption stripped most of
Russia's industrial assets, cut the nation's output nearly in half, and caused
economic depression and starvation. Step
2 - The IMF/World Bank's one-size-fits-all, rescue-your-economy plan, is "Capital
Market Liberalization". This means repealing any national law that slows
down or taxes money jumping over the borders. In theory, capital market deregulation
allows foreign banks' and multinationals' investment capital to flow in and out.
Unfortunately, in countries like Indonesia and Brazil for example, the money simply
flowed out.
Cash comes in for speculation, then flees at the first whiff of trouble. A nation's
reserves can drain in days, 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% and 80%. Higher interest rates demolish property values,
savage industrial production and drain national treasuries. Step
3 - At this point, the IMF drags the gasping nation to "Market Based Pricing",
a fancy term for raising prices on food, water and domestic gas. When a nation
is down and out, the IMF turns up the heat until finally, the whole cauldron blows
up -as when the IMF eliminated food and fuel subsidies for the poor of Indonesia
in 1998 -the nation exploded into riots. There are other examples; the Bolivian
riots over water price hikes pushed by the World Bank in April 2000 and, in early
2001 the riots in Ecuador over the rise in domestic gas prices. Each new riot
("riot" meaning peaceful demonstrations that are dispersed by batons,
bullets or tanks) causes a panicked flight of capital and government bankruptcies.
Such
economic arson has its bright side of course -foreign corporations can then pick
off a nation's remaining assets, such as the odd mining concession or a port -all
at fire-sale prices. The IMF can scrounge up tens of billions of dollars to save
the country's financiers and, by extension, the US and European banks from which
they had borrowed. A
pattern emerges. There are lots of losers in this system, but two clear winners:
Western banks and the US Treasury. They alone make the big bucks from this crazy
new international capital churn. For example, World Bank and IMF had ordered Ethiopia
to divert European 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 newly elected leader of Ethiopia's first democratic election,
begged World Bank to let him use the aid money to rebuild the nation. But no,
the loot went straight to the US Treasury. Step
4 - This is what World Bank the IMF and call their "Poverty Reduction Strategy":
ie Free Trade. This is free trade by the rules of World Bank and the World Trade
Organization (WTO). By the way, don't be confused by the name mix of the IMF,
World Bank and WTO. They are interchangeable masks of a single governance system.
They have locked themselves together by what they unpleasantly call "triggers".
For example, taking a World Bank loan for a school "triggers" a requirement to
accept every "conditionality' as laid down by both the WTO and IMF. 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 Reduction Programs are never instituted
democratically. Black
Africa's productivity under the guiding hand of IMF/World Bank "assistance" has
disappeared. Did any nation avoid this fate? Yes, Botswana. And their trick? -they
told the IMF to go packing.
SOURCE:
Freely transcribed from "Best Democracy Money Can Buy". Greg Palast, pages 150-156.
Used with permission.
Palast acknowledges the following sources in his text;
Nancy Alexander, 'Citizens Network on Essential Services', Joseph Stiglitz, former
chief economist of World Bank, and the IMF 'World Outlook' report April 2000
www.gregpalast.com | 
