Mnogie menya zdes navernoe ne tak seryozno vosprinimayut. Mol chudak romantik antiimperialist.
Yesli eto tak to pochitayte vot eto. Napisal izvestni ekonomist Stiglitz.
I vi uznaete pochemu mi jivem bedno i pochemu esho ochen ochen dolgo pojivyom v bednosti
-------------
The IMF And The Dollar-System
By: F. William Engdahll -
[email protected] on: 15.05.2004 [13:07 ] (183 reads)
“Modern high-tech warfare is designed to avoid physical contact with the enemy. One doesn’t see what one does in dropping bombs from a height of 30,000 feet. Modern economic control is very similar. From a luxury hotel, conditions can be imposed heartlessly about which one would reflect twice if one knew the people whose lives would be destroyed.”
(31555 bytes)
One of the supporting pillars under girding the present dollar system is Washington’s control of the International Monetary Fund, the IMF. How this actually functions is carefully hidden behind a façade of technocrats and an economic theory based on the ideology of the free market. In reality, the IMF is a modern collection agency for the dollar empire. The IMF demands its tribute with the help of important international banks that spend dollars to extend American financial- and business hegemony, the driving engine of globalization.
Although the IMF represents a main support of the dollar system, its nominal director is ironically a European, the German Horst Kohler. Before Kohler, the director was the Frenchman Michel Camdessus. The real hierarchies of power are carefully concealed behind this façade. The statutes of the IMF insure that no important decision can be made without the approval of 85% of the executive directorate. The United States, which designed the original IMF Charter in Bretton Woods, New Hampshire in 1944, made sure that it had the decisive blocking minority with an 18% voting share. This blocking minority still exists today. Insiders know very well that Washington leads the IMF. It is no accident that its headquarters are located in Washington, D.C.
Original Goals
The IMF was called into being in 1944 on the occasion of the international monetary conference in Bretton Woods, New Hampshire. On President Roosevelt’s initiative, a monetary- and trading system for the post-war era was founded. The IMRF should be a fund supporting the stability of the currencies and trade of the European allies in the post-war era. Up to now, the US owned the largest share of the world gold reserves and granted dollar credits for Europe’s reconstruction. The original IMF idea was to combine the reserves of member states in a pool from which every individual state could receive credits to stabilize its currency in the case of a short-term payment problem.
Ten years after the Great Depression, creating a stable growing Europe as an export market for American products was in the interest of the large industrial nations including the US. The first country that received credits after the war was Great Britain. The last European country was Italy in 1977.
Restructuring in the 1980s
Since 1977 none of the G& European countries has turned to the IMF to borrow money. Instead they obtain money from private banks or contract public debts. They know only too well how destructive are the IMF conditions. At the end of the 1970s, some were convinced that the IMF fulfilled its role as Nato fulfilled its role after the ending of the Cold War. Washington had other plans for the IMF.
In the early 1980s, the role of the IMF changed dramatically under the pressure of the US. Instead of serving as a stabilization fund for the industrial countries in Europe or Japan, the IMF became the decisive instrument for controlling the economic policy of underdeveloped countries. In the course of the first Latin American debt crisis at the beginning of the 1980s, the IMF assumed a completely new role as constable amassing dollar loans from private New York and international banks. The IMF was the driving force for what was later termed “globalization”.
Latin American Debt Crisis
After the first oil price increase around 400% in the 1970s, many developing countries like Brazil, Argentina and most countries in Africa accepted massive credits for financing their necessary oil imports or trade deficits. They made dollar loans from the great international banks that operated the Eurodollar market in London. London was the center for handling the recycling of vast sums of petrodollars of the Arab OPEC-countries to the US and the other important banks.
The large banks took the new oil dollars and immediately lent them to countries like Argentina or Egypt with a handsome profit. Before the 1970s, Argentina’s economy grew quickly and developed a modern industry and agriculture that brought a rising standard of living to its population. Argentina had almost no foreign debts. Ten years later, the country was under the control of the IMF and foreign banks. The US changed the rules and created the debt crisis.
The “Volker-Interest-Shock”
In October 1979, the indebted countries experienced a dramatic shock. Overnight their cheap dollar loans cost 300% more in interests. Paul Volker from the US Federal Reserve unilaterally changed the interest policy upgrading the dollar in relation to other currencies. As a result, US interest rates rose around 300% and those of the London banks even more massively. Bank credits to Argentina and other countries were arranged with “floating” or freely fluctuating interest rates. If the leading international interest rate on the London bank market (London Interbank Offered Rate) was low, Argentina paid a low interest rate on its debts. However many countries were confronted with a payment crisis when this interest rate suddenly rose around 300% between 1979 and 1980.
In 1982 the crisis reached the level of insolvency. At this point Washington demanded that the IMF start a process of debt collection with countries developing into debtors. What was described as the debt crisis of the third world arose. The impression was created as though countries like Argentina were responsible for this crisis through their own mismanagement. However great may have been the extent of political corruption in the debtor countries, the corruption of the IMF system and petrodollar recycling was far greater. The Volker interest rate shock completed the bundle of destruction of living standards through dollar debts.
