THE CLAIRE FOSS JOURNAL
THE NEW GLOBAL ORDER - WAKE UP CALL
A - I N F O S N E W S S E R V I C E
News about and of interest to anarchists
"The new global order has condemned people to
death. They don't care if people live or die."
Joseph Stiglitz, The World Bank's former Chief Economist.
Sixty years ago this month, Western leaders got together at
Bretton Woods to redesign the world's financial systems, creating
the International Monetary Fund and World Bank. Although there is
plenty for them to celebrate, SchNEWS warns readers to read on
before sending them a birthday card.
Whilst the IMF and World Bank lend cash to 'developing' countries
to help them run construction projects and meet budget deficits,
their real role is to ensuring that the international economy is
geared to boosting the profits of Western corporations. By the
1970s troublesome unionised workers in Europe and the US started
making big wage demands to state owned and private sector
companies. Paying to meet the cost of the huge rise in oil prices
in 1973, governments no longer had the cash to meet these demands
and corporations found it harder to increase profits. Solution?
Get rid of the unions, flog off the state companies and relocate
to the Third World where wages were smaller and governments
weren't too fussy about worker and environmental protection.
An example of this philosophy in action was The North American
Free Trade Agreement signed in 1994 between America, Canada and
Mexico. This enabled company bosses to dump 800,000 unionised US
auto workers earning around $17 per hour, in favour of 700,000
Mexican workers on $5 a day. 400,000 of these jobs are now off to
China for $2 a day. Size matters too. Small, local businesses are
no match for the likes of Wal-Mart, Coke and Nike. Home-grown
industries are quickly bought out or pushed aside. With the
competitors out of the frame, international firms then use their
monopoly position to raise prices and profits.
Not that the countries of the South were that cheap, for the
multinationals, at least to start off with. Some governments
subsidised basic necessities like food, health care and housing.
Governments also added tariffs to imports to protect their
farmers. If a US firm exported maize to Mexico, a percentage was
added to the cost to make sure that Mexican grown maize was
cheaper. This helped guarantee a basic wage for farmers and gave
local companies time to develop technologies so they could compete
with international firms: a standard policy followed by all
European and US countries during most of the 20th century.
Most countries in the 'developing' world had their wealth
plundered by Europe during colonial times. Take Bolivia, once the
richest country in Latin America because of its vast silver mines.
The Spanish drained the mines, killing 8 million indigenous people
in the process and now it's the poorest country in mainland Latin
America. With no assets of their own, countries have to borrow
cash, but loans from the World Bank and IMF are conditional upon
countries 'structurally adjusting' their economies. This entails:
cutting wages, axing pensions, social security and workers
benefits and also hacking away at subsidies on food and housing.
There are so many examples of piss poor policy making, greed and
corruption that it's difficult to pick a birthday example, but the
way they sucked the cash out of Argentina is worth a mention. The
country followed the fundamentalism of the 'Washington Consensus',
beginning by 'pegging' the Argentinean currency to the dollar.
This meant that for every Peso spent the government had to have a
dollar to back it up in its coffers. Of course Argentina didn't
have any dollars and needed to borrow, but the banks lending the
cash, thought that doing so was risky business, so they charged
16% interest on such loans.
But the rip off didn't stop there. When the economy looked like it
was about to collapse, the IMF offered the government $20bn in
return for further reducing wages and cutting pensions. Despite
following instructions the Argentineans never got their hands on
the $20bn. It lingered in New York bank vaults and was used to pay
the interest on loans made by firms like Citibank. During the
crisis, poverty in Argentina affected 58% of the population and
over a quarter earned too little even to feed themselves. In total
$130bn left Argentina for Western banks. During each day in 2001,
20,000 Argentineans slid below the poverty line.
Although Citibank lost some $2bn during the Argentinean crisis, it
was but a small blip, with profits rising 36% during 2003 (they
also bunged the US Republican party $4m between 1999 and 2004). Oh
and there's some corruption too. Using a series of "offshore
banks" (which only do business with customers outside the country
where they are licensed), well-connected Argentines laundered
millions of dollars in bribes and drug money through Citibank,
which in turn made little effort to stop them.
Since it got a bashing at its fiftieth birthday celebrations, the
IMF and World Bank have been keen to show how much they've
reformed. But don't believe the hype. As ex World Bank's Chief
Economist Joseph Stiglitz said "I was very naive and I am not
pleased to have discovered a confused world where money takes
priority over the life of people."
Although it says its reports are now released after five years,
instead of thirty, most of the information is in English, and very
little of it translated into the languages spoken by the people
most likely to be affected by a dam, power plant, or road-building
project. Nor does the re-labelling of 'Structural Adjustment
Programs' to 'Poverty Reduction and Growth Facility Programs' hide
the fact that 'poverty reduction' in Nigeria has seen the country
pay over $16bn for an original loan of $5b - and they still owe
another $32 billion!
The World Bank and IMF are used by the powerful financial elite to
carve up the global economy to suit their own needs. Votes are
based on cash, with the G8 countries alone controlling almost half
the votes. The US will not allow its voting power in the IMF to
drop below 15%, which gives it a veto over all key decisions. At
the same time Bush talks about free trade and breaking government
intervention, the Farm Security and Rural Investment Act of 2002
chucked US farmers a cool $249bn. And don't forget the World Bank
is a bank! It's made a profit every year since it came into
existence - over $3 billion in 2003.
'IMF riots' have often ravaged Latin America's cities from Buenos
Aires to Caracas, leaving hundreds of dead and wounded and losses
of millions of dollars in damaged property. People are supposed to
retire at 60, SchNEWS reckons its time the IMF and World Bank did
* 60 glorious or notorious years? Saturday 10 July 5-7pm Speakers
include Rudolf Amenga-Etego, winner of this year's Goldman
Environmental Award for his work with the Ghanaian National
Coalition who successfully stopped a $400bn water privatization
project, which was backed by the World Bank.
Discussion organised by the World Development Movement at the
Friends House, 173 Euston Road, London, NW1 2B. 020 7737 6215
* 50 years is enough network: www.50years.org
* Joseph Stilgitz "Globalisation and its Discontents" (Penguin)