-Caveat Lector- >From www.newdawnmagazine.com.au/current.htm > Masterstroke: > Who Benefits from > World Economic Chaos > <Picture> > > > > > By SUSAN BRYCE > > While the Packer and Murdoch controlled media keep Australians > updated on corrupt IOC officials and cricket scandals, and we > digest the latest information about the Clinton presidential > penis over our soggy breakfast corn flakes, the world economic > crisis is pushed to the back of editorial agendas. The > International Monetary Fund is set to undergo some of the most > sweeping reforms in its history and the benefactors will be the > world’s largest financial institutions. Meanwhile the Australian > government slavishly pushes ahead with structural adjustments, > fuelling the hungry fires of the globalisation juggernaut as our > hard won freedoms are traded for the IMF’s economic disasters. > > The myths of globalisation have been fully exposed and debunked > in the wake of the Asian financial collapse, the ongoing > disintegration of the Russian economy, and the recent shocks in > Latin America. "Instead of economic prosperity and social > stability that it promised for all nations, globalisation has > brought economic turmoil, political and social tension, and > widespread devastation to the world’s peoples and resources."1 > > In the wash up from this debacle, the winners are the purveyors > of globalisation: the International Monetary Fund (IMF) and a > group of about six international banks. The world economic crisis > being experienced at present is a masterstroke for the funny > money people at the IMF and a financial coup d’état for the > international banks. > > Basking in the glory of "saving" the Asian economies, the IMF is > currently waging a campaign based on fear of further economic > calamity, to institute a series of sweeping changes to its > charter. The IMF wants an amendment to its Articles of Agreement > that would make promoting unfettered capital movements one of the > purposes of the IMF and to extend Fund jurisdiction over such > movements. This amendment would effectively give the IMF the > authority to regulate national investment policies, with an eye > towards eliminating any restrictions on capital flows. It is a > back door attempt to achieve the aims of the OECD inspired > Multilateral Agreement on Investment (MAI), which was stopped by > citizen opposition.2 > > As part of its ongoing campaign to achieve these amendments, the > Managing Director of the IMF Michel Camdessus, is openly > advocating increased trade liberalisation, prodding countries to > open up their economies, more than ever before, to foreign > capital. Camdessus told the National Press Club in Washington on > April 2, 1998, the IMF will encourage member countries "to > liberalise capital flows in a prudent and properly sequenced way > that will maximize the benefits and minimize the risks of freer > capital movements. To this end, work is under way on an amendment > to the IMF’s charter that would make the liberalization of > capital movements one of the purposes of the Fund, and extend its > jurisdiction to capital movements," Camdessus said. > > The premature liberalisation of capital markets pushed by the IMF > is one of the main causes of the Asian crisis. It was financial > market "reform" that allowed Thai, South Korean and Indonesian > banks to tap into short-term international loans in the early > 1990s. Hundreds of billions of dollars in loans flooded in as the > factories of the Asian tiger economies increased their exports to > phenomenal levels, fuelling a decade of rapid growth. > > Thailand, South Korea and Indonesia were left smothered in bad > debts, preventing companies from getting working capital to keep > producing. When the Thai baht was devalued by 40%, the country’s > unrepayable foreign debts, low level of foreign reserves, heavy > deficits and open financial exchanges spearheaded its decline > into economic abyss. South Korea and Indonesia suffered a similar > fate. A cartel of international banks including BankAmerica, > Citibank, Chase Manhattan, J.P. Morgan, Bankers Trust, Bank of > New York, the First National Bank of Chicago and Morgan Guaranty > with upward of US$20 billion in loan exposures in South Korea3,4, > were bailed out to the tune of US$35 billion. The IMF acted as a > free insurance broker as the foreign loans of international banks > went bad. > > The standard operating procedure of the IMF is to bail out Wall > Street and other lenders5, doling out harsh punishment to > borrower countries, socialising the risk and privatising the > profits. The IMF’s Asian bailout conditions were dependent upon > stringent compliance to the Fund's economic regime of Structural > Adjustment Programmes. In return for the bailout, Thailand, > Indonesia and South Korea agreed to further open their economies > to foreign investors and allow unprecedented Foreign Direct > Investment in factories, agriculture, service operations (eg: > tourism and banks), as well as portfolio investment in stocks, > bonds and currency. This policy enabled the same cartel of > international banks that were bailed out of the Asian crisis, > with only the slightest sacrifice, to buy up lucrative sectors of > the now suffering Asian economies. > > After the Asian bailouts the IMF was left with approximately > US$45 billion in liquid