File spoon-archives/bhaskar.archive/bhaskar_2001/bhaskar.0110, message 23

Date: Sat, 13 Oct 2001 23:09:47 -0400
Subject: Re: BHA: Terrorism and poverty (fwd) Stiglitz

Jan and Viren,

Thanks for the post Jan, but I do need for accuracies sake, the statistic.
If Viren's post is right, then 365 x 35,000+ = 13,000,000+ children die of
starvation each year.  Is that accurate?


At 09:19 PM 10/13/01 +0100, you wrote:
>Hi Howard,
>below a piece that's not so much about the statistics, but more on
>the underlying power structures and their strategies
>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
>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
>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.
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