----- Original Message -----
From: John Clancy <[EMAIL PROTECTED]>
To: <[EMAIL PROTECTED]>; <[EMAIL PROTECTED]>; <[EMAIL PROTECTED]>; <[EMAIL PROTECTED]>;
<[EMAIL PROTECTED]>; <[EMAIL PROTECTED]>; <[EMAIL PROTECTED]>;
<[EMAIL PROTECTED]>; <[EMAIL PROTECTED]>; <[EMAIL PROTECTED]>
Sent: Thursday, December 14, 2000 4:32 PM
Subject: [Cuba SI] Znet: Rob Hahnel -IMF World Bank at it in Chad,Turkey
from: [EMAIL PROTECTED]
subject: Znet: Rob Hahnel -IMF, World Bank at it in Chad,Turkey!
Delivered-To: [EMAIL PROTECTED]
X-Authentication-Warning: dojo.tao.ca: znet set sender to owner-
[EMAIL PROTECTED] using -f
From: "Michael Albert" <[EMAIL PROTECTED]>
To: <[EMAIL PROTECTED]>
Subject: ZNet Commentary / Robin Hahnel / Play It Again Sam /
Dec 9
Date: Fri, 8 Dec 2000 Sender: [EMAIL PROTECTED]
Precedence: first-class
Note: Today's Commentary is on the IMF and World Bank
machinations in
Chad and Turkey. It is longer than usual, but the topic is
fantastically timely and important, and requires a bit more words
to
address...
--> If you are not a ZNet Sustainer and you do not want to receive
these commentaries please remove yourself from our list either
for
the month only or permanently at www.zmag.org/weluser.htm --
This is
the only way to get off...and it works fine.
--> If you are not yet a ZNet Sustainer and you want to learn more
about the program, including information about the forums, the
online
Zine, the commentaries, the commentary writers, and the
purpose of
the donations, please consult:
http://www.zmag.org/Commentaries/donorform.htm
--> If you have decided that you would like to sign up and join
the Sustainer Program to support ZNet, you can access the form
directly with this link:
http://zena.secureforum.com/members/profile_user.cfm
====
PLAY IT AGAIN SAM: THE IMF AND WORLD BANK ARE AT IT
AGAIN By Robin
Hahnel
Just in case anyone thought the IMF and the World Bank had
gotten
the message in Seattle, Washington DC, and Prague, all he or she
has
to do is read the December 5 edition of the Washington Post to
find
out otherwise. Looming disasters in Chad and Turkey are proof
positive that nothing besides a tactical adjustment of rhetoric
has
changed at the Bank and the Fund. Anyone who thought the
World Bank
had finally learned that helping multinational companies and
banks
accelerate the extraction of third world natural resources does
not
benefit the third world poor, much less the environment, needs
to
check out what is happening in Chad. And anyone who thought
managers
at the Fund had learned from the East Asian crisis that capital
liberalization puts third world economies dangerously at risk,
and conditionality agreements only compound the crises that
result,
needs to watch the Fund repeat every mistake they made in East
Asia,
Russia, and Brazil all over again in Turkey.
Douglas Farah and David Ottaway inform us: "In June, when the
World
Bank agreed to back a controversial, 650-mile oil pipeline from
this
impoverished desert nation [where more than two-thirds of the
population lives on an average of less than $250 a year] to
Africa's
Atlantic coast, it declared that it had found a way to prevent
corrupt officials from stealing the country's new wealth.
Criticized
for years over projects in developing nations that failed to return
benefits to their populations, bank officials knew that the $3.7
billion pipeline -- the most expensive infrastructure project now
underway in Africa -- would be closely scrutinized. So
they imposed
strict accounting standards and insisted on guarantees from
the Chadian government to ensure that its oil profits would be
spent
to improve public health, education and vital infrastructure here,
rather than disappearing into secret bank accounts or funding
weapons
purchases by those in power. World Bank officials said that their
'Chadian model' would prove they could overcome the African
nation's
endemic corruption and that it might be applied to other
corruption-
prone oil-producing lands. In a press release after it approved
the
project, the bank called the agreement with the Chad
government an
'unprecedented framework to transform oil wealth into direct
benefits
for the poor, the vulnerable and the environment.' So
when Chadian
President Idriss Deby, a general who seized power in a 1990
coup, declared last week that he had used $4.5 million of the
government's first oil receipts to buy weapons instead of
bolstering
social programs, saying 'it is patently obvious that without
security
there can be no development programs,' he sent a jolt through
the
bank."
