Sunday, October 29, 2006

Vietnam - Firms Bend to WTO

Under the pressure of looming WTO membership, domestic corporations are rushing to meet legal obligations by purchasing copyright licences for software from foreign companies but delaying acquiring similar copyrights for domestically-made products.

The country’s second largest state-owned bank in terms of total assets, Vietcombank, recently signed an enterprise agreement with the FPT Information System, Microsoft’s authorised dealer, and Microsoft to secure perpetual licensing rights of Microsoft Office 2003 for 4,000 users. The bank will also receive updates of any new Microsoft Office version that the world’s leading software company is set to launch within the next three years.

The agreement was the first of its kind among the non-IT business community to acquire such large numbers of licensing rights for end-users. Microsoft also signed an agreement with the Ministry of Finance of Vietnam on the same issue.

Vietcombank will run a number of Microsoft technology applications in its day-to-day reporting of financial performance, and use a wide range of genuine software, which includes the operating system software for servers and clients, database, media, programming tools and office software.

“IT applications are critical for all businesses that provide banking services. Making IT investment is highly important and must be done immediately to prepare for Vietnam’s WTO accession,” said Vu Viet Ngoan, CEO of Vietcombank.

Ngoan added that through the acquisition of IT, the bank aims to gain trust from investors who will hold shares in the bank once it is equitised.

Christ Atkinson, president of Microsoft Southeast Asia, said: “I applaud Vietcombank’s efforts in taking the lead in the business community in Vietnam to sign the enterprise agreement with us, ensuring genuine software for their computer system. This demonstrates Vietcombank’s vision for long-term good business performance and benefits.”

The bank has increased its annual budget for software copyright by around 30 per cent, reaching $3 million for the year. The budget for next year will be around $4m.

“We planned the purchase a year ago under the pressure of fair play in the WTO framework and the equitisation process,” said Dao Minh Tuan, Vietcombank’s IT centre director.

“We will buy domestically made software copyrights, but not now. Maybe some time next year,” said Tuan, adding that most of the bank’s copyright purchases for software licenses were with foreign partners.

The reason behind the tardiness for domestic software copyright purchase is the lack of government policy on the use of common domestic software, as well as the definition of common software usage in the bank’s system.

“We have not laid the foundations for the purchase calculations of domestic software as we have not yet considered which software is compulsory for banking operations. Meanwhile, the copyright registration for software is still not clear enough,” said Tuan.

Lac Viet Company, which has developed a dictionary software programme that has the highest number of illegally installed versions in Vietnam has said that it will keep developing the programme whether or not local users pay the copyright.

However, the number of licences will reach tens of thousands this year once a purchase agreement is signed with the country’s fourth largest state-owned bank, Incombank.

“We are negotiating with other customers as well,” said Ha Than, Lac Viet’s director.

The Ministry of Post and Telematics has also started compiling a list of information technology products, including software, which will be given priority for purchases by the state budget. The list is planned to be released in the first quarter of next year.


As a member of the WTO, now Vietnam has to please the WTO by prioritizing US goods over local goods. Whose economy do u think such a move will benefit? Definately not Vietnam.

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Thursday, October 19, 2006


Despite attempts by the World Bank (Bank) and the International Monetary Fund (Fund) to spin their 2006 Annual Meetings (19-20 September) in Singapore as a success, events before and during the Meetings show that the two institutions have been unable to deflect doubts among civil society and developing countries about their credibility, legitimacy and relevance.

On the ‘official’ front, the Bank and Fund were unable to make convincing arguments in support of the only two new initiatives they trotted out: a proposal by the Fund for reform of quotas, and the Bank’s anti-corruption framework. On the civil society front, the Bank and Fund proved their hypocrisy once again through their reluctance to push the Singapore Government to allow full and free participation of civil society representatives in the Annual Meetings.


The Fund’s big news was that they brought a proposal to the Meetings for reform of quotas or equity shares within the Fund by increasing the quotas of Turkey, Mexico, China and South Korea. Although the stated aim of this increase was to increase the participation of developing countries in decision making within the Fund, the proposal did not seek to alter the dominance of developed countries over Fund policy and operations. The proposal on the table did not offer significant increases in the shares of the four countries: China went from 2.98% to 3.72%; Mexico from 1.21% to 1.45%; Korea from 0.77% to 1.35%; and Turkey from 0.45% to 0.55%. (1) But at the same time, the voting shares of some other developing countries decreased.

