{"id":5833,"date":"2022-11-30T13:00:00","date_gmt":"2022-11-30T13:00:00","guid":{"rendered":"http:\/\/ci02b18f0120002605"},"modified":"2025-09-28T17:44:13","modified_gmt":"2025-09-28T22:44:13","slug":"imf-world-bank-repress-poor-countries","status":"publish","type":"post","link":"https:\/\/bitcoinmagazine.com\/culture\/imf-world-bank-repress-poor-countries","title":{"rendered":"Structural Adjustment: How The IMF And World Bank Repress Poor Countries And Funnel Their Resources To Rich Ones"},"content":{"rendered":"
<\/div>
<\/figure>\n

This is an opinion editorial by Alex Gladstein, chief strategy officer of the Human Rights Foundation and author of \u201cCheck Your Financial Privilege.\u201d<\/em><\/p>\n

I. The Shrimp Fields<\/h2>\n
\n

\u201cEverything is gone.\u201d<\/em><\/p>\n

\u2013Kolyani Mondal<\/em><\/p>\n

<\/em><\/p>\n<\/blockquote>\n

Fifty-two years ago, Cyclone Bhola killed an estimated<\/a> 1 million people in coastal Bangladesh. It is, to this day, the deadliest tropical cyclone in recorded history<\/a>. Local and international authorities knew well the catastrophic risks of such storms: in the 1960s, regional officials had built a massive array of dikes<\/a> to protect the coastline and open up more territory for farming. But in the 1980s after the assassination of independence leader Sheikh Mujibur Rahman, foreign influence pushed a new autocratic Bangladeshi regime to change course. Concern for human life was dismissed and the public\u2019s protection against storms was weakened, all in order to boost exports to repay debt.<\/p>\n

Instead of reinforcing the local mangrove forests which naturally protected the one-third of the population that lived near the coast<\/a>, and instead of investing in growing food to feed the quickly growing nation, the government took out loans from the World Bank<\/a> and International Monetary Fund<\/a> in order to expand shrimp farming. The aquaculture process \u2014 controlled by a network<\/a> of wealthy elites linked to the regime \u2014 involved pushing farmers to take out loans to \u201cupgrade\u201d their operations by drilling holes in the dikes that protected their land from the ocean, filling their once-fertile fields with saltwater. Then, they would work back-breaking hours to hand-harvest young shrimp from the ocean, drag them back to their stagnant ponds, and sell the mature ones to the local shrimp lords.<\/p>\n

With financing<\/a> from the World Bank and IMF, countless farms and their surrounding wetlands and mangrove forests were engineered into shrimp ponds known as ghers<\/em>. The area\u2019s Ganges river delta is an incredibly fertile place, home to the Sundarbans<\/a>, the world\u2019s biggest stretch of mangrove forest. But as a result of commercial shrimp farming becoming the region\u2019s main economic activity, 45%<\/a> of the mangroves have been cut away, leaving millions of people exposed to the 10-meter waves that can crash against the coast during major cyclones. Arable land and river life has been slowly destroyed by excess salinity leaking in from the sea. Entire forests have vanished<\/a> as shrimp farming has<\/a> killed much of the area\u2019s vegetation, “rendering this once bountiful land into a watery desert,\u201d according to Coastal Development Partnership.<\/p>\n

<\/figure>\n

The shrimp lords, however, have made a fortune, and shrimp (known as \u201cwhite gold\u201d<\/a>) has become the country\u2019s second-largest<\/a> export. As of 2014, more than 1.2 million<\/a> Bangladeshis worked in the shrimp industry, with 4.8 million people indirectly dependent on it, roughly half of the coastal poor. The shrimp collectors, who have the toughest job, make up 50% of the labor force but only see 6%<\/a> of the profit. Thirty percent<\/a> of them are girls and boys engaged in child labor, who work as much as nine hours a day in the salt water, for less than $1<\/a> per day, with many giving up school and remaining illiterate to do so. Protests against the expansion of shrimp farming have happened, only to be put down violently. In one prominent case, a march was attacked with explosives from shrimp lords and their thugs, and a woman named Kuranamoyee Sardar was decapitated<\/a>.<\/p>\n

In a 2007 research paper<\/a>, 102 Bangladeshi shrimp farms were surveyed, revealing that, out of a cost of production of $1,084 per hectare, the net income was $689. The nation\u2019s export-driven profits came at the expense of the shrimp laborers, whose wages were deflated and whose environment was destroyed.<\/p>\n

In a report by the Environmental Justice Foundation, a coastal farmer named Kolyani Mondal said<\/a> that she \u201cused to farm rice and keep livestock and poultry,\u201d but after shrimp harvesting was imposed, \u201cher cattle and goats developed diarrhea-type disease and together with her hens and ducks, all died.\u201d <\/p>\n

Now her fields are flooded with salt water, and what remains is barely productive: years ago her family could generate \u201c18-19 mon of rice per hectare,\u201d but now they can only generate one. She remembers shrimp farming in her area beginning in the 1980s, when villagers were promised more income as well as lots of food and crops, but now \u201ceverything is gone.\u201d The shrimp farmers who use her land promised to pay her $140 per year, but she says the best she gets are \u201coccasional installments of $8 here or there.\u201d In the past, she says, \u201cthe family got most of the things they needed from the land, but now there are no alternatives but going to the market to buy food.\u201d<\/p>\n

In Bangladesh, billions of dollars of World Bank and IMF \u201cstructural adjustment\u201d loans \u2014 named for the way they force borrowing nations to modify their economies to favor exports at the expense of consumption \u2014 grew national shrimp profits from $2.9 million in 1973 to $90 million in 1986 to $590 million<\/a> in 2012. As in most cases with developing countries, the revenue was used to service foreign debt, develop military assets, and line the pockets of government officials. As for the shrimp serfs, they have been impoverished: less free, more dependent and less able to feed themselves than before. To make matters worse, studies show that<\/a> \u201cvillages shielded from the storm surge by mangrove forests experience significantly fewer deaths\u201d than villages which had their protections removed or damaged.<\/p>\n

Under public pressure in 2013 the World Bank loaned Bangladesh $400 million<\/a> to try and reverse the ecological damage. In other words, the World Bank will be paid a fee in the form of interest to try and fix the problem it created in the first place. Meanwhile, the World Bank has loaned billions to countries everywhere from Ecuador<\/a> to Morocco<\/a> to India<\/a> to replace traditional farming with shrimp production.<\/p>\n

The World Bank claims<\/a> that Bangladesh is \u201ca remarkable story of poverty reduction and development.\u201d On paper, victory is declared: countries like Bangladesh tend to show economic growth over time as their exports rise to meet their imports. But exports earnings flow mostly to the ruling elite and international creditors. After 10 structural adjustments<\/a>, Bangladesh\u2019s debt pile has grown exponentially from $145 million<\/a> in 1972 to an all-time high of $95.9 billion<\/a> in 2022. The country is currently facing yet another balance of payments crisis, and just this month agreed to take its 11th loan from the IMF, this time a $4.5 billion<\/a> bailout, in exchange for more adjustment. The Bank and the Fund claim to want to help poor countries, but the clear outcome after more than 50 years of their policies is that nations like Bangladesh are more dependent and indebted than ever before.<\/p>\n

During the 1990s in the wake of the Third World Debt Crisis, there was a swell of global public scrutiny on the Bank and Fund: critical studies, street protests, and a widespread, bipartisan belief (even in the halls of the U.S. Congress) that these institutions ranged from wasteful to destructive. But this sentiment and focus has largely faded. Today, the Bank and the Fund manage to keep a low profile in the press. When they do come up, they tend to be written off as increasingly irrelevant, accepted as problematic yet necessary, or even welcomed as helpful.<\/p>\n

The reality is that these organizations have impoverished and endangered millions of people; enriched dictators and kleptocrats; and cast human rights aside to generate a multi-trillion-dollar flow of food, natural resources and cheap labor from poor countries to rich ones. Their behavior in countries like Bangladesh is no mistake or exception: it is their preferred way of doing business.<\/p>\n

II. Inside The World Bank And IMF<\/h2>\n
\n

\u201cLet us remember that the main purpose of aid is not to help other nations but to help ourselves.\u201d <\/em><\/p>\n

\u2013<\/em>Richard Nixon<\/em><\/a><\/p>\n<\/blockquote>\n

The IMF is the world\u2019s international lender of last resort, and the World Bank is the world\u2019s largest development bank<\/a>. Their work is carried out on behalf of their major creditors, which historically<\/a> have been the United States, the United Kingdom, France, Germany and Japan.<\/p>\n

<\/figure>\n

The sister organizations \u2014 physically joined together at their headquarters in Washington, DC \u2014 were created at the Bretton Woods Conference<\/a> in New Hampshire in 1944 as two pillars of the new U.S.-led global monetary order. Per tradition, the World Bank is headed by an American, and the IMF by a European.<\/p>\n

Their initial purpose was to help rebuild war-torn Europe and Japan, with the Bank to focus on specific loans for development projects, and the Fund to address balance-of-payment issues via \u201cbailouts\u201d to keep trade flowing even if countries couldn\u2019t afford more imports.<\/p>\n

Nations are required to join the IMF in order to get access to the \u201cperks\u201d of the World Bank. Today, there are 190 member states<\/a>: each one deposited a mix of their own currency plus \u201charder currency\u201d (typically dollars, European currencies or gold) when they joined, creating a pool of reserves.<\/p>\n

When members encounter chronic balance-of-payments issues, and cannot make loan repayments, the Fund offers them credit from the pool at varying multiples of what they initially deposited, on increasingly expensive terms.<\/p>\n

The Fund is technically a supranational central bank, as since 1969 it has minted its own currency: the special drawing rights (SDR), whose value is based on a basket of the world\u2019s top currencies. Today, the SDR<\/a> is backed by 45% dollars, 29% euros, 12% yuan, 7% yen and 7% pounds. The total lending capacity of the IMF today stands at $1 trillion<\/a>.<\/p>\n

Between 1960 and 2008, the Fund largely focused on assisting developing countries with short-term, high-interest-rate loans. Because the currencies issued by developing countries are not freely convertible, they usually cannot be redeemed for goods or services abroad. Developing states must instead earn hard currency through exports. Unlike the U.S., which can simply issue the global reserve currency, countries like Sri Lanka and Mozambique often run out of money. At that point, most governments \u2014 especially authoritarian ones \u2014 prefer the quick fix of borrowing against their country\u2019s future from the Fund.<\/p>\n

As for the Bank, it states<\/a> that its job is to provide credit to developing countries to \u201creduce poverty, increase shared prosperity, and promote sustainable development.\u201d The Bank itself is split up into five parts, ranging from the International Bank for Reconstruction and Development (IBRD), which focuses on more traditional \u201chard\u201d loans to the larger developing countries (think Brazil or India) to the International Development Association (IDA), which focuses on \u201csoft\u201d interest-free loans with long grace periods for the poorest countries. The IBRD makes money in part through the Cantillon effect: by borrowing on favorable terms from its creditors and private market participants who have more direct access to cheaper capital and then loaning out those funds at higher terms to poor countries who lack that access.<\/p>\n

World Bank loans traditionally<\/a> are project- or sector-specific, and have focused on facilitating the raw export of commodities (for example: financing the roads, tunnels, dams, and ports needed to get minerals out of the ground and into international markets) and on transforming traditional consumption agriculture into industrial agriculture or aquaculture so that countries could export more food and goods to the West.<\/p>\n

Bank and Fund member states do not have voting power based on their population. Rather, influence was crafted seven decades ago to favor the U.S., Europe and Japan over the rest of the world. That dominance has only weakened mildly in recent years.<\/p>\n

Today the U.S. still owns far and away the largest vote share, at 15.6% of the Bank<\/a> and 16.5% of the Fund<\/a>, enough to single-handedly veto any major decision, which requires 85% of votes at either institution. Japan owns 7.35% of the votes at the Bank and 6.14% at the Fund; Germany 4.21% and 5.31%; France and the U.K. 3.87% and 4.03% each; and Italy 2.49% and 3.02%.<\/p>\n

By contrast, India with its 1.4 billion people only has 3.04% of the Bank\u2019s vote and just 2.63% at the Fund: less power than its former colonial master despite having a population 20 times bigger. China\u2019s 1.4 billion people get 5.7% at the Bank and 6.08% at the fund, roughly the same share as the Netherlands plus Canada and Australia. Brazil and Nigeria, the largest countries in Latin America and Africa, have about the same amount of sway as Italy, a former imperial power in full decline.<\/p>\n

Tiny Switzerland with just 8.6 million people has 1.47% of votes at the World Bank, and 1.17% of votes at the IMF: roughly the same share as Pakistan, Indonesia, Bangladesh, and Ethiopia combined, despite having 90 times<\/em> fewer people.<\/p>\n

<\/figure>\n

These voting shares are supposed to approximate each country\u2019s share of the world economy, but their imperial-era structure helps color how decisions are made. Sixty-five years after decolonization, the industrial powers led by the U.S. continue to have more or less total control over global trade and lending, while the poorest countries have in effect no voice at all.<\/p>\n

The G-5 (the U.S., Japan, Germany, the U.K. and France) dominate the IMF executive board, even though they make up a relatively small percent of the world\u2019s population. The G-10 plus Ireland, Australia, and Korea make up more than 50% of the votes, meaning that with a little pressure on its allies, the U.S. can make determinations<\/a> even on specific loan decisions, which require a majority.<\/p>\n

