by
Patrick M. Wood
Thursday, December 29, 2005
Volume 6, Issue 1
from
AugustReview Website
Introduction
The
International Monetary Fund (IMF) is:
a public institution, established with money provided by taxpayers
around the world. This is important to remember because it does not
report directly to either the citizens who finance it or those whose
lives it affects. Rather, it reports to the ministries of finance
and the central banks of the governments of the world.1
This authoritative statement comes from
Joseph Stiglitz, who served
for seven years as chairman of President Clinton’s Council of
Economic Advisers and as chief economist for the World Bank.
Stiglitz is a mainstream globalist, but still honest enough to have
become disillusioned with the corrupt practices of the IMF and the
World Bank. His first-hand witness is very insightful:
International bureaucrats - the faceless symbols of the world
economic order - are under attack everywhere. Formerly uneventful
meetings of obscure technocrats discussing mundane subjects such as
concessional loans and trade quotas have now become the scene of
raging street battles and huge demonstrations... Virtually every
major meeting of the International Monetary Fund, the World Bank,
and the World Trade Organization is now the scene of conflict and
turmoil. 2
Why is the IMF an organization that people love to hate? This report
will hopefully shed some light on the subject.
IMF Beginnings
According to its own literature, the International Monetary Fund (IMF)
was,
"established to promote international monetary cooperation,
exchange stability, and orderly exchange arrangements; to foster
economic growth and high levels of employment; and to provide
temporary financial assistance to countries to help ease balance of
payments adjustment."
This innocuous description hardly describes the critical functions
that the IMF provides to the process of globalization. Indeed, the
IMF is one of the leading agents of change in the global economy and
global governance.
The IMF was actually created in December, 1945 when the first 29
member nations signed its Articles of Agreement, and began
operations on March 1, 1947. (Note: there are 184 member countries
today.)
The authorization for the IMF came a few months earlier at the
famous Bretton Woods conference of July 1944.
On the heels of World War II, the Bretton Woods Agreements
established a system of procedures and rules, together with
institutions to enforce them, that called for member countries to
adopt a monetary policy that was fixed in terms of gold. Although
the Bretton Woods system utterly collapsed in 1971 after President
Nixon suspended convertibility of the dollar into gold, the
institutions created in 1944 continued on uninterrupted.
While any country may become a member of the IMF, the road to
membership is noteworthy. When application for membership is
submitted to the IMF’s executive board, a "Membership Resolution" is
made to the Board of Governors that covers the member’s quota,
subscription and voting rights. If approved by the Board of
Governors, the applicant must amend its own laws in order to permit
it to sign the IMF’s Articles of Agreement and to otherwise fulfill
the obligations required of members. In other words, the member
subordinates a certain part of its legal sovereignty to the IMF.
This sets the stage for the IMF to take an active role in the
affairs of the member country.
The IMF is viewed by some as a global organization, but it should be
noted that the U.S. has 18.25 percent of the vote on the IMF board,
or three times more than any other member. In addition, it is based
in
Washington, DC.
IMF Founders: Harry Dexter White and John Maynard Keynes
The principal architects of the Bretton Woods system, and hence the IMF, were
Harry Dexter White and John Maynard Keynes.
Keynes was an English economist who has had an enormous impact on
global economic thinking despite the fact that many of his economic
theories have been thoroughly discredited. During WWII, he had
called for the dissolution of the Bank for International Settlements
because of its domination by Nazi operatives. After WWII however,
when disbanding the BIS was actually mandated by Congress, he argued
against the dissolution pending the creation of the IMF and
World
Bank. His latter argument was the often and over-used rationale "If
we close it down too soon, the world financial system will
collapse." Keynes globalist instincts led him to call for a world
currency, called Bancor, that would be managed by a global central
bank. This idea flatly failed.
Harry Dexter White was also considered to be a brilliant economist,
and was appointed in as 1942 assistant to Henry Morgenthau,
Secretary of the Treasury. He remained Morgenthau’s most trusted
assistant throughout his term, and argued verbosely against the Bank
for International Settlements. Like Morgenthau and most all
Americans, White was strongly anti-Nazi. White, however, was NOT
pro-American.3
On October 16, 1950, an FBI memo identified White as a Soviet spy
whose code name was Jurist.
