The World Bank and IMF's 4 Steps To Rip-Off Poor Nations. Insights by Former employee Joe Stiglitz
The World Bank's former
Chief Economist's accusations are eye-popping -
including how the IMF and US Treasury fixed the
Russian elections
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The
World Bank-IMF is owned and controlled by
Nathan Mayer
Rothschild and 30 to 40 of the wealthiest
people in the world. For over 150 years they have planned to take the world
over through money.
The former chief economist of the World Bank,
Joe Stiglitz, was fired recently.
He pointed out to top executives that every
country the IMF/World Bank got involved in ended up with,
Jim Wolfensen, the then president of the World
Bank would not comment on his dismissal. Before Joe Stiglitz was fired he
took a large stack of secret documents out of the World Bank.
These secret documents from the World Bank and
the International Monetary Fund reveal the 4 steps that the IMF required
from nations:
-
to sign secret agreements of 111 items
-
in which they agreed to sell off their
key assets - water, electric, gas, etc.
-
in which they agreed to take economic
steps which are really devastating to the nations involved
-
in which they pay off the politicians
billions of dollars to Swiss bank accounts to do this transfer of a
countries fixed assets
If they do not agree to these steps they are
cut-off from all international borrowing.
Today if can't borrow money in the international
marketplace, no one can survive, whether you are people or corporations or
countries. If that does not work they overthrow the government and plant
lies about the former government and/or even rewrite history.
The Observer, London, Sunday, April 29, 2001.
"It has condemned people to
death," the former apparatchik told me. This was like a scene out of Le Carre.
The brilliant old agent comes in from
the cold, crosses to our side, and in hours of debriefing, empties
his memory of horrors committed in the name of a political ideology
he now realizes has gone rotten.
And here before me was a far bigger catch than some used Cold War
spy. Joseph Stiglitz was Chief Economist of the World Bank.
To a great extent, the new world economic order was his theory come
to life.
I "debriefed" Stigltiz over several days, at Cambridge University,
in a London hotel and finally in Washington in April 2001 during the
big confab of
the World Bank and
the International Monetary Fund.
But instead of chairing the meetings of
ministers and central bankers, Stiglitz was kept exiled safely
behind the blue police cordons, the same as the nuns carrying a
large wooden cross, the Bolivian union leaders, the parents of AIDS
victims and the other 'anti-globalization' protesters. The ultimate
insider was now on the outside.
In 1999 the World Bank fired Stiglitz.
He was not allowed quiet retirement; US
Treasury Secretary Larry Summers, I'm told, demanded a public
excommunication for Stiglitz' having expressed his first mild
dissent from globalization World Bank style.
Here in Washington we completed the last of several hours of
exclusive interviews for The Observer and BBC TV's Newsnight about
the real, often hidden, workings of the IMF, World Bank, and the
bank's 51% owner, the US Treasury.
And here, from sources unnamable (not Stiglitz), we obtained a cache
of documents marked,
"confidential," "restricted," and
"not otherwise (to be) disclosed without World Bank
authorization."
Stiglitz helped translate one from
bureaucratise, a "Country Assistance Strategy."
There's an Assistance Strategy for every
poorer nation, designed, says the World Bank, after careful
in-country investigation. But according to insider Stiglitz, the
Bank's staff 'investigation' consists of close inspection of a
nation's 5-star hotels. It concludes with the Bank staff meeting
some begging, busted finance minister who is handed a 'restructuring
agreement' pre-drafted for his 'voluntary' signature (I have a
selection of these).
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 said could more accurately be
called, 'Briberization.'
Rather than object to the
sell-offs of state industries, he said national leaders -
using the World Bank's demands to silence local critics -
happily flogged their electricity and water companies.
"You could see their eyes
widen" at the prospect of 10% commissions paid to Swiss
bank accounts for simply shaving a few billion off the
sale price of national assets.
And the US government knew it,
charges Stiglitz, at least in the case of the biggest 'briberization'
of all, the 1995 Russian sell-off.
"The US Treasury view was
this was great as we wanted Yeltsin re-elected. We don't
care if it's a corrupt election. We want the money to go
to Yeltzin" via kick-backs for his campaign.
Stiglitz is no conspiracy nutter
ranting about Black Helicopters. The man was inside the
game, a member of Bill Clinton's cabinet as Chairman of the
President's council of economic advisors.
Most ill-making for Stiglitz is that the US-backed oligarchs
stripped Russia's industrial assets, with the effect that
the corruption scheme cut national output nearly in half
causing depression and starvation
● After briberization,
Step Two
of the IMF/World Bank one-size-fits-all rescue-your-economy
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. Cash comes in for speculation in real estate and
currency, 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%.
"The result was
predictable," said Stiglitz of the Hot Money tidal waves
in Asia and Latin America.
Higher interest rates demolished
property values, savaged industrial production and drained
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 cooking gas.
This leads, predictably, to
Step-Three-and-a-Half: what Stiglitz calls,
"The IMF riot."
The IMF riot is painfully
predictable.
When a nation is,
"down and out, [the IMF] takes
advantage and squeezes the last pound of blood out of them.