The proposal passed by 90% of votes, but 23 of the 184 member countries voted against the proposal. Many developing country members who voted in favour of the proposal did so on a tacit understanding that more comprehensive reforms of the entire decision making structure in the Fund will follow within the next couple of years. Developing countries called for reforms to be formulated through a simple and transparent formula that accurately reflects the position of member countries in the global economy and does not decrease the relative shares of low income countries rather than “ad hocism”, in reference to the proposal on the table.

The proposal was also criticised by many low income countries, civil society representatives and independent analysts. The increase in quotas for the above four countries does not change the balance of power in the Fund. Even worse, low income countries that usually have to undertake the most egregious structural adjustment reforms in order to access development capital have practically no voice within the institution. Further, the so called “second phase” of reforms to be completed within the next two years is likely to be based on Fund preferred economic indicators such as GDP and “openness” to trade and investment, which means that low income countries will be exhorted to liberalise even further and chase economic growth targets more aggressively than before if they want to have a say in decision making within the Fund.

The Fund certainly lost points on democracy, commitment to poverty reduction and even creative reform on the quotas issues.

The Bank did not fare particularly well either. The product it showcased in the Annual Meetings was the Wolfowitz inspired anti-corruption framework. At the centerpiece of the Bank's anti-corruption strategy is a Voluntary Disclosure Programme (VDP) under which contractors on Bank projects are encouraged to perform their own internal investigations and report corrupt acts in Bank projects for the last five years, and commit to follow Bank rules on future projects. They are then subject to a three-year monitoring program managed by the Bank's Department of Institutional Integrity but in exchange, they secure confidentiality and the right to continue bidding on Bank-funded projects. Although the VDP was praised by some civil society organisations (CSOs), many others pointed out that the programme not only protects corrupt companies and individuals from debarments, but also, allows the Bank to cover up its own complicity or negligence. (2)

Although the Bank has made some high profile moves in the past months by canceling projects identified as corrupt in Cambodia, India and other countries, there is little indication that the Bank intends to apply the transparency and anti-corruption standards it demands from governments consistently across the board to all Bank financed projects, and to its own operations. Government officials bristle at charges of corruption but the truth is that many are indeed corrupt and resistant to checks on how they handle project budgets from any source. At the same time, many officials also point out that Bank projects and programmes continue to be formulated and implemented without independent third party oversight. Particularly problematic are large infrastructure projects where bidding, procurement and awards of contracts are conducted in small closed groups in order to ensure commercial confidentiality. Democratically elected bodies at local and national levels have little or no oversight in how such projects are designed, nor in how project contractors are selected. The Bank has yet to heed civil society calls for independent audits of its large infrastructure projects.

Another drawback in the Bank’s anti-corruption strategy is that it undermines national anti-corruption laws by initiating parallel processes of investigation and resolution. This is evident in projects such as the Lesotho Highlands Water Project, the Bujagali dam, and numerous mining and oil/gas projects. The Bank’s International Finance Corporation (IFC) holds shares in some of the mining corporations that get IFC financing. IFC also supports corporations that have been known to make payments to national officials in order to garner support for projects. The Bank’s International Centre for Settlement of Investor Disputes (ICSID) operates outside the jurisdiction of domestic legal processes and can even initiate legal action against national governments. At the same time, all institutions in the World Bank Group have immunity against national and international legal proceedings by virtue of their founding charter.

Nowhere in the Bank’s anticorruption framework is there any mention of Bank complicity in creating odious debt. Given the Bank’s proven inclination to support dictatorial regimes, a transparent and independent audit of Bank operations in several countries is likely to yield huge amounts of evidence of odious debt created by Bank lending for corrupt and unaccountable purposes.

But then again, what else can one expect from an anti-corruption framework under the leadership of Paul Wolfowitz?


