| What
are the World Bank and International Monetary Fund?
At both the World Bank and IMF, the number of
votes a country receives is based on how much capital it gives the
institution, so rich countries like the United States can dominate.
After all, who would know more about "a world free of poverty" than US
bankers? The United States has about 17% of the vote, with the seven
richest countries (G-7) holding a total of 45%.
In both, five powerful countries (the United
States, Great Britain, France, Germany, and Japan) get to appoint their
own representatives to the institution’s executive board (with the
other 150 or so nations left to fight over the 19 other directors
seats.)
World Bank
The president of the World Bank is usually
American and the managing director of the IMF is usually a European.
The World Bank started innocently, loaning
money to Western European governments to help rebuild their countries
after World War 2.
It was during the long rein (1968-1981) of
former U.S. Defense Secretary Robert S. McNamara as president that the
bank turned towards "development" loans to Third World countries.
McNamara brought the same philosophy to
"development" that he had used in war - bigger is better. Ever since,
the Bankk has chosen oversized, expensive projects like mega-dams
regardless of their appropriateness to local conditions. Wealthy
countries were developed one step at a time - the Pilgrims did not hop
off the Mayflower and start building the Hoover dam, for example.
Meanwhile, there is the $40 million loan to the communist Chinese
dictatorship for a project that will resettle 60,000 Chinese into
occupied Tibet. The widely-respected Dalai Lama, Tibet's spiritual
leader, called it "cultural genocide".
The World Bank had promised to consult with the
people who were to be resettled, and those displaced by the
resettlement. They had lied.
According to the Bank's independent Inspection
Panel, it did not even consider alternative sites or other options-- a
major violation of the Bank's guidelines.
The Bank is intolerant of dissent. In December
1999, Joseph Stiglitz, the Bank's chief economist, was forced out after
he criticized the IMF's handling of the Asian financial crisis.
Stiglitz, one of the America's most highly
respected academic economists, had also written reports on how the IMF
caused disaster in the former Soviet Union and Eastern Europe. In
Russia alone, Stiglitz noted in one paper, the number of people in
poverty rose from 2 million to 60 million in just a few years of IMF
rule.
In March 2000 Ravi Kanbur, a Cornell University
economist who was lead author of the World Bank's influential 2000
World Development Report, quit after being pressured by neos to move
the report to the right.
His supporters did not give up, and as a result
the final draft of the 2000 Annual Development Report of the World Bank
admitted that trade by itself is not magic and recommends instead that
governments "make state and social institutions more responsive" to
those trapped in poverty.
However, Ravi and friends never broke any
windows, and got no press coverage.
The World Bank spends millions of dollars each
year on public relations, yet had to cancel a meeting in Spain because
they were causing such huge protests.
How's the World Bank's record on responsible
lending?
In 1992, an internal World bank review found
that more than a third of all Bank loans did not even meet the World
Bank's own standards.
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IMF
The IMF works with the WB as a "lender of last
resort" to countries that cannot borrow money from other sources. In
other words, the IMF is a "loan shark".
Like a loan shark the IMF always has strings
attached. Borrowers must implement what is formally known as a
"structural adjustment program" (SAP), but more often referred to as an
"austerity plan" regardless of what the public wants.
Typically, a government is forced to eliminate
price controls or subsidies, devalue its currency or eliminate labor
regulations like minimum wage laws.
By some bizarre coincidence, all of these
policies hurt the poor and help the rich. They also destroy economies,
meaning that the loans will never be paid off...But then, bankers do
not profit from that, they profit from interest payments. In fact, the
poor nations have already paid five times as much as they received in
the first place. Over the years 1981 through 1987, the poor paid US$1.5
trillion more in debt service than they received in new loans. Not that
new loans are that great - as of 1991 debt payments and interest meant
that the poor were sending rich bankers $145,000 every MINUTE, nearly
twenty-five hundred dollars a second. A strange way to make a world
free of poverty.
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Why is the third world in debt?
The people who suffer because of debt are not "reaping what
they sow". They did not elect the dictators who took out the loans, and
did not benefit from the mansions and armies the dictators spent them
on. For example, World Bank loans to General Mobutu of Zaire was used
to buy himself:
European castles, 11 in Belgium alone
8 Mansions and a palace in Zaire plus more abroad,
51 Mercedes
and a private 747 jumbo jet
In 1984 the IMF decided that the government of Zaire was
wasting money - and had 46,000 teachers fired.
 Mobutu with Bush senior
But some debtors are democracies...
Other reasons the poor are in debt is because of the rise in
oil prices and interest rates during the 1970s - in short, decisions
made by the rich, who profit from the debt.
Interestingly, when a corporation is "weeded out" by the free
market for being innefficient, it often can get bankruptcy protection.
When the U.S. department store Macy's filed for bankruptcy in January
1992, it received instant protection from creditors and working capital
to keep open. When Africans starve because bankers chose to raise
interest rates, they do not even get a shovel to bury their dead. Neos
believe in social darwinism more than free markets.
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