The demonstrators in Seattle, Washington DC, and Prague were
not the
only ones who warned the World Bank that this is exactly what
would
happen. Human rights activists in Chad fought the project for
years,
claiming it would "only escalate armed power struggles and be
diverted by authoritarian rulers to buy guns or to fatten their
bank
accounts." Delphine K. Djiraibe, president of the Chadian
Association
for the Promotion and Defense of Human Rights was quick to
point out
after the story broke: "The arms purchases should be a warning
to
show that when the oil money flows, the World Bank won't have
any way
to know what Deby will do with it."
But the diversion of profits to purchase arms is only one
problem.
The main objections critics have voiced to this and similar World
Bank projects elsewhere are that too much of the profits go to
foreign companies and banks, leaving too little to make a
significant
dent in unpayable international debts that should be forgiven.
Chad
is only projected to receive $2 to $3 billion over 25 years from
the
pipeline, the rest going to the consortium of international oil
companies led by Exxon Mobil Corp., to the international banks
financing the project, and to the World Bank itself for brokering
the
deal and putting up 3 percent of the initial financing.
Meanwhile, another IMF "success story" is in crisis and about to
receive the usual IMF ministrations -- the twenty-first century
version of blood letting with leeches. In the same edition of the
Washington Post, Molly Moore informs us from Istanbul that
"Turkey's
stock market plunged today and some interest rates soared to
more
than 1,200 percent in a financial crisis that analysts fear could
spread to Russia and other struggling economies. Turkish
officials
began emergency talks with the International Monetary Fund in
Ankara,
the capital, urgently asking for a $5 billion loan to help counter a
rush to sell Turkish lira that threatens to undermine
the country's
precarious economy. Officials fear that if it is not contained, the
financial crisis could send Turkey's economy into a downward
spiral
of unemployment and company closures. Investors, both foreign
and
Turkish, are moving their money out of markets here as they
lose
confidence in the country's future and worry about the effect a
devaluation of the lira could have on their holdings. Turkey's
stock
market has lost nearly 40 percent of its value in the last two
weeks,
including today's plunge of 8 percent."
How is this possible? Reporting from Washington in the same
story
Steven Pearlstein tells us: "The first 10 months of this year
marked
one of the most stable economic periods in recent Turkish
history."
And: "In the past year, Turkey has won praise from the IMF and
international financial analysts for streamlining its financial
policies, reining in government spending and making other
economic
policy changes suggested by the IMF." In other words, Turkey was
a
paragon of neoliberal economic virtue according to the IMF, and
therefore one would think the last place a crisis should
break out.
But of course that was what the IMF and World Bank had said
about
the East Asian economies only a year before their crises. In that
case as well, East Asian economies who succumbed to pressure
from the
US Treasury Department and the IMF to open themselves
completely to
international financial investment, including short-run,
speculative
capital flows, were praised by the US and the Fund as neoliberal
success stories. But as soon as the hot money took fright and
fled,
as soon as the IMF imposed its draconian conditionality
agreements --
calculated to protect international investors -- in exchange for a
bail out, and as soon as all this left the East Asian economies in
ruins, Fund managers hastened to tell us the East Asian
governments
had been less virtuous than heretofore presumed. And just as
Fund
managers hastened to point the finger of blame elsewhere for
the disaster they were responsible for orchestrating in East Asia,
with the help of the mainstream Western media they are already
positioning themselves to blame the victim in Turkey.
Once again we will be told the Turkish fall from grace is due to
their "crony capitalism," "lack of transparency," and "insufficient
prudential regulation." We are already being told "the crisis was
set
off by almost daily disclosures of banking scandals and related
criminal investigations" - as if this were not what triggers most
financial crises. The real question is why disclosure of some bad
loans triggered a crisis in this situation whereas it usually does
not. The reason we are not reminded of the real question is the
answer points straight to the magnitude and conditions
under which
international speculative capital poured into Turkey over the past
few years, i.e., the "financial streamlining" orchestrated and
praised by the IMF. We are also told "astronomically high interest
rates have taken hold in loans between banks because lending
banks
fear that borrowing banks may default", small wonder! The real
question is who decided to subordinate the interest of financing
productive Turkish investments, which will be brought to a
standstill
by astronomical interest rates, to the interests of international
wealth management in the first place? Again,
international investment
banks taking part in an IMF sponsored program in Turkey come
to mind.
Moore informs us: "Banks in Germany--which have invested
heavily
in Turkey's efforts to sell off state-owned companies and in its
economy in general -- have suffered drops in their own share
prices
because of the Turkish crisis." Finally, we are also being warned
that Turkish government reluctance to shut down troubled banks
and
assume their liabilities may deepen the crisis. "The government
has
already placed 10 troubled banks in receivership. According to
sources familiar with the talks, the IMF is pressing officials in
Ankara to take over and close more of the country's 81 banks, a
politically difficult step that would cause powerful owners to
lose their investments. In return, the government would
guarantee all
or most of the depositors' funds." Notice whose cronyism is
subject
to criticism and whose is not. For the Turkish government to
worry
about Turkish business loses is irresponsible cronyism. But when
the
IMF urges the government of a developing country to guarantee
the
funds of wealthy international depositors -- in this case German
banks financing the IMF privatization program in Turkey! -- it is
only sound crisis management.
