Bretton Woods Institutions: The IMF and The World Bank
From inception, their mission was to integrate developing nations into the Global North-dominated world economy and use debt repayment as the way to transfer wealth from poor countries to powerful bankers in rich ones.
The scheme is called debt slavery because new loans are needed to service old ones, indebtedness rises, and borrowing terms stipulate harsh one-way "structural adjustment" provisions that include:
- privatizations of state enterprises;
- government deregulation;
- deep cuts in social spending;
- wage freezes or cuts;
- unrestricted free market access for foreign corporations;
- corporate-friendly tax cuts;
- crackdowns on trade unionists; and
- savage repression for non-believers under a system incompatible with social democracy.
Everywhere the scheme is the same:
- huge public wealth transfers to elitist private hands,
- exploding public debt,
- an ever-widening disparity between the super-rich and desperate poor, and
- an aggressive nationalism to justify huge spending on security for aggressive surveillance,
- mass incarceration plus repression and torture for social control.
The Bank of the South
Hugo Chavez's vision is to liberate the region's countries from IMF, World Bank, and Inter-American Development Bank (IBD) control that condemn millions to poverty through their lending practices.
The bank will be officially launched at a presidential November 3 summit in Caracas, where it is to be headquartered, with seven founding member-states - Venezuela, Argentina, Brazil, Uruguay, Paraguay, Bolivia and Ecuador.
- "created to build a new architecture that assumes an improved relationship of the bank and its capacity to offer credits for its people."
- aims to increase liquidity and revive socioeconomic development and infrastructure investments in participating countries and
- keep them outside the restrictive control of the IMF and World Bank
- "There will not be credit subjected to economic policies.
- There will not be credit that produces a calamity for our people and as a result,
- it will not be a tool of domination" like the international lending agencies.
Nobel laureate economist Joseph Stiglitz
- "One of the advantages of having a Bank of the South is that it would reflect the perspectives of those in the South (while in contrast IMF and World Bank conditions) hinder (regional) development effectiveness."
- praised his (Chavez) redistributive social policies. He also
- criticized Washington Consensus neoliberal practices that
- exploit the region's people,
- "undermin(e)....Andean cooperation, and it is
- part of the American strategy of divide and conquer,
- a strategy trying to get as much of the benefits for American companies" at the expense of the region and its people.
Financial autonomy alone won't free the region from Washington's grip without greater change. What's needed are
- sweeping nationalizations of basic industries, an
- end to one-way WTO-style trade deals,
- socially redistributing national resources,
- developing local economies,
- achieving land and housing reform, plus
- a sweeping commitment to social equity and
- a resolve to end a 25 year neoliberal nightmare.
From 1960 to 1980, the region's per capita income growth was 82%. From 1980 to 2000, however, it was 9%, and from 2000 to 2005 only 4%. For the region, it meant sweeping poverty, inequality and the most extreme disparity between the super-rich and desperate poor in the world.
Chavez now has an ally in Ecuador under Rafael Correa, whose early efforts are promising.
Brazil, Argentina, and Bolivia, however, claim to be center-left but, in fact, embrace 1990s neoliberalism,
Brazil under Lula, closely tied to Washington and in its grip.
Stephen Lendman lives in Chicago and can be reached at firstname.lastname@example.org. Also visit his blog site at sjlendman.blogspot.com and listen to The Steve Lendman News and Information Hour on TheMicroEffect.com Mondays at noon US central time.