Questo è un editoriale di opinione di Alex Gladstein, chief strategy officer della Human Rights Foundation e autore di”Check Your Financial Privilege”.
I. The Shrimp Fields
“Tutto è andato.”
–Kolyani Mondal
Cinquantadue anni fa, il ciclone Bhola uccise un stimato 1 milione di persone nella costa del Bangladesh. È, fino ad oggi, il ciclone tropicale più mortale mai registrato nella storia. Le autorità locali e internazionali conoscevano bene i rischi catastrofici di tali tempeste: negli anni’60, i funzionari regionali aveva costruito un’enorme serie di dighe per proteggere la costa e aprire più territorio all’agricoltura. Ma negli anni’80 dopo Dopo l’assassinio del leader dell’indipendenza Sheikh Mujibur Rahman, l’influenza straniera ha spinto un nuovo regime autocratico del Bangladesh a cambiare rotta. La preoccupazione per la vita umana è stata accantonata e la protezione del pubblico contro le tempeste è stata indebolita, tutto per aumentare le esportazioni per ripagare il debito.
Invece di rafforzare le foreste di mangrovie locali che proteggevano naturalmente il un terzo della popolazione che viveva vicino alla costa e invece di investire nella coltivazione di cibo per nutrire la nazione in rapida crescita, il governo ha preso prestiti dalla Banca Mondiale e Fondo monetario internazionale per espandere l’allevamento di gamberetti. Il processo di acquacoltura — controllato da una rete delle élite benestanti legate al regime, che consisteva nel spingere gli agricoltori a contrarre prestiti per”migliorare”le loro attività praticando buchi nelle dighe che proteggevano la loro terra dall’oceano, riempiendo i loro campi un tempo fertili di acqua salata. Quindi, lavoravano ore estenuanti per raccogliere a mano i giovani gamberetti dall’oceano, trascinarli nei loro stagni stagnanti e vendere quelli maturi ai signori locali dei gamberetti.
Con finanziamenti della Banca mondiale e del FMI, innumerevoli allevamenti e zone umide e foreste di mangrovie circostanti sono stati progettati in stagni di gamberetti noti come gher. Il delta del fiume Gange della zona è un luogo incredibilmente fertile, sede del Sundarbans, il più grande tratto di foresta di mangrovie. Ma poiché l’allevamento commerciale di gamberi è diventato la principale attività economica della regione, 45% delle mangrovie è stato tagliato via, lasciando milioni di persone esposte alle onde di 10 metri che possono infrangersi contro la costa durante principali cicloni. La terra arabile e la vita fluviale sono state lentamente distrutte dall’eccesso di salinità che fuoriesce dal mare. Intere foreste sono scomparse a causa dell’allevamento di gamberetti ha ucciso gran parte della vegetazione della zona,”trasformando questa terra un tempo generosa in un deserto acquoso”, secondo Coastal Development Partnership.
Una fattoria nella provincia di Khuna, allagata per produrre campi di gamberi
I signori dei gamberi, tuttavia, hanno fatto fortuna e i gamberi (noto come”oro bianco”) è diventato il seconda esportazione. A partire dal 2014, più di 1,2 milioni di bengalesi lavoravano nell’industria dei gamberetti, con 4,8 milioni di persone che ne dipendevano indirettamente, circa la metà dei poveri della costa. I raccoglitori di gamberetti, che svolgono il lavoro più duro, costituiscono il 50% della forza lavoro ma vedono solo 6% del profitto. Trenta per cento del si tratta di ragazze e ragazzi impegnati nel lavoro minorile, che lavorano fino a nove ore al giorno nell’acqua salata, per meno di $ 1 al giorno, con molti che abbandonano la scuola e rimangono analfabeti per farlo. Ci sono state proteste contro l’espansione dell’allevamento di gamberi, solo per essere represse violentemente. In un caso importante, una marcia è stata attaccata con esplosivi dai signori dei gamberi e dai loro teppisti, e una donna di nome Kuranamoyee Sardar è stata decapitato.
In un documento di ricerca del 2007, Sono stati esaminati 102 allevamenti di gamberetti del Bangladesh, rivelando che, su un costo di produzione di 1.084 dollari per ettaro, il reddito netto era di 689 dollari. I profitti delle esportazioni della nazione sono andati a scapito dei lavoratori dei gamberetti, i cui salari sono stati sgonfiati e il cui ambiente è stato distrutto.
In un rapporto della Environmental Justice Foundation, un allevatore costiero di nome Kolyani Mondal ha detto che”coltivava riso e allevava bestiame e pollame”, ma dopo che è stata imposta la raccolta dei gamberetti,”I suoi bovini e le sue capre hanno sviluppato una malattia simile alla diarrea e, insieme alle sue galline e anatre, sono tutti morti”.
Ora i suoi campi sono inondati di acqua salata, e ciò che rimane è poco produttivo: anni fa la sua famiglia poteva generare”18-19 mon di riso per ettaro”, ma ora ne può generare solo uno. Ricorda l’allevamento di gamberetti nella sua zona a partire dagli anni’80, quando agli abitanti del villaggio erano stati promessi più reddito e molto cibo e raccolti, ma ora”tutto è andato”. Gli allevatori di gamberetti che usano la sua terra le hanno promesso di pagarle 140 dollari all’anno, ma lei dice che il meglio che ottiene sono”rate occasionali di 8 dollari qua e là”. In passato, dice,”la famiglia riceveva la maggior parte delle cose di cui aveva bisogno dalla terra, ma ora non ci sono alternative se non andare al mercato a comprare cibo”.
In Bangladesh, miliardi di dollari dei prestiti di”aggiustamento strutturale”della Banca Mondiale e del FMI-così chiamati per il modo in cui costringono le nazioni mutuatarie a modificare le loro economie per favorire le esportazioni a scapito del consumo-hanno fatto crescere i profitti nazionali dei gamberetti da $ 2,9 milioni nel 1973 a $ 90 milioni nel 1986 a $590 milioni nel 2012. Come nella maggior parte dei casi con lo sviluppo paesi, le entrate sono state utilizzate per onorare il debito estero, sviluppare risorse militari e riempire le tasche dei funzionari governativi. Quanto ai servi dei gamberi, sono stati impoveriti: meno liberi, più dipendenti e meno capaci di nutrirsi di prima. A peggiorare le cose, gli studi mostrano che“i villaggi sono protetti dalla tempesta dalle foreste di mangrovie subiscono un numero significativamente inferiore di morti”rispetto ai villaggi a cui sono state rimosse o danneggiate le loro protezioni.
Sotto la pressione dell’opinione pubblica, nel 2013 la Banca Mondiale ha prestato al Bangladesh $ 400 milioni per tentare di invertire la rotta il danno ecologico. In altre parole, la Banca Mondiale riceverà un compenso sotto forma di interessi per cercare di risolvere il problema che ha creato in primo luogo. Nel frattempo, la Banca mondiale ha prestato miliardi a paesi di tutto il mondo da Ecuador a Marocco al India per sostituire l’agricoltura tradizionale con la produzione di gamberetti.
La sostiene che il Bangladesh è”una storia straordinaria di riduzione della povertà e sviluppo”. Sulla carta, la vittoria è dichiarata: paesi come il Bangladesh tendono a mostrare una crescita economica nel tempo man mano che le loro esportazioni aumentano per soddisfare le loro importazioni. Ma i proventi delle esportazioni vanno principalmente all’élite dominante e ai creditori internazionali. Dopo 10 aggiustamenti strutturali, il debito del Bangladesh è cresciuto in modo esponenziale dai $ 145 milioni nel 1972 al massimo storico di 95,9 miliardi di dollari nel 2022. Il paese sta attualmente affrontando un’altra crisi della bilancia dei pagamenti e proprio questo mese ha accettato di ottenere il suo 11° prestito dal FMI, questa volta un $4,5 miliardi salvataggio, in cambio di ulteriori aggiustamenti. La Banca e il Fondo affermano di voler aiutare i paesi poveri, ma il risultato evidente dopo oltre 50 anni di politiche è che nazioni come il Bangladesh sono più dipendenti e indebitate che mai.
Durante gli anni’90 in Sulla scia della crisi del debito del terzo mondo, c’è stata un’ondata di controllo pubblico globale sulla Banca e sul Fondo: studi critici, proteste di piazza e una diffusa convinzione bipartisan (anche nel sale del Congresso degli Stati Uniti) che queste istituzioni andavano da dispendiose a distruttive. Ma questo sentimento e attenzione sono in gran parte svaniti. Oggi la Banca e il Fondo riescono a mantenere un basso profilo sulla stampa. Quando emergono, tendono a essere liquidate come sempre più irrilevanti, accettate come problematiche ma necessarie o addirittura accolte come utili.
La realtà è che queste organizzazioni hanno impoverito e messo in pericolo milioni di persone; dittatori e cleptocrati arricchiti; e mettere da parte i diritti umani per generare un flusso multimiliardario di cibo, risorse naturali e manodopera a basso costo dai paesi poveri a quelli ricchi. Il loro comportamento in paesi come il Bangladesh non è un errore o un’eccezione: è il loro modo preferito di fare affari.
II. Inside The World Bank And FMI
“Ricordiamoci che lo scopo principale degli aiuti non è aiutare altre nazioni ma aiutare noi stessi.”
Il FMI è il prestatore internazionale di ultima istanza al mondo e la Banca mondiale è il la banca di sviluppo più grande del mondo. Il loro lavoro viene svolto per conto dei loro principali creditori, che storicamente sono stati Stati Uniti, Regno Unito, Francia, Germania e Giappone.
FMI e Mondo Uffici della banca a Washington, DC
Le organizzazioni gemelle — fisicamente riunite nella loro sede centrale a Washington, DC — sono stati creati alla Conferenza di Bretton Woods nel New Hampshire nel 1944 come due pilastri del nuovo ordine monetario globale guidato dagli Stati Uniti. Per tradizione, la Banca mondiale è guidata da un americano e il FMI da un europeo.
Il loro scopo iniziale era quello di aiutare a ricostruire l’Europa e il Giappone dilaniati dalla guerra, con la Banca che si concentrava su prestiti specifici per lo sviluppo progetti e il Fondo per affrontare i problemi della bilancia dei pagamenti tramite”salvataggi”per mantenere il flusso degli scambi anche se i paesi non potrebbero permettersi ulteriori importazioni.
Le nazioni devono aderire al FMI per ottenere l’accesso ai “vantaggi” della Banca Mondiale. Oggi ci sono 190 stati membri: ognuno ha depositato un mix della propria valuta più”moneta più forte”(in genere dollari, valute europee o oro) quando hanno aderito, creando un pool di riserve.
Quando i membri incontrano problemi cronici di bilancia dei pagamenti e non possono concedere prestiti rimborsi, il Fondo offre loro credito dal pool a multipli variabili di quanto inizialmente depositato, a condizioni sempre più costose.
Il Fondo è tecnicamente una banca centrale sovranazionale, poiché dal 1969 ha coniato la propria valuta: i diritti speciali di prelievo (SDR), il cui valore si basa su un paniere delle principali valute mondiali. Oggi, l’SDR è coperto dal 45% di dollari, il 29% euro, 12% yuan, 7% yen e 7% sterline. La capacità di prestito totale della FMI ammonta oggi a 1 trilione di dollari.
Tra il 1960 e il 2008, il Fondo si è concentrato principalmente sull’assistenza ai paesi in via di sviluppo con-prestiti a tasso d’interesse. Poiché le valute emesse dai paesi in via di sviluppo non sono liberamente convertibili, di solito non possono essere convertite in beni o servizi all’estero. Gli stati in via di sviluppo devono invece guadagnare valuta forte attraverso le esportazioni. A differenza degli Stati Uniti, che possono semplicemente emettere la valuta di riserva globale, paesi come lo Sri Lanka e il Mozambico spesso finiscono i soldi. A quel punto, la maggior parte dei governi, specialmente quelli autoritari, preferisce la soluzione rapida di prendere in prestito dal Fondo per il futuro del proprio paese.
Per quanto riguarda la Banca, afferma che il suo compito è fornire credito ai paesi in via di sviluppo per”ridurre la povertà, aumentare prosperità condivisa e promuovere lo sviluppo sostenibile”. La Banca stessa è suddivisa in cinque parti, che vanno dalla Banca Internazionale per la Ricostruzione e lo Sviluppo (IBRD), che si concentra su prestiti”duri”più tradizionali ai paesi in via di sviluppo più grandi (si pensi al Brasile o all’India) all’Associazione Internazionale per lo Sviluppo (IDA ), che si concentra su prestiti senza interessi “agevolati” con lunghi periodi di grazia per i paesi più poveri. L’IBRD fa soldi in parte attraverso l’effetto Cantillon: prendendo in prestito a condizioni favorevoli dai suoi creditori e partecipanti al mercato privato che hanno un accesso più diretto a capitali più economici e poi prestando quei fondi a condizioni più elevate ai paesi poveri che non hanno tale accesso.
I prestiti della Banca Mondiale sono tradizionalmente specifici per progetti o settori e si sono concentrati sulla facilitazione dell’esportazione di merci grezze (ad esempio: finanziamento di strade, tunnel, dighe e porti necessari per estrarre minerali dal terreno e nei mercati internazionali) e sulla trasformazione dell’agricoltura di consumo tradizionale in agricoltura industriale o acquacoltura in modo che i paesi possano esportare più cibo e beni in Occidente.
Gli Stati membri della Banca e del Fondo non hanno potere di voto basato sulla loro popolazione. Piuttosto, l’influenza è stata creata sette decenni fa per favorire gli Stati Uniti, l’Europa e il Giappone rispetto al resto del mondo. Tale predominio si è indebolito solo leggermente negli ultimi anni.
Oggi gli Stati Uniti detengono ancora di gran lunga la quota di voti più ampia, con il 15,6% del Banca e il 16,5% della Fondo, sufficiente per porre il veto da solo a qualsiasi decisione importante, che richiede l’85% dei voti in entrambe le istituzioni. Il Giappone detiene il 7,35% dei voti della Banca e il 6,14% del Fondo; Germania 4,21% e 5,31%; Francia e Regno Unito 3,87% e 4,03% ciascuno; e l’Italia il 2,49% e il 3,02%.
L’India invece con i suoi 1,4 miliardi di abitanti ha solo il 3,04% dei voti alla Banca e appena il 2,63% al Fondo: meno potere del suo ex padrone coloniale pur avendo un popolazione 20 volte più grande. Gli 1,4 miliardi di cinesi ottengono il 5,7% dalla Banca e il 6,08% dal fondo, più o meno la stessa quota dei Paesi Bassi più Canada e Australia. Il Brasile e la Nigeria, i paesi più grandi dell’America Latina e dell’Africa, hanno all’incirca la stessa influenza dell’Italia, un’ex potenza imperiale in pieno declino.
La minuscola Svizzera con appena 8,6 milioni di abitanti ha l’1,47% dei voti alla Banca Mondiale e l’1,17% dei voti al FMI: all’incirca la stessa quota di Pakistan, Indonesia, Bangladesh ed Etiopia messi insieme, nonostante abbiano 90 volte meno persone.
Popolazione contro diritti di voto del FMI
Queste quote di voto dovrebbero approssimare la quota di ogni paese dell’economia mondiale, ma la loro struttura dell’era imperiale aiuta a colorare il modo in cui vengono prese le decisioni. Sessantacinque anni dopo la decolonizzazione, le potenze industriali guidate dagli Stati Uniti continuano ad avere il controllo più o meno totale sul commercio globale e sui prestiti, mentre i paesi più poveri in effetti non hanno voce in capitolo.
Il G-5 (Stati Uniti, Giappone, Germania, Regno Unito e Francia) dominano il consiglio esecutivo del FMI, anche se costituiscono una percentuale relativamente piccola della popolazione mondiale. Il G-10 più l’Irlanda, l’Australia e la Corea costituiscono oltre il 50% dei voti, il che significa che con un po’di pressione sui propri alleati, gli Stati Uniti possono prendere decisioni anche su specifiche decisioni di prestito, che richiedono la maggioranza.