Following the collapse of the Soviet Union in 1991, formerly secret
intelligence documents were made public and shined new light on the
matter. White was not just a spy among the 50-odd identified
American spies, he was likely the top spy for the USSR in the U.S.
In 1999, the Hoover Digest wrote:
In their new book Venona: Decoding Soviet Espionage in America,
Harvey Klehr and John Haynes argue that of some fifty Americans
known to have spied for Stalin (many more have never been
identified), Harry Dexter White was probably the most important
agent.
The Venona intercepts revealed that at the 1945 conference in San
Francisco founding the United Nations, White met with a Soviet KGB
officer and informed him of the U.S. negotiating position on a
number of issues. (White’s KGB code name was at various times
“Lawyer,” “Richard,” and “Reed.”) Another KGB message noted that
White was thinking of resigning his high Treasury post and entering
the private sector because he needed more income to pay one of his
daughter’s college tuition. White was regarded as so important to
the Kremlin that his handlers proposed to pay the tuition so White
could remain at Treasury.4
Had White lived beyond 1946, he likely would have been prosecuted
for high treason against the U.S., the penalty for which is
execution.
Such is the moral fiber and intellectual credentials of the creators
of the IMF:
Trying to figure out where these two really stood in the eyes of the
core
global elite has more twists than a Sherlock Holmes mystery
story. It is more easily perceived by the end result -- the
successful creation of the IMF and the World Bank, both of which
were heartily endorsed by the likes of J.P. Morgan and Chase Bank,
among other international bankers.
Positioning: IMF vs. the World Bank and the BIS
There is a triad of monetary powers that rule global money
operations:
Although they work together very closely, it is
necessary to see which part each plays in the globalization process.
The International Monetary Fund (IMF) and the World Bank interact
only with governments whereas the BIS interacts only with other
central banks. The IMF loans money to national governments, and
often these countries are in some kind of fiscal or monetary crisis.
Furthermore, the IMF raises money by receiving "quota" contributions
from its 184 member countries. Even though the member countries may
borrow money to make their quota contributions, it is, in reality,
all tax-payer money.5
The World Bank also lends money to governments and has 184 member
countries. Within the World Bank are two separate entities:
The IBRD focuses on
middle income and credit-worthy poor countries, while the IDA
focuses on the poorest of nations. The World Bank is self-sufficient
for internal operations, borrowing money by direct lending from
banks and by floating bond issues, and then loaning this money
through IBRD and IDA to troubled countries.6
The BIS, as central bank to the other central banks, facilitates the
movement of money. They are well-known for issuing "bridge loans" to
central banks in countries where IMF or World Bank money is pledged
but has not yet been delivered. These bridge loans are then repaid
by the respective governments when they receive the funds that had
been promised by the IMF or World Bank.7
The IMF has become known as the "lender of last resort." When a
country starts to crumble because of problems with trade deficits or
excessive debt burdens, the IMF can step in and bail it out. If the
country were a patient in a hospital, the treatment would include a
transfusion and other life support measures to just keep the patient
alive -- full recovery is not really in view, nor has it ever
happened.
One must remember that rescue operations would not be necessary if
it were not for the central banks, international banks, the IMF and
the World Bank leading these countries into debts they cannot
possibly ever repay in the first place.
The Purpose and Structure of the IMF
According to the IMF pamphlet, A Global Institution: The IMF’s Role
at a Glance,
The IMF is the central institution of the international monetary
system—the system of international payments and exchange rates among
national currencies that enables business to take place between
countries.
It aims to prevent crises in the system by encouraging countries to
adopt sound economic policies; it is also—as its name suggests—a
fund that can be tapped by members needing temporary financing to
address balance of payments problems.