To complement the IMF\u2019s trillion-dollar<\/a> lending power, the World Bank group claims more than $350 billion<\/a> in outstanding loans across more than 150 countries. This credit has spiked over the past two years, as the sister organizations have lent<\/a> hundreds of billions of dollars to governments who locked down their economies in response to the COVID-19 pandemic.<\/p>\n

Over the past few months, the Bank<\/a> and Fund<\/a> began orchestrating billion-dollar deals to \u201csave\u201d governments endangered by the U.S. Federal Reserve\u2019s aggressive interest rate hikes. These clients are often human rights violators who borrow without permission from their citizens, who will ultimately be the ones responsible for paying back principal plus interest on the loans. The IMF is currently bailing out Egyptian dictator Abdel Fattah El-Sisi \u2014 responsible for the largest massacre<\/a> of protestors since Tiananmen Square \u2014 for example, with $3 billion<\/a>. Meanwhile, the World Bank was, during the past year, disbursing a $300 million<\/a> loan to an Ethiopian government that was committing genocide<\/a> in Tigray.<\/p>\n

The cumulative effect of Bank and Fund policies is much larger than the paper amount of their loans, as their lending drives bilateral assistance. It is estimated<\/a> that \u201cevery dollar provided to the Third World by the IMF unlocks a further four to seven dollars of new loans and refinancing from commercial banks and rich-country governments.\u201d Similarly, if the Bank and Fund refuse to lend to a particular country, the rest of the world typically follows suit.<\/p>\n

It is hard to overstate the vast<\/a> impact the Bank and Fund have had across developing nations, especially in their formative decades after World War II. By 1990 and the end of the Cold War, the IMF had extended credit to 41 countries<\/a> in Africa, 28 countries in Latin America, 20 countries in Asia, eight countries in the Middle East and five countries in Europe, affecting 3 billion people, or what was then two-thirds of the global population<\/a>. The World Bank has extended loans to more than 160<\/a> countries. They remain the most important international financial institutions on the planet.<\/p>\n

III. Structural Adjustment<\/h2>\n
\n

\u201cAdjustment is an ever new and never-ending task\u201d<\/em><\/p>\n

\u2013<\/em>Otmar Emminger<\/em><\/a>, former IMF director and creator of SDR<\/em><\/p>\n<\/blockquote>\n

Today, financial headlines are filled with stories about IMF visits to countries like Sri Lanka<\/a> and Ghana<\/a>. The outcome is that the Fund loans billions of dollars to countries in crisis in exchange for what is known as structural adjustment.<\/p>\n

In a structural-adjustment loan, borrowers not only have to pay back principal plus interest: they also have to agree to change<\/a> their economies according to Bank and Fund demands. These requirements almost always stipulate that clients maximize exports at the expense of domestic consumption.<\/p>\n

During research for this essay, the author learned much from the work of the development scholar Cheryl Payer<\/a>, who wrote landmark books and papers on the influence of the Bank and Fund in the 1970s, 1980s and 1990s. This author may disagree with Payer\u2019s \u201csolutions\u201d \u2014 which, like those of most critics of the Bank and Fund, tend to be socialist \u2014 but many observations she makes about the global economy hold true regardless of ideology.<\/p>\n

\u201cIt is an explicit and basic aim of IMF programs,\u201d she wrote<\/a>, \u201cto discourage local consumption in order to free resources for export.\u201d<\/p>\n

This point cannot be stressed enough.<\/p>\n

The official narrative is that the Bank and Fund were designed<\/a> to \u201cfoster sustainable economic growth, promote higher standards of living, and reduce poverty.\u201d But the roads and dams the Bank builds are not designed to help improve transport and electricity for locals, but rather to make it easy for multinational corporations to extract wealth. And the bailouts the IMF provides aren\u2019t to \u201csave\u201d a country from bankruptcy \u2014 which would probably be the best thing for it in many cases \u2014 but rather to allow it to pay its debt with even more debt, so that the original loan doesn\u2019t turn into a hole on a Western bank\u2019s balance sheet.<\/p>\n

In her books on the Bank and Fund, Payer describes how the institutions claim that their loan conditionality enables borrowing countries \u201cto achieve a healthier balance of trade and payments.\u201d But the real purpose, she says, is \u201cto bribe the governments to prevent them from making the economic changes which would make them more independent and self-supporting.\u201d When countries pay back their structural adjustment loans, debt service is prioritized, and domestic spending is to be \u201cadjusted\u201d downwards.<\/p>\n

IMF loans were often allocated through a mechanism<\/a> called the \u201cstand-by agreement,\u201d a line of credit that released funds only as the borrowing government claimed to achieve certain objectives. From Jakarta to Lagos to Buenos Aires, IMF staff would fly in (always first or business class) to meet undemocratic rulers and offer them millions or billions of dollars in exchange for following their economic playbook.<\/p>\n

Typical IMF demands would include<\/a>:<\/p>\n

    \n
  1. Currency devaluation<\/li>\n
  2. Abolition or reduction of foreign exchange and import controls<\/li>\n
  3. Shrinking of domestic bank credit<\/li>\n
  4. Higher interest rates<\/li>\n
  5. Increased taxes<\/li>\n
  6. An end to consumer subsidies on food and energy<\/li>\n
  7. Wage ceilings<\/li>\n
  8. Restrictions on government spending, especially in healthcare and education<\/li>\n
  9. Favorable legal conditions and incentives for multinational corporations<\/li>\n
  10. Selling off state enterprises and claims on natural resources at fire sale prices<\/li>\n<\/ol>\n

    The World Bank had its own playbook, too. Payer gives examples<\/a>:<\/p>\n

      \n
    1. The opening up of previously remote regions through transportation and telecommunications investments<\/li>\n
    2. Aiding multinational corporations in the mining sector<\/li>\n
    3. Insisting on production for export<\/li>\n
    4. Pressuring borrowers to improve legal privileges for the tax liabilities of foreign investment<\/li>\n
    5. Opposing minimum wage laws and trade union activity<\/li>\n
    6. Ending protections for locally-owned businesses<\/li>\n
    7. Financing projects that appropriate land, water and forests from poor people and hand them to multinational corporations<\/li>\n
    8. Shrinking manufacturing and food production at the expense of the export of natural resources and raw goods<\/li>\n<\/ol>\n

      Third World governments have historically been forced to agree to a mix of these policies \u2014 sometimes known as the \u201cWashington Consensus\u201d<\/a> \u2014 in order to trigger the ongoing release of Bank and Fund loans.<\/p>\n

      The former colonial powers tend to focus their \u201cdevelopment\u201d lending on former colonies or areas of influence: France in West Africa, Japan in Indonesia, Britain in East Africa and South Asia and the U.S. in Latin America. A notable example is the CFA zone, where 180 million people in 15 African countries are still forced to use<\/a> a French colonial currency. At the suggestion of the IMF, in 1994 France devalued the CFA by 50%, devastating<\/a> the savings and purchasing power of tens of millions of people living in countries ranging from Senegal to Ivory Coast to Gabon, all to make raw goods exports more competitive<\/a>.<\/p>\n

      The outcome of Bank and Fund policies on the Third World has been remarkably similar to what was experienced under traditional imperialism: wage deflation, a loss of autonomy and agricultural dependency. The big difference is that in the new system, the sword and the gun have been replaced by weaponized debt.<\/p>\n

      Over the last 30 years, structural adjustment has intensified with regard to the average number of conditions in loans extended by the Bank and Fund. Before 1980, the Bank did not generally make structural adjustment loans, most everything was project- or sector-specific. But since then, \u201cspend this however you want\u201d bailout loans with economic quid pro quos have become a growing part of Bank policy. For the IMF, they are its lifeblood.<\/p>\n

      For example, when the IMF bailed out<\/a> South Korea and Indonesia with $57 billion and $43 billion packages during the 1997 Asian Financial Crisis, it imposed heavy conditionality. Borrowers had to sign agreements that \u201clooked more like Christmas trees than contracts, with anywhere from 50 to 80 detailed conditions covering everything from the deregulation of garlic monopolies to taxes on cattle feed and new environmental laws,\u201d according to political scientist Mark S. Copelvitch.<\/p>\n

      A 2014 analysis<\/a> showed that the IMF had attached, on average, 20 conditions to each loan it gave out in the previous two years, a historic increase. Countries like Jamaica, Greece and Cyprus have borrowed in recent years with an average of 35<\/a> conditions each. It is worth noting that Bank and Fund conditions have never included protections on free speech or human rights, or restrictions on military spending or police violence.<\/p>\n

      An added twist of Bank and Fund policy is what is known as the \u201cdouble loan\u201d: money is lent to build, for example, a hydroelectric dam, but most if not all of the money gets paid to Western companies. So, the Third World taxpayer is saddled with principal and interest, and the North gets paid back double.<\/p>\n

      The context for the double loan is that dominant states extend credit through the Bank and Fund to former colonies, where local rulers often spend the new cash directly back to multinational companies who profit from advising, construction or import services. The ensuing and required currency devaluation, wage controls and bank credit tightening imposed by Bank and Fund structural adjustment disadvantage local entrepreneurs who are stuck in a collapsing and isolated fiat system, and benefit multinationals who are dollar, euro or yen native.<\/p>\n

      Another key source for this author has been the masterful book \u201cThe Lords of Poverty<\/a>\u201d by historian Graham Hancock, written to reflect on the first five decades of Bank and Fund policy and foreign assistance in general. <\/p>\n

      \u201cThe World Bank,\u201d Hancock writes, \u201cis the first to admit that out of every $10 that it receives, around $7 are in fact spent on goods and services from the rich industrialized countries.\u201d<\/p>\n

      In the 1980s, when Bank funding was expanding rapidly<\/a> around the world, he noted that \u201cfor every US tax dollar contributed, 82 cents are immediately returned to American businesses in the form of purchase orders.\u201d This dynamic applies not just to loans but also to aid. For example, when the U.S. or Germany sends a rescue plane to a country in crisis, the cost of transport, food, medicine and staff salaries are added to what is known as ODA, or \u201cofficial development assistance.\u201d On the books, it looks like aid and assistance. But most of the money is paid right back to Western companies and not invested locally.<\/p>\n

      Reflecting on the Third World Debt Crisis of the 1980s, Hancock noted that \u201c70 cents out of every dollar of American assistance never actually left the United States.\u201d The U.K., for its part, spent a whopping 80% of its aid during that time directly on British goods and services. <\/p>\n

      \u201cOne year,\u201d Hancock writes, \u201cBritish tax-payers provided multilateral aid agencies with 495 million pounds; in the same year, however, British firms received contracts worth 616 million pounds.\u201d Hancock said that multilateral agencies could be \u201crelied upon to purchase British goods and services with a value equivalent to 120% of Britain\u2019s total multilateral contribution.\u201d<\/p>\n

      One starts to see how the \u201caid and assistance\u201d we tend to think of as charitable is really quite the opposite.<\/p>\n

      And as Hancock points out, foreign-aid budgets always increase no matter the outcome. Just as progress is evidence that the aid is working, a \u201clack of progress is evidence that the dosage has been insufficient and must be increased.\u201d<\/p>\n

      Some development advocates, he writes, \u201cargue that it would be inexpedient to deny aid to the speedy (those who advance); others, that it would be cruel to deny it to the needy (those who stagnate). Aid is thus like champagne: in success you deserve it, in failure you need it.\u201d<\/p>\n

      IV. The Debt Trap<\/h2>\n
      \n

      \u201cThe concept of the Third World or the South and the policy of official aid are inseparable. They are two sides of the same coin. The Third World is the creation of the foreign aid: without foreign aid there is no Third World.\u201d <\/em><\/p>\n

      \u2013<\/em>P\u00e9ter Tam\u00e1s Bauer<\/em><\/a><\/p>\n<\/blockquote>\n

      According to the World Bank, its objective<\/a> is \u201cto help raise living standards in developing countries by channeling financial resources from developed countries to the developing world.\u201d<\/p>\n

      But what if the reality is the opposite?<\/p>\n

      At first, beginning in the 1960s, there was an enormous flow of resources from rich countries to poor ones. This was ostensibly done to help them develop. Payer writes<\/a> that it was long considered \u201cnatural\u201d for capital to \u201cflow in one direction only from the developed industrial economies to the Third World.\u201d<\/p>\n

      <\/figure>\n

      But, as she reminds us, \u201cat some point the borrower has to pay more to his creditor than he has received from the creditor and over the life of the loan this excess is much higher than the amount that was originally borrowed.\u201d<\/p>\n

      In global economics, this point happened in 1982, when the flow of resources permanently reversed. <\/em>Ever since, there has been an annual net flow of funds from poor countries to rich ones. This began<\/a> as an average of $30 billion per year flowing from South to North in the mid-to-late 1980s, and is today<\/a> in the range of trillions of dollars per year. Between 1970 and 2007 \u2014 from the end of the gold standard to the Great Financial Crisis \u2014 the total debt service paid by poor countries to rich ones was $7.15 trillion<\/a>.<\/p>\n

      <\/figure>\n

      To give an example of what this might look like in a given year, in 2012 developing countries received $1.3 trillion<\/a>, including all income, aid and investment. But that same year, more than $3.3 trillion flowed out. In other words, according<\/a> to anthropologist Jason Hickel, \u201cdeveloping countries sent $2 trillion more to the rest of the world than they received.\u201d <\/p>\n