Per integrare il potere di prestito trilione di dollari dell’FMI , il gruppo della Banca Mondiale rivendica più di 350 miliardi di dollari in prestiti in essere in più di 150 paesi. Questo credito è aumentato negli ultimi due anni, poiché le organizzazioni sorelle hanno ha prestato centinaia di miliardi di dollari ai governi che hanno bloccato le loro economie in risposta alla pandemia di COVID-19.
Negli ultimi mesi, Banca e Fondo ha iniziato a orchestrare accordi da miliardi di dollari per”salvare”i governi minacciati dagli aggressivi aumenti dei tassi di interesse della Federal Reserve statunitense. Questi clienti sono spesso violatori dei diritti umani che prendono in prestito senza permesso dai loro cittadini, che alla fine saranno i responsabili del rimborso del capitale più gli interessi sui prestiti. Il FMI sta attualmente salvando il dittatore egiziano Abdel Fattah El-Sisi, responsabile della più grande massacro di manifestanti da piazza Tiananmen — ad esempio, con $ 3 miliardi. Nel frattempo, la Banca mondiale, durante lo scorso anno, ha erogato un prestito di $ 300 milioni a un governo etiope che stava commettendo genocidio nel Tigray.
L’effetto cumulativo delle politiche della Banca e del Fondo è molto maggiore dell’importo cartaceo dei loro prestiti, poiché i loro prestiti guidano l’assistenza bilaterale. Si stima che”ogni dollaro fornito al Terzo Mondo dal FMI sblocchi altri 4-7 dollari di nuovi prestiti e rifinanziamenti da banche commerciali e governi dei paesi ricchi”. Allo stesso modo, se la Banca e il Fondo si rifiutano di concedere prestiti a un determinato paese, il resto del mondo in genere segue l’esempio.
È difficile sopravvalutare il vasto impatto che la Banca e il Fondo hanno avuto nelle nazioni in via di sviluppo, specialmente nei decenni formativi dopo la seconda guerra mondiale. Entro il 1990 e la fine della Guerra Fredda, il FMI aveva concesso crediti a 41 paesi in Africa, 28 paesi in America Latina, 20 paesi in Asia, otto paesi in Medio Oriente e cinque paesi in Europa, colpendo 3 miliardi di persone, o quelli che allora erano i due terzi della popolazione mondiale. La Banca mondiale ha concesso prestiti a più di 160 Paesi. Rimangono le istituzioni finanziarie internazionali più importanti del pianeta.
III. Adeguamento strutturale
“L’adeguamento è un compito sempre nuovo e senza fine”
–Otmar Emminger, ex direttore del FMI e creatore di SDR
Oggi, i titoli finanziari sono pieni di storie sulle visite del FMI in paesi come lo Sri Lanka e Ghana. Il risultato è che il Fondo presta miliardi di dollari ai paesi in crisi in cambio di ciò che è noto come aggiustamento strutturale.
In un prestito di aggiustamento strutturale, i mutuatari non devono solo rimborsare il capitale più gli interessi: devono devono anche accettare di cambiare le loro economie in base alle richieste di banche e fondi. Questi requisiti stabiliscono quasi sempre che i clienti massimizzino le esportazioni a scapito del consumo interno.
Durante la ricerca per questo saggio, l’autore ha imparato molto dal lavoro della studiosa di sviluppo Cheryl Payer, che ha scritto libri e articoli fondamentali su l’influenza della Banca e del Fondo negli anni’70,’80 e’90. Questa autrice potrebbe non essere d’accordo con le”soluzioni”di Payer, che, come quelle della maggior parte dei critici della Banca e del Fondo, tendono ad essere socialiste, ma molte delle sue osservazioni sull’economia globale sono vere indipendentemente dall’ideologia.
“È un obiettivo esplicito e fondamentale dei programmi del FMI”, ha scritto,”scoraggiare il consumo locale per liberare risorse per l’esportazione”.
Questo punto non sarà mai sottolineato abbastanza.
La versione ufficiale è che la Banca e il Fondo sono stati progettati per “promuovere una crescita economica sostenibile, promuovere standard di vita più elevati e ridurre la povertà”. Ma le strade e le dighe che la Banca costruisce non sono progettate per aiutare a migliorare i trasporti e l’elettricità per la gente del posto, ma piuttosto per rendere facile per le multinazionali estrarre ricchezza. E i salvataggi forniti dall’FMI non sono per”salvare”un paese dalla bancarotta-che probabilmente sarebbe la cosa migliore per esso in molti casi-ma piuttosto per consentirgli di pagare il suo debito con ancora più debito, in modo che il prestito originario non si trasformi in un buco nel bilancio di una banca occidentale.
Nei suoi libri su Bank and Fund, Payer descrive come le istituzioni affermano che la loro condizionalità sui prestiti consente ai paesi mutuatari di”raggiungere un più sano equilibrio di commercio e pagamenti”. Ma il vero scopo, dice, è”corrompere i governi per impedire loro di apportare i cambiamenti economici che li renderebbero più indipendenti e autosufficienti”. Quando i paesi rimborsano i loro prestiti di aggiustamento strutturale, viene data priorità al servizio del debito e la spesa interna deve essere”adeguata”al ribasso.
I prestiti del FMI venivano spesso assegnati attraverso un meccanismo chiamato”accordo stand-by”, un linea di credito che ha rilasciato fondi solo quando il governo mutuatario ha affermato di raggiungere determinati obiettivi. Da Jakarta a Lagos a Buenos Aires, il personale del FMI arrivava in volo (sempre in prima o in business class) per incontrare i governanti non democratici e offrire loro milioni o miliardi di dollari in cambio del rispetto del loro manuale economico.
Richieste tipiche del FMI. includerebbe:
Svalutazione della valuta Abolizione o riduzione dei controlli sui cambi e sulle importazioni Restrizione del credito bancario interno Tassi di interesse più elevati Aumento delle tasse Fine dei sussidi al consumo su cibo ed energia Limiti salariali Restrizioni alla spesa pubblica, in particolare nel settore sanitario e dell’istruzione Condizioni legali favorevoli e incentivi per le multinazionali Svendita imprese statali e rivendicazioni sulle risorse naturali a prezzi di svendita
Anche la Banca mondiale aveva il suo playbook. Il pagatore fornisce esempi:
L’apertura di regioni precedentemente remote attraverso investimenti nei trasporti e nelle telecomunicazioniAiutare le multinazionali nel settore minerarioInsistere sulla produzione per l’esportazionePremere i mutuatari per migliorare i privilegi legali per le passività fiscali degli investimenti stranieriOpporsi alle leggi sul salario minimo e all’attività sindacaleMettere le protezioni per le imprese di proprietà localeFinanziamento di progetti che si appropriano di terra, acqua e foreste dai poveri e li consegnano alle multinazionaliRiduzione della produzione manifatturiera e alimentare a scapito dell’esportazione di risorse naturali e materie prime
I governi del Terzo Mondo sono stati storicamente costretti ad accettare a una combinazione di queste politiche, a volte note come “Washington Consensus”, al fine di attivare il rilascio continuo di prestiti bancari e fondi.
Le ex potenze coloniali tendono a concentrare i loro prestiti di”sviluppo”su ex colonie o aree di influenza: Francia in Africa occidentale, Giappone in Indonesia, Gran Bretagna in Africa orientale e Asia meridionale e Stati Uniti in America Latina. Un esempio notevole è la zona CFA, dove 180 milioni di persone in 15 paesi africani sono ancora costretti a utilizzare una valuta coloniale francese. Su suggerimento del FMI, nel 1994 la Francia ha svalutato il CFA del 50%, devastanti i risparmi e il potere d’acquisto di decine di milioni di persone che vivono in paesi che vanno dal Senegal alla Costa d’Avorio al Gabon, tutto per esportare materie prime più competitivo.
Il risultato di Bank and Le politiche dei fondi sul Terzo mondo sono state notevolmente simili a quelle vissute sotto l’imperialismo tradizionale: deflazione salariale, perdita di autonomia e dipendenza agricola. La grande differenza è che nel nuovo sistema, la spada e la pistola sono state sostituite dal debito armato.
Negli ultimi 30 anni, l’aggiustamento strutturale si è intensificato per quanto riguarda il numero medio di condizioni nei prestiti concessi dalla Banca e dal Fondo. Prima del 1980, la Banca generalmente non concedeva prestiti di adeguamento strutturale, quasi tutto era specifico per progetto o settore. Ma da allora, i prestiti di salvataggio”spendi come vuoi”con contropartite economiche sono diventati una parte crescente della politica della banca. Per il FMI, sono la sua linfa vitale.
Ad esempio, quando il FMI ha salvato la Corea del Sud e l’Indonesia con pacchetti da 57 miliardi di dollari e 43 miliardi di dollari durante la crisi finanziaria asiatica del 1997, ha imposto pesanti condizioni. I mutuatari dovevano firmare accordi che”assomigliavano più ad alberi di Natale che a contratti, con da 50 a 80 condizioni dettagliate che coprivano tutto, dalla deregolamentazione dei monopoli dell’aglio alle tasse sui mangimi per il bestiame e alle nuove leggi ambientali”, secondo il politologo Mark S. Copelvitch.
Un analisi ha mostrato che il FMI aveva allegato, in media, 20 condizioni a ciascun prestito concesso nei due anni precedenti, un aumento storico. Paesi come Giamaica, Grecia e Cipro hanno preso in prestito negli ultimi anni con una media di 35 condizioni ciascuno. Vale la pena notare che le condizioni della Banca e del Fondo non hanno mai incluso protezioni sulla libertà di parola o sui diritti umani, o restrizioni sulle spese militari o sulla violenza della polizia.
Un’ulteriore svolta della politica della Banca e del Fondo è quella che è nota come “doppio prestito”: il denaro viene prestato per costruire, ad esempio, una diga idroelettrica, ma la maggior parte se non tutto il denaro viene versato alle compagnie occidentali. Quindi, il contribuente del Terzo Mondo è gravato di capitale e interessi, e il Nord viene rimborsato il doppio.
Il contesto del doppio prestito è che gli stati dominanti estendono il credito attraverso la Banca e il Fondo alle ex colonie, dove i governanti locali spesso spendono il nuovo denaro direttamente a società multinazionali che traggono profitto da servizi di consulenza, costruzione o importazione. La conseguente e richiesta svalutazione della valuta, i controlli sui salari e la stretta del credito bancario imposti dall’adeguamento strutturale della Banca e del Fondo svantaggiano gli imprenditori locali che sono bloccati in un sistema fiat al collasso e isolato e avvantaggiano le multinazionali native del dollaro, dell’euro o dello yen.
Un’altra fonte chiave per questo autore è stata il magistrale libro”The Lords of Poverty”dello storico Graham Hancock, scritto per riflettere sui primi cinquant’anni di politica delle banche e dei fondi e sull’assistenza estera in generale.
“La Banca Mondiale”, scrive Hancock,”è la prima ad ammettere che su ogni $ 10 che riceve, circa $ 7 vengono effettivamente spesi in beni e servizi dai ricchi paesi industrializzati.”
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Negli anni’80, quando i finanziamenti bancari si stavano espandendo rapidamente in tutto il mondo, ha osservato che”per ogni dollaro di tasse statunitensi contribuito, 82 centesimi vengono immediatamente restituiti alle imprese americane sotto forma di ordini di acquisto”. Questa dinamica vale non solo per i prestiti ma anche per gli aiuti. Ad esempio, quando gli Stati Uniti o la Germania inviano un aereo di soccorso in un paese in crisi, i costi di trasporto, cibo, medicine e stipendi del personale vengono aggiunti a ciò che è noto come ODA, o”assistenza ufficiale allo sviluppo”. Sui libri, sembra aiuto e assistenza. Ma la maggior parte del denaro viene restituita direttamente alle società occidentali e non viene investita localmente.
Riflettendo sulla crisi del debito del terzo mondo degli anni’80, Hancock ha osservato che”70 centesimi su ogni dollaro di assistenza americana non lasciato gli Stati Uniti”. Il Regno Unito, da parte sua, ha speso un enorme 80% dei suoi aiuti durante quel periodo direttamente in beni e servizi britannici.
“Un anno”, scrive Hancock, “i contribuenti britannici hanno fornito alle agenzie umanitarie multilaterali 495 milioni di sterline; nello stesso anno, però, le ditte britanniche hanno ricevuto contratti per un valore di 616 milioni di sterline”. Hancock ha affermato che si potrebbe”fare affidamento sulle agenzie multilaterali per l’acquisto di beni e servizi britannici per un valore equivalente al 120% del contributo multilaterale totale della Gran Bretagna”. pensare che sia caritatevole è esattamente l’opposto.
E come sottolinea Hancock, i budget per gli aiuti esteri aumentano sempre, indipendentemente dal risultato. Proprio come il progresso è la prova che l’aiuto sta funzionando, una”mancanza di progresso è la prova che il dosaggio è stato insufficiente e deve essere aumentato”.
Alcuni sostenitori dello sviluppo, scrive,”sostengono che sarebbe inopportuno negare l’aiuto ai veloci (quelli che avanzano); altri, che sarebbe crudele negarlo ai bisognosi (coloro che ristagnano). L’aiuto è quindi come lo champagne: nel successo te lo meriti, nel fallimento ne hai bisogno.”
IV. La trappola del debito
“Il concetto di Terzo Mondo o Sud e la politica degli aiuti ufficiali sono inscindibili. Sono due facce della stessa medaglia. Il Terzo Mondo è la creazione degli aiuti esteri: senza aiuti esteri non c’è Terzo Mondo”.
Secondo la Banca Mondiale, il suo obiettivo è”aiutare la rai se gli standard di vita nei paesi in via di sviluppo incanalando le risorse finanziarie dai paesi sviluppati al mondo in via di sviluppo.”
Ma se la realtà fosse l’opposto?
All’inizio, a partire dagli anni’60, c’è stato un enorme flusso di risorse dai paesi ricchi a quelli poveri. Questo è stato apparentemente fatto per aiutarli a svilupparsi. Payer scrive che è stato a lungo considerato”naturale”che il capitale”fluisse in una sola direzione dalle economie industriali sviluppate al Terzo Mondo”.
Il ciclo di vita di un prestito della Banca Mondiale: positivo, poi profondamente flussi di cassa negativi per il paese del mutuatario
Ma, come ci ricorda,”a un certo punto il mutuatario deve pagare al suo creditore più di quanto ha ricevuto dal creditore e per tutta la durata del prestare questo eccesso è molto più alto dell’importo originariamente preso in prestito.”
Nell’economia globale, questo punto si è verificato nel 1982, quando il flusso di risorse si è definitivamente invertito. Da allora, c’è stato un flusso netto annuale di fondi dai paesi poveri a quelli ricchi. Questo è iniziato con una media di 30 miliardi di dollari all’anno che scorrevano dal sud al nord tra la metà e la fine degli anni’80, ed è oggi nell’ordine di trilioni di dollari all’anno. Tra il 1970 e il 2007 — dalla fine del gold standard alla Grande Crisi Finanziaria — il servizio del debito totale pagato dai paesi poveri a quelli ricchi è stato di 7,15 trilioni di dollari.
Trasferimenti netti di risorse dai paesi in via di sviluppo: sempre più negativi dal 1982
Per fare un esempio di come potrebbe essere in un dato anno, nel 2012 i paesi in via di sviluppo hanno ricevuto $1,3 trilioni, compresi tutti i redditi, gli aiuti e gli investimenti. Ma nello stesso anno sono usciti più di 3,3 trilioni di dollari. In altre parole, secondo l’antropologo Jason Hickel,”i paesi in via di sviluppo hanno inviato al resto del mondo 2 trilioni di dollari in più rispetto a quelli che hanno ricevuto”.
Quando tutti i flussi sono stati sommati dal 1960 al 2017, è emersa una triste verità: 62 trilioni di dollari sono stati sottratti al mondo in via di sviluppo, l’equivalente di 620 piani Marshall in dollari di oggi.
Il FMI e la Banca mondiale avrebbero dovuto risolvere i problemi della bilancia dei pagamenti, e aiutare i paesi poveri a diventare più forti e più sostenibili. L’evidenza è stata l’esatto opposto.
