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Published on Saturday, April 15, 2000 in The Progressive
The Bell Tolls For The IMF, World Bank
by Matthew Rothschild
 
The protests this weekend in Washington are an inspiration.

At last, tens of thousands of people--religious folks, trade unionists, environmentalists, Third World activists, young people--have come together at the fount of power.

For the IMF and the World Bank are the two most powerful international economic bodies in the entire world.

And until now, their functioning was virtually unknown in the United States.

Oh, they were notorious all over the Third World, and for good reason: When the IMF imposes conditions on its loans, or when the World Bank coerces a country to accept its "structural adjustment program," the people suffer.

The IMF has been front-page news--and bad news--for decades in Latin America, Asia, and Africa.

It has caused food riots from Argentina to Zambia, from Jordan to Indonesia.

Here's how it works: When a country has gotten itself into umanageable debt (often to Western bankers that lended imprudently), the IMF is the only place to go for a bailout.

But the IMF extorts painful concessions from the borrowing country and, in essence, takes over the reins of economic sovereignty.

To get the IMF money, a country typically has to take the following steps, which--sometimes overnight--result in a drastic lowering of people's living standards.

First, the IMF insists on the abolition of public subsidies for such basic items as food and fuel. That loaf of bread or pound of rice last night might cost twice as much tomorrow.

Second, the IMF often insists on devaluing the currency. So the money someone had in Zambia, for instance, to buy a loaf of bread last night is not worth nearly as much tomorrow.

Third, the IMF slashes employment in the public sector, increasing unemployment.

Fourth, the IMF raises interest rates, which wipes out a lot of local small businesses, again increasing unemployment.

And fifth, it pries open the economy to foreign competition and export-oriented growth, which can devastate a local economy.

The World Bank is not much better. Its "structural adjustment programs" apply the same blueprint. And more than 40 percent of its loans go for oil, gas, timber, and mineral projects that damage the environment and often trample on the sacred land of indigenous people.

Plus, the huge dams that World Bank favors also dislocate people by the thousands. When the World Bank comes in, eviction notices get tacked up.

So the demonstrators this weekend are right on target.

And it's a relief to see these institutions, long shrouded in obscurity here in the United States, finally have to bear some public scrutiny.

They don't like it. They'd much prefer to work in secret and have almost no one in the United States know about what they do.

Why?

Because they don't serve the interests of working people in the United States; they serve the interests of the U.S. corporations and banks that operate around the world.

When a country can't repay its debt to Citigroup, the IMF comes in and gives that country enough money to make Citigroup whole.

When a country is forced to devalue its currency, that makes it cheaper for U.S. corporations to produce goods in that country.

That doesn't help workers here (they have to compete against workers whose wages have just fallen), and obviously it doesn't help workers there, who have just lost earning power.

The protests are also making another important point: These are not democratic institutions at all. The United States dominates the IMF and the World Bank because it is the biggest single funder; what the U.S. says goes. Third World countries that bear the brunt of these policies have virtually no power.

The protests in Washington are about democratic accountability, as well as economic and environmental policies.

We, as American citizens, have a special responsibility when it comes to these institutions. Because the President of the United States and, more specifically, the Secretary of the Treasury call the tune at the IMF and the World Bank.

They don't have to tell the IMF and the World Bank to impose cruel and destructive policies.

They do so because they have made a golden calf out of the free market and because big corporations and banks, which are also big campaign contributors, have a lot of influence over policy.

What the protests in Washington are saying is, we won't let the U.S. government serve those special interests any longer--not without a fight, anyway.

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