File spoon-archives/bhaskar.archive/bhaskar_2001/bhaskar.0110, message 25


Date: Sun, 14 Oct 2001 13:22:01 -0500 (CDT)
Subject: Re: BHA: Terrorism and poverty (fwd) Stiglitz


Hi Howard:

Sorry I cannot conclusively confirm the information that I sent, since I
just received it from a friend.  I have written to him and am waiting for
a reply.

Best,

Viren

On Sat, 13 Oct 2001, howard engelskirchen wrote:

> 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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