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IMF'S FOUR STEPS TO DAMNATION

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  • Robert Sterling
    Please send as far and wide as possible. Thanks, Robert Sterling Editor, The Konformist http://www.konformist.com greg@gregpalast.com IMF S FOUR STEPS TO
    Message 1 of 1 , May 1 9:16 AM
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      Please send as far and wide as possible.

      Thanks,

      Robert Sterling
      Editor, The Konformist
      http://www.konformist.com


      greg@...


      IMF'S FOUR STEPS TO DAMNATION
      ---------------------------------------------
      How crises, failures, and suffering finally drove a Presidential
      adviser to
      the wrong side of the barricades

      Gregory Palast
      Sunday April 29, 2001
      The Observer

      It was like a scene out of Le Carré: the brilliant agent comes in
      from the
      cold and, in hours of debriefing, empties his memory of horrors
      committed in
      the name of an ideology gone rotten.

      But this was a far bigger catch than some used-up Cold War spy. The
      former
      apparatchik was Joseph Stiglitz, ex-chief economist of the World
      Bank. The
      new world economic order was his theory come to life.

      He was in Washington for the big confab of the World Bank and
      International
      Monetary Fund. But instead of chairing meetings of ministers and
      central
      bankers, he was outside the police cordons. The World Bank fired
      Stiglitz two
      years ago. He was not allowed a quiet retirement: he was
      excommunicated
      purely for expressing mild dissent from globalisation World Bank-
      style.

      Here in Washington we conducted exclusive interviews with Stiglitz,
      for The
      Observer and Newsnight, about the inside workings of the IMF, the
      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' and 'restricted'.

      Stiglitz helped translate one, 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 'investigation'
      involves little
      more than close inspection of five-star hotels. It concludes with a
      meeting
      with a begging finance minister, who is handed a 'restructuring
      agreement'
      pre-drafted for 'voluntary' signature.

      Each nation's economy is analysed, says Stiglitz, then the Bank hands
      every
      minister the same four-step programme.

      Step One is privatisation. Stiglitz said that rather than objecting
      to the
      sell-offs of state industries, some politicians - 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 possibility
      of
      commissions for shaving a few billion off the sale price.

      And the US government knew it, charges Stiglitz, at least in the case
      of the
      biggest privatisation 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." '

      Stiglitz cannot simply be dismissed as a conspiracy nutter. The man
      was
      inside the game - a member of Bill Clinton's cabinet, chairman of the
      President's council of economic advisers.

      Most sick-making for Stiglitz is that the US-backed oligarchs stripped
      Russia's industrial assets, with the effect that national output was
      cut
      nearly in half.

      After privatisation, Step Two is capital market liberalisation. In
      theory
      this allows investment capital to flow in and out. Unfortunately, as
      in
      Indonesia and Brazil, the money often simply flows 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.

      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. Higher interest rates
      demolish
      property values, savage industrial production and drain national
      treasuries.

      At this point, according to Stiglitz, 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] squeezes the last drop 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.

      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 believe the riot was
      expected.

      And it is. What Stiglitz did not know is that Newsnight obtained
      several
      documents from inside the World Bank. In one, last year's Interim
      Country
      Assistance Strategy for Ecuador, the Bank several times suggests -
      with cold
      accuracy - that the plans could be expected to spark 'social unrest'.

      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 IMF riots (and by riots I mean peaceful demonstrations dispersed
      by
      bullets, tanks and tear gas) cause new flights of capital and
      government
      bankruptcies This economic arson has its bright side - for
      foreigners, who
      can then pick off remaining assets at fire sale prices.

      A pattern emerges. There are lots of losers but the clear winners
      seem to be
      the western banks and US Treasury.

      Now we arrive at Step Four: free trade. This is free trade by the
      rules of
      the World Trade Organisation and the World Bank, which Stiglitz
      likens to the
      Opium Wars. 'That too was about "opening markets",' he said. As in the
      nineteenth century, Europeans and Americans today are kicking down
      barriers
      to sales in Asia, Latin American and Africa while barricading our own
      markets
      against the Third World 's agriculture.