The IMF works for global prosperity by promoting
-
the balanced expansion
of world trade
-
stability of exchange
rates
-
avoidance of competitive
devaluations
-
orderly correction of balance of payments problems
The IMF’s statutory purposes include promoting the balanced
expansion of world trade, the stability of exchange rates, the
avoidance of competitive currency devaluations, and the orderly
correction of a country’s balance of payments problems.8
Although the IMF has changed in significant ways over the years,
their current literature makes it quite clear that the statutory
purposes of the IMF today are the same as when they were formulated
in 1944:
i. To promote international monetary cooperation through a permanent
institution which provides the machinery for consultation and
collaboration on international monetary problems.
ii. To facilitate the expansion and balanced growth of international
trade, and to contribute thereby to the promotion and maintenance of
high levels of employment and real income and to the development of
the productive resources of all members as primary objectives of
economic policy.
iii. To promote exchange stability, to maintain orderly exchange
arrangements among members, and to avoid competitive exchange
depreciation.
iv. To assist in the establishment of a multilateral system of
payments in respect of current transactions between members and in
the elimination of foreign exchange restrictions which hamper the
growth of world trade.
v. To give confidence to members by making the general resources of
the Fund temporarily available to them under adequate safeguards,
thus providing them with opportunity to correct maladjustments in
their balance of payments without resorting to measures destructive
of national or international prosperity.
vi. In accordance with the above, to shorten the duration and lessen
the degree of disequilibrium in the international balances of
payments of members.8
As lofty as this might sound, one can interpret meanings by matching
up its actions. For instance, "consultation and collaboration" often
means "we will enforce our policies on your country" and "adequate
safeguards" mean the "collateral and concessions we demand in return
for borrowing our money."
The IMF has been likened to an international credit union, where
members who contribute reserves have the opportunity to borrow as
the need may arise. The IMF is further able to raise funds by
borrowing from member countries or from private markets. The IMF
claims to have not raised funds from private markets as of yet.
This report will examine four aspects of IMF operations:
Currency, Monetary Roles and Gold
Two years prior to the collapse of the
Bretton Woods system, the IMF
created a reserve mechanism called the
Special Drawing Right, or SDR.
The SDR is not a currency, nor is it a liability of the IMF, rather
it is primarily a potential claim on freely usable currencies.
Freely usable currencies, as determined by the IMF, are the U.S.
dollar, euro, Japanese yen, and pound sterling.9
Since the value of the component currencies change relative to each
other, the value of the SDR changes relative to each component. As
of December 29, 2005, one SDR was valued at $1.4291. The SDR
interest rate was pegged at 3.03 percent.
There should be no mistake in the readers mind that the IMF
correctly views itself as the "currency controller" for all
countries who have hitched a ride on the globalization express.
According to an official publication,
The IMF is therefore concerned not only with the problems of
individual countries but also with the working of the international
monetary system as a whole. Its activities are aimed at promoting
policies and strategies through which its members can work together
to ensure a stable world financial system and sustainable economic
growth. The IMF provides a forum for international monetary
cooperation, and thus for an orderly evolution of the system, and it
subjects a wide area of international monetary affairs to the
covenants of law, moral suasion, and understandings.10
The IMF works closely with the
Bank for International Settlements in
promoting smooth currency markets, exchange rates, monetary policy,
etc. The BIS, as central bank for central banks, more likely tells
the IMF what to do rather than vice versa. This notion is bolstered
by the fact that on March 10, 2003, the BIS adopted the SDR as its
official reserve asset, abandoning the 1930 gold Swiss franc
altogether.
This action removed all restraint from the creation of paper money
in the world. In other words, gold backs no national currency,
leaving the central banks a wide-open field to create money as they
alone see fit. Remember, that almost all the central banks in the
world are privately- or jointly-held entities, with an exclusive
franchise to arrange loans for their respective host countries.
This is not to say that gold has no current or future role in
international money. Under Bretton Woods, gold was the central
reserve asset, and original subscribers contributed large amounts of
gold bullion. Gold was abandoned completely in 1971, but the IMF
continues to own and hold gold into the present: 103.4 million
ounces (3,217 metric tons) with a current market value of about $45
billion. This is no small amount of gold!
The U.S. Treasury claims to have 261.5 million ounces of gold, but
there has never been an official, physical audit of Fort Knox and
other repositories to back up this claim. By comparison, Great
Britain claims to own 228 million ounces of gold.
The BIS, IMF and major central banks (notably the
New York Federal
Reserve Bank and the Bank of England) have collectively and
methodically sold portions of their gold stocks while claiming that
"gold is dead". This manipulation has tended to suppress the price
of gold since the early 1970’s. Antony Sutton’s 1979 book, The War
on Gold, dealt definitively on this matter. More recently, the group
Gold Anti-Trust Action Committee (GATA) was founded in 1999 with
essentially the same argument: gold has been unfairly manipulated.
