Central Bank Digatal Currencies and the Reset Possibilities
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Friday, December 11, 2015
The IMF Just Entered The Cold War, Forgives Ukraine's Debt To Russia
Submitted by Tyler Durden on 12/09/2015 21:49 -0500Link
Authored by Michael Hudson, originally posted by The Saker, author of The Essential Saker: from the trenches of the emerging multipolar world,
On December 8, the IMF’s Chief Spokesman Gerry Rice sent a note saying:
“The IMF’s Executive Board met today and agreed to change the current policy on non-toleration of arrears to official creditors. We will provide details on the scope and rationale for this policy change in the next day or so.”
Since 1947 when it really started operations, the World Bank has acted as a branch of the U.S. Defense Department, from its first major chairman John J. McCloy through Robert McNamara to Robert Zoellick and neocon Paul Wolfowitz. From the outset, it has promoted U.S. exports – especially farm exports – by steering Third World countries to produce plantation crops rather than feeding their own populations. (They are to import U.S. grain.) But it has felt obliged to wrap its U.S. export promotion and support for the dollar area in an ostensibly internationalist rhetoric, as if what’s good for the United States is good for the world.
The IMF has now been drawn into the U.S. Cold War orbit. On Tuesday it made a radical decision to dismantle the condition that had integrated the global financial system for the past half century. In the past, it has been able to take the lead in organizing bailout packages for governments by getting other creditor nations – headed by the United States, Germany and Japan – to participate. The creditor leverage that the IMF has used is that if a nation is in financial arrears to any government, it cannot qualify for an IMF loan – and hence, for packages involving other governments.
This has been the system by which the dollarized global financial system has worked for half a century. The beneficiaries have been creditors in US dollars.
But on Tuesday, the IMF joined the New Cold War. It has been lending money to Ukraine despite the Fund’s rules blocking it from lending to countries with no visible chance of paying (the “No More Argentinas” rule from 2001). When IMF head Christine Lagarde made the last IMF loan to Ukraine in the spring, she expressed the hope that there would be peace. But President Porochenko immediately announced that he would use the proceeds to step up his nation’s civil war with the Russian-speaking population in the East – the Donbass.
That is the region where most IMF exports have been made – mainly to Russia. This market is now lost for the foreseeable future. It may be a long break, because the country is run by the U.S.-backed junta put in place after the right-wing coup of winter 2014. Ukraine has refused to pay not only private-sector bondholders, but the Russian Government as well.
This should have blocked Ukraine from receiving further IMF aid. Refusal to pay for Ukrainian military belligerence in its New Cold War against Russia would have been a major step forcing peace, and also forcing a clean-up of the country’s endemic corruption.
Instead, the IMF is backing Ukrainian policy, its kleptocracy and its Right Sector leading the attacks that recently cut off Crimea’s electricity. The only condition on which the IMF insists is continued austerity. Ukraine’s currency, the hryvnia, has fallen by a third this years, pensions have been slashed (largely as a result of being inflated away), while corruption continues unabated.
Despite this the IMF announced its intention to extend new loans to finance Ukraine’s dependency and payoffs to the oligarchs who are in control of its parliament and justice departments to block any real cleanup of corruption.
For over half a year there was a semi-public discussion with U.S. Treasury advisors and Cold Warriors about how to stiff Russia on the $3 billion owed by Ukraine to Russia’s Sovereign Wealth Fund. There was some talk of declaring this an “odious debt,” but it was decided that this ploy might backfire against U.S. supported dictatorships.
In the end, the IMF simply lent Ukraine the money.
By doing so, it announced its new policy: “We only enforce debts owed in US dollars to US allies.” This means that what was simmering as a Cold War against Russia has now turned into a full-blown division of the world into the Dollar Bloc (with its satellite Euro and other pro-U.S. currencies) and the BRICS or other countries not in the U.S. financial and military orbit.
What should Russia do? For that matter, what should China and other BRICS countries do? The IMF and U.S. neocons have sent the world a message: you don’t have to honor debts to countries outside of the dollar area and its satellites.
Why then should these non-dollarized countries remain in the IMF – or the World Bank, for that matter. The IMF move effectively splits the global system in half,between the BRICS and the US-European neoliberalized financial system.
Should Russia withdraw from the IMF? Should other countries?