“Per ogni dollaro di aiuti che i paesi in via di sviluppo ricevono”, scrive Hickel,”perdono 24 dollari in deflussi netti”. Invece di porre fine allo sfruttamento e allo scambio iniquo, gli studi mostrano che le politiche di aggiustamento strutturale sono cresciute loro in modo massiccio.
Dal 1970, il debito pubblico estero dei paesi in via di sviluppo è aumentato da 46 miliardi di dollari a $8,7 trilioni. Negli ultimi 50 anni, paesi come l’India, le Filippine e il Congo ora devono ai loro ex padroni coloniali 189 volte l’importo dovuto nel 1970. Hanno pagato $4,2 trilioni sui soli pagamenti di interessi dal 1980.
L’aumento esponenziale nel debito dei paesi in via di sviluppo
Even Payer — il cui libro del 1974 “The Debt Trap” utilizzava i dati del flusso economico per mostrare come il FMI ha irretito i paesi poveri incoraggiandoli a prendere in prestito più di quanto potrebbero eventualmente restituire — rimarrebbe scioccata dalle dimensioni della trappola del debito odierna.
La sua osservazione secondo cui”il cittadino medio degli Stati Uniti o dell’Europa potrebbe non essere consapevole di questo enorme drenaggio di capitali da parti del mondo che ritiene essere piti completamente povero” suona vero ancora oggi. Con vergogna di questo autore, non conosceva la vera natura del flusso globale di fondi e presumeva semplicemente che i paesi ricchi sovvenzionassero quelli poveri prima di intraprendere la ricerca per questo progetto. Il risultato finale è un letterale schema Ponzi, in cui negli anni’70 il debito del Terzo Mondo era così grande che era possibile pagare solo con nuovo debito. Da allora è sempre stato lo stesso.
Molti critici della Banca e del Fondo presumono che queste istituzioni stiano lavorando con il cuore nel posto giusto e, quando falliscono, è a causa di errori, sprechi o cattiva gestione.
La tesi di questo saggio è che ciò non è vero e che gli obiettivi fondamentali del Fondo e della Banca non sono riparare la povertà, ma piuttosto arricchire le nazioni creditrici a spese di quelle povere.
Questo autore semplicemente non è disposto a credere che un flusso permanente di fondi dai paesi poveri a quelli ricchi dal 1982 sia un”errore”. Il lettore può contestare che l’accordo sia intenzionale, e piuttosto può credere che sia un risultato strutturale inconscio. La differenza conta poco per i miliardi di persone che la Banca e il Fondo hanno impoverito.
V. Sostituzione del consumo di risorse coloniali
“Sono così stanco di aspettare. Non lo sei, perché il mondo diventi buono, bello e gentile? Prendiamo un coltello e tagliamo il mondo in due-e vediamo cosa stanno mangiando i vermi sulla scorza.
Alla fine degli anni’50, l’Europa e il Giappone si erano in gran parte ripresi dalla guerra e avevano ripreso una significativa crescita industriale, mentre i paesi del Terzo Mondo erano rimasti senza fondi. Pur avendo bilanci sani negli anni’40 e all’inizio degli anni’50, i paesi poveri esportatori di materie prime si sono imbattuti in problemi di bilancia dei pagamenti quando il valore delle loro merci è crollato sulla scia della guerra di Corea. Questo è quando è iniziata la trappola del debito e quando la Banca e il Fondo hanno aperto le cateratte di ciò che sarebbe finito per diventare trilioni di dollari di prestiti.
Questa era ha anche segnato la fine ufficiale del colonialismo, mentre gli imperi europei attiravano di ritorno dai loro possedimenti imperiali. L’assunto nello sviluppo internazionale è che il successo economico delle nazioni è dovuto “principalmente alle loro condizioni interne, domestiche. I paesi ad alto reddito hanno raggiunto il successo economico”, prosegue la teoria, “grazie al buon governo, alle istituzioni forti e ai mercati liberi. I paesi a basso reddito non sono riusciti a svilupparsi perché mancano di queste cose o perché soffrono di corruzione, burocrazia e inefficienza».
Questo è certamente vero. Ma un altro motivo importante per cui i paesi ricchi sono ricchi e i paesi poveri sono poveri è che i primi hanno saccheggiato i secondi per centinaia di anni durante il periodo coloniale.
“La rivoluzione industriale della Gran Bretagna”, Jason Hickel scrive,”dipendeva in gran parte dal cotone, che veniva coltivato su terreni sottratti con la forza agli indigeni americani , con manodopera sottratta agli schiavi africani. Altri input cruciali richiesti dai produttori britannici-canapa, legname, ferro, grano-sono stati prodotti utilizzando il lavoro forzato nelle tenute dei servi in Russia e nell’Europa orientale. Nel frattempo, l’estrazione britannica dall’India e da altre colonie ha finanziato più della metà del bilancio interno del paese, pagando strade, edifici pubblici, lo stato sociale-tutti i mercati dello sviluppo moderno-consentendo l’acquisto di input materiali necessari per l’industrializzazione. p>
La dinamica del furto è stata descritta da Utsa e Prabhat Patnaik nel loro libro”Capital And Imperialism”: le potenze coloniali come l’impero britannico userebbero la violenza per estrarre materie prime dai paesi deboli, creando una”fuga coloniale”di capitale che vita potenziata e sovvenzionata a Londra, Parigi e Berlino. Le nazioni industriali trasformerebbero queste materie prime in manufatti e le rivenderebbero alle nazioni più deboli, traendo enormi profitti e spiazzando anche la produzione locale. E-in modo critico-manterrebbero bassa l’inflazione interna sopprimendo i salari nei territori coloniali. O attraverso la vera e propria schiavitù o pagando ben al di sotto del tasso di mercato globale.
Quando il sistema coloniale iniziò a vacillare, il mondo finanziario occidentale affrontò una crisi. I Patnaik sostengono che la Grande Depressione fu il risultato non solo di cambiamenti nella politica monetaria occidentale, ma anche del rallentamento della fuga coloniale. Il ragionamento è semplice: i paesi ricchi avevano costruito un nastro trasportatore di risorse provenienti dai paesi poveri, e quando il nastro si è rotto, si è rotto anche tutto il resto. Tra gli anni’20 e’60, il colonialismo politico si è praticamente estinto. Gran Bretagna, Stati Uniti, Germania, Francia, Giappone, Paesi Bassi, Belgio e altri imperi furono costretti a rinunciare al controllo su più della metà del territorio e delle risorse del mondo.
Come scrivono i Patnaik, l’imperialismo è”un accordo per imporre la deflazione del reddito alla popolazione del Terzo Mondo al fine di ottenere i loro beni primari senza incorrere nel problema dell’aumento del prezzo dell’offerta.
Dopo il 1960, questa è diventata la nuova funzione della Banca mondiale e del FMI: ricreare la fuga coloniale dai paesi poveri ai paesi ricchi che un tempo era mantenuta da un semplice imperialismo.
Drenaggio post-coloniale dal Dal Sud del mondo al Nord del mondo
I funzionari di Stati Uniti, Europa e Giappone volevano raggiungere un”equilibrio interno”, in altre parole, la piena occupazione. Ma si sono resi conto che non potevano farlo tramite sussidi all’interno di un sistema isolato, altrimenti l’inflazione sarebbe dilagante. Per raggiungere il loro obiettivo sarebbe necessario un contributo esterno da parte dei paesi più poveri. Il valore aggiunto in più estratta dal nucleo dai lavoratori della periferia è nota come “rendita imperialista”. Se i paesi industriali potessero ottenere materiali e manodopera più economici, e poi rivendere i prodotti finiti con un profitto, potrebbero avvicinarsi all’economia dei sogni dei tecnocrati. E hanno realizzato il loro desiderio: a partire dal 2019, i salari pagati ai lavoratori nei paesi in via di sviluppo erano Il 20% del livello dei salari pagati ai lavoratori nel mondo sviluppato.
Come esempio di come la Banca abbia ricreato la dinamica della fuga coloniale, Payer cita il caso classico della Mauritania degli anni’60 nell’Africa nordoccidentale. Un progetto minerario chiamato MIFERMA fu firmato dagli occupanti francesi prima che la colonia diventasse indipendente. L’accordo alla fine divenne”solo un progetto di enclave vecchio stile: una città in un deserto e una ferrovia che porta all’oceano”, poiché l’infrastruttura era focalizzata esclusivamente sul trasporto di minerali verso i mercati internazionali. Nel 1969, quando la miniera rappresentava il 30% del PIL della Mauritania e il 75% delle sue esportazioni, il 72% del reddito veniva inviato all’estero e”praticamente tutto il reddito distribuito localmente ai dipendenti evaporava in importazioni”. Quando i minatori hanno protestato contro l’accordo neocoloniale, le forze di sicurezza li hanno selvaggiamente repressi.
Geografia del drenaggio dal Sud del mondo dal 1960 al 2017
MIFERMA è un esempio stereotipato del tipo di”sviluppo” che verrebbe imposto al Terzo Mondo ovunque, dalla Repubblica Dominicana al Madagascar alla Cambogia. E di questi progetti si espansero rapidamente negli anni’70, grazie al sistema del petrodollaro.
Dopo il 1973, i paesi arabi dell’OPEC con enormi eccedenze derivanti dall’aumento vertiginoso dei prezzi del petrolio investirono i loro profitti in depositi e tesorerie nelle banche occidentali, che avevano bisogno un luogo dove prestare le loro crescenti risorse. I dittatori militari in America Latina, Africa e Asia si sono fatti ottimi obiettivi: avevano preferenze temporali elevate ed erano felici di prendere in prestito contro le generazioni future.
A contribuire ad accelerare la crescita dei prestiti è stata la”put del FMI”: le banche private hanno iniziato a crederci (correttamente) che il FMI salverebbe i paesi in caso di default, proteggendo i loro investimenti. Inoltre, i tassi di interesse a metà degli anni’70 erano spesso in territorio reale negativo, incoraggiando ulteriormente i mutuatari. Questo, combinato con l’insistenza del presidente della Banca mondiale Robert McNamara affinché l’assistenza si espandesse notevolmente, ha provocato una frenesia del debito. Le banche statunitensi, ad esempio, tra il 1978 e il 1982 hanno aumentato del 300% il loro portafoglio di prestiti del Terzo Mondo, portandolo a 450 miliardi di dollari.
Il problema era che questi prestiti erano in gran parte contratti a tasso d’interesse variabile, e pochi anni dopo , quei tassi sono esplosi quando la Federal Reserve americana ha aumentato il costo globale del capitale vicino al 20%. Il crescente peso del debito combinato con lo shock del prezzo del petrolio del 1979 e la conseguente il crollo del prezzo delle materie prime che alimentano il valore delle esportazioni dei paesi in via di sviluppo ha aperto la strada alla crisi del debito del terzo mondo. A peggiorare le cose, ben poco del denaro preso in prestito dai governi durante la frenesia del debito è stato effettivamente investito nel cittadino medio.
Il servizio del debito del Terzo mondo nel tempo
Nel loro Libro giustamente intitolato”Debt Squads”, i giornalisti investigativi Sue Branford e Bernardo Kucinski spiegano che tra il 1976 e il 1981, i governi latini (di cui 18 su 21 erano dittature) hanno preso in prestito 272,9 miliardi di dollari. Di questi, il 91,6% è stato speso per il servizio del debito, la fuga di capitali e la costituzione di riserve di regime. Solo l’8,4% è stato utilizzato per investimenti nazionali e, anche di questi, molto è stato sprecato.
Carlos Ayuda, sostenitore della società civile brasiliana, descrisse l’effetto del drenaggio alimentato dai petrodollari sul proprio paese:
“La dittatura militare ha utilizzato i prestiti per investire in enormi progetti infrastrutturali, in particolare progetti energetici… l’idea alla base della creazione di un’enorme diga e impianto idroelettrico nel mezzo dell’Amazzonia, ad esempio, era quella di produrre alluminio per l’esportazione nel nord… il governo ha contratto enormi prestiti e ha investito miliardi di dollari nella costruzione della diga di Tucuruí alla fine degli anni’70, distruggendo le foreste native e rimuovendo un numero enorme di popolazioni native e popolazioni rurali povere che vivevano lì da generazioni. Il governo avrebbe raso al suolo le foreste, ma le scadenze erano così brevi che hanno usato l’Agente Arancio per defogliare la regione e poi hanno immerso sott’acqua i tronchi degli alberi spogli… della produzione è stata di $ 48. Quindi i contribuenti hanno fornito sussidi, finanziando energia a basso costo per le multinazionali per vendere il nostro alluminio sul mercato internazionale.”
In altre parole, il popolo brasiliano ha pagato creditori stranieri per il servizio di distruzione del proprio ambiente , spostando le masse e vendendo le loro risorse.
Oggi il drenaggio dai paesi a basso e medio reddito è sbalorditivo. Nel 2015, ha totalizzato 10,1 miliardi di tonnellate di materie prime e 182 milioni di persone-anni di lavoro: il 50% di tutti i beni e il 28% di tutto il lavoro utilizzati quell’anno dai paesi ad alto reddito.
VI. A Dance With Dictators
“Potrebbe essere un figlio di puttana, ma è nostro figlio di puttana.”
Naturalmente, ci vogliono due parti per finalizzare un prestito dalla Banca o dal Fondo. Il problema è che il mutuatario è in genere un leader non eletto o irresponsabile, che prende la decisione senza consultare e senza un mandato popolare da parte dei propri cittadini.
Come scrive Payer in”The Debt Trap”,”I programmi del FMI sono politicamente impopolari, per le ottime ragioni concrete che danneggiano gli affari locali e deprimono il reddito reale dell’elettorato. È probabile che un governo che tenti di soddisfare le condizioni nella sua lettera di intenti all’FMI si ritroverà votato fuori sede.”
Pertanto, l’FMI preferisce lavorare con clienti non democratici che possono licenziare più facilmente giudici fastidiosi e reprimere le proteste di piazza. Secondo Payer, i colpi di stato militari in Brasile nel 1964, in Turchia nel 1960, in Indonesia nel 1966, in Argentina nel 1966 e nelle Filippine nel 1972 sono stati esempi di leader contrari al FMI sostituiti con la forza da altri favorevoli al FMI. Anche se il Fondo non è stato direttamente coinvolto nel colpo di stato, in ognuno di questi casi è arrivato con entusiasmo pochi giorni, settimane o mesi dopo per aiutare il nuovo regime ad attuare aggiustamenti strutturali.
La Banca e il Fondo condividono la volontà di sostenere governi violenti. Forse sorprendentemente, è stata la Banca a dare inizio alla tradizione. Secondo il ricercatore per lo sviluppo Kevin Danaher, “il triste record della Banca nel sostenere regimi e governi militari che hanno apertamente violato i diritti umani è iniziato il 7 agosto 1947, con un prestito per la ricostruzione di 195 milioni di dollari ai Paesi Bassi. Diciassette giorni prima che la Banca approvasse il prestito, i Paesi Bassi avevano scatenato una guerra contro i nazionalisti anticolonialisti nel loro enorme impero d’oltremare nelle Indie Orientali, che aveva già dichiarato la propria indipendenza come Repubblica di Indonesia.”
“Gli olandesi”, scrive Danaher, “inviarono 145.000 soldati (da una nazione con solo 10 milioni di abitanti all’epoca, economicamente in difficoltà al 90% della produzione del 1939) e lanciarono un blocco economico totale delle aree controllate dai nazionalisti, causando una notevole fame e problemi di salute tra i 70 milioni di abitanti dell’Indonesia.”
Nei suoi primi decenni la Banca ha finanziato molti di questi schemi coloniali, tra cui $28 milioni per la Rhodesia dell’apartheid nel 1952, così come prestiti a Australia, Regno Unito e Belgio per”sviluppare”i possedimenti coloniali in Papua Nuova Guinea, Kenya e il Congo belga.
Nel 1966, la Banca sfidò direttamente le Nazioni Unite,”continuando a prestare denaro al Sudafrica e al Portogallo nonostante le risoluzioni dell’Assemblea generale che invitavano tutte le agenzie affiliate alle Nazioni Unite a cessare il sostegno finanziario per entrambi i paesi”, secondo Danaher.