Possibly, the grand award for double speak in this year’s Annual Meetings should go to Bank-Fund cries of “foul” when the Singapore Government flexed its sovereign muscles and refused entry to many civil society representatives into Singapore. Although the paranoid actions of the Singapore Government must be condemned in the strongest possible terms, the Bank and Fund cannot escape their own role and culpability in bringing about this situation.

The inappropriateness of Singapore as a venue for the Bank-Fund Annual Meetings was repeatedly pointed out by numerous CSOs ever since Singapore won the bid to host the Annual Meetings. Singapore is well known for its tight control over freedom of speech and association within its territory, and laws that prohibit the expression of dissent in any manner or form, including street protests. Warning signs started to emerge early in the year when the Singapore Government—shaken by the outpouring of mass protests during the World Trade Organisation’s (WTO) Sixth Ministerial Conference in Hong Kong in December 2005—announced that anyone caught breaking the law during the Annual Meetings would be caned. By March, news started to filter out from the island state about the extensive surveillance and security measures that the Singapore Government had started to put into place to ensure the safety of the delegates to the Annual Meetings. The Government refused to give permission to CSOs to organise a parallel civil society forum for debate and discussion under the banner of the International Peoples’ Forum vs. the IMF and World Bank (IPF). Instead, it earmarked a ten by four-metre space in the Suntec Singapore International Convention and Exhibition Centre—the Annual Meetings venue---as the only place where protest actions would be permitted. Any gathering held outside this area would be against Singapore law and therefore subject to punishment according to Singapore law, for example, caning.

Bank-Fund Management brushed away civil society concerns about the ability of CSOs to freely participate in the Annual Meetings claiming that it had signed a Memorandum of Understanding with the Singapore Government which gave the Bank and Fund the right to accredit civil society participants and required the Singapore Government to “assure expeditious entry procedures” to accredited individuals. By early September, the Singapore Government had objected to the participation of 19 individuals who had been accredited to the Annual Meetings based on “security and law and order considerations.” Soon, the blacklist expanded to include 27 individuals. The message from the Government was clear: these individuals would not be allowed entry into Singapore despite the fact that they had official accreditation and valid Singapore visas.

Although the external relations departments of the Bank and Fund objected to the Singapore Government’s blacklist, they made little attempt to exert pressure on the Government to withdraw its decision. CSOs demanded that if the blacklist was not withdrawn, the Bank and Fund move the Annual Meetings out of Singapore, but these demands fell on deaf ears. The IPF organisers moved the Forum to Batam in neighbouring Indonesia and more than 160 CSOs issued a call to boycott the official programme of the Annual Meetings. The situation further deteriorated when the Singapore Government started to block the entry of individuals who were not on any known blacklist. More than 60 individuals were detained at Singapore’s Changi airport—some for as long as 18 hours—subjected to custodial interrogation, and not permitted to make any phone calls, eat, drink or sleep. Many were deported back to their countries. No reasons were given by the Government for these actions.

Bank-Fund objections to this mistreatment and harassment were weak and ineffective. A much publicised statement by Paul Wolfowitz in which he called Singapore “authoritarian” and claimed that it had done great damage to its reputation left many Singaporeans bristling. (3) Singapore-based media reported that many of their readers had written letters complaining that the Bank and Fund were using Singapore as a scapegoat for what was actually their own doing. After all, many Singaporeans claimed, Singapore put in all these security measures and was wary of letting people through its borders because of the Annual Meetings. The ensuing situation was as much Bank-Fund responsibility as it was the Singapore Government’s. But instead of admitting to this, the Bank and Fund were deflecting all criticism away from themselves and towards the Singapore Government.


For Singapore, the main attraction for hosting the Annual Meetings was clearly commercial. Over the past several years, Singapore has been aggressively competing with its neighbors to sell itself as a high-end services, financial, recreation and convention centre. Maintaining tight control over the conduct of its citizens and all civil society activity has been a key measure by which the island state has attracted capital that might drift to other more democratic locations in the region. In press and media interviews, the Singapore Government acknowledged that allowing outdoor protests by visitors would land them in political trouble with their own citizens who are not permitted to demonstrate. Apparently the last police license for a demonstration was issued in the late 1980s.

