Date: Sat, 13 Oct 2001 23:09:47 -0400 From: howard engelskirchen <lhengels-AT-igc.org> 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? Howard 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 > >yours, >Jan >--------------------------------------------------------------------------- ---- > >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. > > > > > --- from list bhaskar-AT-lists.village.virginia.edu --- > --- from list bhaskar-AT-lists.village.virginia.edu ---
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