      In the Opium Wars, the West used military blockades. Today, the World
      Bank
      can order a financial blockade, which is just as effective and
      sometimes just
      as deadly.

      Stiglitz has two concerns about the IMF/World Bank plans. First, he
      says,
      because the plans are devised in secrecy and driven by an absolutist
      ideology, never open for discourse or dissent, they 'undermine
      democracy'.
      Second, they don't work. Under the guiding hand of IMF structural
      'assistance' Africa's income dropped by 23%.

      Did any nation avoid this fate? Yes, said Stiglitz, Botswana. Their
      trick?
      'They told the IMF to go packing.'
      Stiglitz proposes radical land reform: an attack on the 50% crop rents
      charged by the propertied oligarchies worldwide.

      Why didn't the World Bank and IMF follow his advice?

      'If you challenge [land ownership], that would be a change in the
      power of
      the elites. That's not high on their agenda.'

      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.

      'It's a little like the Middle Ages,' says the economist, 'When the
      patient
      died they would say well, we stopped the bloodletting too soon, he
      still had
      a little blood in him.'

      Maybe it's time to remove the bloodsuckers.

      gregory.palast@...

      ---------------------------------------------

      GREGORY PALAST
      INTERNATIONAL INVESTIGATIVE REPORTER
      by Sandeep Kaushik
      Cleveland Free Times
      Published April 11 - 17, 2001

      Gregory Palast is almost certainly the greatest investigative
      journalist
      you've never heard of. An award-winning reporter in Britain, where he
      writes
      for The Guardian and The Sunday Observer, as well as hosts the BBC's
      60
      Minutes-esque Newsnight, Palast abandoned his native America when the
      mainstream press declined to publish his groundbreaking, hard-hitting
      exposés, known for stripping bare abuses of power. Case in point: his
      recent
      series on how Jeb Bush and Katherine Harris conspired to illegally
      purge the
      Florida voting rolls of thousands of former felons whose voting
      rights had
      been restored by other states, the vast majority of whom were (not
      coincidentally) Democrats. In the few venues that have bothered to
      report it
      in the United States, it's caused scarcely a ripple. Palast will be
      in
      Cleveland on Tuesday to debunk reigning myths about the much-touted
      phenomenon known as globalization.

      Free Times: How did you become an investigative journalist?
      Greg Palast: I started out as an investigator for American state and
      local
      governments; I'm an expert in the regulation of industry. For
      instance, I
      worked for the Chugach natives of Alaska to expose the fraud involved
      in the
      grounding of the Exxon Valdez, and for the government in its
      prosecution of
      the Shoreham nuclear plant scandal in New England, the biggest
      racketeering
      case in history. There we won a $400 million settlement from the
      builders and
      the utility, which we proved had lied about the plant's safety. It
      was a
      natural progression from there into journalistic investigations.
      FT: Ever do any work in Ohio?

      GP: Yeah, I discovered with the steel industry that it's not cheap
      Japanese
      imports that are responsible for the loss of American steel jobs. The
      jobs at
      companies like LTV went with the introduction of continuous casting
      and
      automation. The truth is that when markets were tight, American
      steelmakers
      chose to crank up prices rather than produce and sell more steel,
      which
      helped foreign companies get a foothold in the market. They raised
      prices
      when markets were tight, then closed plants when markets went slack.
      Unlike
      the foreign competitors, they felt no obligation to maintain their
      workforce.

      FT: The promo for your upcoming appearance for the Cleveland Council
      on World
      Affairs says that British Prime Minister Tony Blair called you a
      liar. What's
      that about?

      GP: I did an undercover investigation in which I penetrated his
      cabinet and
      circle of closest advisors to show how U.S. and British companies are
      able to
      buy insider access. I posed as a businessman interested in getting
      legislation changed, and a cabinet minister told me that for 5,000
      pounds, he
      would get me into 10 Downing Street, where I'd get what I wanted
      done. It was
      the biggest scandal of the Blair administration, and forced the
      resignation
      of several ministers, even though Blair said I was a liar.

      FT: What's your beef with American newspapers?

