EQ’s Views

Years ago, when I used to hear mention of the World Bank and International Monetary Fund (IMF), I would get a warm and fuzzy picture in my mind of organizations providing badly needed financial aid and assistance to developing nations. In fact if you go to their respective websites, they will tell you that this is indeed what they do; but nothing could be farther from the truth.

The fact is that these organizations were set up at the end of World War II to be the strong arm debt collection enforcers for the international bankers who finance “humanitarian” business ventures like world wars and other kinds of destructive but lucrative global projects.  While they go to great lengths to convince us that their primary mission is “poverty alleviation” for developing nations, their real clandestine objectives are as follows:

1. To ensure at all costs that third world and developing nations remain hopelessly indebted to the World Bank
2. To keep these nations so encumbered with debt payments that the member nations can pillage their natural resources for pennies on the dollar of their fair market value
3. To make sure that the governments of these countries never gain enough stability to fight back
4.  And of course by any�means necessary, make sure they NEVER MISS A PAYMENT!

At this point, perhaps a bit of history on how and why these organizations were formed is in order.

History of The World Bank & IMF
The plans were laid in July of 1944, while fighting was still raging in the European and Pacific theatres. At a mountain resort in New Hampshire called Bretton Woods, financial representatives from the 44 allied nations devised institutions to alleviate the impediments to international financial growth that had arisen as a result of the war. The International Monetary Fund (IMF) was created to restore the volume of international trade that had dropped due to instability since the 1930s, when countries had abandoned the gold standard. A pool of currencies would be contributed by member states from which any member country could draw upon in order to correct any balance of payment problems. The US dollar was the universal standard, and this was freely convertible with gold at a fixed price.

In December 1945, the IMF and The International Bank for Reconstruction and Development, also known as the World Bank, were officially established. The original purpose of the World Bank was to grant loans to rebuild Europe after the war. Both institutions worked in conjunction with the Marshall Plan for the redevelopment and economic stabilization of Europe.

Membership
Currently there are 179 members of the IMF., the most recent being South Africa. The highest authority of the Fund is the Board of Governors, on which each country has 2 representatives: a Governor and an Alternate Governor. This board meets once a year, and occasionally votes are taken by mail. There is also a 24-member Board of Executive Directors which oversees the day-to-day operations of the Fund. The five largest contributors to the Fund (USA, United Kingdom, Germany, France and Japan) each appoint one Executive Director, while the other 19 are elected to represent several nations. For example, the Executive Director from Iran also represents Afghanistan, Algeria, Ghana, Morocco, Pakistan and Tunisia. Meetings are held behind closed doors, excluding the public and media to access of the proceedings and minutes.

The Debt
Currently, $278 billion is owed to the World Bank and the IMF. The pressure of the debt, as well as export-oriented Structural Adjustment Programs (SAP) and collapsing global prices for exports, have put many countries on an accelerating treadmill, forcing them to sell their assets, mine their natural resources and cut spending. Often this debt occurred because of loaning to corrupt regimes, such as that of Marcos in the Phillippines, Mobutu in Zaire and Somoza in Nicaragua. While many commercial banks and creditor nations have agreed to some debt reduction and rescheduling, the IMF and World Bank refuse to reschedule or reduce debt payments.

Globally poor countries owed lenders from private banks to the World Bank almost US$2.5 trillion in 1998, up US$150 billion from the previous year. But the debt owed to the World Bank and the IMF is the most difficult to deal with because unlike private lenders and government aid agencies, the World Bank and IMF refuse to cancel debts because these two institutions say that their bylaws prohibit them from doing this. Additionally, governments have special incentive to stay current with their multilateral debts, since the IMF determines the creditworthiness of countries: i.e., until the IMF gives its stamp of approval (which usually requires adherence to the economic policies it recommends), poor countries generally cannot get credit or capital from other sources.

Oil Shocks - The Treadmill Engine
The engine that perpetuates these developing nation’s dependency on the World Bank is oil. The International Bankers who control the World Bank and the IMF are also the owners of British Petroleum, Exxon-Mobile, Shell Oil, & Chevron/Texaco. The Oil shock that we are currently experiencing and the ones that occurred in the 1970’s were not due to supply shortages, but were artificially created to build back up the coffers of these banks and oil companies.

Lets review what was done to Africa . . .

Africa’s recent economic history is mostly, but not uniformly, bleak. The two decades after the late 1950s, when the first wave of decolonization swept through the continent, were characterized by steady economic growth and appreciable improvements in economic and social indicators for millions of Africans. Many of the first independent governments pursued a development strategy known as import-substitution industrialization, which stresses government support of domestic products over foreign imports in order to create conditions conducive to the growth of domestic industries and the achievement of technological advancement.

During what are often called the development decades, economic growth was consistent at roughly 4% a year, while manufacturing increased by 7% annually. Educational enrollment and life expectancy shot upward while infant mortality and illiteracy plummeted. Between the late 1960s and mid-late 1970s, GNP per capita in sub-Saharan Africa grew by nearly 20%.3 Multinational banks in the global North (first world), flush with petrodollars after the oil price increases of the 1970s, eagerly lent money to the equally-eager but cash-strapped African regimes pursuing industrialization  who, in consequence, grew progressively indebted.

The heady optimism of the development decades quickly dissipated in the late 1970s. The oil shocks eventually triggered a harsh recession in the North, causing demand for African goods to dry up while commodity prices tumbled. The timing was especially bad for Africa  the slowdown took place at a time when the region was especially desperate for foreign earnings which began to see its modest improvements in economic development and living standards sink under the weight of economic decline. International private creditors became less eager to lend and more eager to collect the debts of poor countries. They were greatly assisted in this by the World Bank and International Monetary Fund, to whom many African governments had to turn to receive much-needed money. The problem is that these loans came at a significant price. The treadmill keeps turning. . .

So when you hear mention of the World Bank or IMF on the news, please listen carefully to what you hear and replace that warm and fuzzy feeling with anger and disdain for the evil men who perpetuate this cycle.

And by all means, please don’t hate on Hugo Chavez, president of Venezuela, one of the first leaders with balls enough to throw these bastards out of his country.