Suffice it to say that if so many organizations have conspired to
keep "gold as money" out of the public mind, then gold is not dead
but just temporarily on the shelf. When fiat currencies have been
drained dry by the global cartel, gold will likely be brought back
by the same people who told us it was forever a dead issue.
Moral Hazard
This is a technical legal term with a precise meaning, but it easily
understood. Moral hazard is the term given to the increased risk of
immoral behavior resulting in a negative outcome (the "hazard"),
because the persons who increased the risk potential in the first
place either suffer no consequences, or benefit from it.
While the IMF is riddled with specific instances of moral hazard,
its very existence is a moral hazard.
The eminent economist Hans F. Sennholz (Grove City College) sums up
the IMF operations this way:
The IMF actually encourages bankers and investors to take imprudent
risk by providing taxpayer funds to bail them out. It encourages
corrupt governments to engage in boom and bust policies by coming to
their rescue whenever they run out of dollar reserves.11
The money shuffle goes like this: The World Bank and the
BIS develop
markets for credit by enticing governments to borrow money. They
(and the private banks along side of them) are encouraged to make
risky loans because they know that IMF stands ready to rescue
countries with defaulting loans -- the moral hazard. As the
usury
interest builds up and finally threatens the entire financial
stability of the affected country, the IMF steps in with a "bail
out" operation.
Defaulted loans are replaced or restructured with
(taxpayer provided) IMF loans. Additional money is loaned to repay
back interest and allow for further expansion of the economy. In the
end, the desperate country is even further in debt and is now
saddled with all kinds of additional restrictions and conditions.
Plus, under the phony aegis of "poverty reduction", citizens are
invariably left worse off than in the beginning.
Conditionalities
This is also a technical term that has a specific meaning: A
conditionality is a condition attached to a loan or a debt relief
granted by the IMF or the World Bank. Conditionalities are typically
non-financial in nature, such as requiring a country to privatize or
deregulate key public services.
Conditionalities are most significant within so-called Structural
Adjustment Programs (SAP) created by the IMF. Nations are required
to implement or promise to implement the attached conditionalities
prior to approval of the loan.
The fallout of conditionalities is notable. The globalist think-tank
Foreign Policy in Focus published IMF Bailouts and Global Financial
Flows by Dr. David Felix in 1998.
The report’s introduction makes
these key points:
-
The IMF has been transformed into an
instrument for prying open
third world markets to foreign capital and for collecting foreign
debts.
-
This transformation violates the IMF charter in spirit and
substance, and has increased the costs to countries requesting IMF
financial aid.
-
The IMF’s operational crisis stems from growing debtor resistance to
its policy demands, soaring fiscal costs, and accumulating evidence
of IMF policy failure.12
The general public has not seen such "internal criticism" of the
IMF.
If an outsider were to make the very same criticism, he would be
ostracized for being part of the radical fringe.
So, conditionalities are instruments of forcing open markets in
third-world countries, and of collecting defaulted debts owed by
public and private organizations. The accumulating result of conditionalities is increasing resistance to such demands, bordering
on hatred in many countries. The countries who can least afford it
are saddled with soaring costs, additional debt and reduced national
sovereignty.
Perhaps the most authoritative report on this topic was produced in
2002 by Axel Dreher of the Hamburg Institute of International
Economics entitled The Development and Implementation of IMF and
World Bank Conditionality.
Dreher notes that there was no consideration of conditionalities at
the founding of the IMF, but rather they were gradually added
in increasing numbers as the years passed and mostly by U.S. banking
interests.13 Conditionalities are arbitrary, unregulated, and
imposed in varying degrees on different countries according to the
whims of the negotiators. The recipient countries have little, if
any, bargaining power.
The August Review has observed several times that 1973, with the
creation of the Trilateral Commission, was a pivotal year in the
stampede to globalization. It is no surprise then that conditionalities became a standard business practice in 1974 with
the introduction of the Extended Fund Facility (EFF).14 EFF created
lines of credit, or "credit tranches", that could be drawn on as
needed by a troubled country, thus creating additional moral hazards
as well.