Danaher scrive che”il dominio coloniale del Portogallo su Angola e Mozambico e l’apartheid del Sud Africa sono state flagranti violazioni della Carta delle Nazioni Unite. Ma la Banca ha sostenuto che l’Articolo IV, Sezione 10 della sua Carta, che proibisce l’interferenza negli affari politici di qualsiasi membro, la obbligava legalmente a ignorare le risoluzioni delle Nazioni Unite. Di conseguenza, dopo l’approvazione della risoluzione delle Nazioni Unite, la Banca ha approvato prestiti di 10 milioni di dollari al Portogallo e di 20 milioni di dollari al Sudafrica.”
A volte, la preferenza della Banca per la tirannia era netta: interrompeva i prestiti alle persone democraticamente-eletto governo Allende in Cile all’inizio degli anni’70, ma poco dopo iniziò a prestare enormi quantità di denaro alla Romania di Ceausescu, uno dei peggiori stati di polizia del mondo. Questo è anche un esempio di come la Banca e il Fondo, contrariamente alla credenza popolare, non si limitassero a prestare secondo le linee ideologiche della Guerra Fredda: per ogni cliente di destra Augusto Pinochet Ugarte o Jorge Rafael Videla, c’era un Josip Broz di sinistra Tito o Julius Nyerere.
Nel 1979, osserva Danaher, 15 dei governi più repressivi del mondo avrebbero ricevuto un terzo intero di tutti i prestiti bancari. Questo anche dopo che il Congresso degli Stati Uniti e l’amministrazione Carter avevano interrotto gli aiuti a quattro dei 15-Argentina, Cile, Uruguay ed Etiopia-per”flagranti violazioni dei diritti umani”. Solo pochi anni dopo, in El Salvador, il FMI ha fatto un $ 43 milioni alla dittatura militare, solo pochi mesi dopo che le sue forze hanno commesso il più grande massacro nell’America Latina dell’era della Guerra Fredda annientando il villaggio di El Mozote.
Sono stati scritti diversi libri sulla Banca e il Fondo nel 1994, cronometrati come retrospettive di 50 anni sulle istituzioni di Bretton Woods. “Perpetuating Poverty” di Ian Vàsquez e Doug Bandow è uno di questi studi, ed è un particolarmente prezioso in quanto fornisce un’analisi libertaria. La maggior parte degli studi critici sulla Banca e sul Fondo sono di sinistra: ma Vásquez e Bandow del Cato Institute hanno individuato molti degli stessi problemi.
“Il Fondo sostiene qualsiasi governo”, scrivono,”per quanto venale e brutale … Alla fine del 1989 la Cina doveva al Fondo 600 milioni di dollari; nel gennaio 1990, pochi mesi dopo che il sangue si era asciugato in piazza Tiananmen a Pechino, il Fmi tenne un seminario sulla politica monetaria nella città”.
Vásquez e Bandow menzionano altri clienti tirannici che vanno dalla Birmania militare, al Cile di Pinochet, al Laos, al Nicaragua sotto Anastasio Somoza Debayle e ai sandinisti, alla Siria e al Vietnam.
“Il FMI”, dicono,”raramente ha incontrato una dittatura che non gli piaceva.”
Vásquez e Bandow dettagli della relazione della Banca con il regime marxista-leninista Mengistu Haile Mariam in Etiopia, dove ha fornito fino al 16% del bilancio annuale del governo mentre aveva uno dei peggiori record di diritti umani al mondo. Il credito della Banca è arrivato proprio mentre le forze di Mengistu stavano”radunando le persone nei campi di concentramento e nelle fattorie collettive”. Sottolineano anche come la Banca abbia dato al regime sudanese 16 milioni di dollari mentre stava cacciando 750.000 profughi da Khartoum nel deserto, e come abbia dato centinaia di milioni di dollari all’Iran-una brutale dittatura teocratica-e al Mozambico, le cui forze di sicurezza erano famigerato per torture, stupri ed esecuzioni sommarie.
Nel suo libro del 2011″Defeating Dictators”, il celebre economista dello sviluppo ghanese George Ayittey ha dettagliato un lungo elenco di”autocrati che ricevono aiuti”: Paul Biya, Idriss Déby, Lansana Conté, Paul Kagame, Yoweri Museveni, Hun Sen, Islam Karimov, Nursultan Nazarbayev e Emomali Rahmon. Ha sottolineato che il Fondo aveva erogato 75 miliardi di dollari solo a questi nove tiranni.
Nel 2014, un rapporto è stato pubblicato dall’International Consortium of Investigative Journalists, in cui si afferma che il governo etiope aveva utilizzato parte di un prestito bancario di 2 miliardi di dollari per forzare trasferire 37.883 famiglie indigene Anuak. Questo era il 60% dell’intera provincia di Gambella del paese. I soldati “picchiarono, violentarono e uccisero” Anuak che si rifiutava di lasciare le proprie case. Le atrocità sono state così male che il Sud Sudan abbia concesso lo status di rifugiato agli Anuak che arrivavano dalla vicina Etiopia. Human Rights Watch report said that the stolen land was then “leased by the government to investors” and that the Bank’s money was “used to pay the salaries of government officials who helped carry out the evictions.” The Bank approved new funding for this “villagization” program even after allegations of mass human rights violations emerged.
Mobutu Sese Soko and Richard Nixon at the White House in 1973
It would be a mistake to leave Mobutu Sese Soko’s Zaire out of this essay. The recipient of billions of dollars of Bank and Fund credit during his bloody 32-year reign, Mobutu pocketed 30% of incoming aid and assistance and let his people starve. He complied with 11 IMF structural adjustments: during one in 1984, 46,000 public school teachers were fired and the national currency was devalued by 80%. Mobutu called this austerity “a bitter pill which we have no alternative but to swallow,” but didn’t sell any of his 51 Mercedes, any of his 11 chateaus in Belgium or France, or even his Boeing 747 or 16th century Spanish castle.
Per capita income declined in each year of his rule on average by 2.2%, leaving more than 80% of the population in absolute poverty. Children routinely died before the age of five, and swollen-belly syndrome was rampant. It is estimated that Mobutu personally stole $5 billion, and presided over another $12 billion in capital flight, which together would have been more than enough to wipe the country’s $14 billion debt clean at the time of his ouster. He looted and terrorized his people, and could not have done it without the Bank and Fund, which continued to bail him out even though it was clear he would never repay his debts.
That all said, the true poster boy for the Bank and Fund’s affection for dictators might be Ferdinand Marcos. In 1966, when Marcos came to power, the Philippines was the second-most prosperous country in Asia, and the country’s foreign debt stood at roughly $500 million. By the time Marcos was removed in 1986, the debt stood at $28.1 billion.
As Graham Hancock writes in “Lords Of Poverty,” most of these loans”had been contracted to pay for extravagant development schemes which, although irrelevant to the poor, had pandered to the enormous ego of the head of state… a painstaking two-year investigation established beyond serious dispute that he had personally expropriated and sent out of the Philippines more than $10 billion. Much of this money — which of course, should have been at the disposal of the Philippine state and people — had disappeared forever in Swiss bank accounts.”
“$100 million,” Hancock writes, “was paid for the art collection for Imelda Marcos… her tastes were eclectic and included six Old Masters purchased from the Knodeler Gallery in New York for $5 million, a Francis Bacon canvas supplied by the Marlborough Gallery in London, and a Michelangelo, ‘Madonna and Child’ bought from Mario Bellini in Florence for $3.5 million.”
“During the last decade of the Marcos regime,” he says, “while valuable art treasuries were being hung on penthouse walls in Manhattan and Paris, the Philippines had lower nutritional standards than any other nation in Asia with the exception of war-torn Cambodia.”
To contain popular unrest, Hancock writes that Marcos banned strikes and “union organizing was outlawed in all key industries and in agriculture. Thousands of Filipinos were imprisoned for opposing the dictatorship and many were tortured and killed. Meanwhile the country remained consistently listed among the top recipients of both US and World Bank development assistance.”
After the Filipino people pushed Marcos out, they still had to pay an annual sum of anywhere between 40% and 50% of the entire value of their exports “just to cover the interest on the foreign debts that Marcos incurred.”
One would think that after ousting Marcos, the Filipino people would not have to owe the debt he incurred on their behalf without consulting them. But that is not how it has worked in practice. In theory, this concept is called “odious debt” and was invented by the U.S. in 1898 when it repudiated Cuba’s debt after Spanish forces were ousted from the island.
American leaders determined that debts “incurred to subjugate a people or to colonize them” were not legitimate. But the Bank and Fund have never followed this precedent during their 75 years of operations. Ironically, the IMF has an article on its website suggesting that Somoza, Marcos, Apartheid South Africa, Haiti’s “Baby Doc” and Nigeria’s Sani Abacha all borrowed billions illegitimately, and that the debt should be written off for their victims, but this remains a suggestion unfollowed.
Technically and morally speaking, a large percentage of Third World debt should be considered “odious” and not owed anymore by the population should their dictator be forced out. After all, in most cases, the citizens paying back the loans didn’t elect their leader and didn’t choose to borrow the loans that they took out against their future.
In July 1987, the revolutionary leader Thomas Sankara gave a speech to the Organistion of African Unity (OAU) in Ethiopia, where he refused to pay the colonial debt of Burkina Faso, and encouraged other African nations to join him.
“We cannot pay,” he said, “because we are not responsible for this debt.”
Sankara famously boycotted the IMF and refused structural adjustment. Three months after his OAU speech, he was assassinated by Blaise Compaoré, who would install his own 27-year military regime that would receive four structural adjustment loans from the IMF and borrow dozens of times from the World Bank for various infrastructure and agriculture projects. Since Sankara’s death, few heads of state have been willing to take a stand to repudiate their debts.
Burkinese dictator Blaise Compaoré and IMF managing director Dominique Strauss-Kahn. Compaoré seized power after assassinating Thomas Sankara (who tried to refuse Western debt) and he went on to borrow billions from the Bank and Fund.
One big exception was Iraq: after the U.S. invasion and ouster of Saddam Hussein in 2003, American authorities managed to get some of the debt incurred by Hussein to be considered “odious” and forgiven. But this was a unique case: for the billions of people who suffered under colonialists or dictators, and have since been forced to pay their debts plus interest, they have not gotten this special treatment.
In recent years, the IMF has even acted as a counter-revolutionary force against democratic movements. In the 1990s, the Fund was widely criticized on the left and the right for helping to destabilize the former Soviet Union as it descended into economic chaos and congealed into Vladimir Putin’s dictatorship. In 2011, as the Arab Spring protests emerged across the Middle East, the Deauville Partnership with Arab Countries in Transition was formed and met in Paris.
Through this mechanism, the Bank and Fund led massive loan offers to Yemen, Tunisia, Egypt, Morocco and Jordan — “Arab countries in transition” — in exchange for structural adjustment. As a result, Tunisia’s foreign debt skyrocketed, triggering two new IMF loans, marking the first time that the country had borrowed from the Fund since 1988. The austerity measures paired with these loans forced the devaluation of the Tunisian dinar, which spiked prices. National protests broke out as the government continued to follow the Fund playbook with wage freezes, new taxes and “early retirement” in the public sector.
Twenty-nine-year-old protestor Warda Atig summed up the situation: “As long as Tunisia continues these deals with the IMF, we will continue our struggle,” she said. “We believe that the IMF and the interests of people are contradictory. An escape from submission to the IMF, which has brought Tunisia to its knees and strangled the economy, is a prerequisite to bring about any real change.”
VII. Creating Agricultural Dependence
“The idea that developing countries should feed themselves is an anachronism from a bygone era. They could better ensure their food security by relying on the U.S. agricultural products, which are available in most cases at lower cost.”
As a result of Bank and Fund policy, all across Latin America, Africa, the Middle East, and South and East Asia, countries which once grew their own food now import it from rich countries. Growing one’s own food is important, in retrospect, because in the post-1944 financial system, commodities are not priced with one’s local fiat currency: they are priced in the dollar.
Consider the price of wheat, which ranged between $200 and $300 between 1996 and 2006. It has since skyrocketed, peaking at nearly $1,100 in 2021. If your country grew its own wheat, it could weather the storm. If your country had to import wheat, your population risked starvation. This is one reason why countries like Pakistan, Sri Lanka, Egypt, Ghana and Bangladesh are all currently turning to the IMF for emergency loans.
Historically, where the Bank did give loans, they were mostly for “modern,” large-scale, mono-crop agriculture and for resource extraction: not for the development of local industry, manufacturing or consumption farming. Borrowers were encouraged to focus on raw materials exports (oil, minerals, coffee, cocoa, palm oil, tea, rubber, cotton, etc.), and then pushed to import finished goods, foodstuffs and the ingredients for modern agriculture like fertilizer, pesticides, tractors and irrigation machinery. The result is that societies like Morocco end up importing wheat and soybean oil instead of thriving on native couscous and olive oil, “fixed” to become dependent. Earnings were typically used not to benefit farmers, but to service foreign debt, purchase weapons, import luxury goods, fill Swiss bank accounts and put down dissent.
Consider some of the world’s poorest countries. As of 2020, after 50 years of Bank and Fund policy, Niger’s exports were 75% uranium; Mali’s 72% gold; Zambia’s 70% copper; Burundi’s 69% coffee; Malawi’s 55% tobacco; Togo’s 50% cotton; and on it goes. At times in past decades, these single exports supported virtually all of these countries’ hard currency earnings. This is not a natural state of affairs. These items are not mined or produced for local consumption, but for French nuclear plants, Chinese electronics, German supermarkets, British cigarette makers, and American clothing companies. In other words, the energy of the labor force of these nations has been engineered toward feeding and powering other civilizations, instead of nourishing and advancing their own.
Researcher Alicia Koren wrote about the typical agricultural impact of Bank policy in Costa Rica, where the country’s “structural adjustment called for earning more hard currency to pay off foreign debt; forcing farmers who traditionally grew beans, rice, and corn for domestic consumption to plant non-traditional agricultural exports such as ornamental plants, flowers, melons, strawberries, and red peppers… industries that exported their products were eligible for tariff and tax exemptions not available to domestic producers.”
“Meanwhile,” Koren wrote, “structural adjustment agreements removed support for domestic production… while the North pressured Southern nations to eliminate subsidies and ‘barriers to trade,’ Northern governments pumped billions of dollars into their own agricultural sectors, making it impossible for basic grains growers in the South to compete with the North’s highly subsidized agricultural industry.”
Koren extrapolated her Costa Rica analysis to make a broader point: “Structural adjustment agreements shift public spending subsidies from basic supplies, consumed mainly by the poor and middle classes, to luxury export crops produced for affluent forei gners.” Third World countries were not seen as body politics but as companies that needed to increase revenues and decrease expenditures.
The testimony of a former Jamaican official is especially telling: “We told the World Bank team that farmers could hardly afford credit, and that higher rates would put them out of business. The Bank told us in response that this means ‘The market is telling you that agriculture is not the way to go for Jamaica’ — they are saying we should give up farming altogether.”
“The World Bank and IMF,” the official said, “don’t have to worry about the farmers and local companies going out of business, or starvation wages or the social upheaval that will result. They simply assume that it is our job to keep our national security forces strong enough to suppress any uprising.”
Developing governments are stuck: faced with insurmountable debt, the only factor they really control in terms of increasing revenue is deflating wages. If they do this, they must provide basic food subsidies, or else they will be overthrown. And so the debt grows.
Even when developing countries try to produce their own food, they are crowded out by a centrally-planned global trade market. For example, one would think that the cheap labor in a place like West Africa would make it a better exporter of peanuts than the United States. But since Northern countries pay an estimated $1 billion in subsidies to their agriculture industries every single day, Southern countries often struggle to be competitive. What’s worse, 50 or 60 countries are often directed to focus on the very same crops, crowding each other out in the global marketplace. Rubber, palm oil, coffee, tea and cotton are Bank favorites, as the poor masses can’t eat them.