      When all the flows were added up from 1960 to 2017, a grim truth emerged: $62 trillion<\/a> was drained out of the developing world, the equivalent of 620 Marshall Plans in today\u2019s dollars.<\/p>\n

      The IMF and World Bank were supposed to fix balance of payments issues, and help poor countries grow stronger and more sustainable. The evidence has been the direct opposite.<\/p>\n

      \u201cFor every $1 of aid that developing countries receive,\u201d Hickel writes, \u201cthey lose $24 in net outflows.\u201d Instead of ending exploitation and unequal exchange, studies show<\/a> that structural adjustment policies grew them in a massive way.<\/p>\n

      Since 1970, the external public debt of developing countries has increased from $46 billion to $8.7 trillion<\/a>. In the past 50 years, countries like India and the Philippines and the Congo now owe their former colonial masters 189 times<\/em> the amount they owed in 1970. They have paid $4.2 trillion<\/a> on interest payments alone<\/em> since 1980.<\/p>\n

      <\/figure>\n

      Even Payer \u2014 whose 1974 book \u201cThe Debt Trap<\/a>\u201d used economic flow data to show how the IMF ensnared poor countries by encouraging them to borrow more than they could possibly pay back \u2014 would be shocked at the size of today\u2019s debt trap.<\/p>\n

      Her observation that \u201cthe average citizen of the US or Europe may not be aware of this enormous drain in capital from parts of the world they think of as being pitifully poor\u201d still rings true today. To this author\u2019s own shame, he did not know about the true nature of the global flow of funds and simply assumed that rich countries subsidized poor ones before embarking on the research for this project. The end result is a literal Ponzi scheme, where by the 1970s, Third World debt was so big that it was only possible to service with new debt. It has been the same ever since.<\/p>\n

      Many critics of the Bank and Fund assume that these institutions are working with their heart in the right place, and when they do fail, it is because of mistakes, waste or mismanagement.<\/p>\n

      It is the thesis of this essay that this is not true, and that the foundational goals of the Fund and Bank are not to fix poverty but rather to enrich creditor nations at the expense of poor ones.<\/p>\n

      This author is simply not willing to believe that a permanent flow of funds from poor countries to rich ones since 1982 is a \u201cmistake.\u201d The reader may dispute that the arrangement is intentional, and rather may believe it is an unconscious structural outcome. The difference hardly matters to the billions of people the Bank and Fund have impoverished.<\/p>\n

      V. Replacing the Colonial Resource Drain<\/h2>\n
      \n

      \u201cI am so tired of waiting. Aren\u2019t you, for the world to become good and beautiful and kind? Let us take a knife and cut the world in two \u2014 and see what worms are eating at the rind.\u201d <\/em><\/p>\n

      \u2013<\/em>Langston Hughes<\/em><\/a><\/p>\n<\/blockquote>\n

      By the end of the 1950s, Europe and Japan had largely recovered from war and resumed significant industrial growth, while Third World countries ran out of funds. Despite having healthy balance sheets in the 1940s and early 1950s, poor, raw-material-exporting countries ran into balance-of-payments issues<\/a> as the value of their commodities tanked in the wake of the Korean War. This is when the debt trap began, and when the Bank and Fund started the floodgates of what would end up becoming trillions of dollars of lending.<\/p>\n

      This era also marked the official end of colonialism, as European empires drew back from their imperial possessions. The establishment assumption<\/a> in international development is that the economic success of nations is due \u201cprimarily to their internal, domestic conditions. High-income countries have achieved economic success,\u201d the theory goes, \u201cbecause of good governance, strong institutions and free markets. Lower-income countries have failed to develop because they lack these things, or because they suffer from corruption, red tape and inefficiency.\u201d <\/p>\n

      This is certainly true. But another major reason why rich countries are rich and poor countries are poor is that the former looted the latter for hundreds of years during the colonial period.<\/p>\n

      \u201cBritain\u2019s industrial revolution,\u201d Jason Hickel writes<\/a>, \u201cdepended in large part on cotton, which was grown on land forcibly appropriated from Indigenous Americans, with labor appropriated from enslaved Africans. Other crucial inputs required by British manufacturers \u2014 hemp, timber, iron, grain \u2014 were produced using forced labor on serf estates in Russia and Eastern Europe. Meanwhile, British extraction from India and other colonies funded more than half the country\u2019s domestic budget, paying for roads, public buildings, the welfare state \u2014 all the markets of modern development \u2014 while enabling the purchase of material inputs necessary for industrialization.\u201d<\/p>\n

      The theft dynamic was described by Utsa and Prabhat Patnaik in their book \u201cCapital And Imperialism<\/a>\u201d: colonial powers like the British empire would use violence to extract raw materials from weak countries, creating a \u201ccolonial drain\u201d of capital that boosted and subsidized life in London, Paris and Berlin. Industrial nations would transform these raw materials into manufactured goods, and sell them back to weaker nations, profiting massively while also crowding out local production. And \u2014 critically \u2014 they would keep inflation at home down by suppressing wages in the colonial territories. Either through outright slavery or through paying well below the global market rate.<\/p>\n

      As the colonial system began to falter, the Western financial world faced a crisis. The Patnaiks argue that the Great Depression was a result not simply of changes in Western monetary policy, but also of the colonial drain slowing down. The reasoning is simple: rich countries had built a conveyor belt of resources flowing from poor countries, and when the belt broke, so did everything else. Between the 1920s and 1960s, political colonialism became virtually extinct. Britain, the U.S., Germany, France, Japan, the Netherlands, Belgium and other empires were forced to give up control over more than half of the world\u2019s territory and resources.<\/p>\n

      As the Patnaiks write, imperialism is \u201can arrangement for imposing income deflation on the Third World population in order to get their primary commodities without running into the problem of increasing supply price.\u201d <\/p>\n

      Post 1960, this became the new function for the World Bank and IMF: recreating the colonial drain from poor countries to rich countries that was once maintained by straightforward imperialism.<\/p>\n

      <\/figure>\n

      Officials in the U.S., Europe and Japan wanted to achieve \u201cinternal equilibrium\u201d \u2014 in other words, full employment. But they realized they could not do this via subsidy inside an isolated system, or else inflation would run rampant. To achieve their goal would require external input from poorer countries. The extra surplus value<\/a> extracted by the core from workers in the periphery is known as \u201cimperialist rent.\u201d If industrial countries could get cheaper materials and labor, and then sell the finished goods back at a profit, they could inch closer to the technocrat dream economy. And they got their wish: as of 2019, wages paid to workers in the developing world were 20%<\/a> the level of wages paid to workers in the developed world.<\/p>\n

      As an example of how the Bank recreated the colonial drain dynamic, Payer gives the classic case<\/a> of 1960s Mauritania in northwest Africa. A mining project called MIFERMA was signed by French occupiers before the colony became independent. The deal eventually became \u201cjust an old-fashioned enclave project: a city in a desert and a railroad leading to the ocean,\u201d as the infrastructure was solely focused on spiriting minerals away to international markets. In 1969, when the mine accounted for 30%<\/a> of Mauritania\u2019s GDP and 75% of its exports, 72% of the income was sent abroad, and \u201cpractically all the income distributed locally to employees evaporated in imports.\u201d When the miners protested against the neocolonial arrangement, security forces savagely put them down.<\/p>\n

      <\/figure>\n

      MIFERMA is a stereotypical example of the kind of \u201cdevelopment\u201d that would be imposed on the Third World everywhere from the Dominican Republic to Madagascar to Cambodia. And all of these projects rapidly expanded in the 1970s, thanks to the petrodollar system.<\/p>\n

      Post-1973, Arab OPEC countries with enormous surpluses from skyrocketing oil prices sank their profits into deposits and treasuries in Western banks, which needed a place to lend out their growing resources. Military dictators across Latin America, Africa and Asia made great targets: they had high time preferences and were happy to borrow against future generations.<\/p>\n

      Helping expedite loan growth was the \u201cIMF put\u201d: private banks started to believe (correctly) that the IMF would bail out countries if they defaulted, protecting their investments. Moreover, interest rates in the mid-1970s were often in negative real territory, further encouraging borrowers. This \u2014 combined with World Bank president Robert McNamara\u2019s insistence that assistance expand dramatically \u2014 resulted in a debt frenzy. U.S. banks, for example, increased their Third World loan portfolio by 300%<\/a> to $450 billion between 1978 and 1982.<\/p>\n

      The problem was that these loans were in large part floating interest rate agreements, and a few years later, those rates exploded as the U.S. Federal Reserve raised the global cost of capital close to 20%. The growing debt burden combined with the 1979 oil price shock and the ensuing global collapse<\/a> in the price of commodities that power the value of developing country exports paved the way for the Third World Debt Crisis. To make matters worse, very little of the money borrowed by governments during the debt frenzy was actually invested in the average citizen.<\/p>\n

      <\/figure>\n

      In their aptly named book \u201cDebt Squads<\/a>,\u201d investigative journalists Sue Branford and Bernardo Kucinski explain that between 1976 and 1981, Latin governments (of which 18 of 21 were dictatorships) borrowed $272.9 billion. Out of that, 91.6% was spent on debt servicing, capital flight and building up regime reserves. Only 8.4% was used on domestic investment, and even out of that, much was wasted.<\/p>\n

      Brazilian civil society advocate Carlos Ayuda vividly described<\/a> the effect of the petrodollar-fueled drain on his own country:<\/p>\n

      \n

      \u201cThe military dictatorship used the loans to invest in huge infrastructure projects \u2014 particularly energy projects\u2026 the idea behind creating an enormous hydroelectric dam and plant in the middle of the Amazon, for example, was to produce aluminum for export to the North\u2026 the government took out huge loans and invested billions of dollars in building the Tucuru\u00ed dam in the late 1970s, destroying native forests and removing massive numbers of native peoples and poor rural people that had lived there for generations. The government would have razed the forests, but the deadlines were so short they used Agent Orange to defoliate the region and then submerged the leafless tree trunks underwater\u2026 the hydroelectric plant\u2019s energy [was then] sold at $13-20 per megawatt when the actual price of production was $48. So the taxpayers provided subsidies, financing cheap energy for transnational corporations to sell our aluminum in the international market.\u201d<\/p>\n<\/blockquote>\n

      In other words, the Brazilian people paid foreign creditors for the service of destroying their environment, displacing the masses and selling their resources.<\/p>\n

      Today the drain from low- and middle-income countries is staggering. In 2015, it totaled<\/a> 10.1 billion tons of raw materials and 182 million person-years of labor: 50% of all goods and 28% of all labor used that year by high-income countries.<\/p>\n

      VI. A Dance With Dictators<\/h2>\n
      \n

      \u201cHe may be a son of a bitch, but he\u2019s our son of a bitch.\u201d <\/em><\/p>\n

      \u2013<\/em>Franklin Delano Roosevelt<\/em><\/a><\/p>\n<\/blockquote>\n

      Of course, it takes two sides to finalize a loan from the Bank or Fund. The problem is that the borrower is typically an unelected or unaccountable leader, who makes the decision without consulting with and without a popular mandate from their citizens.<\/p>\n

      As Payer writes in \u201cThe Debt Trap,\u201d \u201cIMF programs are politically unpopular, for the very good concrete reasons that they hurt local business and depress the real income of the electorate. A government which attempts to carry out the conditions in its Letter of Intent to the IMF is likely to find itself voted out of office.\u201d<\/p>\n

      Hence, the IMF prefers to work with undemocratic clients who can more easily dismiss troublesome judges and put down street protests. According to Payer, the military coups in Brazil in 1964, Turkey in 1960, Indonesia in 1966, Argentina in 1966 and the Philippines in 1972 were examples of IMF-opposed leaders being forcibly replaced by IMF-friendly ones. Even if the Fund wasn\u2019t directly involved in the coup, in each of these cases, it arrived enthusiastically a few days, weeks or months later to help the new regime implement structural adjustment.<\/p>\n

      The Bank and Fund share a willingness to support abusive governments. Perhaps surprisingly, it was the Bank that started the tradition. According to development researcher Kevin Danaher<\/a>, \u201cthe Bank\u2019s sad record of supporting military regimes and governments that openly violated human rights began on August 7, 1947, with a $195 million reconstruction loan to the Netherlands. Seventeen days before the Bank approved the loan, the Netherlands had unleashed a war against anti-colonialist nationalist in its huge overseas empire in the East Indies, which had already declared its independence as the Republic of Indonesia.\u201d<\/p>\n

      \u201cThe Dutch,\u201d Danaher writes, \u201csent 145,000 troops (from a nation with only 10 million inhabitants at the time, economically struggling at 90% of 1939 production) and launched a total economic blockade of nationalist-held areas, causing considerable hunger and health problems among Indonesia\u2019s 70 million inhabitants.\u201d<\/p>\n

      In its first few decades the Bank funded many such colonial schemes, including $28 million<\/a> for apartheid Rhodesia in 1952, as well as loans to Australia, the United Kingdom, and Belgium to \u201cdevelop\u201d colonial possessions in Papua New Guinea, Kenya and the Belgian Congo.<\/p>\n

      In 1966, the Bank directly defied<\/a> the United Nations, \u201ccontinuing to lend money to South Africa and Portugal despite resolutions of the General Assembly calling on all UN-affiliated agencies to cease financial support for both countries,\u201d according to Danaher. <\/p>\n