The Bank-Fund Annual Meeting was the largest convention to be held to date in Singapore and the Government went to extraordinary lengths to ensure that nothing would tarnish Singapore’s reputation for efficiency and security, or hamper its opportunities for future business. News reports indicate that staff in retail, hospitality and services industries underwent special training to raise service standards for the Annual Meetings to combine efficiency with “warmth.” Even the Singapore cab drivers were not spared and were given a 66 page handbook that outlined dos and don’ts including appropriate dress and behaviour, dealing with body odour and acting as tour guides.

The Singapore Government is estimated to have spent about $100 million in arrangements for the Annual Meetings and it is likely that a similar amount may well have been spent by approximately 16,000 delegates on hotels, entertainment, shopping, food and medical care. There were also expectations that Singaporean companies would sign lucrative business deals with the executives of global finance and logistics companies, who are regulars at Bank-Fund Annual Meetings.

But what was the reasoning of the Bank and the Fund to proceed with Singapore as the venue for its 2006 Annual Meetings? It is not as though the Bank and Fund did not know about the Singapore State’s abhorrence of dissent and protests. The Bank has an office in Singapore that is the centre for its regional communications and—ironically—civil society work. (4) Surely, the Bank could have foreseen the Singapore Government’s reaction to the possibility of Bank-Fund critics gathering in Singapore.

Well, authoritarianism serves the purposes of the Bank and Fund as much as it serves those of Singapore. The Bank and Fund have a long history of courting dictatorial regimes in Asia, Africa and Latin America in order to impose their pro-corporate and anti-people policies and programmes. The World Bank recently gave Singapore top ranking for “ease of doing business” in its Doing Business Economy Rankings.(5) Many Singaporeans think that Bank-Fund’s choice for Singapore as the venue for its Annual Meetings was a reward for Singapore’s economic policies that have embraced free trade and investment and provided a home for multi-national corporate operations without cumbersome regulations and opposition from local groups.

The Singaporean private sector has close links with the World Bank Group. Between 2002-2004, Singapore joined the list of Trust Fund donors and launched the Singapore Consultant Trust Fund through which Singaporean consultants secure contracts with the Bank for projects in developing countries. In 2005, the Singaporean private sector appointed a special liaison officer at the International Enterprise (IE) Singapore to facilitate easy access to the World Bank Group. In the same year, the International Organisations Business Association (INTOBA)--a grouping of Singapore based businesses that “partner” with the World Bank, the Asian Development Bank and the United Nations—was formed. IE and INTOBA jointly organise seminars on procurement and business outreach with the Bank. (5)

The truth of the matter is that the Bank and Fund do not want their annual meetings dogged by protests and demonstrations, however peaceful. This is especially so at a time such as now, when both organizations are floundering under increasing evidence of their irrelevance and lack of competence in the world of development and finance, and their inability to deflect charges that they serve the interests of Washington DC more than the needs any of their other members.


The Bank and Fund are not in the same positions of comfort as they were during in the last century. As it is, social movements, local communities displaced or otherwise injured by Bank-Fund programmes, civil society organizations, academics and independent analysts have long called for the closure of the Bank and the Fund. But today, after years of structural adjustment, debt repayments, austerity measures, poverty reduction strategies, policy based lending, economic and governance “reforms,” trade openness and unending conditionalities, most developing country governments have also had enough of Bank-Fund trickery. They see clearly that they are paying more to the Bank and Fund than they ever borrowed and that it is they, the Bank Fund “clients,” not its richer members, who actually finance the institutions but have little say in their operations.

The Bank and Fund continue to demonstrate that they are high on costs and rhetoric, but low on competence and achievements. Their “policy advice” is ideological, prescriptive, and completely unsuited to local and national realities. In fact, most Bank - Fund staff do not have the range and depth of policy experience required to reshape national policy environments as they currently do. Bank-Fund staff complain about the drag that national politics place on creating “sound economic policy,” but as Ngaire Woods points out, “Politics has always influenced the advice offered by the IMF and World Bank…. World Bank projects are sometimes covertly shaped by pre-existing agreements for contracts between large companies backed by powerful governments and borrowers." (7) At a more fundamental level, selections of the World Bank President and IMF Executive Director are political appointments in which developing countries have no say.