The mirror-image response would be for the new Asian Development Bank to announce that countries that joined the ruble-yuan area did not have to pay US dollar or euro-denominated debts. That is implicitly where the IMF’s break is leading.
Tuesday, May 19, 2015
Brazil’s $900 million World Cup stadium is now being used as a parking lot
By Joseph Stromberg, Vox, May 12, 2015
Brazil spent about $3 billion building 12 new or heavily refurbished stadiums for last year’s World Cup. Officials promised these taxpayer-funded venues would continue to generate revenue for years, hosting concerts, pro soccer games, and other events.
But as Lourdes Garcia-Navarro at NPR reports, most stadiums are failing to generate much revenue at all. The most expensive one, in Brasilia, is most regularly used as a site for a municipal bus parking lot.
One big problem is that several of the stadiums–including Brasilia’s 72,000-seat, $900 million venue–were built in cities where there are only minor league pro teams that don’t draw large crowds. This was done so World Cup games could be spread across the entire country, instead of just the southeast, where most of the top pro teams play. It’s as if we built gleaming new stadiums in Montana and Alaska for hosting a World Cup in the US.
In Brazil, this plan has left some pretty useless, expensive facilities scattered across the country, because these minor local teams don’t sell enough tickets to make playing in the fancy (and expensive-to-maintain) stadiums worthwhile. The rainforest city of Manaus, for instance, is home to a $600 million stadium that was used for exactly four World Cup games. The pro team there currently plays in much smaller training centers, because it’d lose money if it tried to rent out the big stadium.
Many cities have been selling the stadiums to private companies that try to squeeze a bit of revenue out of them, but it’s not easy. In Natal, the NPR story reports, a company bought the stadium, but has made little money renting it out for children’s birthday parties and weddings, and the facility is now for sale once again.
What makes all this even more infuriating is that in many of these cities, hundreds of thousands of people were displaced from neighborhoods that were torn down to make way for these stadiums. And even though the World Cup was partly billed as a way to upgrade Brazil’s overall infrastructure, several of the big projects–such as light-rail systems in São Paulo, Cuiaba, and Fortaleza–still aren’t close to being finished.
Of course, the most insane part about all this is that for Brazil, the World Cup was just a prelude to an even bigger waste of public money on sports: the 2016 Summer Olympics in Rio de Janeiro. Though a stadium renovated for the World Cup will be reused for the games, the country will still spend a projected $13.2 billion on other facilities and infrastructure, a number that’s likely to continue climbing as the games approach.
There are economists who study the potential economic impact of these events on the cities that host them, and their findings are unequivocal: they don’t pay. As Victor Matheson, an economist at College of the Holy Cross, told my colleague Brad Plumer, “My basic takeaway for any city considering a bid for the Olympics is to run away like crazy.”
Brazil spent about $3 billion building 12 new or heavily refurbished stadiums for last year’s World Cup. Officials promised these taxpayer-funded venues would continue to generate revenue for years, hosting concerts, pro soccer games, and other events.
But as Lourdes Garcia-Navarro at NPR reports, most stadiums are failing to generate much revenue at all. The most expensive one, in Brasilia, is most regularly used as a site for a municipal bus parking lot.
One big problem is that several of the stadiums–including Brasilia’s 72,000-seat, $900 million venue–were built in cities where there are only minor league pro teams that don’t draw large crowds. This was done so World Cup games could be spread across the entire country, instead of just the southeast, where most of the top pro teams play. It’s as if we built gleaming new stadiums in Montana and Alaska for hosting a World Cup in the US.
In Brazil, this plan has left some pretty useless, expensive facilities scattered across the country, because these minor local teams don’t sell enough tickets to make playing in the fancy (and expensive-to-maintain) stadiums worthwhile. The rainforest city of Manaus, for instance, is home to a $600 million stadium that was used for exactly four World Cup games. The pro team there currently plays in much smaller training centers, because it’d lose money if it tried to rent out the big stadium.
Many cities have been selling the stadiums to private companies that try to squeeze a bit of revenue out of them, but it’s not easy. In Natal, the NPR story reports, a company bought the stadium, but has made little money renting it out for children’s birthday parties and weddings, and the facility is now for sale once again.
What makes all this even more infuriating is that in many of these cities, hundreds of thousands of people were displaced from neighborhoods that were torn down to make way for these stadiums. And even though the World Cup was partly billed as a way to upgrade Brazil’s overall infrastructure, several of the big projects–such as light-rail systems in São Paulo, Cuiaba, and Fortaleza–still aren’t close to being finished.