      Danaher writes that \u201cPortugal\u2019s colonial domination of Angola and Mozambique and South Africa\u2019s apartheid were flagrant violations of the UN charter. But the Bank argued that Article IV, Section 10 of its Charter which prohibits interference in the political affairs of any member, legally obliged it to disregard the UN resolutions. As a result the Bank approved loans of $10 million to Portugal and $20 million to South Africa after the UN resolution was passed.\u201d<\/p>\n

      Sometimes, the Bank\u2019s preference for tyranny was stark: it cut off lending to the democratically-elected Allende government in Chile in the early 1970s, but shortly after began to lend huge quantities of cash to Ceausescu\u2019s Romania, one of the world\u2019s worst police states. This is also an example of how the Bank and Fund, contrary to popular belief, didn\u2019t simply lend along Cold War ideological lines: for every right-wing Augusto Pinochet Ugarte or Jorge Rafael Videla client, there was a left-wing Josip Broz Tito or Julius Nyerere.<\/p>\n

      In 1979, Danaher notes<\/a>, 15 of the world\u2019s most repressive governments would receive a full third of all Bank loans. This even after the U.S. Congress and the Carter administration had stopped aid to four of the 15 \u2014 Argentina, Chile, Uruguay and Ethiopia \u2014 for \u201cflagrant human rights violations.\u201d Just a few years later, in El Salvador, the IMF made a $43 million<\/a> loan to the military dictatorship, just a few months after its forces committed the largest massacre in Cold War-era Latin America by annihilating the village of El Mozote<\/a>.<\/p>\n

      There were several books written about the Bank and the Fund in 1994, timed as 50-year retrospectives on the Bretton Woods institutions. \u201cPerpetuating Poverty<\/a>\u201d by Ian V\u00e0squez and Doug Bandow is one of those studies, and is a particularly valuable one as it provides a Libertarian analysis. Most critical studies of the Bank and Fund are from the left: but the Cato Institute\u2019s V\u00e1squez and Bandow saw many of the same problems.<\/p>\n

      \u201cThe Fund underwrites any government,\u201d they write, \u201chowever venal and brutal\u2026 China owed the Fund $600 million as of the end of 1989; in January 1990, just a few months after the blood had dried in Beijing\u2019s Tiananmen Square, the IMF held a seminar on monetary policy in the city.\u201d <\/p>\n

      V\u00e1squez and Bandow mention other tyrannical clients ranging from military Burma, to Pinochet\u2019s Chile, Laos, Nicaragua under Anastasio Somoza Debayle and the Sandinistas, Syria, and Vietnam. <\/p>\n

      \u201cThe IMF,\u201d they say, \u201chas rarely met a dictatorship that it did not like.\u201d<\/p>\n

      V\u00e1squez and Bandow detail<\/a> the Bank\u2019s relationship with the Marxist-Leninist Mengistu Haile Mariam regime in Ethiopia, where it provided for as much as 16% of the government\u2019s annual budget while it had one of the worst human rights records in the world. The Bank\u2019s credit arrived just as Mengistu\u2019s forces were \u201cherding people into concentration camps and collective farms.\u201d They also point out how the Bank gave the Sudanese regime $16 million while it was driving 750,000 refugees out of Khartoum into the desert, and how it gave hundreds of millions of dollars to Iran \u2014 a brutal theocratic dictatorship \u2014 and Mozambique, whose security forces were infamous for torture, rape and summary executions.<\/p>\n

      In his 2011 book \u201cDefeating Dictators<\/a>,\u201d the celebrated Ghanaian development economist George Ayittey detailed a long list of \u201caid-receiving autocrats\u201d: Paul Biya, Idriss D\u00e9by, Lansana Cont\u00e9, Paul Kagame, Yoweri Museveni, Hun Sen, Islam Karimov, Nursultan Nazarbayev and Emomali Rahmon. He pointed out that the Fund had dispensed $75 billion to these nine tyrants alone.<\/p>\n

      In 2014, a report<\/a> was released by the International Consortium of Investigative Journalists, alleging that the Ethiopian government had used part of a $2 billion Bank loan to forcibly relocate 37,883 indigenous Anuak families. This was 60% of the country\u2019s entire Gambella province. Soldiers \u201cbeat, raped, and killed\u201d Anuak who refused to leave their homes. Atrocities were so bad<\/a> that South Sudan<\/em> granted refugee status to Anuaks streaming in from neighboring Ethiopia. A Human Rights Watch report<\/a> said that the stolen land was then \u201cleased by the government to investors\u201d and that the Bank\u2019s money was \u201cused to pay the salaries of government officials who helped carry out the evictions.\u201d The Bank approved new funding for this \u201cvillagization\u201d program even after allegations of mass human rights violations emerged.<\/p>\n

      <\/figure>\n

      It would be a mistake to leave Mobutu Sese Soko\u2019s Zaire out of this essay. The recipient of billions of dollars of Bank and Fund credit during his bloody 32-year reign, Mobutu pocketed 30%<\/a> of incoming aid and assistance and let his people starve. He complied with 11<\/a> IMF structural adjustments: during one in 1984, 46,000<\/a> public school teachers were fired and the national currency was devalued by 80%. Mobutu called this austerity \u201ca bitter pill which we have no alternative but to swallow,\u201d but didn\u2019t sell any of his 51 Mercedes, any of his 11 chateaus in Belgium or France, or even his Boeing 747 or 16th century Spanish castle. <\/p>\n

      Per capita income declined in each year of his rule on average by 2.2%<\/a>, leaving more than 80% of the population in absolute poverty. Children routinely died before the age of five, and swollen-belly syndrome was rampant. It is estimated that Mobutu personally stole $5 billion<\/a>, and presided over another $12 billion<\/a> in capital flight, which together would have been more than enough to wipe the country\u2019s $14 billion debt clean at the time of his ouster. He looted and terrorized his people, and could not have done it without the Bank and Fund, which continued to bail him out even though it was clear he would never repay his debts.<\/p>\n

      That all said, the true poster boy for the Bank and Fund\u2019s affection for dictators might be Ferdinand Marcos. In 1966, when Marcos came to power, the Philippines was the second-most prosperous country in Asia, and the country\u2019s foreign debt<\/a> stood at roughly $500 million. By the time Marcos was removed in 1986, the debt stood at $28.1 billion.<\/p>\n

      As Graham Hancock writes<\/a> in \u201cLords Of Poverty,\u201d most of these loans “had been contracted to pay for extravagant development schemes which, although irrelevant to the poor, had pandered to the enormous ego of the head of state\u2026 a painstaking two-year investigation established beyond serious dispute that he had personally expropriated and sent out of the Philippines more than $10 billion. Much of this money \u2014 which of course, should have been at the disposal of the Philippine state and people \u2014 had disappeared forever in Swiss bank accounts.\u201d<\/p>\n

      \u201c$100 million,\u201d Hancock writes, \u201cwas paid for the art collection for Imelda Marcos\u2026 her tastes were eclectic and included six Old Masters purchased from the Knodeler Gallery in New York for $5 million, a Francis Bacon canvas supplied by the Marlborough Gallery in London, and a Michelangelo, \u2018Madonna and Child\u2019 bought from Mario Bellini in Florence for $3.5 million.\u201d<\/p>\n

      \u201cDuring the last decade of the Marcos regime,\u201d he says, \u201cwhile valuable art treasuries were being hung on penthouse walls in Manhattan and Paris, the Philippines had lower nutritional standards than any other nation in Asia with the exception of war-torn Cambodia.\u201d<\/p>\n

      To contain popular unrest, Hancock writes that Marcos banned strikes and \u201cunion organizing was outlawed in all key industries and in agriculture. Thousands of Filipinos were imprisoned for opposing the dictatorship and many were tortured and killed. Meanwhile the country remained consistently listed among the top recipients of both US and World Bank development assistance.\u201d<\/p>\n

      After the Filipino people pushed Marcos out, they still<\/a> had to pay an annual sum of anywhere between 40% and 50% of the entire value of their exports \u201cjust to cover the interest on the foreign debts that Marcos incurred.\u201d<\/p>\n

      One would think that after ousting Marcos, the Filipino people would not have to owe the debt he incurred on their behalf without consulting them. But that is not how it has worked in practice. In theory, this concept is called \u201codious debt\u201d and was invented<\/a> by the U.S. in 1898 when it repudiated Cuba\u2019s debt after Spanish forces were ousted from the island. <\/p>\n

      American leaders determined that debts \u201cincurred to subjugate a people or to colonize them\u201d were not legitimate. But the Bank and Fund have never followed this precedent during their 75 years of operations. Ironically, the IMF has an article on its website suggesting<\/a> that Somoza, Marcos, Apartheid South Africa, Haiti\u2019s \u201cBaby Doc\u201d and Nigeria\u2019s Sani Abacha all borrowed billions illegitimately, and that the debt should be written off for their victims, but this remains a suggestion unfollowed.<\/p>\n

      Technically and morally speaking, a large percentage of Third World debt should be considered \u201codious\u201d and not owed anymore by the population should their dictator be forced out. After all, in most cases, the citizens paying back the loans didn\u2019t elect their leader and didn\u2019t choose to borrow the loans that they took out against their future.<\/p>\n

      In July 1987, the revolutionary leader Thomas Sankara gave a speech<\/a> to the Organistion of African Unity (OAU) in Ethiopia, where he refused to pay the colonial debt of Burkina Faso, and encouraged other African nations to join him. <\/p>\n

      \u201cWe cannot pay,\u201d he said, \u201cbecause we are not responsible for this debt.\u201d <\/p>\n

      Sankara famously boycotted the IMF and refused structural adjustment. Three months after his OAU speech, he was assassinated<\/a> by Blaise Compaor\u00e9, who would install his own 27-year military regime that would receive four<\/a> structural adjustment loans from the IMF and borrow dozens of times<\/a> from the World Bank for various infrastructure and agriculture projects. Since Sankara\u2019s death, few heads of state have been willing to take a stand to repudiate their debts.<\/p>\n

      <\/figure>\n

      One big exception was Iraq: after the U.S. invasion and ouster of Saddam Hussein in 2003, American authorities managed to get some of the debt incurred by Hussein to be considered \u201codious\u201d and forgiven<\/a>. But this was a unique case: for the billions of people who suffered under colonialists or dictators, and have since been forced to pay their debts plus interest, they have not gotten this special treatment.<\/p>\n

      In recent years, the IMF has even acted as a counter-revolutionary force against democratic movements. In the 1990s, the Fund was widely criticized on the left<\/a> and the right<\/a> for helping to destabilize the former Soviet Union as it descended into economic chaos and congealed into Vladimir Putin\u2019s dictatorship. In 2011, as the Arab Spring protests<\/a> emerged across the Middle East, the Deauville Partnership with Arab Countries in Transition<\/a> was formed and met in Paris. <\/p>\n

      Through this mechanism, the Bank and Fund led<\/a> massive loan offers to Yemen, Tunisia, Egypt, Morocco and Jordan \u2014 \u201cArab countries in transition\u201d \u2014 in exchange for structural adjustment. As a result, Tunisia\u2019s foreign debt skyrocketed, triggering two<\/a> new IMF loans, marking the first time that the country had borrowed from the Fund since 1988. The austerity measures paired with these loans forced the devaluation of the Tunisian dinar, which spiked<\/a> prices. National protests broke out<\/a> as the government continued to follow the Fund playbook with wage freezes, new taxes and \u201cearly retirement\u201d in the public sector.<\/p>\n

      Twenty-nine-year-old protestor Warda Atig summed up<\/a> the situation: \u201cAs long as Tunisia continues these deals with the IMF, we will continue our struggle,\u201d she said. \u201cWe believe that the IMF and the interests of people are contradictory. An escape from submission to the IMF, which has brought Tunisia to its knees and strangled the economy, is a prerequisite to bring about any real change.\u201d<\/p>\n

      VII. Creating Agricultural Dependence<\/h2>\n
      \n

      “The idea that developing countries should feed themselves is an anachronism from a bygone era. They could better ensure their food security by relying on the U.S. agricultural products, which are available in most cases at lower cost.\u201d<\/em><\/p>\n

      \u2013<\/em>Former U.S. Secretary of Agriculture John Block<\/em><\/a><\/p>\n

      <\/em><\/p>\n<\/blockquote>\n

      As a result of Bank and Fund policy, all across Latin America, Africa, the Middle East, and South and East Asia, countries which once grew their own food now import it from rich countries. Growing one\u2019s own food is important, in retrospect, because in the post-1944 financial system, commodities are not priced with one\u2019s local fiat currency: they are priced in the dollar.<\/p>\n

      Consider the price of wheat, which ranged<\/a> between $200 and $300 between 1996 and 2006. It has since skyrocketed, peaking at nearly $1,100 in 2021. If your country grew its own wheat, it could weather the storm. If your country had to import wheat, your population risked starvation. This is one reason why countries like Pakistan<\/a>, Sri Lanka<\/a>, Egypt<\/a>, Ghana<\/a> and Bangladesh<\/a> are all currently turning to the IMF for emergency loans.<\/p>\n

      Historically, where the Bank did give loans, they were mostly<\/a> for \u201cmodern,\u201d large-scale, mono-crop agriculture and for resource extraction: not for the development of local industry, manufacturing or consumption farming. Borrowers were encouraged to focus on raw materials exports (oil, minerals, coffee, cocoa, palm oil, tea, rubber, cotton, etc.), and then pushed to import finished goods, foodstuffs and the ingredients for modern agriculture like fertilizer, pesticides, tractors and irrigation machinery. The result is that societies like Morocco<\/a> end up importing wheat and soybean oil instead of thriving on native couscous and olive oil, \u201cfixed\u201d to become dependent. Earnings were typically used not to benefit farmers, but to service<\/a> foreign debt, purchase weapons, import luxury goods, fill Swiss bank accounts and put down dissent.<\/p>\n