The discontent of the world’s invisible majority with the Bank and Fund is growing and becoming more visible. Many developing country governments are adding their voices to growing global citizens’ movements for a fundamental rehaul of the ideology, politics and operations of the Bretton Woods twins. Despite the fact that many of these governments are not necessarily champions of democracy themselves, they cannot continue to ignore the voices of their own citizens for much longer. And unlike the Bank and Fund, most governments are (at least hypothetically) constitutionally accountable to their citizens.

Shalmali Guttal


Both the Fund and the Bank were born to alleviate debts. Now it seems any countries who would like to have a vast economic growth have to bend over to please these financial giants.
What gives?

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Sunday, October 15, 2006

World Bank, IMF Censured Over Debt Relief

Bretton Woods institutions and the rich nations have been censured over the conditionalities imposed on poor nations as a prerequisite for debt relief.

The institutions came under scrutiny during an intellectual discourse on various issues by academicians drawn from various institutions of higher learning in the country.

The forum, hosted at Mzumbe University, in Morogoro was meant to commemorate the nation’s founder President, Mwalimu Julius Nyerere’s 7th death anniversary.

Presenters focused on what Nyerere advocated for during his lifetime, ranging from economic development, foreign policy, debt repayment, and other related development subjects.

The intellectuals took a swipe at the World Bank, International Monetary Fund (IMF) and the rich western nations for imposing punitive and unrealistic conditions on poor nations to qualify for debt relief.

The don’s discussion centred on the constant struggle by developing nations to offset huge debts owed to rich nations and the world financial institutions.

Dr Peter Kopoka from the University of Dar es Salaam (UDSM), called on rich nations and international financial institutions to stop pressing hard poor countries to privatise their basic services or liberalise economies as a condition to benefit from debt relief initiative.

’’Indeed the persuasion of debt relief or the threat not to provide further loans has been shamelessly used to push poor countries further into debt,’’ noted Dr Kopoka. He was presenting a paper entitled: Nyerere on Debt and Development in Africa.

Showcasing examples, the don said IMF had compelled Tanzania to privatise the then Dar es Salaam Water and Sewerage Authority (DAWASA) as a condition to secure debt relief under Highly Indebted Poor Countries (HIPC) arrangement.

’’The issue is that IMF had insisted on privatising Dawasa after injection of capital in form of a loan,’’ said Kopoka, quoting reports by an international media agency.
’’The venture did not succeed and Tanzania was left with a poor water facility and repayments of loans,’’ noted the vividly disturbed expert.

He called on rich nations and international financial institutions to cancel all the unserviceable debts by poorest nations.

’’They should not do this as an act of charity, but as an obligation on the part of the rich countries,’’ Kopoka said, adding: ’’They should also not do this by depriving poor countries of new aid, but digging into their own pockets and providing new funds.’’

The forum also heard there was a dire need to pushing for a more transparent international approach on debt cancellation to make sure human needs takes priority in debt repayments.

’’The task of calculating how much debt should be cancelled must no longer be left to creditors alone,’’ observed Kopoka.

African governments, the forum was told, ought to stop colluding with world financial institutions and foreign companies to accumulate massive foreign debts that do not tackle the root cause of poverty.

He said African leaders must break out of the vicious circle of debt by undertaking responsible borrowing.

’’African governments who keep on borrowing more and more should be accountable for these loans, some of which our grandchildren and their children will still be paying,’’ said the development studies’ expert.

’’The people of Africa have the right to know why these debts are accumulated, how the money is used and the costs of repayment,’’ he added.

Mwalimu Nyerere, according to Kopoka, advocated for massive debt cancellations and challenged today’s government to ensure the tireless efforts of Mwalimu were not in vain.

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Tuesday, October 10, 2006

Lamy Still Harbor Hopes of Sustaining DOHA

World Trade Organization chief Pascal Lamy said there was a window of opportunity to resume global free trade talks between U.S. Congressional elections in November and next March, after which it could be too late.

But for formal negotiations to resume, positions must shift significantly, particularly in agriculture over which the WTO's Doha round ground to a halt last July, he told journalists.

This in turn meant secret, behind-the-scenes discussions between the trade powers and alliances to test room for maneuver, because without prior signals of willingness to move, there was no point in getting around a table again, Lamy said.