How did the IMF act during the debt crisis of the third world? The role of the IMF consisted in supporting the dollar hegemony of the US, not in helping poor countries overcome a temporary debt crisis.
IMF as a Supra-National? Organization
The IMF is described now and then as a tool of neo-colonialism. This is a trivializing expression since the British or European colonialism of the 19th century – as ruthless as it was – never brought about the extent of dismantling and destruction of the health- and living standards as the IMF since the 1970s.
The IMF operates as a supra-national organization with the goal of controlling helpless debtor states and forcing an economic policy on them that drives these countries deeper into debt crises while simultaneously opening their markets for exploitation by foreign, often US-American capital and global corporations. The debtor states can never come out of their dollar debts but fall deeper and deeper. The policy of the IMF assures this. Dollar-indebtedness is one of the mainstays of the dollar system and of private international banks. If the debts were repaid, the banks would lose their influence and their credit contracts. As long as the debts increase, the credit businesses also grow. This is the paradox of the modern world of banking.
The real goals of the IMF are clearly different from its public opinions. The IMF has never changed its methods despite repeated evidence for the destructive effects of its policy, the “conditions”. This has a reason.
The Example of Argentina
The example of Argentina deserves close consideration. In the spring of 2002, Argentina was unable to meet its payment obligations amounting to $141 billion in foreign debts. As a result, it experienced one of the most disastrous economic crises of modern history. The IMF played a crucial role. In the spring of 2000, Argentina turned to the IMF for an emergency credit to prevent the collapse of its currency bound to the strong US-dollar at that time. When the dollar gained in value, the Argentine export trade collapsed. The country suffered a recession. The IMF intervened with a “rescue” package of $48 billion but set conditions.
As the first condition before any credits were granted, the government had to agree to incisive cuts in spending dictated by the IMF. State subsidies of food for people with low incomes were ended. This led to plundering food supplies. The interest rates exploded with the futile attempt to deter foreign banks and owners of securities from selling. The economic depression only worsened. To receive money, governmental partnerships saw themselves forced to privatization and liberalization of the free market. The water supply of Buenos Aires was sold to Enron at a ridiculously low price just like a pipeline from Argentina to Chile.
With the argument that the trust of foreign holders of securities and foreign creditors has the highest priority, Washington insisted that Argentina maintain its fixed currency. The land fell into the worst depression of its history. Millions of people lost their work. Even the bank accounts were frozen in the final stages. The ordinary citizen could not set aside his saved money for the vital necessities.
"The “Washington Consensus”
What does the IMF do when it meddles in a country seeking an emergency credit in a crisis to bridge indebtedness or a monetary crisis? The IMF always acts according to the same pattern whether in Russia, Argentina, Zimbabwe or South Korea, all very different cultures, economic systems and social situations. The demands of the IMF are frequently described as the “Washington Consensus”, a term coined by the American economist and IMF-supporter John Williamson in 1990- to summarize the aggressive methods of the IMF.
The medicine of the IMF nearly always contains demands for privatization of state industries. It insists that public expenditures for health and education be drastically cut, that the domestic currency be devalued in relation to the dollar and that the country be opened for the free flow of international capital, for capital flowing into the country and especially for capital flowing out of the country.
“Memorandum of Understanding” – the Prerequisite
First of all, the IMF requires the particular government to sign a secret “Memorandum of Understanding” with the IMF in which it agrees with a list of “conditions” – the prerequisite for any financial allocation by the IMF. Banks do not invest in any country that lacks the official approval of the IMF on the globalized free capital markets of today. Therefore the role of the IMF goes far beyond granting emergency credits. The IMF decides whether a country receives funds from the World Bank, private banks or any other source.
The Four Steps of the IMF-Course: I. Privatization
The conditions of an IMF-deal are always the same. The privatization of state industries has the highest priority. Privatization with a weak peso or ruble allows foreign dollar investors to buy up dirt-cheap the main property assets of a country. The responsible politicians of the country are often corrupted with enticing secret deals to privatize the national assets. Foreign multinational corporations can grab the profitable mining industry, oil or other valuable resources with their dollars.
The Example of Russia
The classic example is the Russian government under Yeltzin. Dollar-billionaires emerged overnight in the course of the plundering of the people’s assets via IMF-dictated privatization. The Clinton administration stood completely behind this process. It knew that Russia would develop into a dollar zone. That was its intention.
II. Liberalization of the Financial Markets
As a second condition, the IMF demands that the respective country liberalize its banking- and financial markets, in other words open them for foreign investors. This enables high-profile speculators as for example a George Soros, Citibank or another money institute to become established in a country, amass property assets in a speculation, make immense profits as in Thailand in the middle of the 1980s and sell quickly to finally leave the country with enormous profits while the economy of the country collapses behind them. Then the multinational corporations can buy up the main property assets very cheaply.