capital, US$25 billion available through > the General Arrangements to Borrow, as well as the Fund's ability > to borrow unlimited sums from private capital markets. Despite > these reserves, the IMF began lobbying the US Congress to fast > track a quota increase of US$14.5 billion, rather than going > through the regular budgetary process. The Fund argued that it > needed extra billions for other imminent financial crises. The > IMF did not elaborate on what the crises might be.6 > > The USA is the largest contributor to the IMF, providing > approximately 18 per cent of funds, putting America in a unique > position to wield influence. Through its aid and trade policies, > the US plays a fundamental role in designing and financing > Structural Adjustment Programs of the IMF. Starting in the 1980s, > the US began routinely conditioning its aid agreements on > acceptance of a package of economic reforms, and adherence to the > prescriptions of the IMF and World Bank.7 As these economic > blackmail measures continued, the political legitimacy of dozens > of developing countries was undermined as the IMF conspired with > governments, influencing them to legislate for US style free > market reform.8 > > These tactics are also reflected in the now all too familiar IMF > bailout procedure. Firstly, the IMF’s negotiating positions are > settled in Washington, then the mission team goes to the client > country to convey Washington’s conclusions. Meanwhile, the > financial markets wait breathlessly to see whether the country > will comply. The American govern-ment repeats the mantra "Obey > the IMF" and journalists assess the "seriousness" of reforms > according to whether countries bite the bullet to carry out the > IMF dictates.9 > > Jeffrey Sachs, professor of international trade at Harvard > University and director of the Harvard Institute for > International Development, describes the US role as "stage > managing the transition to global capitalism"… "America has > wanted global leadership on the cheap. It was desperate for the > developing world and post-communist economies to buy into its > vision, in which globalisation, private capital flows and > Washington’s advice would overcome the obstacles to shared > prosperity, so that pressures on the rich countries to do more > for the poor countries could be contained by the dream of > universal economic growth".10 > > With this vision, the USA would not have to shell out real money > to help the peaceful reconstruction of Russia; or to ameliorate > the desperate impoverishment and illness in Africa. In essence, > America has tried to sell its social ethos: The rich need not > help the poor, since the poor can enjoy rising living standards > and someday become rich themselves.11 The argument is simplistic > and flawed. The IMF’s policies open up developing economies to > competition from large, often-subsidised, multinational > corporations, making transnational corporations richer, and often > impoverishing or bankrupting developing country businesses and > workers. > > SAPPING THE COUNTRY DRY > > The IMF conditions its loans on the debtor nations adherence to > Structural Adjustment Programs (SAP) which suppos-edly stabilise > economies and make them more productive. SAPs are actually > designed purely to maximise extraction of profit from individual > countries at the expense of all else.12 > > Structural adjustment usually begins with trade liberalisation > and the abolition of protection, quotas and tariffs. A > devaluation of the currency takes place, boosting the > competitiveness of the export sector, making exports cheap, with > the aim of earning foreign exchange so Fund loans can be repaid. > Export industries and companies often receive subsidies and > preferential treatment (ironic, given the institutions’ free > trade bent). > > Structural adjustment virtually always requires countries to > reduce government expenditures with the aim of balancing the > budget. The sacrificial lambs are health care, education, social > security and other programs that benefit the poor. The poor often > lose services they are dependent upon, as programmes are slashed > and major sectors of the government are privatised. > > Some of the more obvious effects of SAPs are rising unemployment, > job insecurity, declining standards of living, business > stagnation due to the absence of mass purchasing power, tax > changes, industrial "reform" and the destruction of Trade Unions. > > > Readers in Australia should be very familiar with structural > adjustment policies. Witness the one third privatisation of > Telstra at a cost of 25 000 jobs; the creation of Centrelink; the > closure of the CES; the abolition of Youth Allowance for under 18 > year olds; the Kennett sell off of Victorian Railways; the > Productivity Commission’s proposal to cut tariffs on footwear, > clothing and textiles (which will cost up to 100 000 of the > lowest paid jobs in Australia); the sell off of electricity, > water and gas utilities across the country; a 40% reduction in > the number of farms (so empty have some country centres become, > that businesses are closing, and bank branches, schools, > hospitals, rail, bus and other services are being discontinued); > not to mention the GST; the Workplace Relations Act; the Wallis > Report into banking recommending a complete overhaul of the > banking system to increase competition, foreign ownership and > implement higher consumer charges and the proposed free trade in > farm products. The IMF has praised the Australian government, > comm-ending authorities for implem-enting these "sound > macro-economic policies and structural reforms". > > The IMF’s Structural Adjustment medicine delivers other painful > outcomes. Typically, a regression of democracy occurs, as > economic impositions by governments cause increasing violations > of human, economic, social and cultural rights. Political and > civil rights violations become a fait accompli. The world’s > modest attempts at domestic democratic governance shrivel in the > face of the increasing power of international institutions like > the IMF, Transnational Corporations and international currency > markets, as economic marginalisation leads to political > disempowerment. > > For Heavily Indebted Poor Countries (HIPCs), Structural > Adjustment policies spell even greater disaster. SAPs affect > about 80 indebted developing countries facing debt repayment > problems. Should some of these countries get out of the debt > crisis and no longer require SAPs conditioned loans, or should > there be a change of government or government policies, the SAP > policies can be changed or reversed. Newly emerging businesses in > poor countries find it difficult, if not impossible, to compete > in the world market and large multinationals find it easy to > enter a developing country and take over economic sectors there. > Author Michael Chossudovsky’s book Global Poverty13 describes the > process: > > > > Since the Debt crisis, the economic reforms imposed by the IMF > and the World Bank on developing countries have led to the > impoverishment of hundreds of millions of people. The economies > of sovereign countries are restructured and brought under the > custody of external creditors. Applied simultaneously in more > than 100 countries, these reforms are conductive to the > development of a global cheap labour economy which feeds on human > poverty and the destruction of the natural environment. > > > > It is estimated that Structural Adjustment Programmes in Heavily > Indebted Poor Countries (HIPCs) are responsible for the deaths of > some 6 million children every year since 1982.14 As the victims > are mostly poor people in poor countries, there has been little > public controversy over IMF policy. > > The Heavily Indebted Poor Countries are a group of 41 developing > nations15 that the IMF maintains in a condition of permanent > subsistence. The IMF’s 21st Century "initiative" for the HIPCs is > to cancel some of their debts, after years of delay, but only to > a point that leaves the country still in the red. Post > cancellation debt is meant to equal 200% of exports. These "debt > for export swaps" are then implemented along with standard IMF > Structural Adjustment Programmes, which means the HIPCs don’t > collapse, but they never get better. > > The impacts of globalisation are hard to ignore. The gap between > rich and poor nations is widening, rather than narrowing, and > there is a ‘no holes barred’ trend towards mergers and > acquisitions.16 The 1996 Human Development Report (HDR) launched > by the UN Development Program reveals that over the past 3 > decades only 15 countries have enjoyed high growth whilst 89 > countries are worse off economically than they were 10 years ago. > > > The report reveals that out of the world’s total economic income, > estimated at US$23 trillion, only US$5 trillion (22%) goes to > developing countries, although almost 80% of the world’s > population is housed there. Between 1960 and 1991, the richest > 20% of the world’s people increased their share of total global > income from 70% to 85%. In 1996, just 358 people owned as much > wealth as half the world’s population, while the poorest 20% of > people had their share of "wealth" fall from 2.3% to 1.4%. > > The IMF is group of unelected officials, a secretive > organisation, with all of its programs stamped confidential. Only > since the Asian crisis has the IMF, "an institution out of > control",17 even made the headlines. While the Fund advocates > "transparency" for its client debtors18, the IMF itself, is > anything but transparent. > > Transparency, IMF style, means that a country participating in > IMF programs has to open its books to IMF scrutiny, so that the > Fund knows the who, what, when, where, why and how of each debtor > economy. Every single import and export, every new mine opened, > every ounce of gold sold, natural resources, employment, > unemployment, the volume of shares traded, public and private > borrowings etc., are made known to the IMF. In short, the debtor > country must tell the IMF everything, as part of what the IMF > calls its "surveillance" policy, whereby it keeps an eye on > almost every sector in society and then makes recommendations for > change. > > IMF Managing Director Michel Camdessus describes the IMF as the > most magnificent bureau-cracy, but a more apt description is > provided by Mark Weisbrot in his paper, "IMF Cure Worse than the > Disease": > > > > …The IMF is the international financial equivalent of the CIA. > Its documents and proceedings are shrouded in secrecy, its > bureaucracy is unaccountable, it is blinded by ideology, and > dedicated to protecting