"If the negotiations are to resume, it will only be after flexibility is appearing and this flexibility will not appear to you," he told journalists at a press dinner on Monday night.

After the setback in July, there was a clear risk that the Doha round, heralded as a chance to lift millions out of poverty through greater trade, would end in failure, Lamy said.

"The option of failure is now seriously on the table."

This could undermine faith in the multilateral trading system at a time when the global economy faced less robust growth and protectionist pressures were growing. The big losers would be the poorer, weaker developing countries, Lamy said.

The clock starts running after the November 7 mid-term U.S. Congressional elections and could stop sometime next March when the next U.S. farm bill starts to take shape, Lamy said.

The farm bill lays down agricultural spending for coming years and so influences the U.S. negotiating position.

"So it is sometime between post-mid-term (U.S.) elections and spring next year," he said. "The shape of it (the farm bill) needs to be reasonably clear by spring time," he added.

But Lamy said he saw no impact on trade policy should the Republicans lose control of the House of Representatives to the Democrats, as opinion polls suggest may happen.

"Trade policies, especially on agriculture, have traditionally been very bi-partisan," Lamy said.

A further factor pointing to early next year being a decisive moment was that Congressional discussion would be intensifying on whether to extend current U.S. presidential powers to reach trade deals, so-called 'fast-track' authority, without which the Doha round becomes impossible to negotiate.

By then the WTO must have a credible package of trade measures on the table, he said.

"Credible enough that the negotiation could finish some time in 2007," Lamy added. "That is the time window as I see it."

The round of trade talks, launched in 2001 in the Qatari capital, was put on ice by Lamy in early July after trade powers failed to break a long-standing impasse over farm trade.

Three months later, the fundamental trade-off remained the same -- bigger cuts to U.S. farm subsidies in return for lower tariffs on farm goods' imports in the European Union and leading developing countries.


It failed the previous round because no country was willing to take a cut. How can millions be lifted from poverty?

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Sunday, October 01, 2006

How Wealth Creates Poverty

A Commentary by Michael Parenti

There is a "mystery" we must explain: How is it that as corporate investments and foreign aid and international loans to poor countries have increased dramatically throughout the world over the last half century, so has poverty? The number of people living in poverty is growing at a faster rate than the world's population. What do we make of this?

Over the last half century, U.S. industries and banks (and other western corporations) have invested heavily in those poorer regions of Asia, Africa, and Latin America known as the "Third World." The transnationals are attracted by the rich natural resources, the high return that comes from low-paid labor, and the nearly complete absence of taxes, environmental regulations, worker benefits, and occupational safety costs.

The U.S. government has subsidized this flight of capital by granting corporations tax concessions on their overseas investments, and even paying some of their relocation expenses---much to the outrage of labor unions here at home who see their jobs evaporating.

The transnationals push out local businesses in the Third World and preempt their markets. American agribusiness cartels, heavily subsidized by U.S. taxpayers, dump surplus products in other countries at below cost and undersell local farmers. As Christopher Cook describes it in his Diet for a Dead Planet, they expropriate the best land in these countries for cash-crop exports, usually monoculture crops requiring large amounts of pesticides, leaving less and less acreage for the hundreds of varieties of organically grown foods that feed the local populations.

By displacing local populations from their lands and robbing them of their self-sufficiency, corporations create overcrowded labor markets of desperate people who are forced into shanty towns to toil for poverty wages (when they can get work), often in violation of the countries' own minimum wage laws.

In Haiti, for instance, workers are paid 11 cents an hour by corporate giants such as Disney, Wal-Mart, and J.C. Penny. The United States is one of the few countries that has refused to sign an international convention for the abolition of child labor and forced labor. This position stems from the child labor practices of U.S. corporations throughout the Third World and within the United States itself, where children as young as 12 suffer high rates of injuries and fatalities, and are often paid less than the minimum wage.

The savings that big business reaps from cheap labor abroad are not passed on in lower prices to their customers elsewhere. Corporations do not outsource to far-off regions so that U.S. consumers can save money. They outsource in order to increase their margin of profit. In 1990, shoes made by Indonesian children working twelve-hour days for 13 cents an hour, cost only $2.60 but still sold for $100 or more in the United States.

