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Coruscating criticism of the free market ideology of the IMF 27/4/01
It's quiet now, but all police leave in the capital
has been cancelled. They're taking no chances
after last week's anti-globalisation protests
in Quebec and the street wars on this spot
during the same meeting last year of the IMF
and World Bank.
So what's their complaint? The protesters say
that what we have here is a conspiracy -
the World Bank, IMF and World Trade Organisation
don't help the poor of the world, they crush them.
Well, the bosses are here today, let's ask them.
Mr Wolfensohn, the protesters say
you are the chief of a secretive, undemocratic
world government which has made poverty
worse worldwide. How do you respond?
PRESIDENT, WORLD BANK
Well, I think it's nonsense.
I've been accused of many things
but I didn't know that was one of the accusations.
I'm not sure where this government exists,
but if I can answer the question more seriously,
what I think is behind it, is that I'm very proud
of the record of the bank.
But that's not what the insider says.
FORMER CHIEF ECONOMIST, WORLD BANK
You shouldn't take advantage of someone
who is down and out and squeeze the last blood
out of them.
Joseph Stiglitz was chief economist of the
World Bank - he should know.
He was in the meetings when the World Bank
and IMF met to decide the fate of nations.
They were making the countries worse off.
And he charges the IMF actually encouraged corruption.
They'll take a strong position on petty larceny
and petty theft, but on grand larceny,
they'll look the other way.
The insider says there's a "one-size-fits-all" plan.
Every nation gets the same exact four-step
programme to the free market paradise.
Step one - freedom for hot money.
Step two - freedom to increase prices.
Step three - free trade for all.
Step four, where it all begins, freedom
to privatise everything.
Insiders saw how it worked in Russia.
That was the extreme case.
You turned over these assets to these oligarchs
at a time when the government didn't have
enough money to pay pensions to old people.
It turned over billions of dollars to a few oligarchs
for a fraction of the value of those assets.
How could the IMF let this happen
in their privatisation programme?
When it comes to corruption in Russia,
they were willing to turn the other way.
The IMF and the US Treasury actually almost
There was a real commitment to a particular
set of leadership - to Yeltsin.
There was a fear that if he didn't get re-elected,
who knows what would happen.
So, the belief was the means justified the ends.
Stiglitz charges the US government used the IMF
to fix the Russian elections. Stiglitz isn't guessing.
At the time he was in Clinton's cabinet
as the president's chief economist.
The US Treasury's view was that this was great
because they wanted Yeltsin re-elected.
"We don't care if it is a corrupt election,
we want the money to go to Yeltsin
to be re-elected because he's our friend."
Step two is what the World Bank calls
a poverty reduction strategy.
In Tanzania, the bank's idea of a poverty reduction
strategy was to require the government to raise
the price of medicine during an AIDS epidemic.
In Bolivia, the bank's poverty reduction strategy
was to demand increases in the price of water.
That strategy produced riots.
In Ecuador, the poverty reduction strategy
included increasing the price of cooking gas by 60%.
The nation exploded. The riots in Ecuador came
as no surprise to the World Bank.
We've obtained some confidential documents
from inside. This one's the master strategy
for Ecuador. It says the bank knew that their plans
pushed down real wages and shoved 51% of the
population below the poverty line.
They even scripted in riots. They said their plans
would lead to social unrest.
The insider heard the same story about Indonesia.
They'd been warned if the policies of austerity
were continued, the economy would go down.
The probability of social and political turmoil
was very high. They've been warned and the
unfortunate thing is those predictions came out
to be true.
Finally, the whole cauldron blew up and did
enormous damage, from which the country
has still not recovered.
What got Indonesia was step three of the IMF
assistance programme - ending all controls on capital.
This left Indonesia's fate to the mood of speculators
and what Stiglitz calls "hot money".
In Asia, it was the nations that refused the IMF medicine
that escaped the financial flames.
Both of them weathered the global financial crisis
very well. India's been having growth rate
over the past decade of over 5%.
China's growth rate has been faster.
Neither of them followed the dictum of having
capital market liberalisation.
Step four - free trade. According to the insider,
the World Trade Organisation just makes the rich
So much so, that after the last round of trade
negotiations - the Uruguay round in 1994 -
calculations of the World Bank showed that
sub-Saharan Africa - the poorest region of the world -
was actually worse off by more than 2%.
While the USA was bragging about how many
billions and billions of dollars better off it was.
Stiglitz says the WTO operates like the British
Empire in the Opium Wars, when Britain
forced China at gunpoint to "open its markets"
to British narcotics.
The new drug wars are over the WTO's intellectual
property treaty. Until this month, British and
American drug companies used WTO rules
to prevent AIDS victims in South Africa
getting cheap medicine.
South Africa said, "We want to produce that drug
and sell it at a cost the people can afford."
The drug companies said, "If you do that,
you are violating intellectual property rights."
We don't care if people die, intellectual property rights
are really supreme."
People heard about this and they were outraged.
And the protesters put such pressure
that today, the drug companies have backed down.
One lost skirmish for the drug companies,
but the deadly WTO rule still survives.
And back at the IMF and World Bank spring meeting
today, World Bank chief, Jim Wolfensohn,
is still musing about world domination.
We've done a lot of things well.
We've made a lot of mistakes,
but no more or no less than any other
well-meaning group of people
in a most difficult area. In some cases,
I wish I was president of a world government,
because then I could make sure everything worked -
knowing, as you all do, of my great skill as an administrator!