It is true that the Green Revolution has created more food for the planet, especially in China and East Asia. But despite advances in agricultural technology, much of these new yields go to exports, and vast swathes of the world remain chronically malnourished and dependent. To this day, for example, African nations import about 85% of their food. They pay more than $40 billion per year — a number estimated to reach $110 billion per year by 2025 — to buy from other parts of the world what they could grow themselves. Bank and Fund policy helped transform a continent of incredible agricultural riches into one reliant on the outside world to feed its people.
Reflecting on the results of this policy of dependency, Hancock challenges the widespread belief that the people of the Third World are “fundamentally helpless.”
“Victims of nameless crises, disasters, and catastrophes,” he writes, suffer from a perception that “they can do nothing unless we, the rich and powerful, intervene to save them from themselves.” But as evidenced by the fact that our “assistance” has only made them more dependent on us, Hancock rightfully unmasks the notion that “only we can save them” as “patronizing and profoundly fallacious.”
Far from playing the role of good samaritan, the Fund does not even follow the timeless human tradition, established more than 4,000 years ago by Hammurabi in ancient Babylon, of forgiving interest after natural disasters. In 1985, a devastating earthquake hit Mexico City, killing more than 5,000 people and causing $5 billion of damage. Fund staff — who claim to be saviors, helping to end poverty and save countries in crisis — arrived a few days later, demanding to be repaid.
VIII. You Can’t Eat Cotton
“Development prefers crops that can’t be eaten so the loans can be collected.”
–Cheryl Payer
The Togolese democracy advocate Farida Nabourema’s own personal and family experience tragically matches the big picture of the Bank and Fund laid out thus far.
The way she puts it, after the 1970s oil boom, loans were poured into developing nations like Togo, whose unaccountable rulers didn’t think twice about how they would repay the debt. Much of the money went into giant infrastructure projects that didn’t help the majority of the people. Much was embezzled and spent on pharaonic estates. Most of these countries, she says, were ruled by single party-states or families. Once interest rates started to hike, these governments could no longer pay their debts: the IMF started “taking over” by imposing austerity measures.
“These were new states that were very fragile,” Nabourema says in an interview for this article. “They needed to invest strongly in social infrastructure, just as the European states were allowed to do after World War II. But instead, we went from free healthcare and education one day, to situations the next where it became too costly for the average person to get even basic medicine.”
Regardless of what one thinks about state-subsidized medicine and schooling, eliminating it overnight was traumatic for poor countries. Bank and Fund officials, of course, have their own private healthcare solutions for their visits and their own private schools for their children whenever they have to live “in the field.”
Because of the forced cuts in public spending, Nabourema says, the state hospitals in Togo remain to this day in “complete decay.” Unlike the state-run, taxpayer-financed public hospitals in the capitals of former colonial powers in London and Paris, things are so bad in Togo’s capital Lomé that even water has to be prescribed.
“There was also,” Nabourema said, “reckless privatization of our public companies.” She explained how her father used to work at the Togolese steel agency. During privatization, the company was sold off to foreign actors for less than half of what the state built it for.
“It was basically a garage sale,” she said.
Nabourema says that a free market system and liberal reforms work well when all participants are on an equal playing field. But that is not the case in Togo, which is forced to play by different rules. No matter how much it opens up, it can’t change the strict policies of the U.S. and Europe, who aggressively subsidize their own industries and agriculture. Nabourema mentions how a subsidized influx of cheap used clothes from America, for example, ruined Togo’s local textile industry.
“These clothes from the West,” she said, “put entrepreneurs out of business and littered our beaches.”
The most horrible aspect, she said, is that the farmers — who made up 60% of the population in Togo in the 1980s — had their livelihoods turned upside down. The dictatorship needed hard currency to pay its debts, and could only do this by selling exports, so they began a massive campaign to sell cash crops. With the World Bank’s help, the regime invested heavily in cotton, so much so that it now dominates 50% of the country’s exports, destroying national food security.
In the formative years for countries like Togo, the Bank was the “largest single lender for agriculture.” Its strategy for fighting poverty was agricultural modernization: “massive transfers of capital, in the form of fertilizers, pesticides, earth-moving equipment, and expensive foreign consultants.”
Nabourema’s father was the one who revealed to her how imported fertilizers and tractors were diverted away from farmers growing consumption food, to farmers growing cash crops like cotton, coffee, cocoa and cashews. If someone was growing corn, sorghum or millet — the basic foodstuffs of the population — they didn’t get access.
“You can’t eat cotton,” Nabourema reminds us.
Over time, the political elite in countries like Togo and Benin (where the dictator was literally a cotton mogul) became the buyer of all the cash crops from all of the farms. They’d have a monopoly on purchases, Nabourema says, and would buy the crops for prices so low that the peasants would barely make any money. This entire system — called “sotoco” in Togo — was based on funding provided by the World Bank.
When farmers would protest, she said, they would get beaten or their farms would get burned to rubble. The y could have just grown normal food and fed their families, like they had done for generations. But now they could not even afford the land: the political elite has been acquiring land at an outrageous rate, often through illegal means, jacking up the price.
As an example, Nabourema explains how the Togolese regime might seize 2,000 acres of land: unlike in a liberal democracy (like the one in France, which has built its civilization off the backs of countries like Togo), the judicial system is owned by the government, so there is no way to push back. So farmers, who used to be self-sovereign, are now forced to work as laborers on someone else’s land to provide cotton to rich countries far away. The most tragic irony, Nabourema says, is that cotton is overwhelmingly grown in the north of Togo, in the poorest part of the country.
“But when you go there,” she says, “you see it has made no one rich.”
Women bear the brunt of structural adjustment. The misogyny of the policy is “quite clear in Africa, where women are the major farmers and providers of fuel, wood, and water,” Danaher writes. And yet, a recent retrospective says, “the World Bank prefers to blame them for having too many children rather than reexamining its own policies.”
As Payer writes, for many of the world’s poor, they are poor “not because they have been left behind or ignored by their country’s progress, but because they are the victims of modernisation. Most have been crowded off the good farmland, or deprived of land altogether, by rich elites and local or foreign agribusiness. Their destitution has not ‘ruled them out’ of the development process; the development process has been the cause of their destitution.”
“Yet the Bank,” Payer says, “is still determined to transform the agricultural practices of small farmers. Bank policy statements make it clear that the real aim is integration of peasant land into the commercial sector through the production of a ‘marketable surplus’ of cash crops.”
Payer observed how, in the 1970s and 1980s, many small plotters still grew the bulk of their own food needs, and were not “dependent on the market for the near-totality of their sustenance, as ‘modern’ people were.” These people, however, were the target of the Bank’s policies, which transformed them into surplus producers, and “often enforced this transformation with authoritarian methods.”
In a testimony in front of U.S. Congress in the 1990s, George Ayittey remarked that “if Africa were able to feed itself, it could save nearly $15 billion it wastes on food imports. This figure may be compared with the $17 billion Africa received in foreign aid from all sources in 1997.”
In other words, if Africa grew its own food, it wouldn’t need foreign aid. But if that were to happen, then poor countries wouldn’t be buying billions of dollars of food per year from rich countries, whose economies would shrink as a result. So the West strongly resists any change.
IX. The Development Set
Excuse me, friends, I must catch my jet
I’m off to join the Development Set
My bags are packed, and I’ve had all my shots
I have traveller’s checks and pills for the trots!
The Development Set is bright and noble
Our thoughts are deep and our vision global
Although we move with the better classes
Our thoughts are always with the masses
In Sheraton Hotels in scattered nations
We damn multinational corporations
Injustice seems easy to protest
In such seething hotbeds of social rest.
We discuss malnutrition over steaks
And plan hunger talks during coffee breaks.
Whether Asian floods or African drought
We face each issue with open mouth.
And so begins “The Development Set,” a 1976 poem by Ross Coggins that hits at the heart of the paternalistic and unaccountab le nature of the Bank and the Fund.
The World Bank pays high, tax-free salaries, with very generous benefits. IMF staff are paid even better, and traditionally were flown first or business class (depending on the distance), never economy. They stayed in five-star hotels, and even had a perk to get free upgrades onto the supersonic Concorde. Their salaries, unlike wages made by people living under structural adjustment, were not capped and always rose faster than the inflation rate.
Until the mid-1990s the janitors cleaning the World Bank headquarters in Washington — mostly immigrants who fled from countries that the Bank and Fund had “adjusted” — were not even allowed to unionize. In contrast, Christine Lagarde’s tax-free salary as head of the IMF was $467,940, plus an additional $83,760 allowance. Of course, during her term from 2011 to 2019, she oversaw a variety of structural adjustments on poor countries, where taxes on the most vulnerable were almost always raised.
Graham Hancock notes that redundancy payments at the World Bank in the 1980s “averaged a quarter of a million dollars per person.” When 700 executives lost their jobs in 1987, the money spent on their golden parachutes — $175 million — would have been enough, he notes, “to pay for a complete elementary school education for 63,000 children from poor families in Latin America or Africa.”
According to former World Bank head James Wolfensohn, from 1995 to 2005 there were more than 63,000 Bank projects in developing countries: the costs of “feasibility studies” and travel and lodging for experts from industrialized countries alone absorbed as much as 25% of the total aid.
Fifty years after the creation of the Bank and Fund, “90% of the $12 billion per year in technical assistance was still spent on foreign expertise.” That year, in 1994, George Ayittey noted that 80,000 Bank consultants worked on Africa alone, but that “less than.01%” were Africans.
Hancock writes that “the Bank, which puts more money into more schemes in more developing countries than any other institution, claims that ‘it seeks to meet the needs of the poorest people;’ but at no stage in what it refers to as the ‘project cycle’ does it actually take the time to ask the poor themselves how they perceive their needs… the poor are entirely left out of the decision-making progress — almost as if they don’t exist.”
Bank and Fund policy is forged in meetings in lavish hotels between people who will never have to live a day in poverty in their lives. As Joseph Stiglitz argues in his own criticism of the Bank and Fund, “modern high-tech warfare is designed to remove physical contact: dropping bombs from 50,000 feet ensures that one does not ‘feel’ what one does. Modern economic management is similar: from one’s luxury hotel, one can callously impose policies about which one would think twice if one knew the people whose lives one was destroying.”
Strikingly, Bank and Fund leaders are sometimes the very same people who drop the bombs. For example, Robert McNamara — probably the most transformative person in Bank history, famous for massively expanding its lending and sinking poor countries into inescapable debt — was first the CEO of the Ford corporation, before becoming U.S. defense secretary, where he sent 500,000 American troops to fight in Vietnam. After leaving the Bank, he went straight to the board of Royal Dutch Shell. A more recent World Bank head was Paul Wolfowitz, one of the key architects of the Iraq War.
The development set makes its decisions far away from the populations who end up feeling the impact, and they hide the details behind mountains of paperwork, reports and euphemistic jargon. Like the old British Colonial Office, the set conceals itself “like a cuttlefish, in a cloud of ink.”
The prolific and exhausting histories written by the set are hagiographies: the human experience is airbrushed out. A good example is a study called “Balance of Payments Adjustment, 1945 to 1986: The IMF Experience.” This author had the tedious experience of reading the entire tome. Benefits from colonialism are entirely ignored. The personal stories and human experiences of the people who suffered under Bank and Fund policy are elided. Hardship is buried under countless charts and statistics. These studies, which dominate the discourse, read as if their main priority is to avoid offending Bank or Fund staff. Sure, the tone implies that perhaps mistakes were made here or there, but the intentions of the Bank and Fund are good. They are here to help.
In one example from the aforementioned study, structural adjustment in Argentina in 1959 and 1960 is described as such: “While the measures had initially reduced the standard of living of a vast sector of the Argentine population, in relatively short time these measures had resulted in a favorable trade balance and balance of payments, an increase in foreign exchange reserves, a sharp reduction in the rate of increases in the cost of living, a stable exchange rate, and increased domestic and foreign investment.”
In layman’s terms: Sure, there was enormous impoverishment of the entire population, but hey, we got a better balance sheet, more savings for the regime, and more deals with multinational corporations.
The euphemisms keep coming. Poor countries are consistently described as “test cases.” The lexicon and jargon and language of development economics is designed to hide what is actually happening, to mask the cruel reality with terms and process and theory, and to avoid stating the underlying mechanism: rich countries siphoning resources from poor countries and enjoying double standards that enrich their populations while impoverishing people elsewhere.
The apotheosis of the Bank and Fund’s relationship with the developing world is their annual meeting in Washington, D.C.: a grand festival on poverty in the richest country on earth.
“Over mountainous piles of beautifully prepared food,” Hancock writes, “huge volumes of business get done; meanwhile staggering displays of dominance and ostentation get smoothly blended with empty and meaningless rhetoric about the predicament of the poor.”
“The 10,000 men and women attending,” he writes, “look extraordinarily unlikely to achieve [their] noble objectives; when not yawning or asleep at the plenary sessions they are to be found enjoying a series of cocktail parties, lunches, afternoon teas, dinners, and midnight snacks lavish enough to surfeit the greenest gourmand. The total cost of the 700 social events laid on for delegates during a single week [in 1989] was estimated at $10 million — a sum of money that might, perhaps, have better ‘served the needs of the poor’ had it been spent in some other way.”
This was 33 years ago: one can only imagine the cost of these parties in today’s dollars.
In his book “The Fiat Standard,” Saifedean Ammous has a different name for the development set: the misery industry. His description is worth quoting at length:
“When World Bank planning inevitably fails and the debts cannot be repaid, the IMF comes in to shake down the deadbeat countries, pillage their resources, and take control of political institutions. It is a symbiotic relationship between the two parasitic organizations that generates a lot of work, income and travel for the misery industry’s workers — at the expense of the poor countries that have to pay for it all in loans.”
“The more one reads about it,” Ammous writes, “the more one realizes how catastrophic it has been to hand this class of powerful yet unaccountable bureaucrats an endless line of fiat credit and unleash them on the world’s poor. This arrangement allows unelected foreigners with nothing at stake to control and centrally plan entire nations’ economies…. Indigenous populations are removed from their lands, private businesses are closed to protect monopoly rights, taxes are raised, and property is confiscated… tax-free deals are provided to international corporations under the auspices of the International Financial Institutions, while local producers pay ever-higher taxes and suffer from inflation to accommodate their governments’ fiscal incontinence.”
“As part of the debt relief deals signed with the misery industry,” he continues, “governments were asked to sell off some of their most prized assets. This included government enterprises, but also national resources and entire swaths of land. The IMF would usually auction these to multinational corporations and negotiate with governments for them to be exempt from local taxes and laws. After decades of saturating the world with easy credit, the IFIs spent the 1980s acting as repo men. They went through the wreckage of third-world countries devastated by their policies and sold whatever was valuable to multinational corporations, giving them protection from the law in the scrap heaps in which they operated. This reverse Robin Hood redistribution was the inevitable consequence of the dynamics created when these organizations were endowed with easy money.”
“By ensuring the whole world stays on the U.S. dollar standard,” Ammous concludes, “the IMF guarantees the US can continue to operate its inflationary monetary policy and export its inflation globally. Only when one understands the grand larceny at the heart of the global monetary system can one understand the plight of developing countries.”
X. White Elephants
“What Africa needs to do is grow, grow out of debt.”
–George Ayittey
By the mid-1970s, it was clear to Western policymakers, and especially to Bank president Robert McNamara, that the only way poor countries would be able to pay back their debt was with more debt.
The IMF had always paired its lending with structural adjustment, but for its first few decades, the Bank would give project-specific or sector-specific loans with no additional conditions attached. This changed during McNamara’s tenure, as less specific structural adjustment loans became popular and then even dominant at the Bank during the 1980s.
The reason was simple enough: Bank workers had a lot more money to lend out, and it was easier to give away large sums if the money was not tied to specific projects. As Payer notes, “twice as many dollars per staff week of work” could be disbursed through structural adjustment loans.
The borrowers, Hancock says, couldn’t be happier: “Corrupt ministers of finance and dictatorial presidents from Asia, Africa and Latin America tripped over their own expensive footwear in their unseemly haste to get adjusted. For such people money was probably never easier to obtain: with no complicated projects to administer and no messy accounts to keep, the venal, the cruel and the ugly laughed literally all the way to the bank. For them structural adjustment was like a dream come true. No sacrifices were demanded of them personally. All they had to do — amazing but true — was screw the poor.”
