BANKING: THE INTERNATIONAL MONETARY FUND
IMF Bailout of Asia
The Asian currency crisis came to a head in 1998, and the IMF was on the spot for a massive bailout. Vocal critics of the IMF at that time included George P. Schultz (member of the Trilateral Commission), William E. Simon (Secretary of the Treasury under Nixon and Ford) and Walter B. Wriston (former chairman of Citigroup/Citibank and member of the Council on Foreign Relations). They jointly wrote Abolish the IMF? for the Hoover Institution, where Shultz is also a distinguished fellow. The article states:
Their scathing attack continues throughout the article, and concludes with
It's interesting that these core members of the global elite are throwing stones at their own institution. What is outrageous is that they are completely side-stepping their own personal culpability for having used it to drive globalization with all of its ill side-effects. The fact that they succinctly describe the damage done by the IMF clearly dispenses their typical claim of "ignorance." Are they setting the stage to disband the IMF in favor of another, more powerful monetary authority? Time will tell.
Argentina: A Case Study of Privatization
In 2001, the IMF handed a bailout package to Argentina, valued at $8 billion. The major beneficiaries were the European megabanks, which held about 75 percent of the country's foreign debt. The money river flowed like this: IMF gives $8 billion (about $1.6 billion of which was tax money collected from hard working Americans) to Argentina; Argentina buys U.S. Treasury bills (U.S. gets the dollars back after being "monetized"); Argentina delivers Treasury Bills to creditor banks who graciously agree to retire their worthless Argentinian bonds.
Less than a decade earlier, the IMF and the World Bank backed Argentina in the largest water privatization project in the world. In 1993, Aquas Argentinas was formed between Argentina's water authority and a consortium that included the Suez group from France (largest private water company in the world) and Aquas de Barcelona of Spain. The new company covered a region populated by over 10 million inhabitants.
Now, after 10 years of higher water rates, decreased quality of water and sewage treatment, and neglected infrastructure improvements, the consortium is breaking its 30-year contract and pulling out. Bitterness between Aqua and government officials runs deep because of broken promises and political backlash.
The aftermath of Aqua Argentina is recorded in the November 21, 2005 online edition of the Guardian:
More than 1 million residents in the rural Argentinian province of Santa Fe are facing an anxious wait to discover if their taps will still flow or their toilets flush over the next few weeks.
Since 1995, the province has had its water supply and sewage services provided by a consortium led by the French multinational Suez; now the giant utility wants out, and plans to leave within the month.
The decision, which follows the high-profile collapse of other water privatisation schemes in countries including Tanzania, Puerto Rico, the Philippines and Bolivia, has again raised questions about the viability of privatising utilities in the developing world.
Suez is also preparing an early departure from its formerly lucrative concession in the Argentine capital, Buenos Aires. The deal, struck in 1993, marked the largest water privatisation project in the world.
In both cases, the French utility is terminating its 30-year contract a third of the way through. Suez cannot get the concessions to turn a profit - at least not under the terms of its current agreements.
The French utility giant snapped up both service agreements in the mid-1990s when Argentina was undergoing a massive reform of its public sector, largely at the behest of the World Bank and other lending agencies.
Aqua Argentina milked the market as long as it could, and then simply bailed out. And, why not? The profit dried up and it's not their country!
Global statistics show that some 460 million people around the world must rely on private water corporations like Aqua Argentina, compared to only 51 million in 1990. The IMF (and World Bank) levered the extra 400 million people into privatized contracts with water mega-companies from Europe and the U.S. Now that the cream has been skimmed off the top of the milk, these same companies are excusing themselves from the party -- leaving a shambles, angry customers and incapable governments still saddled with the billions of dollars of debt incurred (at their insistence) to start privatization in the first place.
[Note: In February 2003, CBC News in Canada produced an in depth report Water for Profit: how multinationals are taking control of a public resource that included features and segments that were delivered across five days of broadcasting.]
This report does not pretend to be an exhaustive analysis of the IMF. There are many facets, examples and case studies that could be explored. In fact, many critical analysis books have been written about the IMF. The object of this report was to show generally how the IMF fits into globalization as a critical member in the triad of global monetary powers: The IMF, the BIS and the World Bank.
Despite even establishment calls for the dissolution of the IMF, it continues to operate unhindered and with virtually no accountability. This is reminiscent of the BIS continuing to operate even after its dissolution was officially mandated after WWII.
For the purpose of this report, it is sufficient to conclude that...
Shultz, et. al, Who
Needs the IMF?, Hoover Institution Public Policy Inquiry on the
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Patrick M. Wood is editor of The August Review, which builds on his original research with the late Dr. Antony C. Sutton, who was formerly a Senior Fellow at the Hoover Institution for War, Peace and Revolution at Stanford University. Their 1977-1982 newsletter, Trilateral Observer, was the original authoritative critique on the New International Economic Order spearheaded by members of the Trilateral Commission.
Their highly regarded two-volume book, Trilaterals Over Washington, became a standard reference on global elitism. Wood's ongoing work is to build a knowledge center that provides a comprehensive and scholarly source of information on globalism in all its related forms: political, economic and religious.
E-Mail: [email protected]
Web Site: www.AugustReview.com
Global statistics show that some 460 million people around the world must rely on private water corporations like Aqua Argentina, compared to only 51 million in 1990.