U.S. foreign aid usually works hand in hand with transnational investment. It subsidizes construction of the infrastructure needed by corporations in the Third World: ports, highways, and refineries.

The aid given to Third World governments comes with strings attached. It often must be spent on U.S. products, and the recipient nation is required to give investment preferences to U.S. companies, shifting consumption away from home produced commodities and foods in favor of imported ones, creating more dependency, hunger, and debt.

A good chunk of the aid money never sees the light of day, going directly into the personal coffers of sticky-fingered officials in the recipient countries.

Aid (of a sort) also comes from other sources. In 1944, the United Nations created the World Bank and the International Monetary Fund (IMF). Voting power in both organizations is determined by a country's financial contribution. As the largest "donor," the United States has a dominant voice, followed by Germany, Japan, France, and Great Britain. The IMF operates in secrecy with a select group of bankers and finance ministry staffs drawn mostly from the rich nations.

The World Bank and IMF are supposed to assist nations in their development. What actually happens is another story. A poor country borrows from the World Bank to build up some aspect of its economy. Should it be unable to pay back the heavy interest because of declining export sales or some other reason, it must borrow again, this time from the IMF.

But the IMF imposes a "structural adjustment program" (SAP), requiring debtor countries to grant tax breaks to the transnational corporations, reduce wages, and make no attempt to protect local enterprises from foreign imports and foreign takeovers. The debtor nations are pressured to privatize their economies, selling at scandalously low prices their state-owned mines, railroads, and utilities to private corporations.

They are forced to open their forests to clear-cutting and their lands to strip mining, without regard to the ecological damage done. The debtor nations also must cut back on subsidies for health, education, transportation and food, spending less on their people in order to have more money to meet debt payments. Required to grow cash crops for export earnings, they become even less able to feed their own populations.

So it is that throughout the Third World, real wages have declined, and national debts have soared to the point where debt payments absorb almost all of the poorer countries' export earnings---which creates further impoverishment as it leaves the debtor country even less able to provide the things its population needs.

Here then we have explained a "mystery." It is, of course, no mystery at all if you don't adhere to trickle-down mystification. Why has poverty deepened while foreign aid and loans and investments have grown? Answer: Loans, investments, and most forms of aid are designed not to fight poverty but to augment the wealth of transnational investors at the expense of local populations.

There is no trickle down, only a siphoning up from the toiling many to the moneyed few.

In their perpetual confusion, some liberal critics conclude that foreign aid and IMF and World Bank structural adjustments "do not work"; the end result is less self-sufficiency and more poverty for the recipient nations, they point out. Why then do the rich member states continue to fund the IMF and World Bank? Are their leaders just less intelligent than the critics who keep pointing out to them that their policies are having the opposite effect?

No, it is the critics who are stupid not the western leaders and investors who own so much of the world and enjoy such immense wealth and success. They pursue their aid and foreign loan programs because such programs do work. The question is, work for whom? Cui bono?

The purpose behind their investments, loans, and aid programs is not to uplift the masses in other countries. That is certainly not the business they are in. The purpose is to serve the interests of global capital accumulation, to take over the lands and local economies of Third World peoples, monopolize their markets, depress their wages, indenture their labor with enormous debts, privatize their public service sector, and prevent these nations from emerging as trade competitors by not allowing them a normal development.

In these respects, investments, foreign loans, and structural adjustments work very well indeed.

The real mystery is: why do some people find such an analysis to be so improbable, a "conspiratorial" imagining? Why are they skeptical that U.S. rulers knowingly and deliberately pursue such ruthless policies (suppress wages, rollback environmental protections, eliminate the public sector, cut human services) in the Third World? These rulers are pursuing much the same policies right here in our own country!

Isn't it time that liberal critics stop thinking that the people who own so much of the world---and want to own it all---are "incompetent" or "misguided" or "failing to see the unintended consequences of their policies"? You are not being very smart when you think your enemies are not as smart as you. They know where their interests lie, and so should we.


The commentary clearly defines the true intentions of the World Bank and the IMF. Is it possible that people like us can see the true picture while the governments do not?

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