Beyond “general use” structural adjustment loans, the other way to spend large amounts of money was to finance massive, individual projects. These would become known as “white elephants,” and their carcasses still dot the deserts, mountains and forests of the developing world. These behemoths were notorious for their human and environmental devastation.
A good example would be the billion-dollar Inga dams, built in Zaire in 1972, whose Bank-funded architects electrified the exploitation of the mineral-rich Katanga province, without installing any transformers along the way to help the vast numbers of villagers who were still using oil lamps. Or the Chad-Cameroon pipeline in the 1990s: this $3.7 billion, Bank-funded project was built entirely to siphon resources out of the ground to enrich the Deby dictatorship and its foreign collaborators, without any benefits for the people. Between 1979 and 1983, Bank-financed hydroelectric projects “resulted in the involuntary resettlement of at least 400,000 to 450,000 people on four continents.”
Hancock details many such white elephants in “Lords Of Poverty.” One example is the Singrauli Power and Coal Mining Complex in India’s Uttar Pradesh state, which received nearly a billion dollars in Bank funding.
The Singrauli coal fields
“Here,” Hancock writes, “because of ‘development,’ 300,000 poor rural people were subjected to frequent forced relocations as new mines and power stations opened… the land was totally destroyed and resembled scenes out of the lower circles of Dante’s inferno. Enormous amounts of dust and air and water pollution of every conceivable sort created tremendous public health problems. Tuberculosis was rampant, potable water supplies destroyed, and chloroquine-resistant malaria afflicted the area. Once prosperous villages and hamlets were replaced by unspeakable hovels and shacks on the edges of huge infrastructure projects… some people were living inside the open pit mines. Over 70,000 previously self-sufficient peasant farmers — deprived of all over possible sources of income — had no choice but to accept the indignity of intermittent employment at Singrauli for salaries of around 70 cents a day: below survival level even in India.”
In Guatemala, Hancock describes a giant hydroelectric dam called the Chixoy, built with World Bank support in the Mayan highlands.
“Originally budgeted at $340 million,” he writes, “the construction costs had risen to $1 billion by the time the dam was opened in 1985… the money was lent to the Guatemalan government by a consortium [led] by the World Bank… General Romero Lucas Arica’s military government, in power during the bulk of the construction phase and which signed the contract with the World Bank, was recognized by political analysts as having been the most corrupt administration in the history of a Central American country in a region that has been afflicted by more than its fair share of venal and dishonest regimes… members of the junta pocketed about $350 million out of the $1 billion provided for Chixoy.”
And finally in Brazil, Hancock details one of the Bank’s most harmful projects, a “massive colonization and resettlement scheme” known as Polonoroeste. By 1985, the Bank had committed $434.3 million to the initiative, which ended up transforming “poor people into refugees in their own land.”
The scheme “persuaded hundreds of thousands of needy people to migrate from Brazil’s central and southern provinces and relocate themselves as farmers in the Amazon basin” to generate cash crops. “The Bank’s money,” Hancock wrote, “paid for the speedy paving of Highway BR-364 which runs into the heart of the north-western province of Rondonia. All the settlers traveled along this road on their way to farms that they slashed and burned out of the jungle… Already 4% deforested in 1982, Rondonia was 11% deforested by 1985. NASA space surveys showed that the area of deforestation was doubled approximately every two years.”
As a result of the project, in 1988 “tropical forests covering an area larger than Belgium were burnt by settlers.” Hancock also notes that “more than 200,000 settlers were estimated to have contracted a particularly virulent strain of malaria, endemic in the north-west, to which they had no resistance.”
Such grotesque projects were the result of the massive growth of lending institutions, a detachment of the creditors from the actual places they were lending to, and management by unaccountable local autocrats who pocketed billions along the way. They were the outcome of policies that tried to lend as much money as possible to Third World countries to keep the debt Ponzi going and to keep the flow of resources from south to north moving. The grimmest example of all might be found in Indonesia.
XI. A Real-Life Pandora: The Exploitation Of West Papua
“You want a fair deal, you’re on the wrong planet.”
The island of New Guinea is resource-rich beyond imagination. It contains, just for starters: the third-largest expanse of tropical rainforest in the world, after the Amazon and the Congo; the world’s largest gold and copper mine at Grasberg, in the shadow of the 4,800 meter “Seven Summit” peak of Puncak Jaya; and, offshore, the Coral Triangle, a tropical sea known for its “unparalleled” reef diversity.
And yet, the people of the island, especially those living in the California-sized Western half under Indonesian control, are some of the poorest in the world. Resource colonialism has long been a curse for the residents of this territory, known as West Papua. Whether the pillage was committed by the Dutch, or, in more recent decades, the Indonesian government, imperialists have found generous support from the Bank and the Fund.
This essay already mentioned how one of the World Bank’s first loans was to the Dutch, which it used to try and sustain its colonial empire in Indonesia. In 1962, Imperial Holland was finally defeated, and gave up control over West Papua to the Sukarno government as Indonesia became independent. However, the Papuans (also known as the Irianese) wanted their own freedom.
In the course of that decade — as the IMF credited the Indonesian government with more than $100 million — Papuans were purged from positions of leadership. In 1969, in an event that would make Geroge Orwell’s Oceania blush, Jakarta held the “Act of Free Choice,” a poll where 1,025 people were rounded up and forced to vote in front of armed soldiers. The results to join Indonesia were unanimous, and the vote was ratified by the UN General Assembly. After that, locals had no say in what “development” projects would proceed. Oil, copper and timber were all harvested and removed from the island in the following decades, with no involvement by Papuans, except as forced labor.
The mines, highways and ports in West Papua were not built with the wellbeing of the population in mind, but rather were built to loot the island as efficiently as possible. As Payer was able to observe even in 1974, the IMF helped transform Indonesia’s vast natural resources into “mortgages for an indefinite future to subsidize an oppressive military dictatorship and to pay for imports which supported the lavish lifestyle of the generals in Jakarta.”
A 1959 article on the discovery of gold in the area is the beginning of the story of what would later become the Grasberg mine, the world’s lowest-cost and largest producer of copper and gold. In 1972, the Phoenix-based Freeport signed a deal with Indonesian dictator Suharto to extract gold and copper from West Papua, without any consent from the indigenous population. Until 2017, Freeport controlled 90% of the project’s shares, with 10% in the hands of the Indonesian government and 0% for the Amungme and Kamoro tribes who actually inhabit the area.
The Grasberg mine
By the time Grasberg’s treasures are fully depleted by the Freeport corporation, the project will have generated some six billion tons of waste: more than twice as much rock as was excavated to dig the Panama Canal.
The ecosystems downstream from the mine have since been devastated and stripped of life as more t han a billion tons of waste have been dumped “directly into a jungle river of what had been one of the world’s last untouched landscapes.” Satellite reports show the devastation wrought by the ongoing dumping of more than 200,000 of toxic tailings per day into an area that contains the Lorentz National Park, a world heritage site. Freeport remains the largest foreign taxpayer in Indonesia and the biggest employer in West Papua: it plans to stay until 2040, when the gold will run out.
As the World Bank writes candidly in its very own report on the region, “international business interests want better infrastructure in order to extract and export the non-renewable mineral and forest assets.”
By far the most shocking program that the Bank financed in West Papua was “transmigration,” a euphemism for settler colonialism. For more than a century, the powers in control of Java (home to most of Indonesia’s population) dreamed of moving large chunks of Javanese to farther-flung islands in the archipelago. Not just to spread things out, but also to ideologically “unify” the territory. In a 1985 speech, the Minister of Transmigration said that “by way of transmigration, we will try to … integrate all the ethnic groups into one nation, the Indonesian nation… The different ethnic groups will in the long run disappear because of integration … there will be one kind of man.”
These efforts to resettle Javanese — known as “Transmigrasi” — began during colonial times, but in the 1970s and 1980s the World Bank began financing these activities in an aggressive way. The Bank allocated hundreds of millions of dollars to the Suharto dictatorship to allow it to “transmigrate” what were hoped to be millions of people to places like East Timor and West Papua in what was “the world’s largest-ever exercise in human resettlement.” By 1986, the Bank had committed no less than $600 million directly to support transmigration, which entailed “a breathtaking combination of human rights abuses and environmental destruction.”
Consider the story of the Sago palm, one of the main traditional foodstuffs of Papuans. One tree alone was able to supply food for a family for six to 12 months. But the Indonesian government, at the encouragement of the Bank, came and said no, this is not working: you need to eat rice. And so the Sago gardens were cut down to grow rice for export. And the locals were forced to buy rice in the market, which simply made them more dependent on Jakarta.
Any resistance was met with brutality. Especially under Suharto — who held as many as 100,000 political prisoners — but even today in 2022, West Papua is a police state almost without rival. Foreign journalists are virtually banned; free speech does not exist; the military operates without any accountability. NGOs like Tapol document a legion of human rights violations ranging from mass surveillance of personal devices, restrictions on when and for what reason people can leave their homes and even rules on how Papuans can wear their hair.
Between 1979 and 1984, some 59,700 transmigrants were taken to West Papua, with “large scale” support from the World Bank. More than 20,000 Papuans fled the violence into neighboring Papua New Guinea. Refugees reported to international media that “their villages were bombed, their settlements burned, women raped, livestock killed, and numbers of people indiscriminately shot while others were imprisoned and tortured.”
A subsequent project backed by a $160 million Bank loan in 1985 was called “Transmigration V”: the seventh Bank-funded project in support of settler colonialism, it aimed to finance the relocation of 300,000 families between 1986 and 1992. The regime’s governor of West Papua at the time described the indigenous people as “living in a stone-age era” and called for a further two million Javanese migrants to be sent to the islands so that “backwards local people could intermarry with the newcomers thus giving birth to a new generation of people without curly hair.”
The original and final versions of the Transmigration V loan agreement were leaked t o Survival International: the original version made “extensive reference to the bank’s policies on tribal peoples and provides a list of measures that would be required to comply with these,” but the final version made “no reference to the bank’s policies.”
Cultural genocide in West Papua
Transmigration V ran into budget issues, and was cut short, but ultimately 161,600 families were moved, at a cost of 14,146 Bank staff months. The Bank was clearly financing cultural genocide: today, Ethnic Papuans make up no more than 30% of the territory’s population. But social engineering wasn’t the only goal of taking money from the Bank: 17% of funds for transmigration projects were estimated to have been stolen by government officials.
Fifteen years later on December 11, 2001, the World Bank approved a $200 million loan to “improve road conditions”in West Papua and other parts of Eastern Indonesia. The project, known as EIRTP, aimed to “improve the condition of national and other strategic arterial roads in order to reduce transport costs and provide more reliable access among provincial centers, regional development and production areas, and other key transport facilities. Reducing road transport costs,” the Bank said, “will help to lower input prices, raise output prices and increase the competitiveness of local products from the affected areas.” In other words: the Bank was helping to extract resources as efficiently as possible.
The Bank and Fund’s history in Indonesia is so outrageous that it seems like it must be from another time, ages ago. But that’s simply not true. Between 2003 and 2008, the Bank funded palm oil development in Indonesia to the tune of nearly $200 million and hired private companies who were alleged to have “used fire to clear primary forests and seize lands belonging to indigenous people without due process.”
Today, the Indonesian government remains on the hook for the EIRTP loan. In the past five years, the Bank has collected $70 million in interest payments from the Indonesian government and taxpayer, all for its efforts to accelerate the extraction of resources from islands like West Papua.
XII. The World’s Biggest Ponzi
“Countries don’t go bankrupt.”
–Walter Wriston, former chairman of Citibank
One might consider bankruptcy an important and even essential part of capitalism. But the IMF basically exists to prevent the free market from working as it normally would: it bails out countries that normally would go bankrupt, forcing them instead deeper into debt.
The Fund makes the impossible possible: small, poor countries hold so much debt that they could never pay it all off. These bailouts corrupt the incentives of the global financial system. In a true free market, there would be serious consequences for risky lending: the creditor bank could lose its money.
The exponential rise of Third World debt
When the U.S., Europe or Japan made their deposits at the Bank and Fund, it was similar to purchasing insurance on their ability to extract wealth from developing nations. Their private banks and multinational corporations are protected by the bailout scheme, and on top of it, they earn handsome, steady interest (paid for by poor countries) on what is widely perceived to be humanitarian assistance.
As David Graeber writes in “Debt,” when banks “lent money to dictators in Bolivia and Gabon in the late ’70s: [they made] utterly irresponsible loans with the full knowledge that, once it became known they had done so, politicians and bureaucrats would scramble to ensure that they’d still be reimbursed anyway, no matter how many lives had to be devastated and destroyed in order to do it.”
Kevin Danaher describes the tension that began to emerge in the 1960s: “Borrowers began to pay back more annually to the Bank than it disbursed in new loans. In 1963, 1964, and 1969 India transferred more money to the World Bank than the Bank disbursed to it.” Technically, India was paying off its debts plus interest, but the Bank’s leadership saw a crisis.
“To solve the problem,” Danaher continues, Bank president Robert McNamara increased lending “at a phenomenal rate, from $953 million in 1968 to $12.4 billion in 1981.” The number of IMF lending programs also “more than doubled” from 1976 to 1983, mostly to poor countries. The Bank and the Fund’s assurances led the world’s titanic money center banks as well as hundreds of regional and local banks in the U.S. and Europe — “most of them with little or no previous history of foreign lending” — to go on an unprecedented lending spree.
The Third World debt bubble finally burst in 1982, when Mexico announced a default. According to official IMF history, “private bankers envisaged the dreaded possibility of a widespread repudiation of debts, such as had occurred in the 1930s: at that time the debt owed by debtor countries to industrial counties was mostly in the form of securities issued by debtor countries in the US and in the form of bonds sold abroad; in the 1980s the debt was almost entirely in the form of short and medium term loans from commercial banks in the industrial members. Monetary authorities of industrial members instantly realized the urgency of the problem posed for the world’s banking system.”
In other words: the threat that the banks of the West might have holes on their balance sheet was the danger: not that millions would die of austerity programs in poor countries. In her book “A Fate Worse Than Debt,” the development critic Susan George charts how the top-nine largest U.S. banks all had placed more than 100% of their shareholders’ equity in “loans to Mexico, Brazil, Argentina, and Venezuela alone.” The crisis was averted, however, as the IMF helped credit flow to Third World countries, even though they should have gone bankrupt.
“Simply put,”according to a technical analysis of the Fund, its programs “provide bailouts for private lenders to emerging markets, thereby allowing international creditors to benefit from foreign lending without bearing the full risks involved: the banks reap significant profits if borrowers repay their debts and avoid losses if financial crisis occur”
Latin American citizens suffered under structural adjustment, but between 1982 and 1985. George reported that “in spite of over-exposure to Latin America, dividends declared by the big nine banks increased by more than a third during the same period.” Profits in that time rose by 84% at Chase Manhattan and 66% at Banker’s Trust, and stock value rose by 86% at Chase and 83% at Citicorp.
“Clearly,” she wrote, “austerity is not the term to describe the experiences since 1982 of either the Third World elite or the international banks: the parties that contracted the loans in the first place.”
The “generosity” of the West enabled unaccountable leaders to plunge their nations into debt deeper than ever before. The system was, as Payer writes in “Lent And Lost,” a straightforward Ponzi scheme: the new loans went straight to paying for the old loans. The system needed to grow to avoid collapse.
“By keeping financing going,” an IMF managing director said, according to Payer, structural adjustment loans “permitted trade that might otherwise not have been possible.”
Given that the Bank and Fund will prevent even the most comically corrupt and wasteful governments from going bankrupt, private banks adapted their behavi or accordingly. A good example would be Argentina, which has received 22 IMF loans since 1959, even trying to default in 2001. One would think that creditors would stop lending to such a profligate borrower. But in fact, just four years ago, Argentina received the largest IMF loan of all time, a staggering $57.1 billion.