      Consider some of the world\u2019s poorest countries. As of 2020, after 50 years of Bank and Fund policy, Niger\u2019s exports were 75%<\/a> uranium; Mali\u2019s 72%<\/a> gold; Zambia\u2019s 70%<\/a> copper; Burundi\u2019s 69%<\/a> coffee; Malawi\u2019s 55%<\/a> tobacco; Togo\u2019s 50%<\/a> cotton; and on it goes. At times in past decades, these single exports supported virtually all of these countries\u2019 hard currency earnings. This is not a natural state of affairs. These items are not mined or produced for local consumption, but for French nuclear plants, Chinese electronics, German supermarkets, British cigarette makers, and American clothing companies. In other words, the energy of the labor force of these nations has been engineered toward feeding and powering other civilizations, instead of nourishing and advancing their own.<\/p>\n

      Researcher Alicia Koren wrote<\/a> about the typical agricultural impact of Bank policy in<\/a> Costa Rica, where the country\u2019s \u201cstructural adjustment called for earning more hard currency to pay off foreign debt; forcing farmers who traditionally grew beans, rice, and corn for domestic consumption to plant non-traditional agricultural exports such as ornamental plants, flowers, melons, strawberries, and red peppers\u2026 industries that exported their products were eligible for tariff and tax exemptions not available to domestic producers.\u201d<\/p>\n

      \u201cMeanwhile,\u201d Koren wrote, \u201cstructural adjustment agreements removed support for domestic production\u2026 while the North pressured Southern nations to eliminate subsidies and \u2018barriers to trade,\u2019 Northern governments pumped billions of dollars into their own agricultural sectors, making it impossible for basic grains growers in the South to compete with the North\u2019s highly subsidized agricultural industry.\u201d<\/p>\n

      Koren extrapolated her Costa Rica analysis to make a broader point<\/a>: \u201cStructural adjustment agreements shift public spending subsidies from basic supplies, consumed mainly by the poor and middle classes, to luxury export crops produced for affluent foreigners.\u201d Third World countries were not seen as body politics but as companies that needed to increase revenues and decrease expenditures.<\/p>\n

      The testimony<\/a> of a former Jamaican official is especially telling: \u201cWe told the World Bank team that farmers could hardly afford credit, and that higher rates would put them out of business. The Bank told us in response that this means \u2018The market is telling you that agriculture is not the way to go for Jamaica\u2019 \u2014 they are saying we should give up farming altogether.\u201d <\/p>\n

      \u201cThe World Bank and IMF,\u201d the official said, \u201cdon\u2019t have to worry about the farmers and local companies going out of business, or starvation wages or the social upheaval that will result. They simply assume that it is our job to keep our national security forces strong enough to suppress any uprising.\u201d <\/p>\n

      Developing governments are stuck: faced with insurmountable debt, the only factor they really control in terms of increasing revenue is deflating wages. If they do this, they must provide basic food subsidies, or else they will be overthrown. And so the debt grows.<\/p>\n

      Even when developing countries try to produce their own food, they are crowded out by a centrally-planned global trade market. For example, one would think that the cheap labor in a place like West Africa would make it a better exporter of peanuts than the United States. But since Northern countries pay an estimated $1 billion<\/a> in subsidies to their agriculture industries every single day, Southern countries often struggle to be competitive. What\u2019s worse, 50 or 60 countries are often directed<\/a> to focus on the very same crops, crowding each other out in the global marketplace. Rubber, palm oil, coffee, tea and cotton are Bank favorites, as the poor masses can\u2019t eat them.<\/p>\n

      It is true that the Green Revolution<\/a> has created more food for the planet, especially in China and East Asia. But despite advances in agricultural technology, much of these new yields go to exports, and vast swathes of the world remain chronically malnourished and dependent. To this day, for example, African nations import about 85%<\/a> of their food. They pay more than $40 billion<\/a> per year \u2014 a number estimated to reach $110 billion<\/a> per year by 2025 \u2014 to buy from other parts of the world what they could grow themselves. Bank and Fund policy helped transform a continent of incredible agricultural riches into one reliant on the outside world to feed its people.<\/p>\n

      Reflecting on the results of this policy of dependency, Hancock challenges the widespread belief that the people of the Third World are \u201cfundamentally helpless.\u201d<\/p>\n

      \u201cVictims of nameless crises, disasters, and catastrophes,\u201d he writes, suffer from a perception that \u201cthey can do nothing unless we, the rich and powerful, intervene to save them from themselves.\u201d But as evidenced by the fact that our \u201cassistance\u201d has only made them more dependent on us, Hancock rightfully unmasks the notion that \u201conly we can save them\u201d as \u201cpatronizing and profoundly fallacious.\u201d<\/p>\n

      Far from playing the role of good samaritan, the Fund does not even follow the timeless human tradition, established<\/a> more than 4,000 years ago by Hammurabi in ancient Babylon, of forgiving interest after natural disasters. In 1985, a devastating earthquake hit Mexico City<\/a>, killing more than 5,000 people and causing $5 billion of damage. Fund staff \u2014 who claim to be saviors, helping to end poverty and save countries in crisis \u2014 arrived<\/a> a few days later, demanding to be repaid.<\/p>\n

      VIII. You Can\u2019t Eat Cotton<\/h2>\n
      \n

      \u201cDevelopment <\/em>prefers<\/em><\/a> crops that can\u2019t be eaten so the loans can be collected.\u201d<\/em><\/p>\n

      \u2013<\/em>Cheryl Payer<\/em><\/a><\/p>\n

      <\/em><\/p>\n<\/blockquote>\n

      The Togolese democracy advocate Farida Nabourema\u2019s own personal and family experience tragically matches the big picture of the Bank and Fund laid out thus far.<\/p>\n

      The way she puts it, after the 1970s oil boom, loans were poured into developing nations like Togo, whose unaccountable rulers didn\u2019t think twice about how they would repay the debt. Much of the money went into giant infrastructure projects that didn\u2019t help the majority of the people. Much was embezzled and spent on pharaonic estates. Most of these countries, she says, were ruled by single party-states or families. Once interest rates started to hike, these governments could no longer pay their debts: the IMF started \u201ctaking over\u201d by imposing austerity measures.<\/p>\n

      \u201cThese were new states that were very fragile,\u201d Nabourema says in an interview for this article. \u201cThey needed to invest strongly in social infrastructure, just as the European states were allowed to do after World War II. But instead, we went from free healthcare and education one day, to situations the next where it became too costly for the average person to get even basic medicine.\u201d <\/p>\n

      Regardless of what one thinks about state-subsidized medicine and schooling, eliminating it overnight was traumatic for poor countries. Bank and Fund officials, of course, have their own private healthcare solutions for their visits and their own private schools for their children whenever they have to live \u201cin the field.\u201d<\/p>\n

      Because of the forced cuts in public spending, Nabourema says, the state hospitals in Togo remain to this day in \u201ccomplete decay.\u201d Unlike the state-run, taxpayer-financed public hospitals in the capitals of former colonial powers in London and Paris, things are so bad in Togo\u2019s capital Lom\u00e9 that even water has to be prescribed.<\/p>\n

      \u201cThere was also,\u201d Nabourema said, \u201creckless privatization of our public companies.\u201d She explained how her father used to work at the Togolese steel agency. During privatization, the company was sold off to foreign actors for less than half of what the state built it for. <\/p>\n

      \u201cIt was basically a garage sale,\u201d she said.<\/p>\n

      Nabourema says that a free market system and liberal reforms work well when all participants are on an equal playing field. But that is not the case in Togo, which is forced to play by different rules. No matter how much it opens up, it can\u2019t change the strict policies of the U.S. and Europe, who aggressively subsidize their own industries and agriculture. Nabourema mentions how a subsidized influx of cheap used clothes from America, for example, ruined Togo\u2019s local textile industry. <\/p>\n

      “These clothes from the West,\u201d she said, \u201cput entrepreneurs out of business and littered our beaches.\u201d<\/p>\n

      The most horrible aspect, she said, is that the farmers \u2014 who made up 60% of the population in Togo in the 1980s \u2014 had their livelihoods turned upside down. The dictatorship needed hard currency to pay its debts, and could only do this by selling exports, so they began a massive campaign to sell cash crops. With the World Bank\u2019s help, the regime invested heavily in cotton, so much so that it now dominates 50% of the country\u2019s exports, destroying national food security.<\/p>\n

      In the formative years for countries like Togo, the Bank was the \u201clargest single lender for agriculture.\u201d Its strategy for fighting poverty was agricultural modernization: \u201cmassive transfers of capital, in the form of fertilizers, pesticides, earth-moving equipment, and expensive foreign consultants.\u201d <\/p>\n

      Nabourema\u2019s father was the one who revealed to her how imported fertilizers and tractors were diverted away from farmers growing consumption food, to farmers growing cash crops like cotton, coffee, cocoa and cashews. If someone was growing corn, sorghum or millet \u2014 the basic foodstuffs of the population \u2014 they didn\u2019t get access. <\/p>\n

      \u201cYou can\u2019t eat cotton,\u201d Nabourema reminds us.<\/p>\n

      Over time, the political elite in countries like Togo and Benin (where the dictator was literally a cotton mogul<\/a>) became the buyer of all the cash crops from all of the farms. They\u2019d have a monopoly on purchases, Nabourema says, and would buy the crops for prices so low that the peasants would barely make any money. This entire system \u2014 called \u201csotoco\u201d in Togo \u2014 was based on funding provided by the World Bank. <\/p>\n

      When farmers would protest, she said, they would get beaten or their farms would get burned to rubble. They could have just grown normal food and fed their families, like they had done for generations. But now they could not even afford the land: the political elite has been acquiring land at an outrageous rate, often through illegal means, jacking up the price.<\/p>\n

      As an example, Nabourema explains how the Togolese regime might seize 2,000 acres of land: unlike in a liberal democracy (like the one in France, which has built its civilization off the backs of countries like Togo), the judicial system is owned by the government, so there is no way to push back. So farmers, who used to be self-sovereign, are now forced to work as laborers on someone else\u2019s land to provide cotton to rich countries far away. The most tragic irony, Nabourema says, is that cotton is overwhelmingly grown in the north of Togo, in the poorest part of the country. <\/p>\n

      \u201cBut when you go there,\u201d she says, \u201cyou see it has made no one rich.\u201d<\/p>\n

      Women bear the brunt of structural adjustment. The misogyny of the policy is \u201cquite clear<\/a> in Africa, where women are the major farmers and providers of fuel, wood, and water,\u201d Danaher writes. And yet, a recent retrospective says, \u201cthe World Bank prefers to blame them for having too many children rather than reexamining its own policies.\u201d<\/p>\n

      As Payer writes<\/a>, for many of the world\u2019s poor, they are poor \u201cnot because they have been left behind or ignored by their country\u2019s progress, but because they are the victims of modernisation. Most have been crowded off the good farmland, or deprived of land altogether, by rich elites and local or foreign agribusiness. Their destitution has not \u2018ruled them out\u2019 of the development process; the development process has been the cause of their destitution.\u201d<\/p>\n

      \u201cYet the Bank,\u201d Payer says, \u201cis still determined to transform the agricultural practices of small farmers. Bank policy statements make it clear that the real aim is integration of peasant land into the commercial sector through the production of a \u2018marketable surplus\u2019 of cash crops.\u201d<\/p>\n

      Payer observed how, in the 1970s and 1980s, many small plotters still grew the bulk of their own food needs, and were not \u201cdependent on the market for the near-totality of their sustenance, as \u2018modern\u2019 people were.\u201d These people, however, were the target of the Bank\u2019s policies, which transformed them into surplus producers, and \u201coften enforced this transformation with authoritarian methods.\u201d<\/p>\n

      In a testimony in front of U.S. Congress in the 1990s, George Ayittey remarked<\/a> that \u201cif Africa were able to feed itself, it could save nearly $15 billion it wastes on food imports. This figure may be compared with the $17 billion Africa received in foreign aid from all sources in 1997.\u201d<\/p>\n

      In other words, if Africa grew its own food, it wouldn\u2019t need foreign aid. But if that were to happen, then poor countries wouldn\u2019t be buying billions of dollars of food per year from rich countries, whose economies would shrink as a result. So the West strongly resists any change.<\/p>\n

      IX. The Development Set<\/h2>\n
      \n

      Excuse me, friends, I must catch my jet<\/em><\/p>\n

      I’m off to join the Development Set<\/em><\/p>\n

      My bags are packed, and I’ve had all my shots<\/em><\/p>\n

      I have traveller’s checks and pills for the trots!<\/em><\/p>\n

      The Development Set is bright and noble<\/em><\/p>\n

      Our thoughts are deep and our vision global<\/em><\/p>\n

      Although we move with the better classes<\/em><\/p>\n

      Our thoughts are always with the masses<\/em><\/p>\n

      In Sheraton Hotels in scattered nations<\/em><\/p>\n

      We damn multinational corporations<\/em><\/p>\n

      Injustice seems easy to protest<\/em><\/p>\n

      In such seething hotbeds of social rest.<\/em><\/p>\n

      We discuss malnutrition over steaks<\/em><\/p>\n

      And plan hunger talks during coffee breaks.<\/em><\/p>\n

      Whether Asian floods or African drought<\/em><\/p>\n

      We face each issue with open mouth.<\/em><\/p>\n<\/blockquote>\n

      And so begins \u201cThe Development Set<\/a>,\u201d a 1976 poem by Ross Coggins that hits at the heart of the paternalistic and unaccountable nature of the Bank and the Fund.<\/p>\n