Of course, the most insane part about all this is that for Brazil, the World Cup was just a prelude to an even bigger waste of public money on sports: the 2016 Summer Olympics in Rio de Janeiro. Though a stadium renovated for the World Cup will be reused for the games, the country will still spend a projected $13.2 billion on other facilities and infrastructure, a number that’s likely to continue climbing as the games approach.
There are economists who study the potential economic impact of these events on the cities that host them, and their findings are unequivocal: they don’t pay. As Victor Matheson, an economist at College of the Holy Cross, told my colleague Brad Plumer, “My basic takeaway for any city considering a bid for the Olympics is to run away like crazy.”
Friday, September 19, 2014
So What Does the World Bank Do Exactly?
http://www.corbettreport.com/so-what-does-the-world-bank-do-exactly/?utm
James Corbett
corbettreport.com
This article originally appeared in The Corbett Report Subscriber newsletter on August 16, 2014. To subscribe to the newsletter and become a member of The Corbett Report website, please sign up for a monthly or annual membership here.
As many have heard by now, the leaders of the so-called BRICS nations – Brazil, India, China, Russia and South Africa – used the occasion of the 6th BRICS Summit in Brasilia, Brazil to announce the creation of the long-awaited BRICS Development Bank. Formally the “New Development Bank,” it will be based in Shanghai and capitalized with an initial $10 billion in cash ($2 billion from each of the five founding members) and $40 billion in guarantees, to be built up to a total of $100 billion.
Immediately, the press began touting the new bank as a potential rival to the current IMF / World Bank system of infrastructure development and poverty reduction in the third world. “BRICS Development Bank Could Challenge World Bank and IMF” touts US News & World Report. “BRICS Ink $50 Billion Lender in World Bank, IMF Challenge” asserts Bloomberg. The World Bank, for its part, is downplaying the rivalry, with World Bank President Jim Young Kim openly welcoming the bank at a recent meeting with Indian Prime Minister Narendra Modi. “The only competition we have is with poverty,” he told reporters at the meeting.
But all of this talk about a potential rival to the IMF and World Bank have exposed the general public’s ignorance about what exactly these institutions are and what they do. While most are familiar with the IMF and its predatory lending practices (and those who aren’t are encouraged to acquaint themselves with the “IMF riot” strategy that was developed in the third world and is now being imported to Europe), the World Bank is less scrutinized and less well understood. What is it, what does it do, and why is it important for the BRICS to challenge its hegemony in the development and poverty reduction arenas?
For the answer to that, we’ll need to examine the World Bank’s history, both the official history that it touts to the outside world and the real history of its part in plundering the developing world that it is supposedly there to help.
The Official Story
The World Bank was born along with the IMF at the 1944 Bretton Woods conference that decided on the financial architecture of the post-WWII world, only at that time it was known as the “International Bank for Reconstruction and Development” and was concerned primarily with post-war reconstruction of Europe. After the implementation of the Marshall Plan in 1947, however, its focus shifted to the non-European world where it provided development loans targeted at helping developing countries create income-generating infrastructure (power plants, seaports, highways, etc.).
From the very beginning there have been questions about the overlap of the IMF and World Bank’s respective roles. Both are committed, according to the IMF website, to “raising living standards in their member countries,” but the IMF is financial in nature, concentrating on short and medium-term loans to help countries meet balance of payment needs , while the World Bank is fundamentally a development institution, focusing on technical and financial support for specific projects or sectoral reforms. Part of the confusion is linguistic; at the first ever meeting meeting of the IMF the “father” of Bretton Woods, John Maynard Keynes (who else?), confessed he thought the Fund should be called a bank and the Bank should be called a fund. Nevertheless, the monikers have stuck and the World Bank and IMF continue to talk the talk of global infrastructure development and poverty reduction.
Since the World Bank pivoted away from Europe to concentrate on the developing world in the late 1940s, it has lent more than $330 billion on infrastructure development projects. It currently boasts $232.8 billion in total subscribed capital, overseeing $358.9 billion in total assets. The World Bank concentrates its lending on creditworthy governments of developing nations, and splits its lending activities between the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA). The IBRD generally provides 12-15 year loans at slightly above market rates to countries with per capita GDPs above $1305. The IDA, meanwhile, provides interest-free 35 to 40 year loans to countries with per capita GDPs below the $1305 mark.