the interests of the rich and powerful. > And the Fund has probably toppled more governments, > democratically elected and otherwise, than the CIA" …19 > > > > FOOTNOTES: > > 1. The joint statement of delegates at the 1998 International > Conference on Alternatives to Globalisation November 9, 1998, > Tagaytay City, Philippines. > http://www.economicjustice.org/resources/action/alternativesconfe > rence.html > > 2. Testimony of Ralph Nader on the International Monetary Fund > Before the General Oversight and Investigations Subcommittee, > House of Representatives Committee on Banking and Financial > Services, pp 1, > http://www.Citizen.org/public_citizen/pctrade/IMF/imf.htm > > 3. Ibid pp 3 – 4. > > 4. Over 53 banks were affected by the Asian crisis. The ones most > affected are listed in this article. > > 5. Another example occurred in 1995 when the IMF contributed $18 > billion to a Clinton administration bailout of Wall Street > interests who stood to lose billions with the Mexican peso > devaluation. > > 6. The next currency crisis is likely to occur in Russia, > notwithstanding the fragility of China, Argentina, Columbia and > Brazil. On January 9 this year Russia warned that it could only > pay half of its foreign debt obligations and requested outside > help. The Russian government budgeted $9.5 billion for debt > payments, while $17.5 billion was due. Repayments now must be > delayed, or Russia will default. Key among Russia’s creditors is > the IMF, which loaned Russia $7.9 billion during the Soviet era > and $9.6 billion in loans after the collapse of the Soviet Union. > > 7. Friends of the Earth, 1998, "Structural Adjustment and the > Environment: Promoting Efficiency or Exploiting Natural > Resources, > http://www.thirdworldtraveler.com/50years_Enough/StructAdjust_env > iron.html > > 8. The head of Brazil’s Central Bank resigned recently, sending > ‘shocks’ through international markets. The resignation was > designed to coerce procrastinating Brazilian legislators into > passing a series of sweeping reforms including major changes to > social security, employment conditions and the public service, > that the IMF wanted. > > 9. Sachs, Jeffrey (1998), "Global Capitalism, Making it Work", > The Economist, September 21, 1998, pp 25 – 32. > > 10. Ibid, pp 25 – 26. > > 11. Ibid p 26. > > 12. Structural Adjustment Programs are literally true to their > acronym: SAPping the lifeblood out of the debtor country. > > 13. Chossudovsky, Michel, (1997), Global Poverty, Third World > Network. > > 14. A former IMF economist quoted by Mark Weisbrot, Research > Director at the Preamble Centre for Public Policy and a Research > Associate of the Economic Policy Institute in Washington D.C, in > his article "IMF Cure: Worse than the disease", > http://www.citizen.org/public_citizen/pctrade/IMF/imf.htm > > 15. The 41 HIPCs identified by the IMF are: Angola, Benin, > Bolivia, Burkina Faso, Burundi, Cameroon, Central African > Republic, Chad, Congo, Côte d’Ivoire, Democratic Republic of > Congo, Equatorial Guinea, Ethiopia, Ghana, Guinea, Guinea-Bissau, > Guyana, Honduras, Kenya, Lao PDR, Liberia, Madagascar, Mali, > Mauritania, Mozambique, Myanmar, Nicaragua, Niger, Nigeria, > Rwanda, São Tomé and Principe, Senegal, Sierra Leone, Somalia, > Sudan, Tanzania, Togo, Uganda, Vietnam, Yemen, and Zambia > > 16. Transnational corporations around the world are currently > merging and consolidating their assets. As the world experiences > more financial crises, only the big companies will survive. > > 17. Testimony of Ralph Nader on the International Monetary Fund > Before the General Oversight and Investigations Subcommittee, > House of Representatives Committee on Banking and Financial > Services, pp 1, > http://www.Citizen.org/public_citizen/pctrade/IMF/imf.htm > > 18. The IMF applauded the Howard Government and welcomed the > Charter of Budget Honesty for setting high standards of fiscal > transparency and accountability. > > 19. see (14). > > > <Picture> > Susan Bryce is an investigative journalist and researcher whose > interests include issues which affect individual freedom, > environmental health, surveillance technology and global > politics. She publishes the Australian Freedom & Survival Guide, > available on subscription for $45 for 6 issues/year. Send > cheque/cash/money order to Susan Bryce, PO Box 66, Kenilworth, > QLD 4574, or email [EMAIL PROTECTED] A<>E<>R ~~~~~~~~~~~~~~~ The only real voyage of discovery consists not in seeking new landscapes but in having new eyes. -Marcel Proust + + + + + + + + + + + + + + + + + + + + + + + + + + + + "Believe nothing, no matter where you read it, or who said it, no matter if I have said it, unless it agrees with your own reason and your common sense." --Buddha + + + + + + + + + + + + + + + + + + + + + + + + + + + + A merely fallen enemy may rise again, but the reconciled one is truly vanquished. -Johann Christoph Schiller, German Writer (1759-1805) + + + + + + + + + + + + + + + + + + + + + + + + + + + + It is preoccupation with possessions, more than anything else, that prevents us from living freely and nobly. -Bertrand Russell + + + + + + + + + + + + + + + + + + + + + + + + + + + + "Everyone has the right...to seek, receive and impart information and ideas through any media and regardless of frontiers." 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