      The World Bank pays high, tax-free salaries, with very generous benefits. IMF staff are paid even better, and traditionally<\/a> were flown first or business class (depending on the distance), never economy. They stayed in five-star hotels, and even had a perk<\/a> to get free upgrades onto the supersonic Concorde. Their salaries, unlike wages made by people living under structural adjustment, were not capped<\/a> and always rose faster than the inflation rate.<\/p>\n

      Until the mid-1990s the janitors<\/a> cleaning the World Bank headquarters in Washington \u2014 mostly immigrants who fled from countries that the Bank and Fund had \u201cadjusted\u201d \u2014 were not even allowed to unionize. In contrast, Christine Lagarde\u2019s tax-free salary as head of the IMF was $467,940<\/a>, plus an additional $83,760 allowance. Of course, during her term from 2011 to 2019, she oversaw a variety of structural adjustments on poor countries, where taxes on the most vulnerable were almost always raised.<\/p>\n

      Graham Hancock notes<\/a> that redundancy payments at the World Bank in the 1980s \u201caveraged a quarter of a million dollars per person.\u201d When 700 executives lost their jobs in 1987, the money spent on their golden parachutes \u2014 $175 million \u2014 would have been enough, he notes, \u201cto pay for a complete elementary school education for 63,000 children from poor families in Latin America or Africa.\u201d<\/p>\n

      According to former World Bank head James Wolfensohn, from 1995 to 2005 there were more than 63,000<\/a> Bank projects in developing countries: the costs of \u201cfeasibility studies\u201d and travel and lodging for experts from industrialized countries alone absorbed as much as 25% of the total aid.<\/p>\n

      Fifty years after the creation of the Bank and Fund, \u201c90%<\/a> of the $12 billion per year in technical assistance was still spent on foreign expertise.\u201d That year, in 1994, George Ayittey noted that 80,000 Bank consultants worked on Africa alone, but that \u201cless than .01%<\/a>\u201d were Africans.<\/p>\n

      Hancock writes that \u201cthe Bank, which puts more money into more schemes in more developing countries than any other institution, claims that \u2018it seeks to meet the needs of the poorest people;\u2019 but at no stage in what it refers to as the \u2018project cycle\u2019 does it actually take the time to ask the poor themselves how they perceive their needs\u2026 the poor are entirely left out of the decision-making progress \u2014 almost as if they don\u2019t exist.\u201d<\/p>\n

      Bank and Fund policy is forged in meetings in lavish hotels between people who will never have to live a day in poverty in their lives. As Joseph Stiglitz argues<\/a> in his own criticism of the Bank and Fund, \u201cmodern high-tech warfare is designed to remove physical contact: dropping bombs from 50,000 feet ensures that one does not \u2018feel\u2019 what one does. Modern economic management is similar: from one\u2019s luxury hotel, one can callously impose policies about which one would think twice if one knew the people whose lives one was destroying.\u201d<\/p>\n

      Strikingly, Bank and Fund leaders are sometimes the very same people who drop the bombs. For example, Robert McNamara<\/a> \u2014 probably the most transformative person in Bank history, famous for massively expanding its lending<\/a> and sinking poor countries into inescapable debt \u2014 was first the CEO of the Ford corporation, before becoming U.S. defense secretary, where he sent 500,000 American troops to fight in Vietnam<\/a>. After leaving the Bank, he went straight to the board of Royal Dutch Shell. A more recent World Bank head was Paul Wolfowitz, one of the key architects of the Iraq War<\/a>.<\/p>\n

      The development set makes its decisions far away from the populations who end up feeling the impact, and they hide the details behind mountains of paperwork, reports and euphemistic jargon. Like the old British Colonial Office<\/a>, the set conceals itself \u201clike a cuttlefish, in a cloud of ink.\u201d<\/p>\n

      The prolific and exhausting histories written by the set are hagiographies: the human experience is airbrushed out. A good example is a study called<\/a> \u201cBalance of Payments Adjustment, 1945 to 1986: The IMF Experience.\u201d This author had the tedious experience of reading the entire tome. Benefits from colonialism are entirely ignored. The personal stories and human experiences of the people who suffered under Bank and Fund policy are elided. Hardship is buried under countless charts and statistics. These studies, which dominate the discourse, read as if their main priority is to avoid offending Bank or Fund staff. Sure, the tone implies that perhaps mistakes were made here or there, but the intentions of the Bank and Fund are good. They are here to help.<\/p>\n

      In one example from the aforementioned study<\/a>, structural adjustment in Argentina in 1959 and 1960 is described as such: \u201cWhile the measures had initially reduced the standard of living of a vast sector of the Argentine population<\/em>, in relatively short time these measures had resulted in a favorable trade balance and balance of payments, an increase in foreign exchange reserves, a sharp reduction in the rate of increases in the cost of living, a stable exchange rate, and increased domestic and foreign investment.\u201d <\/p>\n

      In layman\u2019s terms: Sure, there was enormous impoverishment of the entire population, but hey, we got a better balance sheet, more savings for the regime, and more deals with multinational corporations.<\/p>\n

      The euphemisms keep coming. Poor countries are consistently described as \u201ctest cases.\u201d The lexicon and jargon and language of development economics is designed to hide what is actually happening, to mask the cruel reality with terms and process and theory, and to avoid stating the underlying mechanism: rich countries siphoning resources from poor countries and enjoying double standards that enrich their populations while impoverishing people elsewhere.<\/p>\n

      The apotheosis of the Bank and Fund\u2019s relationship with the developing world is their annual meeting in Washington, D.C.: a grand festival on poverty in the richest country on earth. <\/p>\n

      \u201cOver mountainous piles of beautifully prepared food,\u201d Hancock writes, \u201chuge volumes of business get done; meanwhile staggering displays of dominance and ostentation get smoothly blended with empty and meaningless rhetoric about the predicament of the poor.\u201d<\/p>\n

      \u201cThe 10,000 men and women attending,\u201d he writes, \u201clook extraordinarily unlikely to achieve [their] noble objectives; when not yawning or asleep at the plenary sessions they are to be found enjoying a series of cocktail parties, lunches, afternoon teas, dinners, and midnight snacks lavish enough to surfeit the greenest gourmand. The total cost of the 700 social events laid on for delegates during a single week [in 1989] was estimated at $10 million \u2014 a sum of money that might, perhaps, have better \u2018served the needs of the poor\u2019 had it been spent in some other way.\u201d <\/p>\n

      This was 33 years ago: one can only imagine the cost of these parties in today\u2019s dollars.<\/p>\n

      In his book \u201cThe Fiat Standard<\/a>,\u201d Saifedean Ammous has a different name for the development set: the misery industry. His description is worth quoting at length:<\/p>\n

      \u201cWhen World Bank planning inevitably fails and the debts cannot be repaid, the IMF comes in to shake down the deadbeat countries, pillage their resources, and take control of political institutions. It is a symbiotic relationship between the two parasitic organizations that generates a lot of work, income and travel for the misery industry\u2019s workers \u2014 at the expense of the poor countries that have to pay for it all in loans.\u201d<\/p>\n

      \u201cThe more one reads about it,\u201d Ammous writes, \u201cthe more one realizes how catastrophic it has been to hand this class of powerful yet unaccountable bureaucrats an endless line of fiat credit and unleash them on the world\u2019s poor. This arrangement allows unelected foreigners with nothing at stake to control and centrally plan entire nations\u2019 economies\u2026. Indigenous populations are removed from their lands, private businesses are closed to protect monopoly rights, taxes are raised, and property is confiscated\u2026 tax-free deals are provided to international corporations under the auspices of the International Financial Institutions, while local producers pay ever-higher taxes and suffer from inflation to accommodate their governments\u2019 fiscal incontinence.\u201d<\/p>\n

      \u201cAs part of the debt relief deals signed with the misery industry,\u201d he continues, \u201cgovernments were asked to sell off some of their most prized assets. This included government enterprises, but also national resources and entire swaths of land. The IMF would usually auction these to multinational corporations and negotiate with governments for them to be exempt from local taxes and laws. After decades of saturating the world with easy credit, the IFIs spent the 1980s acting as repo men. They went through the wreckage of third-world countries devastated by their policies and sold whatever was valuable to multinational corporations, giving them protection from the law in the scrap heaps in which they operated. This reverse Robin Hood redistribution was the inevitable consequence of the dynamics created when these organizations were endowed with easy money.\u201d<\/p>\n

      \u201cBy ensuring the whole world stays on the U.S. dollar standard,\u201d Ammous concludes, \u201cthe IMF guarantees the US can continue to operate its inflationary monetary policy and export its inflation globally. Only when one understands the grand larceny at the heart of the global monetary system can one understand the plight of developing countries.\u201d<\/p>\n

      X. White Elephants<\/h2>\n
      \n

      \u201cWhat Africa needs to do is grow, grow out of debt.\u201d <\/em><\/p>\n

      \u2013George Ayittey<\/em><\/p>\n<\/blockquote>\n

      By the mid-1970s, it was clear to Western policymakers, and especially to Bank president Robert McNamara, that the only way<\/a> poor countries would be able to pay back their debt was with more debt.<\/p>\n

      The IMF had always paired its lending with structural adjustment, but for its first few decades, the Bank would give project-specific or sector-specific loans with no additional conditions attached. This changed during McNamara\u2019s tenure, as less specific structural adjustment loans became popular<\/a> and then even dominant at the Bank during the 1980s.<\/p>\n

      The reason was simple enough: Bank workers had a lot more money to lend out, and it was easier to give away large sums if the money was not tied to specific projects. As Payer notes<\/a>, \u201ctwice as many dollars per staff week of work\u201d could be disbursed through structural adjustment loans.<\/p>\n

      The borrowers, Hancock says<\/a>, couldn\u2019t be happier: \u201cCorrupt ministers of finance and dictatorial presidents from Asia, Africa and Latin America tripped over their own expensive footwear in their unseemly haste to get adjusted. For such people money was probably never easier to obtain: with no complicated projects to administer and no messy accounts to keep, the venal, the cruel and the ugly laughed literally all the way to the bank. For them structural adjustment was like a dream come true. No sacrifices were demanded of them personally. All they had to do \u2014 amazing but true \u2014 was screw the poor.\u201d<\/p>\n

      Beyond \u201cgeneral use\u201d structural adjustment loans, the other way to spend large amounts of money was to finance massive, individual projects. These would become known as \u201cwhite elephants,\u201d and their carcasses still dot the deserts, mountains and forests of the developing world. These behemoths were notorious for their human and environmental devastation.<\/p>\n

      A good example would be the billion-dollar Inga dams<\/a>, built in Zaire in 1972, whose Bank-funded architects electrified the exploitation of the mineral-rich Katanga province, without installing any transformers along the way to help the vast numbers of villagers who were still using oil lamps. Or the Chad-Cameroon pipeline in the 1990s<\/a>: this $3.7 billion, Bank-funded project was built entirely to siphon resources out of the ground to enrich the Deby dictatorship and its foreign collaborators, without any benefits for the people. Between 1979 and 1983, Bank-financed hydroelectric projects<\/a> \u201cresulted in the involuntary resettlement of at least 400,000 to 450,000 people on four continents.\u201d<\/p>\n

      Hancock details many such white elephants in \u201cLords Of Poverty.\u201d One example is the Singrauli Power and Coal Mining Complex in India\u2019s Uttar Pradesh state, which received nearly a billion dollars in Bank funding.<\/p>\n

      <\/figure>\n

      \u201cHere,\u201d Hancock writes, \u201cbecause of \u2018development,\u2019 300,000 poor rural people were subjected to frequent forced relocations as new mines and power stations opened\u2026 the land was totally destroyed and resembled scenes out of the lower circles of Dante\u2019s inferno. Enormous amounts of dust and air and water pollution of every conceivable sort created tremendous public health problems. Tuberculosis was rampant, potable water supplies destroyed, and chloroquine-resistant malaria afflicted the area. Once prosperous villages and hamlets were replaced by unspeakable hovels and shacks on the edges of huge infrastructure projects\u2026 some people were living inside the open pit mines. Over 70,000 previously self-sufficient peasant farmers \u2014 deprived of all over possible sources of income \u2014 had no choice but to accept the indignity of intermittent employment at Singrauli for salaries of around 70 cents a day: below survival level even in India.\u201d<\/p>\n

      In Guatemala, Hancock describes a giant hydroelectric dam called the Chixoy, built with World Bank support in the Mayan highlands. <\/p>\n

      \u201cOriginally budgeted at $340 million,\u201d he writes, \u201cthe construction costs had risen to $1 billion by the time the dam was opened in 1985\u2026 the money was lent to the Guatemalan government by a consortium [led] by the World Bank\u2026 General Romero Lucas Arica\u2019s military government, in power during the bulk of the construction phase and which signed the contract with the World Bank, was recognized by political analysts as having been the most corrupt administration in the history of a Central American country in a region that has been afflicted by more than its fair share of venal and dishonest regimes\u2026 members of the junta pocketed about $350 million out of the $1 billion provided for Chixoy.\u201d<\/p>\n

