[Excerpt] But all of this talk about a potential rival to the IMF and World Bank have exposed the general public’s ignorance about what exactly these institutions are and what they do. While most are familiar with the IMF and its predatory lending practices (and those who aren’t are encouraged to acquaint themselves with the “IMF riot” strategy that was developed in the third world and is now being imported to Europe), the World Bank is less scrutinized and less well understood. What is it, what does it do, and why is it important for the BRICS to challenge its hegemony in the development and poverty reduction arenas? …
…The process by which these loans are made and the funds distributed to their recipients has long been rife with waste, corruption and fraud. Even in the best circumstances, the types of projects that the Bank concerned itself with in its early days, infrastructure projects focusing on energy and transportation, served to primarily enrich those who were already the richest in the target countries, the friends and cronies of the corrupt rulers whose business interests could make use of such innovations. At its worst, the Bank has been used to underpin the rule of corrupt and tyrannical leaders and force entire nations into debt slavery.
This process was described most famously by former insider and self-described “economic hitman” John Perkins, who wrote his “Confessions of an Economic Hitman” to shed light on the means by which the seemingly benevolent IMF/World Bank system is used to oppress and plunder the very populations it is designed to enrich.
According to Perkins:
“So how does the system work? We economic hitmen have many vehicles to make this happen, but perhaps the most common one is that we will identify a country—usually a developing country—that has resources our corporations covet, like oil, and then we arrange a huge loan to that country from the World Bank or one of its sister organizations. “Now most everybody in our country believes that loan is going to help poor people. It isn’t. Most of the money never goes to the country. In fact it goes to our own corporations. It goes to the Bechtels and the Halliburtons and the ones we all hear about, usually led by engineering firms, but a lot of other companies are brought in and they make fortunes off building the infrastructure projects in that country. Power plants, industrial parks, ports, those types of things. Things that don’t benefit the poor people at all; they’re not connected to the electrical grid, they don’t get the jobs in the industrial parks because they’re not educated enough. But they as a class are left holding a huge debt. The country goes deep into debt in order to make this happen, and a few of its wealthy people get very rich in the process. They own the big industries that do benefit from the ports and the highways and the industrial parks and the electricity.
“The country is left holding this huge debt that it can’t possibly repay, so at some point we economic hitmen go back in and we say, ‘You know, you can’t pay your debts. You owe us a pound of flesh, you owe us a big favor. So sell your oil real cheap to our oil companies, or vote with us on the next critical United Nations vote, or send troops in support of our to some place in the world like Iraq.’ And so we use this whole process as, first of all, a means for getting their money (money we loan them) to enrich our own corporations, and then to use the debt to enslave them.”
[Excerpt] It is in the context of this IMF/World Bank stranglehold over the global financial architecture that we have to understand the stunning development that took place at the 6th BRICS (Brazil, Russia, India, China, South Africa) Summit in Fortaleza, Brazil last month: the creation of a New Development Bank (NDB) to compete with the World Bank in providing funds for infrastructure development to developing nations and the creation of a Contingency Reserve Arrangement (CRA) to compete with the IMF in providing liquidity protection to countries with balance of payment difficulties…
…Like with so many other situations, we must be careful not to fall into the trap of believing that the only alternatives that are being presented to us are the only alternatives that are possible. In this case, it seems that we are being presented with the choice between supporting a development paradigm led by the ‘bad’ globalists of the IMF/World Bank crowd that seek to control other countries through financing and the ‘good’ globalists who are selflessly looking to spur development for the good of humanity. This is just such a false choice.
First, the underlying assumption that the BRICS countries are doing what they’re doing out of some selfless love of humanity needs to be confronted head on. The BRICS countries in general, and China in particular (which is the strongest proponent of the anti-interventionist stance), have much to gain by offering no strings development loans. This was made clear by Gaddafi when he made the argument that China would beat out the US for control over Africa because it’s non-interventionist foreign policy was better at winning Africans hearts and minds. China is interested in securing African resources. It cannot challenge the US directly at its leverage-and-threats approach to gaining control of those resources, so it plays the good cop in the good cop / bad cop game. This allows it to create deep (and lucrative) ties with precisely those nations, such as Sudan, that the US is most interested in ‘reforming.’ It may be a mutually beneficial relationship, but let’s not kid ourselves that China is interested in building up Sudanese infrastructure out of sheer goodwill. Did China finance the construction of a $1.3 billion railway from Khartoum to Port Sudan because they care about Africans or because they care about establishing the infrastructure to service their 2 million ton oil terminal in the port?
Secondly, the idea that the BRICS are creating a ‘good’ globalist institution rests on the further assumption that, even if the current batch of BRICS leaders are benevolent and altruistic, that the next batch (or the one after that…) will be as well. The World Bank, too, started out as a humble institution making very limited loans for very specific projects. It wasn’t until Robert McNamara took the reigns of the Bank in 1968 that it started to take on the characteristics that we recognize today. Similarly who is to say that the BRICS leaders (or their successors) won’t allow the potential power of being a global financing body go to their heads? Why should we trust that any sprawling globalist institution will act always and forever in the interests of the greater good?
No, the ‘good’ globalization / ‘bad’ globalization here seems like a ruse to further globalization. Whether the world comes to accept a greater reliance on and submission of sovereignty to globalist institutions led by the West or institutions led by the BRICS countries does not seem to be a genuine choice.
So what are the alternatives? Surely it is important to build up the infrastructure of the developing countries, isn’t it? Surely this can’t be accomplished without the massive resources of a World Bank or a New Development Bank, can it?
It should first of all be noted that the urge to assume that developing nations cannot possibly find solutions to their own infrastructure and development problems without the aid of the rich global power players is not only paternalistic and patronizing, but contra-indicated by the evidence at hand. What, precisely, has the last 50 years of World Bank/IMF intervention and “aid” to the developing world achieved, exactly? Is Argentina in a better position than it was before IMF intervention, or a worse one? Has sub-Saharan Africa improved its political and economic clout on the world stage as a result of its World Bank financing, or become even more subservient to the countries that have provided it those loans? Are the success stories of economies that have risen out of poverty like South Korea because of or despite IMF/World Bank meddling? The answers to these questions, all easily enough documentable, speak for themselves.