The Example of Asia
In the 1990s, the IMF and the US Treasury Department that defines US-IMF policy, began exerting intense pressure on the fast growing East Asian “tiger states” to end their national controls on capital flow. They argued that Asia would obtain great sums of money for investments. In truth, this opened a gigantic new market to American pension funds and large banks for their speculative businesses. Too much money flowed into the countries. The real estate market was dangerously inflated. This balloon burst when Soros and other US speculators consciously turned the tap off in 1997 and triggered the Asian crisis. As a final result, the Asian economies saw themselves forced to turn to the IMF for rescue measures.
Collapse of the Banking System in Indonesia
However the IMF did not “rescue” any of these Asian economies in 1998. Rather the IMF rescued the international banks and hedge-fund speculators. In Indonesia, the IMF required the government to raise the interest rates to 80% to keep foreign investors from leaving the country and stabilize the situation of the land. In truth, the interest conditions of the IMF guaranteed the total collapse of the Indonesian and other Asian banking systems. IMF critics like Joseph Stiglitz leveled this criticism.
Weakening South Korea
As soon as the IMF gained influence on South Korea, one of the strongest industrial economic powers worldwide, it emphasized dissolving the great industrial conglomerates reproached for “corruption” and capitalist “cronyism”. In reality, Washington hoped to weaken a grown-up rival and open the doors for a takeover to American firms like GM (General Motors) and Ford. This partly succeeded until Korea and other regional economic powers were strong enough to rebuild their own national controls. Malaysia openly resisted the conditions of the IMF and imposed currency controls during the crisis. As a result, Malaysia was hardly damaged. This greatly embarrassed the IMF.
III. The “Market-Price” Demand
The next stage of the IMF conditions consisted in fixing a country’s domestic price “corresponding to the market”. This coded formulation meant abolishing state subsidies and price controls. In developing countries, gasoline, food and other essential goods for the population are often subsidized by the state. In 1998, for example, the IMFR demanded Indonesia’s cancellation of state subsidies for the poor. The notion of a price ”based on the market” is in itself a fiction. People always make the market. The market in Switzerland, Denmark or Japan is different than in Cuba or Cameroon. The goal of the IMF is to drastically slash state budgets to minimize the influence of the state on the economy and make the respective country defenseless against the foreign takeover of its most important property assets. The government portions in the weak economy are cut to assure the foreign banks’ share in the spoils.
IV. Devaluation
Finally, the IMF requires massively devaluing the currency of a particular country, often 60 to 70% or more. The argument here is that this makes exports “more competitive” and leads to higher incomes so foreign dollar debts can be paid off. This is a crucial element of the Washington Consensus medicine of the IMF. As examples, Chile devalues the peso around 50 percent while the Republic of the Congo must export twice as many tons of copper to gain the same dollar profit from export surpluses. This means a 50% reduction in raw material prices for the mammoth multinational corporations of industrial countries.
Even though demand has risen, raw material prices have been drastically forced down in the last 20 years since the IMF started playing the decisive role in restructuring developing countries. The reason is that the countries of Africa and Latin America are mainly raw material exporting countries and their goods, for example oil, are all sold in dollars. These countries must earn dollars to pay their dollar debts. Thus the IMF with its policy drives down raw material prices calculated in dollars. This was intended though never admitted. The IMF is an agency assuring the rule of the dollar on the world market, not an organization helping developing countries.
The True Work of the IMF
Unfortunately this is not an exaggeration. Defenders of the IMF claim that “market liberalization” has led to greater economic growth in developing countries during the last 20 years. The opposite is reality. The gross domestic product in all countries of the former Soviet Union between 1989 and 1997 fell to 30-80% of the state reached before the collapse of state control according to a study by Joseph Stiglitz during his time at the World Bank. Poland was the only exception.
Rapid Privatization in Russia
Russia’s gross domestic product only amounts to 60% of the 1989 amount. Its gross domestic product collapsed 40%. The number of unemployed rose from 2 million to 60 million. The rapid privatization without appropriate legal and institutional securities like unemployment- or health insurance led to a social catastrophe comparable to catastrophes in war times. The demands of the IMF for free capital movement allowed the new Russian dollar-oligarchs like Beresovsky to plunder billions of dollars, transfer them to secret bank accounts in Cyprus or Lichtenstein and buy luxury villas in Monte Carlo. (1)
Effects of the IMF in Africa
The effects of the IMF in Africa are also outrageous and destructive. In Zimbabwe, the IMF required the government to privatize state enterprises and slash the subsidies for food, education and health care to receive IMF assistance. The government fulfilled most of the demands. However the IMF then lodged the reproach that it supported the war in the Democratic Republic of the Congo and under this pretext refused awarding credits to Zimbabwe. In Kenya, the IMF insisted that certain western interests of well-meaning persons be represented in the Moi government. Washington later accused these governments of being “corrupt”, a reproach suited to make public opinion in the West blind to the moral travesty of events under the auspices of the IMF..