      And finally in Brazil, Hancock details one of the Bank\u2019s most harmful projects, a \u201cmassive colonization and resettlement scheme\u201d known as Polonoroeste. By 1985, the Bank had committed $434.3 million to the initiative, which ended up transforming \u201cpoor people into refugees in their own land.\u201d <\/p>\n

      The scheme \u201cpersuaded hundreds of thousands of needy people to migrate from Brazil\u2019s central and southern provinces and relocate themselves as farmers in the Amazon basin\u201d to generate cash crops. \u201cThe Bank\u2019s money,\u201d Hancock wrote, \u201cpaid for the speedy paving of Highway BR-364 which runs into the heart of the north-western province of Rondonia. All the settlers traveled along this road on their way to farms that they slashed and burned out of the jungle\u2026 Already 4% deforested in 1982, Rondonia was 11% deforested by 1985. NASA space surveys showed that the area of deforestation was doubled approximately every two years.\u201d <\/p>\n

      As a result of the project, in 1988 \u201ctropical forests covering an area larger than Belgium were burnt by settlers.\u201d Hancock also notes that \u201cmore than 200,000 settlers were estimated to have contracted a particularly virulent strain of malaria, endemic in the north-west, to which they had no resistance.\u201d<\/p>\n

      Such grotesque projects were the result of the massive growth of lending institutions, a detachment of the creditors from the actual places they were lending to, and management by unaccountable local autocrats who pocketed billions along the way. They were the outcome of policies that tried to lend as much money as possible to Third World countries to keep the debt Ponzi going and to keep the flow of resources from south to north moving. The grimmest example of all might be found in Indonesia.<\/p>\n

      XI. A Real-Life Pandora: The Exploitation Of West Papua<\/h2>\n
      \n

      \u201cYou want a fair deal, you\u2019re on the wrong planet.\u201d<\/em><\/p>\n

      \u2013<\/em>Jake Sully<\/em><\/a><\/p>\n<\/blockquote>\n

      The island of New Guinea is resource-rich beyond imagination. It contains<\/a>, just for starters: the third-largest expanse of tropical rainforest in the world, after the Amazon and the Congo; the world\u2019s largest gold and copper mine at Grasberg, in the shadow of the 4,800 meter \u201cSeven Summit\u201d peak of Puncak Jaya; and, offshore, the Coral Triangle, a tropical sea known for<\/a> its \u201cunparalleled\u201d reef diversity.<\/p>\n

      And yet, the people of the island, especially those living in the California-sized Western half under Indonesian control, are some of the poorest in the world. Resource colonialism has long been a curse for the residents of this territory, known as West Papua. Whether the pillage was committed by the Dutch<\/a>, or, in more recent decades, the Indonesian government, imperialists have found generous support from the Bank and the Fund.<\/p>\n

      This essay already mentioned how one of the World Bank\u2019s first loans was to the Dutch, which it used to try and sustain its colonial empire in Indonesia. In 1962, Imperial Holland was finally defeated<\/a>, and gave up control over West Papua to the Sukarno government as Indonesia became independent. However, the Papuans (also known as the Irianese) wanted their own freedom.<\/p>\n

      In the course of that decade \u2014 as the IMF credited the Indonesian government with more than $100 million<\/a> \u2014 Papuans were purged from positions of leadership. In 1969, in an event that would make George Orwell\u2019s Oceania blush, Jakarta held the \u201cAct of Free Choice,\u201d a poll<\/a> where 1,025 people were rounded up and forced to vote in front of armed soldiers. The results to join Indonesia were unanimous, and the vote was ratified<\/a> by the UN General Assembly. After that, locals had no say in what \u201cdevelopment\u201d projects would proceed. Oil, copper and timber were all harvested<\/a> and removed from the island in the following decades, with no involvement by Papuans, except as forced labor.<\/p>\n

      The mines, highways and ports in West Papua were not built with the wellbeing of the population in mind, but rather were built to loot the island as efficiently as possible. As Payer was able to observe even in 1974, the IMF helped transform Indonesia\u2019s vast natural resources into \u201cmortgages for an indefinite future to subsidize an oppressive military dictatorship and to pay for imports which supported the lavish lifestyle of the generals in Jakarta.\u201d<\/p>\n

      A 1959 article<\/a> on the discovery of gold in the area is the beginning of the story of what would later become the Grasberg mine, the world\u2019s lowest-cost and largest producer of copper and gold. In 1972, the Phoenix-based Freeport signed a deal with Indonesian dictator Suharto to extract gold and copper from West Papua, without any consent from the indigenous population. Until 2017, Freeport controlled 90% of the project\u2019s shares, with 10% in the hands of the Indonesian government and 0% for the Amungme and Kamoro tribes who actually inhabit the area.<\/p>\n

      <\/figure>\n

      By the time Grasberg\u2019s treasures are fully depleted by the Freeport corporation, the project will have generated some six billion tons<\/a> of waste: more than twice<\/a> as much rock as was excavated to dig the Panama Canal.<\/p>\n

      The ecosystems downstream from the mine have since been devastated and stripped of life as more than a billion tons of waste have been dumped<\/a> \u201cdirectly into a jungle river in what had been one of the world\u2019s last untouched landscapes.\u201d Satellite reports show the devastation wrought by the ongoing dumping of more than 200,000 of toxic tailings per day into an area that contains the Lorentz National Park, a world heritage site<\/a>. Freeport remains<\/a> the largest foreign taxpayer in Indonesia and the biggest employer in West Papua: it plans to stay until 2040, when the gold will run out. <\/p>\n

      As the World Bank writes candidly in its very own report on the region, \u201cinternational business interests want better infrastructure<\/a> in order to extract and export the non-renewable mineral and forest assets.\u201d<\/p>\n

      By far the most shocking program that the Bank financed in West Papua was \u201ctransmigration,\u201d a euphemism for settler colonialism. For more than a century, the powers in control of Java (home to most of Indonesia\u2019s population) dreamed of moving large chunks of Javanese to farther-flung islands in the archipelago. Not just to spread things out, but also to ideologically \u201cunify\u201d the territory. In a 1985 speech, the Minister of Transmigration said<\/a> that \u201cby way of transmigration, we will try to \u2026 integrate all the ethnic groups into one nation, the Indonesian nation\u2026 The different ethnic groups will in the long run disappear because of integration \u2026 there will be one kind of man.\u201d<\/p>\n

      These efforts to resettle Javanese \u2014 known as \u201cTransmigrasi\u201d \u2014 began during colonial times, but in the 1970s and 1980s the World Bank began financing these activities in an aggressive way. The Bank allocated hundreds of millions of dollars to the Suharto dictatorship to allow it to \u201ctransmigrate\u201d what were hoped to be millions of people to places like East Timor and West Papua in what was<\/a> \u201cthe world\u2019s largest-ever exercise in human resettlement.\u201d By 1986, the Bank had<\/a> committed no less than $600 million directly to support transmigration, which entailed \u201ca breathtaking combination of human rights abuses and environmental destruction.\u201d<\/p>\n

      Consider the story of the Sago palm<\/a>, one of the main traditional foodstuffs of Papuans. One tree alone was able to supply food for a family for six to 12 months. But the Indonesian government, at the encouragement of the Bank, came and said no, this is not working: you need to eat rice. And so the Sago gardens were cut down to grow rice for export. And the locals were forced to buy rice in the market, which simply made them more dependent on Jakarta.<\/p>\n

      Any resistance was met with brutality. Especially under Suharto \u2014 who held as many as 100,000<\/a> political prisoners \u2014 but even today in 2022, West Papua is a police state almost without rival. Foreign journalists are virtually banned; free speech does not exist; the military operates without any accountability. NGOs like Tapol document a legion of human rights violations ranging from mass surveillance of personal devices, restrictions on when and for what reason people can leave their homes and even rules on how Papuans can wear their hair<\/a>.<\/p>\n

      Between 1979 and 1984, some 59,700 transmigrants were taken to West Papua, with \u201clarge scale\u201d support from the World Bank. More than 20,000<\/a> Papuans fled the violence into neighboring Papua New Guinea. Refugees reported to international media that \u201ctheir villages were bombed, their settlements burned, women raped, livestock killed, and numbers of people indiscriminately shot while others were imprisoned and tortured.\u201d<\/p>\n

      A subsequent project backed by a $160 million Bank loan in 1985 was called \u201cTransmigration V<\/a>\u201d: the seventh Bank-funded project in support of settler colonialism, it aimed to finance the relocation of 300,000 families between 1986 and 1992. The regime\u2019s governor of West Papua at the time described the indigenous people as \u201cliving in a stone-age era\u201d and called for a further two million Javanese migrants to be sent to the islands so that<\/a> \u201cbackwards local people could intermarry with the newcomers thus giving birth to a new generation of people without curly hair.\u201d<\/p>\n

      The original and final versions of the Transmigration V loan agreement were leaked to Survival International: the original version made<\/a> \u201cextensive reference to the bank\u2019s policies on tribal peoples and provides a list of measures that would be required to comply with these,\u201d but the final version made \u201cno reference to the bank\u2019s policies.\u201d<\/p>\n

      <\/figure>\n

      Transmigration V ran into budget issues, and was cut short, but ultimately 161,600 families were moved, at a cost of 14,146 Bank staff months. The Bank was clearly financing cultural genocide: today, Ethnic Papuans make up no more than 30%<\/a> of the territory\u2019s population. But social engineering wasn\u2019t the only goal of taking money from the Bank: 17%<\/a> of funds for transmigration projects were estimated to have been stolen by government officials.<\/p>\n

      Fifteen years later on December 11, 2001, the World Bank approved a $200 million loan<\/a> to \u201cimprove road conditions” in West Papua and other parts of Eastern Indonesia. The project, known as EIRTP, aimed to \u201cimprove the condition of national and other strategic arterial roads in order to reduce transport costs and provide more reliable access among provincial centers, regional development and production areas, and other key transport facilities. Reducing road transport costs,\u201d the Bank said, \u201cwill help to lower input prices, raise output prices and increase the competitiveness of local products from the affected areas.\u201d In other words: the Bank was helping to extract resources as efficiently as possible.<\/p>\n

      The Bank and Fund\u2019s history in Indonesia is so outrageous that it seems like it must be from another time, ages ago. But that\u2019s simply not true. Between 2003 and 2008, the Bank funded<\/a> palm oil development in Indonesia to the tune of nearly $200 million and hired private companies who were alleged to have \u201cused fire to clear primary forests and seize lands belonging to indigenous people without due process.\u201d<\/p>\n

      Today, the Indonesian government remains on the hook for the EIRTP loan. In the past five years, the Bank has collected $70 million<\/a> in interest payments from the Indonesian government and taxpayer, all for its efforts to accelerate the extraction of resources from islands like West Papua.<\/p>\n

      XII. The World\u2019s Biggest Ponzi<\/h2>\n
      \n

      \u201cCountries don\u2019t go bankrupt.\u201d <\/em><\/p>\n

      \u2013<\/em>Walter Wriston<\/em><\/a>, former chairman of Citibank<\/em><\/p>\n<\/blockquote>\n

      One might consider bankruptcy an important and even essential part of capitalism. But the IMF basically exists to prevent the free market from working as it normally would: it bails out countries that normally would go bankrupt, forcing them instead deeper into debt.<\/p>\n

      The Fund makes the impossible possible: small, poor countries hold so much debt that they could never pay it all off. These bailouts corrupt the incentives of the global financial system. In a true free market, there would be serious consequences for risky lending: the creditor bank could lose its money.<\/p>\n

      <\/figure>\n

      When the U.S., Europe or Japan made their deposits at the Bank and Fund, it was similar to purchasing insurance on their ability to extract wealth from developing nations. Their private banks and multinational corporations are protected by the bailout scheme, and on top of it, they earn handsome, steady interest (paid for by poor countries) on what is widely perceived to be humanitarian assistance.<\/p>\n

      As David Graeber writes in \u201cDebt<\/a>,\u201d when banks \u201clent money to dictators in Bolivia and Gabon in the late \u201970s: [they made] utterly irresponsible loans with the full knowledge that, once it became known they had done so, politicians and bureaucrats would scramble to ensure that they\u2019d still be reimbursed anyway, no matter how many lives had to be devastated and destroyed in order to do it.\u201d<\/p>\n

      Kevin Danaher describes<\/a> the tension that began to emerge in the 1960s: \u201cBorrowers began to pay back more annually to the Bank than it disbursed in new loans. In 1963, 1964, and 1969 India transferred more money to the World Bank than the Bank disbursed to it.\u201d Technically, India was paying off its debts plus interest, but the Bank\u2019s leadership saw a crisis.<\/p>\n

      \u201cTo solve the problem,\u201d Danaher continues<\/a>, Bank president Robert McNamara increased lending \u201cat a phenomenal rate, from $953 million in 1968 to $12.4 billion in 1981.\u201d The number<\/a> of IMF lending programs also \u201cmore than doubled\u201d from 1976 to 1983, mostly to poor countries. The Bank and the Fund\u2019s assurances led the world\u2019s titanic money center banks as well as hundreds<\/a> of regional and local banks in the U.S. and Europe \u2014 \u201cmost of them with little or no previous history of foreign lending\u201d \u2014 to go on an unprecedented lending spree.<\/p>\n