Payer summed up “The Debt Trap” by stating that the moral of her work was “both simple and old-fashioned: that nations, like individuals, cannot spend more than they earn without falling into debt, and a heavy debt burden bars the way to autonomous action.”
But the system makes the deal too sweet for the creditors: profits are monopolized while losses are socialized.
Payer realized this even 50 years ago in 1974, and hence concluded that “in the long run it is more realistic to withdraw from an exploitative system and suffer the dislocation of readjustment than it is to petition the exploiters for a degree of relief.”
XIII. Do As I Say, Not As I Do
“Our lifestyle is not up for negotiation.”
In a true global free market, the policies that the Bank and Fund impose on poor countries might make sense. After all, the record of socialism and large-scale nationalization of industry is disastrous. The problem is, the world is not a free market, and double standards are everywhere.
Subsidies — for example, free rice in Sri Lanka or discounted fuel in Nigeria — are ended by the IMF, yet creditor nations like the U.K. and U.S. extend state-funded healthcare and crop subsidies to their own populations.
One can take a Libertarian or Marxist view and arrive at the same conclusion: this is a double standard which enriches some countries at the expense of others, with most citizens of rich countries blissfully unaware.
To help build out from the rubble of World War II, IMF creditors relied heavily on central planning and anti-free market policy for the first few decades after Bretton Woods: for example, import restrictions, capital outflow limits, foreign exchange caps and crop subsidies. These measures protected industrial economies when they were most vulnerable.
In the U.S., for example, the Interest Equalization Act was passed by John F. Kennedy to stop Americans from buying foreign securities and instead focus them on domestic investing. This was one of many measures to tighten capital controls. But the Bank and Fund have historically prevented poor countries from using the same tactics to defend themselves.
As Payer observes, “The IMF has never played a deciding role in the adjustment of exchange rates and trade practices among the wealthy developed nations… It is the weaker nations which are subjected to the full force of the IMF principles… the inequality of power relationships meant that the Fund could do nothing about market ‘distortions’ (such as trade protection) which were practiced by the rich countries.”
Cato’s Vásquez and Bandow came to a similar conclusion, noting that “most industrialized nations have maintained a patronizing attitude towards underdeveloped nations, hypocritically shutting out their exports.”
In the early 1990s, while the U.S. stressed the importance of free trade, it “erected a virtual iron curtain against [Eastern Europe’s] exports, including textiles, steel, and agricultural products.” Poland, Czechoslovakia, Hungary, Romania, Bosnia, Croatia, Slovenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, Ukraine and Uzbekistan were all targeted. The U.S. prevented Eastern European nations from selling “a single pound of butter, dry milk, or ice cream in America” and both the Bush and Clinton administrations imposed stiff chemical and pharmaceutical import restrictions on the region.
It is estimated that protectionism by industrial countries “reduces developing countries’ national income by roughly twice as much as provided by development assistance.” In other words, if Western nations simply opened their economies, they wouldn’t have to provide any development assistance at all.
There is a sinister twist to the arrangement: when a Western country (i.e., the U.S.) runs into an inflationary crisis — like today’s — and is forced to tighten its monetary policy, it actually gains more control over developing countries and their resources, whose dollar debt becomes much more difficult to pay back, and who fall deeper into the debt trap, and deeper into Bank and Fund conditionality.
In 2008, during the Great Financial Crisis, American and European authorities lowered interest rates and juiced up banks with extra cash. During the Third World Debt Crisis and the Asian Financial Crisis, the Bank and Fund refused to permit this kind of behavior. Instead, the recommendation to afflicted economies was to tighten at home and borrow more from abroad.
In September 2022, newspaper headlines stated that the IMF was “worried” about inflation in the United Kingdom, as its bond market teetered on the brink of collapse. This is of course another hypocrisy, given that the IMF did not seem worried about inflation when it imposed currency devaluation on billions of people for decades. Creditor nations play by different rules.
In a final case of “do as I say, not as I do,” the IMF still holds a whopping 90.5 million ounces — or 2,814 metric tons — of gold. Most of this was accumulated in the 1940s, when members were forced to pay 25% of their original quotas in gold. In fact, until the 1970s, members “normally paid all interest owed on IMF credit in gold.”
When Richard Nixon formally ended the gold standard in 1971, the IMF did not sell its gold reserves. And yet, attempts by any member countries to fix their currency to gold are forbidden.
XIV. Green Colonialism
“If you turned the electricity off for a few months in any developed Western society, 500 years of supposed philosophical progress about human rights and individualism would quickly evaporate like they never happened.”
In the past few decades, a new double standard has emerged: green colonialism. This, at least, is what the Senegalese entrepreneur Magatte Wade calls the West’s hypocrisy over energy use in an interview for this article.
Wade reminds us that industrial countries developed their civilizations by utilizing hydrocarbons (in large part stolen or bought on the cheap from poor countries or colonies), but today the Bank and Fund try to push policies which prohibit the developing world from doing the same.
Where the U.S. and U.K. were able to use coal and the Third World’s oil, the Bank and Fund want African countries to use solar and wind manufactured and financed by the West.
This hypocrisy was on display a few weeks ago in Egypt, where world leaders gathered at COP 27 (the Sharm el-Sheikh Climate Change Conference) to discuss how to reduce energy use. The location on the African continent was intentional. Western leaders — currently scrambling to import more fossil fuels after their access to Russian hydrocarbons was curtailed — flew in on gas-guzzling private jets to plead with poor countries to reduce their carbon footprint. In typical Bank and Fund tradition, the ceremonies were hosted by the resident military dictator. During the festivities, Alaa Abd Al Fattah, a prominent Egyptian human rights activist, languished nearby on hunger strike in prison.
British Prime Minister Rishi Sunak arrives at COP 27 on a private jet
“Just like back in the day when we were colonized and the colonizers set the rules to how our societies would work,” Wade said, “this green agenda is a new form of governing us. This is master now dictating to us what our relationship with energy should be, telling us what kind of energy we should use, and when we can use it. The oil is in our soil, it is part of our sovereignty: but now they are saying we cannot use it? Even after they looted incalculable amounts for themselves?”
Wade points out that as soon as the core countries have an economic crisis (as they now face heading into the winter of 2022), they go right back to using fossil fuels. She observes that poor countries aren’t allowed to develop nuclear energy, and notes that when Third World leaders tried to push in this direction in the past, some of them — notably in Pakistan and Brazil — were assassinated.
Wade says her life’s work is prosperity building in Africa. She was born in Senegal, and moved to Germany at age seven. She still remembers her first day in Europe. She was used to a shower being a 30-minute affair: get the coal stove going, boil the water, put some cold water in it to cool it down, and drag the water to the shower area. But in Germany, all she had to do was turn a handle.
“I was shocked,” she says. “This question defined the rest of my life: How come they have this here but we don’t over there?”
Wade learned over time that reasons for Western success included the rule of law, clear and transferable property rights, and stable currencies. But, also, critically, reliable energy access.
“We can’t have limitations on our energy use imposed on us by others,” Wade said. And yet, the Bank and Fund continue to put pressure on energy policy in poor countries. Last month, Haiti followed pressure from the Bank and Fund to end its fuel subsidies. “The result,” wrote energy reporter Michael Schellenberger, “has been riots, looting, and chaos.”
“In 2018,” Schellenberger says, “the Haitian government agreed to IMF demands that it cut fuel subsidies as a prerequisite for receiving $96 million from the World Bank, European Union, and Inter-American Development bank, triggering protests that resulted in the resignation of the prime minister.”
“In over 40 nations since 2005,” he says, “riots have been triggered after cutting fuel subsidies or otherwise raising energy prices.”
It is the height of hypocrisy for the West to achieve success based on robust energy consumption and on energy subsidies, and then try to limit the type and amount of energy used by poor countries and then raise the price that their citizens pay. This amounts to a Malthusian scheme in line with former Bank chief Robert McNamara’s well-documented belief that population growth was a threat to humanity. The solution, of course, was always to try and reduce the population of poor countries, not rich ones.
“They treat us like little experiments,” Wade says, “where the West says: we might lose some people along the way, but let’s see if poor countries can develop without the energy types we used.”
“Well,” she says,” “we are not an experiment.”
XV. The Human Toll Of Structural Adjustment
“To the World Bank, development means growth… But … unrestrained growth is the ideology of the cancer cell.”
The social impact of structural adjustment is immense, and barely ever gets mentioned in traditional analysis of the Bank and Fund’s policy. There have been plenty of exhaustive studies done on their economic impact, but very little comparatively on their global health impact.
Researchers like Ayittey, Hancock and Payer give a few jarring examples from the 1970s and 1980s:
Between 1977 and 1985, Peru undertook IMF structural adjustment: the average per capita income of Peruvians fell 20%, and inflation soared from 30% to 160%. By 1985, a worker’s pay was only worth 64% of what it had been worth in 1979 and 44% of what it had been in 1973. Child malnutrition rose from 42% to 68% of the population.In 1984 and 1985 the Philippines under Marcos implemented yet another round of IMF structural reform: after one year, GNP per capita regressed to 1975 levels. Real earnings fell by 46% among urban wage earners.In Sri Lanka, the poorest 30% suffered an uninterrupted decline in calorie consumption after more than a decade of structural adjustment.In Brazil, the number of citizens suffering from malnutrition jumped from 27 million (one third of the population) in 1961 to 86 million (two thirds of the population) in 1985 after 10 doses of structural adjustment.Between 1975 and 1984 in IMF-guided Bolivia, the number of hours the average citizen had to work to purchase 1,000 calories of bread, beans, corn, wheat, sugar, potatoes, milk or quinoa increased on average by five times.After structural adjustment in Jamaica in 1984, the nutritional purchasing power of one Jamaican dollar plummeted in 14 months from being able to buy 2,232 calories of flour to just 1,443; from 1,649 calories of rice to 905; from 1,037 calories of condensed milk to 508; and from 220 calories of chicken to 174.As a result of structural adjustment, Mexican real wages declined in the 1980s by more than 75%. In 1986, about 70% of lower-income Mexicans had “virtually stopped eating rice, eggs, fruit, vegetables, and milk (never mind meat or fish)” at a time when their government was paying $27 million per day — $18,750 per minute — in interest to its creditors. By the 1990s, “a family of four on the minimum wage (which made up 60% of the employed labor force) could only buy 25% of its basic needs.In sub-Saharan Africa, GNP per capita “dropped steadily from $624 in 1980 to $513 in 1998… food production per capita in Africa was 105 in 1980 but 92 for 1997… and food imports rose an astonishing 65% between 1988 and 1997.”
These examples, though tragic, only give a small and patchwork picture of the deleterious impact that Bank and Fund policies have had on the health of the world’s poor.
On average, every year from 1980 to 1985, there were 47 countries in the Third World pursuing IMF-sponsored structural adjustment programs, and 21 developing countries pursuing structural or sector adjustment loans from the World Bank. During this same period, 75% of all countries in Latin America and Africa experienced declines in per capita income and child welfare.
The decline in living standards make sense when one considers that Bank and Fund policies sculpted societies to focus on exports at the expense of consumption while gutting food security and healthcare services.
During IMF structural adjustment, real wages in countries like Kenya declined by more than 40%. After billions in Bank and Fund credit, per capita food production in Africa fell by nearly 20% between 1960 and 1994. Meanwhile, health expenditures in “IMF-World Bank programmed countries” declined by 50% during the 1980s.
When food security and healthcare collapse, people die.
Papers from 2011 and 2013 showed that countries that took a structural adjustment loan had higher levels of child mortality than those that did not. A 2017 analysis was “virtually unanimous in finding a detrimental association between structural adjustment and child and maternal health outcomes.” A 2020 study reviewed data from 137 developing countries between 1980 and 2014 and found that “structural adjustment reforms lower health system access and increase neonatal mortality.” A paper from 2021 concluded that structural adjustment plays “a significant role in perpetuating preventable disability and death.”
It is impossible to do a full accounting of just how many women, men and children were killed as a result of Bank and Fund austerity policies.
Food security advocate Davidson Budhoo claimed that six million children died each year in Africa, Asia and Latin America between 1982 and 1994 as a result of structural adjustment. This would put the Bank and Fund’s death toll in the same ballpark as the deaths caused by Stalin and Mao.
Is this remotely possible? No one will ever know. But by looking at the data, we can begin to get a sense.
Research from Mexico — a typical country in terms of consistent involvement historically from the Bank and Fund — shows that for every 2% decrease in GDP, the mortality rate increased by 1%.
Now consider that as a result of structural adjustment, the GDP of dozens of countries in the Third World between the 1960s and 1990s suffered double-digit contractions. Despite massive population growth, many of these economies stagnated or shrank over 15-25 year periods. Meaning: the Bank and the Fund’s policies likely killed tens of millions of people.
Whatever the final death toll, there are two certainties: one, these are crimes against humanity, and two, no Bank or Fund officials will ever go to prison. There will never be any accountability or justice.
The inescapable reality is that millions died too young in order to extend and improve the lives of millions elsewhere. It is of course true that much of the success of the West is because of enlightenment values like rule of law, free speech, liberal democracy and domestic respect for human rights. But the unspoken truth is that much of the West’s success is also the result of resource and time theft from poor countries.
The stolen wealth and labor of the Third World will go unpunished but remains visible today, forever encrusted in the developed world’s architecture, culture, science, technology and quality of life. The next time one visits London, New York, Tokyo, Paris, Amsterdam or Berlin, this author suggests going for a walk and pausing at a particularly impressive or scenic view of the city to reflect on this. As the old saying goes, “We must pass through the darkness to reach the light.”
XVI. A Trillion Dollars: The Bank And Fund In The Post-COVID World
“We are all in this together.”
–Christine Lagarde, former IMF managing director
Bank and Fund policy towards developing countries has not changed much over the past few decades. Sure, there have been a few superficial tweaks, like the “Highly-Indebted Poor Countries” (HIPC) initiative, where some governments can qualify for debt relief. But underneath the new language, even these poorest of the poor countries still need to do structural adjustment. It’s just been rebranded to “Poverty Reduction Strategy.”
The same rules still apply: in Guyana, for example, “the government decided in early 2000 to increase the salaries of civil servants by 3.5%, after a fall in purchasing power of 30% over the previous five years.” The IMF immediately threatened to remove Guyana from the new list of HIPCs. “After a few months, the government had to backpedal.”
The same large-scale devastation still occurs. In a 2015 International Consortium Of Investigative Journalists (ICIJ) report, for instance, it was estimated that 3.4 million people were displaced in the previous decade by Bank-funded projects. The old accounting games, meant to exaggerate the good done by assistance, are joined by new ones.
The U.S. government applies a 92% discount to the debt of Highly-Indebted Poor Countries, and yet U.S. authorities include the nominal value of the debt relief in their “ODA” (official development assistance) numbers. Meaning: they significantly exaggerate the volume of their aid. The Financial Times has argued that it is “the aid that isn’t” and has argued that “writing off official commercial debt should not count as aid.”
While it’s true that there have actually been large transformations at the Bank and Fund in recent years, those changes have not been in the way that the institutions try to shape the economies of borrowing countries, but rather in that they have focused their efforts on nations closer to the world’s economic core.
“By practically any metric,” a NBER study observes, “the post-2008 IMF programs to several European economies are the largest in the IMF’s 70-year history.”
The largest IMF bailouts in history
“IMF commitments as a share of world GDP,” the study explains, “hit an all-time high as the European Debt Crisis began to unravel.” Iceland began an IMF program in 2008, followed by Greece, Ireland and Portugal.
The IMF-led bailout of Greece was a staggering $375 billion. In July 2015, “popular discontent led to a ‘no’ vote in a referendum on whether to accept the IMF’s loan conditions, which included raising taxes, lowering pensions and other spending, and privatizing industries.”
In the end, however, the Greek people’s voice wasn’t heard since “the government subsequently ignored the results and accepted the loans.”
The Fund used the same playbook in Greece and other lower-income European countries as it has used all over the developing world for decades: breaking democratic norms to provide billions to the elites, with austerity for the masses.
In the past two years, the Bank and Fund have pumped hundreds of billions of dollars into countries following government lockdowns and COVID-19 pandemic restrictions. More loans were given out in a shorter time than ever before.
