Each nation's economy is individually analyzed, then, says Stiglitz, The World Bank (WB) hands every minister the same exact four-step program. Step One is Privatization - which Stiglitz said could more accurately be called, 'Briberization.' Rather than object to the sell-offs of state industries, he said national leaders - using the WB's demands to silence local critics - happily flogged their electricity and water companies. "You could see their eyes widen" at the prospect of 10% commissions paid to Swiss bank accounts for simply shaving a few billion off the sale price of national assets.
And the US government knew it, charges Stiglitz, at least in the case of the biggest 'briberization' of all, the 1995 Russian sell-off. "The US Treasury view was this was great as we wanted Yeltsin re-elected. We don't care if it's a corrupt election. We want the money to go to Yeltzin" via kick-backs for his campaign.
Stiglitz is no conspiracy nutter ranting about Black Helicopters. The man was inside the game, a member of Bill Clinton's cabinet as Chairman of the President's council of economic advisors.
After briberization, Step Two of the IMF/World Bank one-size-fits-all rescue-your-economy plan is 'Capital Market Liberalization.' In theory, capital market deregulation allows investment capital to flow in and out. Unfortunately, as in Indonesia and Brazil, the money simply flowed out and out. Stiglitz calls this the "Hot Money" cycle. Cash comes in for speculation in real estate and currency, then flees at the first whiff of trouble. A nation's reserves can drain in days, hours. And when that happens, to seduce speculators into returning a nation's own capital funds, the IMF demands these nations raise interest rates to 30%, 50% and 80%.
"The result was predictable," said Stiglitz of the Hot Money tidal waves in Asia and Latin America. Higher interest rates demolished property values, savaged industrial production and drained national treasuries.
At this point, the IMF drags the gasping nation to Step Three: Market-Based Pricing, a fancy term for raising prices on food, water & cooking gas. This leads, predictably, to Step-Three-and-a-Half: what Stiglitz calls, "The IMF riot."
The IMF riot is painfully predictable. When a nation is, "down and out, [the IMF] takes advantage & squeezes the last pound of blood out of them. They turn up the heat until, finally, the whole cauldron blows up," as when the IMF eliminated food & fuel subsidies for the poor in Indonesia in 1998. Indonesia exploded into riots, but there are other examples - the Bolivian riots over water prices last year & this February, the riots in Ecuador over the rise in cooking gas prices imposed by the WB. You'd almost get the impression that the riot is written into the plan.
And it is. What Stiglitz did not know is that, while in the States, BBC and The Observer obtained several documents from inside the WB, stamped over with those pesky warnings, "confidential," "restricted," "not to be disclosed." Let's get back to one: the "Interim Country Assistance Strategy" for Ecuador, in it the Bank several times states - with cold accuracy - that they expected their plans to spark, "social unrest," to use their bureaucratic term for a nation in flames.
That's not surprising. The secret report notes that the plan to make the US dollar Ecuador's currency has pushed 51% of the population below the poverty line. The WB "Assistance" plan simply calls for facing down civil strife & suffering with, "political resolve" - & still higher prices. The IMF riots (& by riots I mean peaceful demonstrations dispersed by bullets, tanks & teargas) cause new panicked flights of capital and government bankruptcies. This economic arson has it's bright side - for foreign corporations, who can then pick off remaining assets, such as the odd mining concession or port, at fire sale prices. Stiglitz notes that the IMF and WB are not heartless adherents to market economics. At the same time the IMF stopped Indonesia 'subsidizing' food purchases, "when the banks need a bail-out, intervention (in the market) is welcome." The IMF scrounged up tens of billions of dollars to save Indonesia's financiers and, by extension, the US & European banks from which they had borrowed.
Now we arrive at Step Four of what the IMF and WB call their "poverty reduction strategy": Free Trade. This is free trade by the rules of the WTO and WB, Stiglitz the insider likens free trade WTO-style to the Opium Wars. "That too was about opening markets," he said. As in the 19th century, Europeans & Americans today are kicking down the barriers to sales in Asia, Latin American & Africa, while barricading our own markets against 3rd World agriculture.
Stiglitz is no conspiracy nutter ranting about Black Helicopters. The man was inside the game, a member of Bill Clinton's cabinet as Chairman of the President's council of economic advisors.
After briberization, Step Two of the IMF/World Bank one-size-fits-all rescue-your-economy plan is 'Capital Market Liberalization.' In theory, capital market deregulation allows investment capital to flow in and out. Unfortunately, as in Indonesia and Brazil, the money simply flowed out and out. Stiglitz calls this the "Hot Money" cycle. Cash comes in for speculation in real estate and currency, then flees at the first whiff of trouble. A nation's reserves can drain in days, hours. And when that happens, to seduce speculators into returning a nation's own capital funds, the IMF demands these nations raise interest rates to 30%, 50% and 80%.
"The result was predictable," said Stiglitz of the Hot Money tidal waves in Asia and Latin America. Higher interest rates demolished property values, savaged industrial production and drained national treasuries.
At this point, the IMF drags the gasping nation to Step Three: Market-Based Pricing, a fancy term for raising prices on food, water & cooking gas. This leads, predictably, to Step-Three-and-a-Half: what Stiglitz calls, "The IMF riot."
The IMF riot is painfully predictable. When a nation is, "down and out, [the IMF] takes advantage & squeezes the last pound of blood out of them. They turn up the heat until, finally, the whole cauldron blows up," as when the IMF eliminated food & fuel subsidies for the poor in Indonesia in 1998. Indonesia exploded into riots, but there are other examples - the Bolivian riots over water prices last year & this February, the riots in Ecuador over the rise in cooking gas prices imposed by the WB. You'd almost get the impression that the riot is written into the plan.
And it is. What Stiglitz did not know is that, while in the States, BBC and The Observer obtained several documents from inside the WB, stamped over with those pesky warnings, "confidential," "restricted," "not to be disclosed." Let's get back to one: the "Interim Country Assistance Strategy" for Ecuador, in it the Bank several times states - with cold accuracy - that they expected their plans to spark, "social unrest," to use their bureaucratic term for a nation in flames.
That's not surprising. The secret report notes that the plan to make the US dollar Ecuador's currency has pushed 51% of the population below the poverty line. The WB "Assistance" plan simply calls for facing down civil strife & suffering with, "political resolve" - & still higher prices. The IMF riots (& by riots I mean peaceful demonstrations dispersed by bullets, tanks & teargas) cause new panicked flights of capital and government bankruptcies. This economic arson has it's bright side - for foreign corporations, who can then pick off remaining assets, such as the odd mining concession or port, at fire sale prices. Stiglitz notes that the IMF and WB are not heartless adherents to market economics. At the same time the IMF stopped Indonesia 'subsidizing' food purchases, "when the banks need a bail-out, intervention (in the market) is welcome." The IMF scrounged up tens of billions of dollars to save Indonesia's financiers and, by extension, the US & European banks from which they had borrowed.
Now we arrive at Step Four of what the IMF and WB call their "poverty reduction strategy": Free Trade. This is free trade by the rules of the WTO and WB, Stiglitz the insider likens free trade WTO-style to the Opium Wars. "That too was about opening markets," he said. As in the 19th century, Europeans & Americans today are kicking down the barriers to sales in Asia, Latin American & Africa, while barricading our own markets against 3rd World agriculture.