Dreher also points out the tight coordination with the World Bank:
The reforms under IMF programs have mainly been designed by World
Bank economists. Fund conditionality often was supportive of
measures contained in Bank supported public enterprise reform
operations. The selection of public enterprises to be reformed as
well as the modalities and time table was developed by the Bank as
well.15
So, we see that the IMF does not act alone in the application of
conditionalities and in some cases, it is pointedly driven by the
World Bank.
Dreher’s meticulous research uncovered another interesting
statistic: The most frequent condition included is bank
privatization -- included in 35 percent of the programs analyzed!16
International bankers have always had disdain for banking operations
run by governments instead of by private or corporate ownership.
Thus, they have used the IMF and World Bank to force privatization
of what remains in government hands in the third-world.
If all of this was not disturbing enough, Dreher informs us that
there are direct connections between conditionalities imposed and
various private banks who work in concert with the IMF and World
Bank:
Since private creditors were willing to lend further only if IMF
programs were in effect, the Fund’s leverage was enhanced... since
for crisis resolution sometimes more money is needed than can be
provided by the IFIs, IMF and World Bank depend on these private
creditors who should therefore be able to press for conditions which
lie in their interest.17
With the IMF, World Bank and other international banks forcing
governments to run their countries in ways not of their choosing,
and with the United States viewed as the primary driver of these
organizations, it is no wonder that the third-world musters such
intense hatred for the U.S. and for the self-interested
globalization it exports wherever possible. The globalization
process is most often anti-democratic and completely ineffective at
accomplishing it’s lofty stated goal of poverty reduction.
It should be plainly evident by now that the "can opener" for
globalization to take place is the power of money. Borrowed money
enslaves the borrower, and puts him at the mercy of the lender. When
President Bill Clinton finally acknowledged the error of his ways
during his affair with Monica Lewinski, he stated that it was for
the absolutely worst of reasons: "Because I could." Why do these
global financial organizations take such advantage of those whom
they systematically put in jeopardy? Because they can!
IMF Bailout of Brazil
The 1998 the Brazil currency crisis was caused by that country’s
inability to pay inordinate accumulated interest on loans made over
a protracted period of time. These loans were extended by banks like
Citigroup, J.P. Morgan Chase and FleetBoston, and they stood to lose
a huge amount of money.
The IMF, along with the World Bank and the U.S., bailed out Brazil
with a $41.5 billion package that saved Brazil, its currency and,
not incidentally, certain private banks.
Congressman Bernard Sanders (I-VT), ranking member of the
International Monetary Policy and Trade Subcommittee, blew the
whistle on this money laundering operation. Sander’s entire
congressional press release is worth reading:
IMF Bailout for Brazil is Windfall to Banks, Disaster for US
Taxpayers Says Sanders
BURLINGTON, VERMONT - August 15 - Congressman Bernard Sanders
(I-VT), the Ranking Member of the International Monetary Policy and
Trade Subcommittee, today called for an immediate Congressional
investigation of the recent $30 billion International Monetary Fund
(IMF) bailout of Brazil.
Sanders, who is strongly opposed to the bailout and considers it
corporate welfare, wants Congress to find out why U.S. taxpayers are
being asked to provide billions of dollars to Brazil and how much of
this money will be funneled to U.S. banks such as Citigroup,
FleetBoston and J.P. Morgan Chase. These banks have about $25.6
billion in outstanding loans to Brazilian borrowers. U.S. taxpayers
currently fund the IMF through a $37 billion line of credit.
Sanders said,
"At a time when we have a $6 trillion national debt, a
growing federal deficit, and an increasing number of unmet social
needs for our veterans, seniors, and children, it is unacceptable
that billions of U.S. taxpayer dollars are being sent to the IMF to
bailout Brazil."
"This money is not going to significantly help the poor people of
that country. The real winners in this situation are the large,
profitable U.S. banks such as Citigroup that have made billions of
dollars in risky investments in Brazil and now want to make sure
their investments are repaid. This bailout represents an egregious
form of corporate welfare that must be put to an end. Interestingly,
these banks have made substantial campaign contributions to both
political parties," the Congressman added.