Unlike the IMF, which is funded by quota subscriptions from member countries, the World Bank finances its lending by borrowing on the international bond market. As a result, for the first decades of its existence the World Bank was concerned with building up its reputation as a lender and establishing its own creditworthiness. Until 1968, the Bank was a relatively small institution with less than 1000 employees concentrated in Washington that concerned itself almost exclusively with loans designed to finance transportation and energy infrastructure projects.
When JFK/LBJ Secretary of Defense and unconvicted war criminal Robert McNamara took over as president in 1968, however, he began a radical repositioning of the Bank and transformation of its aim, scope and practices. Over his 12 years at the helm of the Bank, McNamara greatly expanded its lending activities, shifting the aim of that lending toward agricultural reform and literacy initiatives, as well as the building of schools and hospitals. During this period the Bank’s treasurer, Eugene Rotberg, increased the Bank’s capital by going beyond the established developed world banks that had been its primary funding source and tapping into the global bond market. In the 1980s the bank began to press so-called “Structural Adjustment Programs” on loan recipients, including mandates to devalue currencies or reduce government spending in various areas, as pre-conditions for lending. The Bank also began providing lending to help governments service the debts they had racked up in previous rounds of lending.
After the Bank came under increasing scrutiny (and protest) in the 1990s and early 2000s, it has adjusted its policies and practices to address its critics. It now touts environmental responsibility in the infrastructure projects it provides loans for and places greater emphasis on the goal of promoting economic engagement by the poorest people in its target countries. As a result, the World Bank now claims to focus on the eradication of hunger, gender equality, environmental sustainability, maternal health and child mortality, communicable disease prevention, and universal primary education in its target countries.
The Real Story
As readers of these pages will no doubt be aware, there is of course more to the story than that glossy, PR-friendly official story would have us believe. The period of McNamara’s stewardship from 1968-1980 was instrumental in shaping the institution that we know (or should know) today: a tool of the Washington power players that is used as a way of transferring the productive wealth of the third world back to the first world. The larger capital that was raised during his tenure was used to expand the bank’s lending activities, and those expanded loans kicked off the era of the third world debt crisis, including a period from 1976 to 1980 where developing world debt rose on average 20% per year.
As journalist John Pilger noted in his powerful documentary, “War By Other Means,” released back in 1991:
“Remember Live Aid in 1985, that symbol of concern and generosity? Did you know that during that year, the hungriest countries in Africa gave twice as much money to us in the developed world as we gave to them? There was another famine last year. Perhaps you are one of those who took part in Red Nose Day. Did you know that before that day was over, the equivalent of all the money that comic relief had raised in Britain, about 12 million pounds, had come back to the rich countries? For every day this amount is given by the poorest to the rich on interest payments on loans that most of them never asked for or knew existed. In other words, contrary to a myth long popular in the West, it has been the poor of the world who have financed the rich, not the other way around.”
The process by which these loans are made and the funds distributed to their recipients has long been rife with waste, corruption and fraud. Even in the best circumstances, the types of projects that the Bank concerned itself with in its early days, infrastructure projects focusing on energy and transportation, served to primarily enrich those who were already the richest in the target countries, the friends and cronies of the corrupt rulers whose business interests could make use of such innovations. At its worst, the Bank has been used to underpin the rule of corrupt and tyrannical leaders and force entire nations into debt slavery.
This process was described most famously by former insider and self-described “economic hitman” John Perkins, who wrote his “Confessions of an Economic Hitman” to shed light on the means by which the seemingly benevolent IMF/World Bank system is used to oppress and plunder the very populations it is designed to enrich.
According to Perkins:
“So how does the system work? We economic hitmen have many vehicles to make this happen, but perhaps the most common one is that we will identify a country-usually a developing country-that has resources our corporations covet, like oil, and then we arrange a huge loan to that country from the World Bank or one of its sister organizations.