They turn up the heat until, finally, the whole cauldron
blows up," as when the IMF eliminated food and fuel
subsidies for the poor in Indonesia in 1998.
Indonesia exploded into riots,
but there are other examples,
You'd almost get the impression
that the riot is written into the plan. And it is.
What Stiglitz did not know is
that, while in the States, BBC and The Observer obtained
several documents from inside the World Bank, stamped over
with those pesky warnings, "confidential," "restricted,"
"not to be disclosed."
Let's get back to one:
the "Interim Country
Assistance Strategy" for Ecuador, in it the Bank several
times states - with cold accuracy - that they expected
their plans to spark, "social unrest," to use their
bureaucratic term for a nation in flames.
That's not surprising.
The secret report notes that the
plan to make the US dollar Ecuador's 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 (and by riots I mean peaceful demonstrations
dispersed by bullets, tanks and teargas) cause new panicked
flights of capital and government bankruptcies. This
economic arson has it's bright side - for foreign
corporations, who can then pick off remaining assets, such
as the odd mining concession or port, at fire sale prices.
Stiglitz notes that the IMF and World Bank are not heartless
adherents to market economics.
At the same time the IMF stopped
Indonesia 'subsidizing' food purchases,
"when the banks need a
bail-out, intervention (in the market) is welcome."
The IMF scrounged up tens of
billions of dollars to save Indonesia'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 one clear winner: the Western banks and US Treasury,
making the big bucks off this crazy new international
capital churn. Stiglitz told me about his unhappy meeting,
early in his World Bank tenure, with Ethiopia's new
president in the nation's first democratic election.
The World Bank and 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 we arrive at
Step Four
of what the IMF and World Bank call their "poverty reduction
strategy": Free Trade.
This is free trade by the rules
of the World Trade Organization and World Bank, Stiglitz the
insider likens free trade WTO-style to the Opium Wars.
"That too was about opening
markets," he said.
As in the 19th
century, Europeans and Americans today are kicking down the
barriers to sales in Asia, Latin American and Africa, while
barricading our own markets against Third World agriculture.
In
the Opium Wars, the West
used military blockades to force open markets for their
unbalanced trade. Today, the World Bank can order a
financial blockade just as effective - and sometimes just as
deadly.
Stiglitz is particularly emotional over the WTO's
intellectual property rights treaty (it goes by the acronym
TRIPS, more on that in the
next chapters).
It is here, says the economist,
that the new global order has "condemned people to death" by
imposing impossible tariffs and tributes to pay to
pharmaceutical companies for branded medicines.
"They don't care," said the
professor of the corporations and bank loans he worked
with, "if people live or die."
By the way, don't be confused by the mix
in this discussion of the IMF, World Bank and WTO.
They are interchangeable masks
of a single governance system. They have locked themselves
together by what are unpleasantly 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 IMF.
In fact, said Stiglitz the IMF requires
nations to accept trade policies more punitive than the official WTO
rules.
Stiglitz greatest concern is that World Bank plans, devised in
secrecy and driven by an absolutist ideology, are never open for
discourse or dissent. Despite the West's push for elections
throughout the developing world, the so-called Poverty Reduction
Programs "undermine democracy."
And they don't work. Black Africa's productivity under the guiding
hand of IMF structural "assistance" has gone to hell in a handbag.
Did any nation avoid this fate? Yes, said Stiglitz, identifying
Botswana.
Their trick?
"They told the IMF to go packing."
So then I turned on Stiglitz. OK, Mr
Smart-Guy Professor, how would you help developing nations?
Stiglitz proposed radical land reform,
an attack at the heart of "landlordism," on the usurious rents
charged by the propertied oligarchies worldwide, typically 50% of a
tenant's crops.
So I had to ask the professor: as you
were top economist at the World Bank, why didn't the Bank follow
your advice?
"If you challenge [land ownership],
that would be a change in the power of the elites. That's not
high on their agenda."
Apparently not.
Ultimately, what drove him to put his job on the line was the
failure of the banks and US Treasury to change course when
confronted with the crises - failures and suffering perpetrated by
their four-step monetarist mambo.
Every time their free market solutions
failed, the IMF simply demanded more free market policies.
"It's a little like the Middle
Ages," the insider told me, "When the patient died they would
say, "well, he stopped the bloodletting too soon, he still had a
little blood in him."
I took away from my talks with the
professor that the solution to world poverty and crisis is simple:
remove the bloodsuckers.
A version of this was first published as "The
IMF's Four Steps to Damnation" in The Observer (London)
in April and another version in The Big Issue - that's the magazine
that the homeless flog on platforms in the London Underground.
Big Issue offered equal space to the
IMF, whose "deputy chief media officer" wrote:
"...I find it impossible to respond
given the depth and breadth of hearsay and misinformation in [Palast's]
report."
Of course it was difficult for the
Deputy Chief to respond. The information (and documents) came from
the unhappy lot inside his agency and the World Bank.
Award-winning reporter Palast writes Inside Corporate America for
the London Observer.
Africason is a die-hard believer in Africa.
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