Are The World Bank and the IMF Global Loan Sharks?
Who are the World Bank and IMF?
The World Bank and the IMF – the International Monetary Fund - were set up in 1944, towards the end of World War II, initially to promote global economic stability.
Part of the original objective was to advance loans to member countries to allow them to balance their trade deficits. All good and above board at a time when many countries found themselves in debt and unable to balance their books, due to huge costings of troops and ammunition, coupled with internal infrastructure damage that had to be corrected.
All in all, the idea of an International Monetary Fund was good, and certainly useful to those countries ravaged by war.
The World Bank is financed my member countries. Each share costs $1, and the more shares bought gives a country a greater say.
Which is a little unfair because it has led to the imbalance of richer nations having more say and therefore power, than poorer nations.
Out of 184 registered nation members, the US, at present, has the controlling share of the IMF with 18%, with Germany, France, Japan and Great Britain not far behind, resulting in those 5 countries controlling 50% of the world’s finances.
IMF are no better than loan sharks
Even more tellingly, members of the IMF do not have to answer to voters, or even to governments, despite being funded by taxpayers money. Once they are placed in their position, everything they do and every decision they take is not open to public scrutiny. Unlike other government bodies, they do not have to listen to environmentalists or health or educational experts debates on important issues. They more or less have free rein to do what they like.
The IMF has become the loan shark of emerging nations. Loans sharks prey on the poor and the desperate, demanding exhorbitant interest rates in return for a tide-over loan.
The IMF does not demand exhorbitant interest rates, in fact they offer loans at lower rates than those countries could get from international banks.
Instead, they demand control of the state or country’s infrastructure, making their loan conditional on that country doing their bidding.
In effect, the IMF, which is made up of bankers, investors and the big corporations can demand (and get) practically anything they want from the poorer nations.
The similarity with loan sharks sticks. These guys demand high interest on their initial loan, and send the heavies round when you can’t pay.
Is what the IMF does with poorer countries any different?
The IMF and the World Bank rob poor nations
Some demands made of countries who borrowed money from the World Bank
Some of their demands are suicidal for the countries in question. In emerging nations, they demand cuts in worker’s basic pay, or rises in electricity costs, or other changes that affect every single person, making poverty greater and unemploymenthigher, but in each and every case the rich bankers and corporations who control the IMF get fatter.
After the Haiti earthquake, the IMF offered $100 million in loans to re-structure the devastated island, but with the proviso that the already impoverished workers wages were further cut, and that the price of electricity rose.
Tanzania applied for an IMF loan, only to be told that part of the loan condition would mean privatizing their water supply. Such was the savagery of cuts in public services to comply with conditions of the loan the country's death rate spiked sharply.
Bolivia got a loan of $138 million but had to agree to sell off itsoil and water.
Zimbabwe got their much needed loan but only after promising to sell off their stockpiled grain, while at the same time switching to growing tobacco for export instead of grain. Famine is not far away for their people.
India was awarded $400 million from the World Bank to develop their coal burning electricity stations, at a time when Global Warming and CO2 emissions were deeply worrying developed nations.
A $57 billion loan to South Korea had such stringent conditions attached that millions ended up unemployed.
Some demands shown to be made for private interests
In 1992, a memo by the World Bank’s chief economist Lawrence Summers was leaked. In it he proclaimed “The economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable, and we should face up to that.... I've always thought that underpopulated countries in Africa are vastly under-polluted”.
An IMF loan to Pakistan in 2008 came with the conditions that it raise both interest rates and electricity prices, leading to extreme poverty among many of Pakistan’s poorer people.
Sri Lanka was awarded a massive $2.6 billion from the IMF on 2009, despite opposition from many nations including the UK, France, US, Germany and Argentina over Sri Lanka’s poor record of Human Rights. Indeed, the only reason the country got into debt was because they overspent on armaments for an ongoing war of their own making.
Many of the poorest nations on the planet have found themselves in even greater debt after applying the conditions demanded of the IMF.
"From the onset of the debt crisis in 1982, until 1990, debtor countries paid creditors in the North $6,500 million [$6.5 billion] per month in interest alone," reports the British magazine New Scientist. "Yet in 1991 those countries were 61 percent more indebted than they were in 1982."
BBC Newsnight - World Bank and IMF creating poverty
Never-ending debt for some countries, thanks to IMF policies
Governmentswho refuse to follow the advice and demands set out by the World Bank find themselves effectively cut off from all international lending, as the international banks follow advice made by IMF and cut off all lending to indebted countries.
The demands made of these countries have been designed to pull that country and their people down into a never-ending spiral of debt from which they can never break free.
Africa, Asia and Latin America have fared particularly badly. The demands made of them as conditions for their loans from the IMF include cutting subsidies, devaluing their own currency, while freezing wages and reducing public service employment.
Those demands have led to higher unemployment, greater poverty and high food prices in the shops.
World Trade more important that population feeding
Another demand frequently made by the IMF is that they switch their domestic agriculture to exporting crops.
Davison Budhoo, an economist who resigned from the IMF in protest, contends that the agency's approach has "led to the devastation of traditional agriculture, and to the emergence of hordes of landless farmers in virtually every country where the World Bank and IMF operate." And, he adds, "Food security has declined dramatically in all Third World regions, but in Africa in particular."
At a time when environmentalists are worried about saving the planet and sustainable agriculture, it seems that every time the IMF make loan conditions, it is to the detriment of those ideals, and to the benefit of the fat economists in the West.
Haiti use to subsidize their own farmers to produce affordable rice for its own people. The IMF forced them to open their imported rice market, where local farmers then had to compete with highly subsidized rice from the US, while at the same time the IMF forced Haiti to stop their own subsidies.
As a result, Haiti now imports 70% of its rice from the US, while its own farmers face poverty and starvation because they can't sell their produce.
The World Bank and the IMF have over-stepped the mark, creating a rich elite who will one day have control of all of the world's resources, if they are not regulated now.