“Now most everybody in our country believes that loan is going to help poor people. It isn’t. Most of the money never goes to the country. In fact it goes to our own corporations. It goes to the Bechtels and the Halliburtons and the ones we all hear about, usually led by engineering firms, but a lot of other companies are brought in and they make fortunes off building the infrastructure projects in that country. Power plants, industrial parks, ports, those types of things. Things that don’t benefit the poor people at all; they’re not connected to the electrical grid, they don’t get the jobs in the industrial parks because they’re not educated enough. But they as a class are left holding a huge debt. The country goes deep into debt in order to make this happen, and a few of its wealthy people get very rich in the process. They own the big industries that do benefit from the ports and the highways and the industrial parks and the electricity.
“The country is left holding this huge debt that it can’t possibly repay, so at some point we economic hitmen go back in and we say, ‘You know, you can’t pay your debts. You owe us a pound of flesh, you owe us a big favor. So sell your oil real cheap to our oil companies, or vote with us on the next critical United Nations vote, or send troops in support of our to some place in the world like Iraq.’ And so we use this whole process as, first of all, a means for getting their money (money we loan them) to enrich our own corporations, and then to use the debt to enslave them.”
http://fightforyourfaith.blogspot.pt/2013/02/confessions-of-economic-hitman-john.html
In his book, “The Globalization of Poverty and the New World Order,” Professor Michel Chossudovsky of the University of Ottawa provides extensive documentation of precisely how this process has functioned over the years through the Structural Adjustment Loan and Sector Adjustment Loan programs at the World Bank’s disposal. This documentation includes details of the Bank’s oversight of the build-up of Rwanda’s military budget in the run-up to its bloody internal war of 1994, the Bank’s own admission of how its loan-dictated deregulation of Vietnam’s grain market led to widespread child malnutrition in the country, and the World Bank’s contribution (in conjunction with the IMF) to the unprecedented plundering of Russia that took place in the wake of the Soviet collapse.
The World Bank, despite its friendly exterior and the lofty platitudes its proponents spout in its defense, continues to undergird a system of exploitation and debt enslavement of developing countries. For half a century, the Bank has been responsible for the furtherance of a Pax Americana built not upon peace, prosperity and free trade but violence, debt and enforced servitude.
The Rest of the Story
…But now along comes the New Development Bank promising an alternative to the World Bank hegemony. Unlike the Structural Adjustment Loan regime of the World Bank, the NDB is promising to provide loans with no strings attached; the BRICS have no interest in telling loan recipients how to run their country.
Is this a fundamental challenge to the system as it exists? Is the NDB likely to live up to the lofty expectations that have been placed on it? In what time frame can we expect to see the changes to the international order take place?
The answer to these questions constitute what Paul Harvey would call in his trademark drawl, “the rest of the story…” and we will explore that story here next week.
To watch John Perkins on YouTube click on following link:
http://fightforyourfaith.blogspot.pt/2013/10/john-perkins-secret-history-of-american.html
James Corbettcorbettreport.com
This article originally appeared in The Corbett Report Subscriber newsletter on August 16, 2014. To subscribe to the newsletter and become a member of The Corbett Report website, please sign up for a monthly or annual membership here.
As many have heard by now, the leaders of the so-called BRICS nations – Brazil, India, China, Russia and South Africa – used the occasion of the 6th BRICS Summit in Brasilia, Brazil to announce the creation of the long-awaited BRICS Development Bank. Formally the “New Development Bank,” it will be based in Shanghai and capitalized with an initial $10 billion in cash ($2 billion from each of the five founding members) and $40 billion in guarantees, to be built up to a total of $100 billion.
Immediately, the press began touting the new bank as a potential rival to the current IMF / World Bank system of infrastructure development and poverty reduction in the third world. “BRICS Development Bank Could Challenge World Bank and IMF” touts US News & World Report. “BRICS Ink $50 Billion Lender in World Bank, IMF Challenge” asserts Bloomberg. The World Bank, for its part, is downplaying the rivalry, with World Bank President Jim Young Kim openly welcoming the bank at a recent meeting with Indian Prime Minister Narendra Modi. “The only competition we have is with poverty,” he told reporters at the meeting.
But all of this talk about a potential rival to the IMF and World Bank have exposed the general public’s ignorance about what exactly these institutions are and what they do. While most are familiar with the IMF and its predatory lending practices (and those who aren’t are encouraged to acquaint themselves with the “IMF riot” strategy that was developed in the third world and is now being imported to Europe), the World Bank is less scrutinized and less well understood. What is it, what does it do, and why is it important for the BRICS to challenge its hegemony in the development and poverty reduction arenas?