One question is whether the IMF bailout will work in Turkey in
even
the most narrow terms. We are informed: "The flow of
investment funds
out of the country has led the central bank to spend at least $6
billion of its $18 billion foreign exchange reserves in the last two
weeks shoring up the lira -- buying the currency to offset the
downward pressure on its value caused by investors selling it to
buy
dollars and leave the country. Analysts fear that if the IMF does
not
quickly give Turkey its requested $5 billion emergency loan, the
government could soon run out of foreign reserves and be
unable to
support the lira. In that case, the currency's value would likely
plummet." Whereas the IMF pulled off a successful bailout in
Mexico
in 1995, they failed to do so in East Asia in 1997 where it
was predominantly Japanese banks and multinational companies
who
stood to lose, as opposed to US banks and companies in Mexico.
Technical "success" in Mexico was due to the speed and size of
the
bailout package.
In Asia the IMF was slow and cheap, concentrating instead on
forcing
internal "reforms" in the stricken economies. The US Treasury
Department even dispatched then deputy secretary Larry
Summers to
tell the Japanese in no uncertain terms that their offer to put up
$100 billion for bailouts without conditions was unacceptable.
Turkey
has already spent a third of its foreign exchange reserves in just
two weeks to prop up the lira. Whether $5 billion from the IMF
will
prove enough, and arrive quickly enough to ward off the
speculative attack on the Turkish lira remains to be seen. I have
no
doubt what the German government will be lobbying the new
German
managing director of the IMF to do! Whether Larry Summers
proves more
interested in using the crisis to force further debilitating
"reforms" on Turkey, or more interested in staving off an
international financial crisis and any possible
contagion, remains
to be seen.
But whether the IMF bail out is a technical success, as it was in
Mexico, or a failure, as it was in East Asia, is not the most
important issue. Technical success means international investors
will
not suffer and the stricken economy will recover more quickly.
Technical failure means greater investor loses, extending to
taxpayers, contagion effects in other emerging markets, and a
much
deeper and longer depression in the afflicted economy. But in
either
case IMF policies are detrimental to the interests of developing
economies as they tie them ever more tightly to the torture
rack of
highly leveraged international wealth management. At a
minimum,
the crisis in Turkey proves once again that playing the IMF game
--
reducing government spending, privatizing public services,
opening
completely to international investment, and accumulating what
used to
be more than sufficient foreign exchange reserves to adequately
protect your currency ($18 billion in the case of Turkey!) - is no
protection at all from economic ruin in the brave new world of
unchecked neoliberalism.
Update: Financial crisis are fast breaking stories. On December 7,
2000 Molly Moore wrote: "The International Monetary Fund
today
announced a $10 billion credit package for Turkey in an effort to
stem a financial crisis that has seriously undermined the nation's
economy and threatened to spread to other emerging markets."
What are
we supposed to think when the Turkish government asks for a $5
billion bailout one day and is delivered a $10 billion bailout the
next! Could it be that somebody at the Fund is just a little
concerned? But obviously Fund concern is not limiting its
demands,
as we also read that the Turkish government has caved to Fund
pressure to assume responsibility for bank deposits and speed up
privatization: "IMF officials were concerned that Turkey had not
responded sufficiently to the banking scandal that has left 11 of
the
nation's 81 banks in receivership.
Turkish Prime Minister Bulent Ecevit said today that the
government
would make bolder efforts to insure deposits in the nation's
troubled
banks and will move to begin privatization of the state-owned
telephone company, Turk Telecom, Turkish Airlines and the
power and
electricity sector by the end of next week." Obviously what
managers
at the Fund have learned from a year of escalating protests and
public concern is to rev neoliberalism up to warp speed. " JC
-------------------------- eGroups Sponsor -------------------------~-~>
Big News - eGroups is becoming Yahoo! Groups
Click here for more details:
http://click.egroups.com/1/10801/0/_/30563/_/976743282/
---------------------------------------------------------------------_->
Cuba SI - Imperialism NO!
Information and discussion about Cuba.
Socialism or death! Patria o muerte! Venceremos!
http://www.egroups.com/group/cubasi
Subscribe: [EMAIL PROTECTED]
Unsubscribe: [EMAIL PROTECTED]
Change Delivery Options: http://www.egroups.com/mygroups
