Scoop Column: Abolish IMF And World Bank
The annual meetings of the IMF and the World Bank in Washington next week will discuss whether commercial banks and private investors should play a bigger role in bailing out troubled national economies. Scoop’s West Coast correspondent John Howard writes that both organisations should be abolished.
One reason it was so difficult to get the US Congress to approve an $18 billion increase in IMF financing last year was the perception that Wall Street, rather than Main Street, was benefiting much more from IMF-led rescue packages.
Indeed, both the World Bank and the IMF are now seen by many world leaders as destabilising social engineering organisation's who provide tax-payer subsidised loan money to wrecked economies simply to bail out banks who made bad investments and bad decisions in the first place.
In July, Zimbabwe President Robert Mugabe, speaking in defense of his nation's policies, described the IMF as "that creature." He accused the IMF of "shifting the goal posts" every time an agreement was in sight."
Mugabe has broad support in the population for his fight against the IMF. "Thousands of children die each year due to the debt burden and many African countries have been forced to shut down medical services," declared Rev. Guide Makore of Jubilee 2000.
The IMF had announced that it would suspend all loan payments, because the government had taken action to control the price of the main food staple, maize meal, a move seen as a serious attempt to stave off a food-shortage crisis. The IMF says the decision breached its rules.
And in Bosnia the World Bank pledged $50 million in credits, provided Bosnia reforms its economy, labour, social security, health and education laws. Bosnia's labour law, for example, allows one-year full paid maternity leave and a month's annual leave for employees.
During the 1992-1995 war, about half of Bosnia's four million people were displaced from their homes and about one million fled abroad.
Then there is Malaysia. Following the 1996-97 Asia crisis Prime Minster, Dr Mahathir Mohamed, denounced the "criminal raid by currency speculators" who wrecked the currencies and economies of Thailand, South Korea, Malaysia and Indonesia leaving mass unemployment, bloody riots, widespread upheaval and depression in their wake.
Some shaken regional leaders, among them former Indonesia President Suharto, thought the way out of the crisis lay in a submissive deal accepting the domination of the IMF and its western mega-bank supporters.
"They were wrong," said Dr Paul Adler, an economic consultant. "The economy disintegrated and Suharto was overthrown."
Malaysia's Mahathir, however, did the opposite. "Instead of kow-towing to the IMF and its financiers, he imposed strict controls on hot-money speculators, currency manipulators and on foreign debt," said Dr Adler.
The result: Mahathir and his adminstration are still firmly in charge, orchestrated attempts to overthrow him have been resisted, the currency has now stabilised, interest rates are down, production is rising and the Malaysian economy is staging a vigorous comeback.
Malaysia's leadership is important because it has shown that government's with the courage to say "no" to the IMF don't have to take orders from it.
Impressed by Mahathir's success, Hong Kong, Chile and Columbia have re-created capital controls and restrictions on hot-money speculation and currency trading similar to the measures in Malaysia.
In Panama, Mieya Moscoso Arias, the policies of the attractive, dynamic widow of the late President, are also ringing alarm bells among the world's financiers and trans-national corporations who saw "unfettered" investment opportunities.
>From April, Turkey also has a new leader in economics professor, Devley Bachceli, who scored a smashing 130-seat victory over what he described as "right wing economic extremists."
Shocked by the rebellion of these nation's the American think-tank, the Council on Foreign Relations, sponsored a high-level taskforce which has now recommending the IMF return to a previous policy of providing smaller rescue packages.
The 29-person taskforce includes economists, business leaders, labour union representatives, former government officials and lawmakers.
In what is now seen as a massive sea-change in thinking the taksforce now believes that the responsibility for crisis prevention and management in emerging economies should be placed on the economies themselves and on the private lenders and investors that dominate today's international capital markets.
These issues are expected to be at the centre of next week's annual meetings of the IMF and World Bank in Washington.
Other nations and the IMF have committed a $190 billion bail-out of Thailand, Indonesia, South Korea, Russia and Brazil. Only one-third of the money has been disbursed so far even though these countries remain in serious difficulty. It appears loans are consistently held up simply because the IMF and World Bank doesn't agree with internal policies.
However, the World Bank and IMF financial domination and their destabilising social engineering rules may be coming to an end. They have failed miserably and, realistically, both organisation's should be abolished and consigned to oblivion for all time. The 21st-century world can do without them.