Globalization And The International Monetary Fund

I have to wonder what world the people at the International Monetary Fund (IMF) are living in. A number of Finance Ministers and Central Bankers from countries around the world met up together in Washington D.C. this past weekend and issued a communiqué saying that they thought everything was just peachy.

They expressed satisfaction with what they called the robust expansion of the global economy and that and quite happily predicted that the world economy would continue to expand through 2008 underpinned by solid economic foundations. Of course they have a couple of worries; what to do about any inflationary problem if the price of oil bounces up again and what to do if the American economy goes into the tank instead of just slumping as expected.

Now normally I can’t be bothered to read any official reports or press regurgitations about IMF meetings, because the lie hasn’t much changed in all the years. They’re still pushing the same “Globalization will save the world economy” crap. Of course they don’t mention the fact that’s only if you are in one of the so called developed countries where they take things like running water, a proper education, and medical care for granted.

But on this occasions the headline of IMF Needs To Correct Trade Imbalance caught my eye. For a second I thought they were finally going to try and figure out some way of helping countries that are being forced to have fire sales on their natural resources just so they can eat. But I should have known better.

They were talking about China and the United States and how they needed to reduce both America’s trade imbalance with China and how the Chinese needed to play fair with the rest of the world by not fluctuating their currency. In other words all they are giving a damn about is propping up the status quo and making sure the wealthy stay wealthy.

I guess I shouldn’t have been so surprised. The IMF seems to exist only to make the world safe for the American economy. But, I can hear everyone of you commerce type people out there saying, without the American economy the rest of the world would be in trouble. What I don’t understand is how the world let itself get so dependant on a country that has a debt in the trillions of dollars?

If they are so important to the world why didn’t the IMF step in and say, Mr. Bush stop spending a billions of dollars a year on pointless wars and military hardware? Why hasn’t the IMF said anything about the escalating cost of America’s continued occupation of Iraq? It wouldn’t be because the IMF is an American tool for ensuring artificial trade conditions exist that favour the Americans?

Well according to the The Global Exchange web site the IMF doesn’t just favour, it damn well caters to them and any other member state with enough money to buy control of it. You see the more money you put into the IMF the more you control it. This might sound logical on the surface, but what it results in is a few nations end up controlling the fates of the entire developing world by dictating to them the terms and conditions of loans.

When you consider the fact that the IMF was set up after World War Two as a means of trying to ensure that another global depression could be avoided, you would think that meant they would have the best interests of the poorer member states at heart. Originally the idea was to give developing countries short-term loans so they could start up trade with developed countries. But what’s ended up happening is the IMF now controls the economies of around sixty countries in the world.

The way they work is really nasty; more like a form of blackmail than anything else. A country approaches them and says we need X amount of money to help us buy some necessary technology so we can build up our manufacturing base or strengthen our ability to develop our natural resources so we have something we can sell on the world market.

First of all, seeing as how they are supposed to be assisting their member states, you’d think they would offer favourable interest rates and flexible arrangements for repayment, unlike a bank. Supposedly the idea is to get countries on their feet and be competitive in the brave new world of the global economy.

Instead of doing something helpful what they do is attach conditions to the loans that no bank would ever consider doing, or bank regulator would allow. They have what they call Structural Adjustment Policies (SAPS) which they claim are needed to ensure debt repayment. They demand that governments cut spending to frills like education, health care, environmental controls and that’s just the start. They then insist that restrictions on foreign ownership for things like natural resources are relaxed, publicly owned services are privatized, wages are frozen, and labour laws gutted.

The result of all this is that a country takes out a loan to supposedly improve their economy but the conditions attached to the loan are so usurious that they actually cripple it. All of a sudden natural resources that would have supplied much needed trade goods and money coming into the economy are owned by foreign corporations that put as little money as possible into the country.

The workers who are employed by the company get bare minimum wages and have little or no money to spend on manufactured goods and what they can afford to buy are the cheap imports flooding the markets due to tariffs being removed. Local industry, without financing like the big multi nationals can’t compete and go under or barely survive which means that no manufacturing base is being developed.

With workers wages frozen and funds for education and health care frozen or cut, families aren’t able to afford higher educations for their children that would help pull them out of poverty while illness and disease can be devastating to a family’s financial survival. With environmental controls relaxed to accommodate the needs of foreign owners and currencies devalued to export the goods easily and at a profit (everything just costs that much less for them now doesn’t it if the local currency is twenty to the dollar instead of ten) the long-term prospects of the country suck.

Just so you understand how rigged this system is against the debtor nations, you know who it is who comes up with the repayment package ideas? That’s right the same guys who have the most money and the most control. They get to set it up so they get full benefit from the loans not the poor debtor country who’s had to bend over and take it in a desperate bid to survive.

Oh, just one other little thing about all these strings that the IMF attaches to loans. Remember all those promises of debt forgiveness? Well, all the same rules apply to them as well. The IMF can say to some starving African nation with a horrible debt load but big nickel deposits – “let’s make a deal”. They wipe the slate clean and the country loses its one asset to greed heads from other countries.

Is it any wonder that most of the developing world is beginning to hate us with such an intensity? Sure their colonial masters might have given them independence, but it’s a sham without economic freedom and nobody is going to be giving them that any time soon.

The only way to change this situation is to abolish the IMF in its current format. No country should be made to sacrifice its future to receive help in the present. Right now the reality is that only a few nations in the world are benefiting from the great globalization of economies.

So when they release their communiqués announcing things are going great it’s just another lie in the series of lies we are told on a daily basis. Aren’t you getting tired of being lied to? I know I am.