Even in late 2022 as interest rates continue to rise, the debt of poor countries keeps rising, and the amount they owe to rich countries keeps growing. History rhymes, and IMF visits to dozens of countries remind us of the early 1980s, when a massive debt bubble was popped by Federal Reserve policies. What followed was the worst depression in the Third World since the 1930s.
We can hope that this does not happen again, but given the Bank and the Fund’s efforts to load up poor countries with more debt than ever before, and given that the cost of borrowing is going up in a historic way, we can predict that it will happen again.
And even where the Bank and Fund’s influence shrinks, the Chinese Communist Party (CCP) is beginning to step in. In the past decade, China has tried to emulate the dynamics of the IMF and World Bank through its own development institutions and through its “Belt and Road” initiative.
As the Indian geostrategist Brahma Chellaney writes, “Through its $1 trillion ‘one belt, one road’ initiative, China is supporting infrastructure projects in strategically located developing countries, often by extending huge loans to their governments. As a result, countries are becoming ensnared in a debt trap that leaves them vulnerable to China’s influence… the projects that China is supporting are often intended not to support the local economy, but to facilitate Chinese access to natural resources, or to open the market for its low-cost and shoddy export goods. In many cases, China even sends its own construction workers, minimizing the number of local jobs that are created.”
The last thing the world needs is another Bank and Fund drain dynamic, only pulling resources from poor countries to go to the genocidal dictatorship in Beijing. So it is good to see the CCP having trouble in this area. It is trying to grow its Asian Infrastructure Investment Bank by more than $10 billion per year, but it is encountering a variety of issues with projects that it financed across the developing world. Some governments, like in Sri Lanka, simply cannot pay back. Since the CCP cannot mint the world reserve currency, it actually has to eat the loss. Because of this, it won’t likely be able to come anywhere close to approximating the lending volume of the U.S.-Europe-Japan-led system.
Which is certainly a good thing: CCP loans may not come with onerous structural adjustment conditions, but they certainly don’t have any considerations for human rights. In fact, the CCP helped shield one belt and road client — Sri Lankan president Mahinda Rajapaksa — from war crimes allegations at the UN. Looking at its projects in Southeast Asia (where it is depleting Burmese minerals and timber and eroding Pakistani sovereignty) and sub-Saharan Africa (where it is extracting an enormous amount of rare earths), it largely amounts to the same kind of resource theft and geopolitical control tactics practiced by colonial powers for centuries, just dressed up in a new kind of clothing.
It’s not clear that the Bank and Fund even view the CCP as a bad actor. After all, Wall Street and Silicon Valley tend to be quite friendly with the world’s worst dictators. China remains a creditor at the Bank and Fund: its membership has never been in question, despite the genocide of the Uyghur people. As long as the CCP does not get in the way of the big picture goals, the Bank and Fund probably don’t mind. There’s enough loot to go around.
XVII. From Arusha To Accra
“Those who wield power control money.”
–Arusha Delegates, 1979
In 1979, developing nations gathered in the Tanzanian city of Arusha to devise an alternative plan to the IMF-and World Bank-led structural adjustment that had left them with mountains of debt and very little say as to the future of the world economy.
“Those who wield power control money,” the delegates wrote: “Those who manage and control money wield power. An international monetary system is both a function and an instrument of prevailing power structures.”
As Stefan Eich writes in “The Currency Of Politics,” “the Arusha Initiative’s emphasis on the international monetary system’s burden of hierarchical imbalances was a powerful attempt to insist on money’s political nature by countering claims to neutral technical expertise asserted by the Fund’s money doctors.”
“The IMF may have claimed a neutral, objective, scientific stance,” Eich writes, “but all scholarly evidence, including the Fund’s internal documentation, pointed the other way. The Fund was, in fact, deeply ideological in the way it framed underdevelopment as a lack of private markets but systematically applied double standards in ignoring similar market controls in ‘developed’ countries.”
This resonates with what Cheryl Payer observed, that Bank and Fund economists “erected a mystique around their subject which intimidated even other economists.”
“They represent themselves,” she said, “as highly trained technicians who determine the ‘correct’ exchange rate and ‘proper’ amount of money creation on the basis of complex formulas. They deny the political significance of their work.”
Like most of the leftist discourse on the Bank and Fund, the criticisms made at Arusha were mostly on target: the institutions were exploitative, and enriched their creditors at the expense of poor countries. But Arusha’s solutions missed the mark: central planning, social engineering and nationalization.
The Arusha delegates advocated for the Bank and Fund to be abolished, and for odious debts to be canceled: perhaps noble but entirely unrealistic goals. Beyond that, their best plan of action was “shift power into the hands of local governments” — a poor solution given that the vast majority of Third World countries were dictatorships.
For decades, the public in developing countries suffered as their leaders wavered between selling out their country to multinational corporations and socialist authoritarianism. Both options were destructive.
This is the trap that Ghana has found itself in since independence from the British Empire. More often than not, the Ghanaian authorities, regardless of ideology, chose the option of borrowing from abroad.
Ghana has a stereotypical history with the Bank and Fund: military leaders seizing power by coup only to impose IMF structural adjustment; real wages dropping between 1971 and 1982 by 82%, with public health spending shrinking 90% and meat prices up 400% during the same time; borrowing to build enormous white elephant projects like the Akosombo Dam, which powered a U.S.-owned aluminum plant at the expense of more than 150,000 people who contracted river blindness and paralysis from the creation of the world’s largest manmade lake; and a depletion of 75% of the country’s rainforests as timber, cocoa and minerals industries boomed while domestic food production cratered. $2.2 billion of assistance flowed into Ghana in 2022, but the debt stands at an all-time high of $31 billion, up from $750 million 50 years ago.
Since 1982, under IMF “guidance,” the Ghanaian cedi was devalued by 38,000%. One of the biggest outcomes of structural adjustment has been, like elsewhere around the world, expedition of the extraction of Ghana’s natural resources. Between 1990 and 2002, for example, the government only received $87.3 million from the $5.2 billion worth of gold mined out of Ghanaian soil: in other words, 98.4% of the profits from gold mining in Ghana went to foreigners.
As Ghanaian protestor Lyle Pratt says, “The IMF is not here to bring down prices, they are not here to ensure that we construct roads — it is not their business and they simply don’t care… The IMF’s primary concern is to make sure that we build the capacity to pay our loans, not to develop.”
2022 feels like a rerun. The Ghanaian cedi has been one of the world’s worst-performing currencies this year, losing 48.5% of its value since January. The country is facing a debt crisis, and, like in decades past, is forced to prioritize paying back its creditors over investing in its own people.
In October, just a few weeks ago, the country received its latest IMF visit. If a loan is finalized, it would be the 17th IMF loan for Ghana since the CIA-backed military coup of 1966. That is 17 layers of structural adjustment.
A visit from the IMF is a bit like a visit from the Grim Reaper — it can only mean one thing: more austerity, pain, and — without exaggeration — death. Perhaps the wealthy and well-connected can escape unscathed or even enriched, but for the poor and working classes, the currency devaluation, rising interest rates and disappearance of bank credit is devastating. This is not the Ghana of 1973 that Cheryl Payer first wrote about in “The Debt Trap”: it is 50 years later, and the trap is 40 times deeper.
But perhaps there is a glimmer of hope.
On December 5 to 7, 2022 in the Ghanaian capital of Accra, there will be a different kind of visit. Instead of creditors looking to charge interest on the people of Ghana and dictate their industries, the speakers and organizers of the Africa Bitcoin Conference are gathering to share information, open-source tools and decentralizing tactics on how to build economic activity beyond the control of corrupt governments and foreign multinational corporations.
Farida Nabourema is the lead organizer. She is pro-democracy; pro-poor; anti-Bank and Fund; anti-authoritarian; and pro-Bitcoin.
“The real issue,” Cheryl Payer once wrote, “is who controls the capital and technology that is exported to the poorer countries.”
One can argue that Bitcoin as capital and as technology is being exported to Ghana and Togo: it certainly didn’t arise there. But it’s not clear where it arose. No one knows who created it. And no government or corporation can control it.
Bitcoin and cryptocurrency ownership per capita: countries with a history of IMF structural adjustments tend to rank very high
During the gold standard, the violence of colonialism corrupted a neutral monetary standard. In the post-colonial world, a fiat monetary standard — upheld by the Bank and Fund — corrupted a post-colonial power structure. For the Third World, perhaps a post-colonial, post-fiat world will be the right mix.
Proponents of dependency theory like Samir Amin gathered at conferences like Arusha and called for a “delinking” of poor countries from rich ones. The idea was: the wealth of rich countries was not just attributable to their liberal democracies, property rights and entrepreneurial environments, but also to their resource and labor theft from poor countries. Sever that drain, and poor countries could get a leg up. Amin predicted that “the construction of a system beyond capitalism will have to begin in the peripheral areas.” If we agree with Allen Farrington that today’s fiat system is not capitalism, and that the current dollar system is deeply flawed, then perhaps Amin was right. A new system is more likely to emerge in Accra, not Washington or London.
As Saifedean Ammous writes, “The developing world consists of countries that had not yet adopted modern industrial technologies by the time an inflationary global monetary system began replacing a relatively sound one in 1914. This dysfunctional global monetary system continuously compromised these countries’ development by enabling local and foreign governments to expropriate the wealth produced by their people.”
In other words: rich countries got industrialized before they got fiat: poor countries got fiat before they got industrialized. The only way to break the cycle of dependency, according to Nabourema and other organizers of the Africa Bitcoin Conference, might be to transcend fiat.
XVIII. A Glimmer of Hope
“The root problem with conventional currency is all the trust that’s required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.”
Whatever the answer is to poverty in the Third World, we know it is not more debt. “The poor of the world,” Cheryl Payer concludes, “don’t need another ‘bank,’ however benign. They need decently paid work, responsive government, civil rights, and national autonomy.”
For seven decades, the World Bank and IMF have been enemies of all four.
Looking forward, says Payer, “the most important task for those in the wealthy countries who are concerned with international solidarity is to actively fight to end the flow of foreign aid.” The problem is that the current system is designed and incentivized to keep this flow going. The only way to make a change is through a total paradigm shift.
We already know that Bitcoin can help individuals inside developing countries gain personal financial freedom and escape the broken systems imposed on them by their corrupt rulers and international financial institutions. This is what will be accelerated in Accra next month, contra the designs of the Bank and Fund. But can Bitcoin actually change the core-periphery dynamics of the world’s power and resource structure?
Nabourema is hopeful, and doesn’t understand why leftists in general condemn or ignore Bitcoin.
“A tool that is capable of allowing people to build and access wealth independent from institutions of control can be seen as a leftist project,” she says. “As an activist that believes that citizens should be paid in currencies that actually value their life and sacrifices, Bitcoin is a people’s revolution.”
“I find it painful,” she says, “that a farmer in sub-Saharan Africa only earns 1% of the price of coffee on the global market. If we can get to a stage where farmers can sell their coffee without so many middle institutions more directly to the buyers, and get paid in bitcoin, you could imagine how much of a difference that would make in their lives.”
“Today,” she says, “our countries in the Global South still borrow money in U.S. dollars, but over time our currencies depreciate and lose value and we end up having to make twice or three times the payment we initially promised in order to reimburse our creditors.”
“Now imagine,” she says, “if we get to a stage in 10 or 20 years where bitcoin is the global money that is accepted for business worldwide, where every nation has to borrow in bitcoin and spend bitcoin and every nation has to pay their debts in bitcoin. In that world, then foreign governments cannot demand that we repay them in currencies that we need to earn but they can simply print; and just because they decide to increase their interest rates, it won’t automatically jeopardize the lives of millions or billions of people in our countries.”
“Of course,” Nabourema says, “Bitcoin is going to come with issues like any innovation. But the beauty is that those issues can be improved with peaceful, global collaboration. No one knew 20 years ago what amazing things the internet allows us to do today. No one can tell what amazing things Bitcoin will allow us to do in 20 years.”
“The way forward,” she says, “is an awakening of the masses: for them to understand the ins and outs of how the system works and to understand that there are alternatives. We have to be in a position where people can reclaim their liberty, where their lives aren’t controlled by authorities that can confiscate their freedom at any time without consequences. Gradually we are getting closer to this goal with Bitcoin.”
“Since money is the center of everything in our world,” Nabourema says, “the fact that we are now able to obtain financial independence is so important for people in our countries, as we seek to reclaim our rights in every field and sector.”
In an interview for this article, deflation advocate Jeff Booth explains that as the world approaches a bitcoin standard, the Bank and the Fund will be less likely to be creditors, and more likely to be co-investors, partners, or simply grantors. As prices fall over time, this means debt gets more expensive and more difficult to repay. And with the U.S. money printer turned off, there would be no more bailouts. At first, he suggests, the Bank and Fund will try to continue to lend, but for the first time they’ll actually lose big chunks of money as countries freely default as they move onto a bitcoin standard. So they may consider co-investing instead, where they might become more interested in the real success and sustainability of the projects they support as the risk is more equally shared.
Bitcoin mining is an additional area of potential change. If poor countries can exchange their natural resources for money without dealing with foreign powers, then maybe their sovereignty can strengthen, instead of erode. Through mining, the vast amounts of river power, hydrocarbons, sun, wind, ground warmth, and offshore OTEC in emerging markets could be converted directly to the world reserve currency without permission. This has never before been possible. The debt trap seems truly inescapable for most poor countries, continuing to grow every year. Maybe investing in anti-fiat Bitcoin reserves, services and infrastructure is a way out and a path to striking back.
Bitcoin, Booth says, can short-circuit the old system that has subsidized wealthy countries at the expense of wages in poor countries. In that old system, the periphery had to be sacrificed to protect the core. In the new system, the periphery and core can work together. Right now, he says, the U.S. dollar system keeps people poor through wage deflation in the periphery. But by equalizing the money and creating a neutral standard for everyone, a different dynamic is created. With one monetary standard, labor rates would be necessarily pulled closer together, instead of kept apart. We don’t have words for such a dynamic, Booth says, because it has never existed: he suggests “forced cooperation.”
Booth describes the U.S. ability to instantly issue any amount of more debt as “theft in base money.” Readers may be familiar with the Cantillon effect, where those who are closest to the money printer benefit from fresh cash while those farthest away suffer. Well, it turns out there is a global Cantillon effect, too, where the U.S. benefits from issuing the global reserve currency, and poor countries suffer.
“A bitcoin standard,” Booth says, “ends this.”
How much of the world’s debt is odious? There are trillions of dollars of loans created at the whim of dictators and unelected supranational financial institutions, with zero consent from the people on the borrowing side of the deal. The moral thing to do would be to cancel this debt, but of course, that will never happen because the loans exist ultimately as assets on the balance sheets of the creditors of the Bank and Fund. They will always prefer to keep the assets and simply create new debt to pay the old.
The IMF “put” on sovereign debt creates the biggest bubble of all: bigger than the dot-com bubble, bigger than the subprime mortgage bubble, and bigger even than the stimulus-powered COVID bubble. Unwinding this system will be extremely painful, but it’s the right thing to do. If debt is the drug, and the Bank and Fund are the dealers, and the developing country governments are the addicts, then it’s unlikely either party will want to stop. But to heal, the addicts need to go to rehab. The fiat system makes this basically impossible. In the Bitcoin system, it may get to the point where the patient has no other choice.
As Saifedean Ammous says in an interview for this article, today, if Brazil’s rulers want to borrow $30 billion and the U.S. Congress agrees, America can snap its fingers and allocate the funds through the IMF. It’s a political decision. But, he says, if we get rid of the money printer, then these decisions become less political and start to resemble the more prudent decision-making of a bank that knows no bailout will come.
In the last 60 years of Bank and Fund dominance, countless tyrants and kleptocrats were bailed out — against any financial common sense — so that their nations’ natural resources and labor could continue to be exploited by core countries. This was possible because the government at the very heart of the system could print the reserve currency.
But in a bitcoin standard, Ammous wonders, who is going to make these high risk, billion-dollar loans in exchange for structural adjustment?
“You,” he asks, “and whose bitcoins?”
This is a guest post by Alex Gladstein. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