      GP: Just look at my Florida theft-of-the-election story. When it came
      out in
      Britain, hundreds of people asked me, "When will Bush resign?" It's a
      dual
      shame: first the election shenanigans, then the almost total lack of
      reporting about them. Mainstream American papers don't like to
      publish
      controversial stuff, particularly if it has to do with investigations
      of
      industry. The Washington Post did print my story on the scam of
      utility
      deregulation in California, but for the most part, while I'm
      mainstream in
      Europe, I'm non-stream in my home town. I should say, though, that I
      am
      currently filming a documentary for PBS on the presidential election
      rip-off.

      FT: Your talk in Cleveland is on the myth of "globalization." What
      does the
      term even mean?

      GP: The way it's usually bandied about, it's pretty vague. It has
      something
      to do with the future, with giving Bolivian peasants cell phones and
      wiring
      Eskimos to the internet. If you're against it, that means you must be
      against
      the future, and the communication revolution, and the concept of
      bringing the
      world together. You're a Luddite. But it's funny; I haven't yet met
      an
      anti-globalization activist who is against the internet. Let's get
      real - no
      one';s against the natives in Alaska getting on the net and
      downloading their
      porn just like everyone else.

      FT: So if it';s not about wiring the Sahara for cable, what is it
      about?

      GP: I'm talking about groups like the International Monetary Fund
      [IMF], the
      World Bank [WB], and the World Trade Organization [WTO]. Think of
      those wacko
      right-wing conspiracy nuts that are always screaming about one world
      government. Well, they're completely right that one exists, though
      while they
      think it's the Jews or communists who are running it, in reality it's
      the
      white WASPs that run the IMF and WB. When I talk about globalization,
      I'm
      taking it upon myself to pull together the facts that reveal what the
      IMF
      actually does.

      FT: What does it do?

      GT: It goes around to poor and needy countries and imposes something
      it calls
      a "poverty reduction strategy." First this involves "liberalizing
      capital
      markets," which means making it easy for American banks to move money
      into
      and out of the country. When things are good, money flows in; when
      they're
      bad, it flies out. At the same time, the IMF requires them to
      maintain the
      value of their currency. But when the economy takes a downturn and
      the money
      flows elsewhere, a country has to raise interest rates to levels that
      would
      make a Lower East Side loan shark salivate to bring it back. In
      essence,
      these countries end up buying back their own money, but at incredibly
      high
      rates. And this is just the beginning of the IMF's involvement.

      FT: You claim to know the dirty inner secrets of the IMF. How is that
      possible?

      GP: I've had large numbers of secret hidden documents slipped to me.
      The IMF
      really is its own secret world government; all of these reports are
      stamped
      "for official use only" and "restricted distribution." They know if
      the
      details of what they're doing gets out, there'd be people in the
      streets. In
      fact, there were 400 major demonstrations, riots and actions against
      these
      organizations across the world in 1999 alone, but only about a dozen
      were in
      the West, so you don't hear about them. You will, though, if you come
      to my
      Cleveland talk; it's going to be fun.

      --------------------------------------------
      Award-winning reporter Palast writes Inside Corporate America for the
      London
      Observer. To read other Palast reports, to contact the author or to
      subscribe
      to his column, go to http://www.gregpalast.com (cut and paste into
      your
      address bar)

      ---------------------------------------------
      You can still view BBC TV's, THEFT OF THE PRESIDENCY, at BBC
      Newsnight;
      http://news.bbc.co.uk/hi/english/events/newsnight/newsid_1174000/11741
      15.stm

      Read A BLACKLIST BURNING FOR BUSH The (London) Observer;
      http://www.observer.co.uk/Print/0,3858,4103063,00.html

      FLORIDA'S ETHNIC CLEANSING OF VOTER ROLLS Salon.com story of the
      year;
      http://www.salon.com/politics/feature/2000/12/04/voter_file/index.html

      FLORIDA'S DISAPPEARED VOTERS in The Nation;
      http://www.thenation.com

      US media failures at SILENCE OF THE LAMBS;
      http://www.mediachannel.org/views/whistleblower/palast.shtml

      and on Bush family finances: BEST DEMOCRACY MONEY CAN BUY;
      http://www.gregpalast.com/detail.cfm?artid=15&row=1


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