Tuesday, March 26, 2002

The apostasy of Joseph Stiglitz continues. Stiglitz is the former head economist for the World Bank, fired in 1999 for relatively mild public dissent from its policies. (As an indication of the view of the economics profession as a whole on Stiglitz' merit as an economist, he was subsequently awarded a Nobel prize for economics). These days, he's not so mild, says Greg Palast:

Each nation's economy is individually analyzed, then, says Stiglitz, the Bank hands every minister the exact same four-step program.

Step 1 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 World Bank's demands to silence local critics -- happily flogged their electricity and water companies. "You could see their eyes widen" at the prospect of 10 per cent 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 Advisers.

Step two is capital market liberalization which, time and again, has done little more than drain the country's capital reserves; when they draw down to nothing, that leads to step three, drastic price hikes, and "The IMF Riot":

The IMF riot is painfully predictable. When a nation is "down and out, [the IMF] takes advantage and 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 and fuel subsidies for the poor in Indonesia in 1998. Indonesia exploded into riots, but there are other examples -- the Bolivian riots over water prices in April 2000 and, in February 2001, the riots in Ecuador over the rise in domestic gas prices imposed by the World Bank. You'd almost get the impression that the riot is written into the plan.

And it is. Stiglitz did not know about the documents the BBC and the Observer obtained from inside the World Bank, stamped over with those pesky warnings "confidential", "restricted", "not to be disclosed". Let's get back to 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 per cent of the population below the poverty line. The World Bank "Assistance" plan simply calls for facing down civil strife and suffering with "political resolve" -- and still higher prices.

The victims could be forgiven for confusing this sort of liberalization with old-style colonial plunder, particularly since the notionally separate international institutions involved are in fact tightly linked:

By the way, don't be confused by the mix in this discussion of the IMF, World Bank and WTO. They are interchangeable masks of a single governance system. They have locked themselves together by what are unpleasantly called "triggers". Taking a World Bank loan for a school "triggers" a requirement to accept every "conditionality" -- they average 111 per nation -- laid down by both the World Bank and IMF. In fact, said Stiglitz, the IMF requires nations to accept trade policies more punitive than the official WTO rules.

It's been a staple of pro-war discourse the last few months that it isn't the poor from the third world who are rising against us --- it's the rich and the middle class. True, as far as it goes --- the poor themselves are too busy trying to find their next meal. But the existance of the destitute poor, and a misguided sympathy with them, is certainly a motivating factor.

This is something that the Arab governments understand --- the reason that Palestinians living in Arab lands are isolated in refugee camps, deprived of jobs and even the limited rights of a citizen in those countries, is precisely to preserve their destitution as a useful causus belli (as I've argued in the past at greater length).

And even if this sort of sponsored plunder doesn't lead directly to terrorism, the question of its basic morality is still there.

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8:52 PM  

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