For the answer to that, we’ll need to examine the World Bank’s history, both the official history that it touts to the outside world and the real history of its part in plundering the developing world that it is supposedly there to help.
The Official Story
The World Bank was born along with the IMF at the 1944 Bretton Woods conference that decided on the financial architecture of the post-WWII world, only at that time it was known as the “International Bank for Reconstruction and Development” and was concerned primarily with post-war reconstruction of Europe. After the implementation of the Marshall Plan in 1947, however, its focus shifted to the non-European world where it provided development loans targeted at helping developing countries create income-generating infrastructure (power plants, seaports, highways, etc.).From the very beginning there have been questions about the overlap of the IMF and World Bank’s respective roles. Both are committed, according to the IMF website, to “raising living standards in their member countries,” but the IMF is financial in nature, concentrating on short and medium-term loans to help countries meet balance of payment needs , while the World Bank is fundamentally a development institution, focusing on technical and financial support for specific projects or sectoral reforms. Part of the confusion is linguistic; at the first ever meeting meeting of the IMF the “father” of Bretton Woods, John Maynard Keynes (who else?), confessed he thought the Fund should be called a bank and the Bank should be called a fund. Nevertheless, the monikers have stuck and the World Bank and IMF continue to talk the talk of global infrastructure development and poverty reduction.
Since the World Bank pivoted away from Europe to concentrate on the developing world in the late 1940s, it has lent more than $330 billion on infrastructure development projects. It currently boasts $232.8 billion in total subscribed capital, overseeing $358.9 billion in total assets. The World Bank concentrates its lending on creditworthy governments of developing nations, and splits its lending activities between the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA). The IBRD generally provides 12-15 year loans at slightly above market rates to countries with per capita GDPs above $1305. The IDA, meanwhile, provides interest-free 35 to 40 year loans to countries with per capita GDPs below the $1305 mark.
Unlike the IMF, which is funded by quota subscriptions from member countries, the World Bank finances its lending by borrowing on the international bond market. As a result, for the first decades of its existence the World Bank was concerned with building up its reputation as a lender and establishing its own creditworthiness. Until 1968, the Bank was a relatively small institution with less than 1000 employees concentrated in Washington that concerned itself almost exclusively with loans designed to finance transportation and energy infrastructure projects.
When JFK/LBJ Secretary of Defense and unconvicted war criminal Robert McNamara took over as president in 1968, however, he began a radical repositioning of the Bank and transformation of its aim, scope and practices. Over his 12 years at the helm of the Bank, McNamara greatly expanded its lending activities, shifting the aim of that lending toward agricultural reform and literacy initiatives, as well as the building of schools and hospitals. During this period the Bank’s treasurer, Eugene Rotberg, increased the Bank’s capital by going beyond the established developed world banks that had been its primary funding source and tapping into the global bond market. In the 1980s the bank began to press so-called “Structural Adjustment Programs” on loan recipients, including mandates to devalue currencies or reduce government spending in various areas, as pre-conditions for lending. The Bank also began providing lending to help governments service the debts they had racked up in previous rounds of lending.After the Bank came under increasing scrutiny (and protest) in the 1990s and early 2000s, it has adjusted its policies and practices to address its critics. It now touts environmental responsibility in the infrastructure projects it provides loans for and places greater emphasis on the goal of promoting economic engagement by the poorest people in its target countries. As a result, the World Bank now claims to focus on the eradication of hunger, gender equality, environmental sustainability, maternal health and child mortality, communicable disease prevention, and universal primary education in its target countries.
The Real Story
As readers of these pages will no doubt be aware, there is of course more to the story than that glossy, PR-friendly official story would have us believe. The period of McNamara’s stewardship from 1968-1980 was instrumental in shaping the institution that we know (or should know) today: a tool of the Washington power players that is used as a way of transferring the productive wealth of the third world back to the first world. The larger capital that was raised during his tenure was used to expand the bank’s lending activities, and those expanded loans kicked off the era of the third world debt crisis, including a period from 1976 to 1980 where developing world debt rose on average 20% per year.