Sanders noted that the neo-liberal policies of the IMF developed in
the 1980’s pushing countries towards unfettered free trade,
privatization, and slashing social safety nets has been a disaster
for Latin America and has contributed to increased global poverty
throughout the world. At the same time that Latin America countries
such as Brazil and Argentina followed these neo-liberal dictates
imposed by the IMF, from 1980-2000, per capita income in Latin
America grew at only one-tenth the rate of the previous two decades.
Sanders continued,
"The policies of the IMF over the past 20 years
advocating unfettered free trade, privatizing industry, deregulation
and slashing government investments in health, education, and
pensions has been a complete failure for low income and middle class
families in the developing world and in the United States . Clearly,
these policies have only helped corporations in their constant
search for the cheapest labor and weakest environmental regulations.
Congress must work on a new global policy that protects workers,
increases living standards and improves the environment." [Emphasis
added]
IMF Bailout of Asia
The Asian currency crisis came to a head in 1998, and the IMF was on
the spot for a massive bailout. Vocal critics of the IMF at that
time included George P. Schultz (member of the
Trilateral
Commission), William E. Simon (Secretary of the Treasury under Nixon
and Ford) and Walter B. Wriston (former chairman of
Citigroup/Citibank and member of the
Council on Foreign Relations).
They jointly wrote Abolish the IMF? for the Hoover Institution,
where Shultz is also a distinguished fellow. The article states:
The $118 billion Asian bailout, which may rise to as much as $160
billion, is by far the largest ever undertaken by the IMF. A distant
second was the 1995 Mexican bailout, which involved some $30 billion
in loans, mostly from the IMF and the U.S. Treasury. The IMF’s
defenders often tout the Mexican bailout as a success because the
Mexican government repaid the loans on schedule. But the Mexican
people suffered a massive decline in their standard of living as a
result of that crisis. As is typical when the IMF intervenes, the
governments and the lenders were rescued but not the people.18
Their scathing attack continues throughout the article, and
concludes with,
The IMF is ineffective, unnecessary, and obsolete. We do not need
another IMF, as Mr. (George) Soros recommends. Once the Asian crisis
is over, we should abolish the one we have.18
It’s interesting that these core members of
the global elite are
throwing stones at their own institution. What is outrageous is that
they are completely side-stepping their own personal culpability for
having used it to drive globalization with all of its ill
side-effects. The fact that they succinctly describe the damage done
by the IMF clearly dispenses their typical claim of "ignorance." Are
they setting the stage to disband the IMF in favor of another, more
powerful monetary authority? Time will tell.
Argentina: A Case Study of Privatization
In 2001, the IMF handed a bailout package to Argentina, valued at $8
billion. The major beneficiaries were the European megabanks, which
held about 75 percent of the country’s foreign debt. The money river
flowed like this:
-
IMF gives $8 billion (about $1.6 billion of which
was tax money collected from hard working Americans) to Argentina
-
Argentina buys U.S. Treasury bills (U.S. gets the dollars back after
being "monetized")
-
Argentina delivers Treasury Bills to creditor
banks who graciously agree to retire their worthless Argentinian
bonds
Less than a decade earlier, the IMF and the
World Bank backed
Argentina in the largest water privatization project in the world.
In 1993, Aquas Argentinas was formed between Argentina’s water
authority and a consortium that included the Suez group from France
(largest private water company in the world) and Aquas de Barcelona
of Spain. The new company covered a region populated by over 10
million inhabitants.
Now, after 10 years of higher water rates, decreased quality of
water and sewage treatment, and neglected infrastructure
improvements, the consortium is breaking its 30-year contract and
pulling out. Bitterness between Aqua and government officials runs
deep because of broken promises and political backlash.
The aftermath of Aqua Argentina is recorded in the November 21, 2005
online edition of the Guardian:
More than 1 million residents in the rural Argentinian province of
Santa Fe are facing an anxious wait to discover if their taps will
still flow or their toilets flush over the next few weeks.
Since 1995, the province has had its water supply and sewage
services provided by a consortium led by the French multinational
Suez; now the giant utility wants out, and plans to leave within the
month.
