>From ENWL (EcoNews St Petersburg, Russia) Here's a message sent to me by an American friend of mine who collects information on IMF, World Bank etc. It may be of interest to you: The IMF has helped foster a severe depression in Russia Russia in the 1990s has witnessed a peacetime economic contraction of unprecedented scale. Many believe much of the blame for the social and economic catastrophe rests with the IMF, which has had a central role in designing and supervising Russia's economic policy since 1992. The number of Russians in poverty has risen from 2 million to 60 million since the IMF came to post-Communist Russia. Male life expectancy has dropped sharply from 65 years to 57. Economic output is down by at least 40 percent. The IMF's shock therapy -- sudden and intense structural adjustment -- helped bring about this disaster. "In retrospect, its hard to see what could have been done wrong that wasn't," Mark Weisbrot of the Center for Economic and Policy Research told a Congressional committee in late 1998. "First there was an immediate de-control of prices. Given the monopoly structure of the economy, as well as the large amount of cash savings accumulated by Russian households, inflation soared 520 percent in the first three months. Millions of people saw their savings and pensions reduced tocrumbs." "Then the IMF and Russian policymakers compounded their mistakes," Weisbrot explained. "In order to push inflation down, the authorities slammed on the monetary and fiscal brakes, bringing about a depression. Privatization was carried out in a way that enriched a small class of people, while the average persons income fell by about half within four years." Meanwhile, Russia kept its economy functioning with an influx of foreign funds, lent at astronomically high interest rates because of the strong possibility of default. In 1998, with the Asian crisis still unfolding and with Russian default seemingly near, the IMF agreed to a $23 billion loan package to Russia, seeking to maintain the rubles overvalued exchange rate. An initial $4.8 billion portion of the loan left the country immediately -- some used to pay off foreign lenders, much of it stolen by Russian politicians. Soon after that fiasco, the ruble collapsed -- with none of the horrible consequences predicted. For the IMF, the prospect of Russia deciding to continue not to repay loans was extremely worrisome. To avert this problem, the Fund continued its loan program, but its loans to Russia dont actually go to Russia; all IMF money disbursed to Russia is held at the IMF -- and used to pay off prior IMF loans to Russia. Does the IMF think it made fundamental mistakes in Russia? No. From the IMF's perspective, the problem has been not enough IMF-style reform. Here's how former IMF Managing Director Michel Camdessus put it in September 1999: "[Russias economic] shortcomings represent not so much the failure of reform as the effects of 70 years of central planning and the incomplete implementation of reform policies -- itself a result of a lack of domestic political consensus on reform." The IMF Bails Out Big Banks IMF-orchestrated bailouts of countries in financial crisis -- assistance to countries whose exchange rates are plummeting -- provide money primarily so that developing countries can pay off their foreign creditors, including private banks. In 1995, the IMF contributed almost $18 billion to a Clinton administration bailout of the Wall Street interests which stood to lose billions with the peso devaluation in Mexico. The same thing happened with the Asian financial crisis. U.S. banks had approximately $20 billion in outstanding debt in South Korea alone, with BankAmerica, Citibank, J.P. Morgan, Bankers Trust, the Bank of New York and Chase Manhattan the major banks with heavy exposure in South Korea. With the loans threatening to go bad, the IMF swooped in, pushed the government to take on the debts of failing private sector companies, and provided tens of billions of dollars to the government to pay off the debts owed to the private lenders. The Korean bailout was particularly noteworthy for the conditions which accompanied it: South Korea was required to open its financial sector to foreign investors -- meaning the banks and international financiers who directly contributed to the financial crisis received a double benefit. Not only were they bailed out, they were given the right to penetrate the Korean financial sector. The IMF went on to repeat the fiasco in Russia, where its August 1998 multi-billion dollar loans immediately left the country -- some directed to foreign creditors, much of it stolen and deposited in foreign bank accounts. There are substantial costs to these bailouts. Not only do they waste taxpayer money, they encourage future imprudent loans by private lenders. Knowing that they can earn high returns on risky loans without fear of losing their money if the investments go bad, lenders and investors are encouraged to direct money to unworthy sources -- making future bailouts that much more likely. Structural Adjustment Destroys the Environment Structural adjustment contributes to environmental degradation through its manic emphasis on promoting exports, including especially agricultural and resource exports, as well as through its undermining of enforcement of environmental regulations. Here is how Friends of the Earth describes the problem in a recent report, "IMF: Selling the Environment Short." "One