      The Third World debt bubble finally burst in 1982, when Mexico announced a default. According to official<\/a> IMF history, \u201cprivate bankers envisaged the dreaded possibility of a widespread repudiation of debts, such as had occurred in the 1930s: at that time the debt owed by debtor countries to industrial counties was mostly in the form of securities issued by debtor countries in the US and in the form of bonds sold abroad; in the 1980s the debt was almost entirely in the form of short and medium term loans from commercial banks in the industrial members. Monetary authorities of industrial members instantly realized the urgency of the problem posed for the world\u2019s banking system.\u201d<\/p>\n

      In other words: the threat that the banks of the West might have holes on their balance sheet was the danger: not<\/em> that millions would die of austerity programs in poor countries. In her book \u201cA Fate Worse Than Debt<\/a>,\u201d the development critic Susan George charts how the top-nine largest U.S. banks all had placed more than 100% of their shareholders\u2019 equity in \u201cloans to Mexico, Brazil, Argentina, and Venezuela alone.\u201d The crisis was averted, however, as the IMF helped credit flow to Third World countries, even though they should have gone bankrupt.<\/p>\n

      \u201cSimply put<\/a>,” according to a technical analysis of the Fund, its programs \u201cprovide bailouts for private lenders to emerging markets, thereby allowing international creditors to benefit from foreign lending without bearing the full risks involved: the banks reap significant profits if borrowers repay their debts and avoid losses if financial crisis occur\u201d<\/p>\n

      Latin American citizens suffered under structural adjustment, but between 1982 and 1985. George reported<\/a> that \u201cin spite of over-exposure to Latin America, dividends declared by the big nine banks increased by more than a third during the same period.\u201d Profits in that time rose<\/a> by 84% at Chase Manhattan and 66% at Banker\u2019s Trust, and stock value rose by 86% at Chase and 83% at Citicorp. <\/p>\n

      \u201cClearly,\u201d she wrote, \u201causterity is not the term to describe the experiences since 1982 of either the Third World elite or the international banks: the parties that contracted the loans in the first place.\u201d<\/p>\n

      The \u201cgenerosity\u201d of the West enabled unaccountable leaders to plunge their nations into debt deeper than ever before. The system was, as Payer writes in \u201cLent And Lost<\/a>,\u201d a straightforward Ponzi scheme: the new loans went straight to paying for the old loans. The system needed to grow to avoid collapse. <\/p>\n

      \u201cBy keeping financing going,\u201d an IMF managing director said, according to Payer, structural adjustment loans \u201cpermitted trade that might otherwise not have been possible.\u201d<\/p>\n

      Given that the Bank and Fund will prevent even the most comically corrupt and wasteful governments from going bankrupt, private banks adapted their behavior accordingly. A good example would be Argentina, which has received 22<\/a> IMF loans since 1959, even trying to default in 2001. One would think that creditors would stop lending to such a profligate borrower. But in fact, just four years ago, Argentina received the largest IMF loan of all time, a staggering $57.1<\/a> billion.<\/p>\n

      Payer summed up \u201cThe Debt Trap<\/a>\u201d by stating that the moral of her work was \u201cboth simple and old-fashioned: that nations, like individuals, cannot spend more than they earn without falling into debt, and a heavy debt burden bars the way to autonomous action.\u201d<\/p>\n

      But the system makes the deal too sweet for the creditors: profits are monopolized while losses are socialized.<\/p>\n

      Payer realized this even 50 years ago in 1974, and hence concluded that \u201cin the long run it is more realistic to withdraw from an exploitative system and suffer the dislocation of readjustment than it is to petition the exploiters for a degree of relief.\u201d<\/p>\n

      XIII. Do As I Say, Not As I Do<\/h2>\n
      \n

      \u201cOur lifestyle is not up for negotiation.\u201d <\/em><\/p>\n

      \u2013<\/em>George H.W. Bush<\/em><\/a><\/p>\n<\/blockquote>\n

      In a true global free market, the policies that the Bank and Fund impose on poor countries might make sense. After all, the record of socialism and large-scale nationalization of industry is disastrous. The problem is, the world is not a free market, and double standards are everywhere.<\/p>\n

      Subsidies \u2014 for example, free rice in Sri Lanka or discounted fuel in Nigeria \u2014 are ended<\/a> by the IMF, yet creditor nations like the U.K. and U.S. extend state-funded healthcare<\/a> and crop subsidies<\/a> to their own populations.<\/p>\n

      One can take a Libertarian or Marxist view and arrive at the same conclusion: this is a double standard which enriches some countries at the expense of others, with most citizens of rich countries blissfully unaware.<\/p>\n

      To help build out from the rubble of World War II, IMF creditors relied heavily<\/a> on central planning and anti-free market policy for the first few decades after Bretton Woods: for example, import restrictions<\/a>, capital outflow limits, foreign exchange caps and crop subsidies. These measures protected industrial economies when they were most vulnerable.<\/p>\n

      In the U.S., for example, the Interest Equalization Act<\/a> was passed by John F. Kennedy to stop Americans from buying foreign securities and instead focus them on domestic investing. This was one of many measures to tighten capital controls. But the Bank and Fund have historically prevented poor countries from using the same tactics to defend themselves.<\/p>\n

      As Payer observes<\/a>, \u201cThe IMF has never played a deciding role in the adjustment of exchange rates and trade practices among the wealthy developed nations\u2026 It is the weaker nations which are subjected to the full force of the IMF principles\u2026 the inequality of power relationships meant that the Fund could do nothing about market \u2018distortions\u2019 (such as trade protection) which were practiced by the rich countries.\u201d<\/p>\n

      Cato\u2019s V\u00e1squez and Bandow came to a similar conclusion, noting<\/a> that \u201cmost industrialized nations have maintained a patronizing attitude towards underdeveloped nations, hypocritically shutting out their exports.\u201d <\/p>\n

      In the early 1990s, while the U.S. stressed the importance of free trade, it \u201cerected a virtual iron curtain against [Eastern Europe\u2019s] exports, including textiles, steel, and agricultural products.\u201d Poland, Czechoslovakia, Hungary, Romania, Bosnia, Croatia, Slovenia, Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, Ukraine and Uzbekistan were all targeted. The U.S. prevented Eastern European nations from<\/a> selling \u201ca single pound of butter, dry milk, or ice cream in America\u201d and both the Bush and Clinton administrations imposed stiff chemical and pharmaceutical import restrictions on the region.<\/p>\n

      It is estimated that protectionism by industrial countries \u201creduces developing countries\u2019 national income by roughly twice as much<\/a> as provided by development assistance.\u201d In other words, if Western nations simply opened their economies, they wouldn\u2019t have to provide any development assistance at all.<\/p>\n

      There is a sinister twist to the arrangement: when a Western country (i.e., the U.S.) runs into an inflationary crisis \u2014 like today\u2019s \u2014 and is forced to tighten its monetary policy, it actually gains more control <\/em>over developing countries and their resources, whose dollar debt becomes much more difficult to pay back, and who fall deeper into the debt trap, and deeper into Bank and Fund conditionality.<\/p>\n

      In 2008, during the Great Financial Crisis<\/a>, American and European authorities lowered interest rates and juiced up banks with extra cash. During the Third World Debt Crisis and the Asian Financial Crisis, the Bank and Fund refused to permit this kind of behavior. Instead, the recommendation to afflicted economies was to tighten<\/a> at home and borrow more from abroad.<\/p>\n

      In September 2022, newspaper headlines<\/a> stated that the IMF was \u201cworried\u201d about inflation in the United Kingdom, as its bond market teetered on the brink of collapse. This is of course another hypocrisy, given that the IMF did not seem worried about inflation when it imposed currency devaluation on billions of people for decades. Creditor nations play by different rules.<\/p>\n

      In a final case of \u201cdo as I say, not as I do,\u201d the IMF still holds a whopping 90.5 million ounces \u2014 or 2,814 metric tons<\/a> \u2014 of gold. Most of this was accumulated in the 1940s, when members were forced to pay 25% of their original quotas in gold. In fact, until the 1970s, members<\/a> \u201cnormally paid all interest owed on IMF credit in gold.\u201d<\/p>\n

      When Richard Nixon formally ended the gold standard in 1971<\/a>, the IMF did not sell its gold reserves. And yet, attempts by any member countries to fix their currency to gold are forbidden.<\/p>\n

      XIV. Green Colonialism<\/h2>\n
      \n

      \u201cIf you turned the electricity off for a few months in any developed Western society, 500 years of supposed philosophical progress about human rights and individualism would quickly evaporate like they never happened.\u201d <\/em><\/p>\n

      \u2013<\/em>Murtaza Hussain<\/em><\/a><\/p>\n<\/blockquote>\n

      In the past few decades, a new double standard has emerged: green colonialism. This, at least, is what the Senegalese entrepreneur Magatte Wade calls the West\u2019s hypocrisy over energy use in an interview for this article.<\/p>\n

      Wade reminds us that industrial countries developed their civilizations by utilizing hydrocarbons (in large part stolen or bought on the cheap from poor countries or colonies), but today the Bank and Fund try to push policies which prohibit the developing world from doing the same.<\/p>\n

      Where the U.S. and U.K. were able to use coal and the Third World\u2019s oil, the Bank and Fund want African countries to use solar and wind manufactured and financed by the West.<\/p>\n

      This hypocrisy was on display a few weeks ago in Egypt, where world leaders gathered at COP 27<\/a> (the Sharm el-Sheikh Climate Change Conference) to discuss how to reduce energy use. The location on the African continent was intentional. Western leaders \u2014 currently scrambling to import more fossil fuels after their access to Russian hydrocarbons was curtailed \u2014 flew in on gas-guzzling private jets to plead with poor countries to reduce their carbon footprint. In typical Bank and Fund tradition, the ceremonies were hosted by the resident military dictator. During the festivities, Alaa Abd Al Fattah, a prominent Egyptian human rights activist, languished nearby on hunger strike in prison.<\/p>\n

      <\/figure>\n

      \u201cJust like back in the day when we were colonized and the colonizers set the rules to how our societies would work,\u201d Wade said, \u201cthis green agenda is a new form of governing us. This is master now dictating to us what our relationship with energy should be, telling us what kind of energy we should use, and when we can use it. The oil is in our soil, it is part of our sovereignty: but now they are saying we cannot use it? Even after they looted incalculable amounts for themselves?\u201d<\/p>\n

      Wade points out that as soon as the core countries have an economic crisis (as they now face heading into the winter of 2022), they go right back to using fossil fuels. She observes that poor countries aren\u2019t allowed to develop nuclear energy, and notes that when Third World leaders tried to push in this direction in the past, some of them \u2014 notably in Pakistan<\/a> and Brazil<\/a> \u2014 were assassinated.<\/p>\n

      Wade says her life\u2019s work is prosperity building in Africa. She was born in Senegal, and moved to Germany at age seven. She still remembers her first day in Europe. She was used to a shower being a 30-minute affair: get the coal stove going, boil the water, put some cold water in it to cool it down, and drag the water to the shower area. But in Germany, all she had to do was turn a handle.<\/p>\n

      \u201cI was shocked,\u201d she says. \u201cThis question defined the rest of my life: How come they have this here but we don\u2019t over there?\u201d<\/p>\n

      Wade learned over time that reasons for Western success included the rule of law, clear and transferable property rights, and stable currencies. But, also, critically, reliable energy access.<\/p>\n

      \u201cWe can\u2019t have limitations on our energy use imposed on us by others,\u201d Wade said. And yet, the Bank and Fund continue to put pressure on energy policy in poor countries. Last month, Haiti followed pressure from the Bank and Fund to end its fuel subsidies. \u201cThe result,\u201d wrote<\/a> energy reporter Michael Schellenberger, \u201chas been riots, looting, and chaos.\u201d<\/p>\n

      \u201cIn 2018,\u201d Schellenberger says, \u201cthe Haitian government agreed to IMF demands that it cut fuel subsidies as a prerequisite for receiving $96 million from the World Bank, European Union, and Inter-American Development bank, triggering protests that resulted in the resignation of the prime minister.\u201d<\/p>\n

      \u201cIn over 40 nations since 2005,\u201d he says, \u201criots have been triggered after cutting fuel subsidies or otherwise raising energy prices.\u201d<\/p>\n

      It is the height of hypocrisy for the West to achieve success based on robust energy consumption and on energy subsidies, and then try to limit the type and amount of energy used by poor countries and then raise the price that their citizens pay. This amounts to a Malthusian scheme in line with former Bank chief Robert McNamara\u2019s well-documented<\/a> belief that population growth was a threat to humanity. The solution, of course, was always to try and reduce the population of poor countries, not rich ones.<\/p>\n

      \u201cThey treat us like little experiments,\u201d Wade says, \u201cwhere the West says: we might lose some people along the way, but let\u2019s see if poor countries can develop without the energy types we used.\u201d<\/p>\n

      \u201cWell,\u201d she says,\u201d \u201cwe are not an experiment.\u201d<\/p>\n

      XV. The Human Toll Of Structural Adjustment<\/h2>\n
      \n

      \u201cTo the World Bank, development means growth\u2026 But \u2026 unrestrained growth is the ideology of the cancer cell.\u201d <\/em><\/p>\n

      \u2013<\/em>Mohammed Yunus<\/em><\/a><\/p>\n<\/blockquote>\n

      The social impact of structural adjustment is immense, and barely ever gets mentioned in traditional analysis of the Bank and Fund\u2019s policy. There have been plenty of exhaustive studies done on their economic impact, but very little comparatively on their global health impact.<\/p>\n

      Researchers like Ayittey, Hancock and Payer give a few jarring examples from the 1970s and 1980s:<\/p>\n