FYI: > The Observer, London October 10, 2001 > > The globalizer who came in from the cold > > Joe Stiglitz: Today's winner of the nobel prize in economics > > by Greg Palast > > The World Bank's former Chief Economist's accusations are eye-popping - > including how the IMF and US Treasury fixed the Russian elections > > "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 - the Bolivian > riots over water prices last year and this February, the riots in Ecuador > over the rise in cooking gas prices imposed by the World Bank. 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 Ethopia'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. +++ Jay Fenello, Internet Coaching http://www.Fenello.com ... 678-585-9765 http://www.YourWebPartner.com ... Web Support http://www.AligningWithPurpose.com ... for a Better World ----------------------------------------------------------- "A new civilization is emerging in our lives, and blind men every�where are trying to suppress it." -- Alvin Toffler