major goal of structural adjustment programs (SAPs) and stabilization programs is to generate foreign exchange through a positive trade balance. To meet the IMF's ambitious targets for currency reserves and trade balance, countries must quickly generate foreign exchange, often turning to their natural resource base. Countries often over-exploit their resources through unsustainable forestry, mining and agricultural practices that generate pollution and environmental destruction, and ultimately threaten future exchange earnings." "[E]xports of natural resources have increased at astonishing rates in many countries under IMF adjustment programs, with no consideration of the environmental sustainability of this approach. Furthermore, the IMF's policies often promote price-sensitive raw resource exports, rather than finished products. Finished products would capture more added value, employ more people in different enterprises, help diversify the economy and disseminate more know-how." "Structural adjustment and stabilization also aim to generate positive government budget balances. In the effort to rapidly trim budget deficits, governments are forced to make choices, and inevitably, the environment loses. Decreased spending weakens government ability to enforce environmental laws and diminishes efforts to promote conservation. In addition, governments are told to increase private investment and to reduce the role of the state in favor of private sector development. Budget priorities are often directed toward business promotion, creating a further strain on cash-strapped environmental enforcement agencies. ... Governments may also relax environmental regulation to meet SAP [structural adjustment program] objectives of increasing foreign investment, as occurred in the case of the Philippines." As one example of how IMF-mandated budget cuts can hurt the environment, Friends of the Earth points to the Brazilian Amazon forest: "Because of IMF budget restrictions, as of July 1999, funding for the enforcement of environmental regulations and supervision programs was reduced by over 50 percent. ... The Brazilian Institute for the Environment and Renewable Natural Resources, responsible for implementing Brazilôs environmental and conservation protection programs, had expenditures that totaled only 16.28 percent of its budget." The IMF says it defers consideration of the environmental effects of structural adjustment to the World Bank, but as Friends of the Earth points out, "The World Bank has failed to provide environmental guidance to the IMF, and is even delinquent in assessing the environmental impacts of its own structural adjustment loans," Friends of the Earth concludes. "A recent internal World Bank study found that fewer than 20 percent of World Bank adjustment loans included any environmental assessment." Structural Adjustment Hurts Workers The structural adjustment policy package -- including privatization, slashing of government spending, trade liberalization and opening to exploitative foreign investment -- is, at its core, anti-worker. For poor countries, the IMF and World Bankôs emphasis on exports is to a considerable extent an entreaty to exploit cheap labor as a "competitive advantage." But with countries around the world all forced to follow the same strategy, relying on cheap labor becomes a race to the bottom -- with countries forced into a de facto race to the bottom to offer foreign investors the lowest wages and least substantial labor protections. Other elements of the structural adjustment package reflect especially the IMFôs contempt for workers. As outgoing World Bank economist Joseph Stiglitz says, the IMF views labor as just another commodity. One of the IMF's emphases has been on promoting "labor flexibility" þ meaning making it easier for workers to be fired. The Fund has supported regulatory changes throughout the developing world to remove restrictions on government and private employers firing or laying off workers. The IMF has actively promoted government downsizing, even though in many countries the government is the major employer and there are few prospects for alternative employment. The IMF has also viewed many worker benefits as too costly (if they are provided by the government) or too inefficient (if required of private employers). It has urged major scaling back of government pension programs throughout the world. And it has even called for the roll back of minimum wages in countries like Haiti. Respect for workers' right to organize is not included in the IMFôs structural adjustment policy. __________ earthradioTV.com - Alternative News Forum for ecology, politics & consciousness. MIRROR SITES: USA http://www.earthradioTV.com/ CZECH http://mujweb.cz/www/ecologynews/ UK http://members.tripod.co.uk/ecologynews/ Canada http://www.ecologynews.com/ <A HREF="http://www.ctrl.org/">www.ctrl.org</A> DECLARATION & DISCLAIMER ========== CTRL is a discussion & informational exchange list. Proselytizing propagandic screeds are unwelcomed. Substance—not soap-boxing—please! These are sordid matters and 'conspiracy theory'—with its many half-truths, misdirections and outright frauds—is used politically by different groups with major and minor effects spread throughout the spectrum of time and thought. That being said, CTRL gives no endorsement to the validity of posts, and always suggests to readers; be wary of what you read. 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