As journalist John Pilger noted in his powerful documentary, “War By Other Means,” released back in 1991:
“Remember Live Aid in 1985, that symbol of concern and generosity? Did you know that during that year, the hungriest countries in Africa gave twice as much money to us in the developed world as we gave to them? There was another famine last year. Perhaps you are one of those who took part in Red Nose Day. Did you know that before that day was over, the equivalent of all the money that comic relief had raised in Britain, about 12 million pounds, had come back to the rich countries? For every day this amount is given by the poorest to the rich on interest payments on loans that most of them never asked for or knew existed. In other words, contrary to a myth long popular in the West, it has been the poor of the world who have financed the rich, not the other way around.”The process by which these loans are made and the funds distributed to their recipients has long been rife with waste, corruption and fraud. Even in the best circumstances, the types of projects that the Bank concerned itself with in its early days, infrastructure projects focusing on energy and transportation, served to primarily enrich those who were already the richest in the target countries, the friends and cronies of the corrupt rulers whose business interests could make use of such innovations. At its worst, the Bank has been used to underpin the rule of corrupt and tyrannical leaders and force entire nations into debt slavery.
This process was described most famously by former insider and self-described “economic hitman” John Perkins, who wrote his “Confessions of an Economic Hitman” to shed light on the means by which the seemingly benevolent IMF/World Bank system is used to oppress and plunder the very populations it is designed to enrich.
According to Perkins:
“So how does the system work? We economic hitmen have many vehicles to make this happen, but perhaps the most common one is that we will identify a country-usually a developing country-that has resources our corporations covet, like oil, and then we arrange a huge loan to that country from the World Bank or one of its sister organizations.
“Now most everybody in our country believes that loan is going to help poor people. It isn’t. Most of the money never goes to the country. In fact it goes to our own corporations. It goes to the Bechtels and the Halliburtons and the ones we all hear about, usually led by engineering firms, but a lot of other companies are brought in and they make fortunes off building the infrastructure projects in that country. Power plants, industrial parks, ports, those types of things. Things that don’t benefit the poor people at all; they’re not connected to the electrical grid, they don’t get the jobs in the industrial parks because they’re not educated enough. But they as a class are left holding a huge debt. The country goes deep into debt in order to make this happen, and a few of its wealthy people get very rich in the process. They own the big industries that do benefit from the ports and the highways and the industrial parks and the electricity.
“The country is left holding this huge debt that it can’t possibly repay, so at some point we economic hitmen go back in and we say, ‘You know, you can’t pay your debts. You owe us a pound of flesh, you owe us a big favor. So sell your oil real cheap to our oil companies, or vote with us on the next critical United Nations vote, or send troops in support of our to some place in the world like Iraq.’ And so we use this whole process as, first of all, a means for getting their money (money we loan them) to enrich our own corporations, and then to use the debt to enslave them.”
http://fightforyourfaith.blogspot.pt/2013/02/confessions-of-economic-hitman-john.html
In his book, “The Globalization of Poverty and the New World Order,” Professor Michel Chossudovsky of the University of Ottawa provides extensive documentation of precisely how this process has functioned over the years through the Structural Adjustment Loan and Sector Adjustment Loan programs at the World Bank’s disposal. This documentation includes details of the Bank’s oversight of the build-up of Rwanda’s military budget in the run-up to its bloody internal war of 1994, the Bank’s own admission of how its loan-dictated deregulation of Vietnam’s grain market led to widespread child malnutrition in the country, and the World Bank’s contribution (in conjunction with the IMF) to the unprecedented plundering of Russia that took place in the wake of the Soviet collapse.The World Bank, despite its friendly exterior and the lofty platitudes its proponents spout in its defense, continues to undergird a system of exploitation and debt enslavement of developing countries. For half a century, the Bank has been responsible for the furtherance of a Pax Americana built not upon peace, prosperity and free trade but violence, debt and enforced servitude.
The Rest of the Story
…But now along comes the New Development Bank promising an alternative to the World Bank hegemony. Unlike the Structural Adjustment Loan regime of the World Bank, the NDB is promising to provide loans with no strings attached; the BRICS have no interest in telling loan recipients how to run their country.
Is this a fundamental challenge to the system as it exists? Is the NDB likely to live up to the lofty expectations that have been placed on it? In what time frame can we expect to see the changes to the international order take place?
The answer to these questions constitute what Paul Harvey would call in his trademark drawl, “the rest of the story…” and we will explore that story here next week.
To watch John Perkins on YouTube click on following link:
http://fightforyourfaith.blogspot.pt/2013/10/john-perkins-secret-history-of-american.html
