- How crises, failures, and suffering finally drove
a Presidential adviser to the wrong side of the barricades
-
- 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 International Investigative
Reporter
-
- By Sandeep Kaushik Cleveland Free Times 4-17-1
-
- 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.
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