The decision, which follows the high-profile collapse of other water
privatization schemes in countries including Tanzania, Puerto Rico,
the Philippines and Bolivia, has again raised questions about the
viability of privatizing utilities in the developing world.
Suez is also preparing an early departure from its formerly
lucrative concession in the Argentine capital, Buenos Aires. The
deal, struck in 1993, marked the largest water privatization project
in the world.
In both cases, the French utility is terminating its 30-year
contract a third of the way through. Suez cannot get the concessions
to turn a profit - at least not under the terms of its current
agreements.
The French utility giant snapped up both service agreements in the
mid-1990s when Argentina was undergoing a massive reform of its
public sector, largely at the behest of the World Bank and other
lending agencies.19
Aqua Argentina milked the market as long as it could, and then
simply bailed out. And, why not? The profit dried up and it’s not
their country!
Global statistics show that some 460 million people around the world
must rely on private water corporations like Aqua Argentina,
compared to only 51 million in 1990. The IMF (and World Bank)
levered the extra 400 million people into privatized contracts with
water mega-companies from Europe and the U.S. Now that the cream has
been skimmed off the top of the milk, these same companies are
excusing themselves from the party -- leaving a shambles, angry
customers and incapable governments still saddled with the billions
of dollars of debt incurred (at their insistence) to start
privatization in the first place.
[Note: In February 2003, CBC News in Canada produced an in depth
report Water for Profit: how multinationals are taking
control of a public resource that included features and segments
that were delivered across five days of broadcasting.]
20
Conclusion
This report does not pretend to be an exhaustive analysis of the
IMF. There are many facets, examples and case studies that could be
explored. In fact, many critical analysis books have been written
about the IMF. The object of this report was to show generally how
the IMF fits into globalization as a critical member in the triad of
global monetary powers: The IMF, the BIS and the World Bank.
Despite even establishment calls for the dissolution of the IMF, it
continues to operate unhindered and with virtually no
accountability. This is reminiscent of the BIS continuing to operate
even after its dissolution was officially mandated after WWII.
For the purpose of this report, it is sufficient to conclude that...
-
of the two founders of the IMF, one was an outright traitor to the
U.S. and the other was a British citizen totally dedicated to
globalism
-
the IMF, in coordination with the BIS, tightly controls currencies
and foreign exchange rates in the global economy
-
the IMF is a channel for taxpayer money to be used to bail out
private banks who made questionable loans to countries already
saddled with too much debt
-
the IMF uses conditionalities is a lever to force privatization of
key and basic industries, such as banking, water, sewer and
utilities
-
conditionalities are often structured with help from the private
banks who loan alongside of the IMF
-
the policies of privatization accomplish just the opposite of what
was promised
-
the global elite are neither ignorant nor repentant of the distress
the IMF has caused so many nations in the third-world
-
when the public heat gets too hot,
the global elite simply join the
critics (thereby shunning all blame) while quietly creating new
initiatives that allow them to get on with business -- that is,
their business!
Footnotes
-
Stiglitz, Globalization and its Discontents (Norton, 2002), p.12
-
ibid, p. 3
-
Ladd, FBI Office Memorandum, October 16, 1950
-
Beichman, Guilty as Charged, Hoover Digest 1999 No. 2
-
IMF web site,
http://www.imf.org
-
World Bank web site.
http://www.WorldBank.org
-
Baker, The Bank for International Settlements: Evolution and
Evaluation, (Quorum, 2002), p. 141-142
-
IMF, What is the International Monetary Fund?, 2004
-
IMF, Overview of the IMF as a Financial Institution, p.11
-
ibid, p. 3
-
Sennholz, IMF Bailouts Make Matters Worse
-
Felix, IMF Bailouts and Global Financial Flows, Vol. 3, No. 3, April
1998
-
Dreher, The Development and Implementation of IMF and World Bank
Conditionality, Hamburg Institute of International Economics
-
ibid, p. 9
-
ibid, p. 17
-
ibid, p. 18
-
ibid, p. 21
-
Shultz, et. al, Who Needs the IMF?, Hoover Institution Public Policy
Inquiry on the IMF
-
The trickle-away effect, The Guardian, November 21, 2005
-
CBC News, Water for Profit: how multinationals are taking control of
a public resource
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