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George Monbiot:
"They are systematically destroying economies"

September 27, 2002 | Pages 6 and 7

GEORGE MONBIOT has become one of the leading voices of the global justice movement worldwide. He is a regular columnist for Britain's Guardian newspaper and author of Captive State: The Corporate Takeover of Britain.

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WHAT'S THE first thing that people should know about the functioning of the IMF and World Bank, and how are these international institutions connected to corporate power?

THE KEY issue is that the World Bank and IMF are controlled exclusively by the rich nations and work exclusively in the poor nations. They set economic policies for those poor nations and effectively deny the governments of those nations from making a serious attempt at setting their own economic policies--and therefore their own political prescriptions.

So you have a straightforward refutation of democracy taking place here. You have the poor world being governed by the rich world, almost exactly as if we were still living in colonial times.

The result is that, very often, we see decisions made which appear to favor not the interests of the poor world--which supposedly these two institutions are trying to help--but the interests of Wall Street brokers, foreign multinationals, big business based in the rich world. The rich world has done very well out of World Bank and IMF decisions, while the poor and less developed world have done very badly.

Take the principal emergency packages from the IMF over the past few years. These have involved enormous bailouts, whose prime purpose is to allow foreign "investors"--which really means speculators--to get their money out before the economies of poor nations collapse.

There have not been any substantial bailouts at all for such essentials in the collapsing countries as health and education, the welfare of the poor who lose their job as a result of the crisis, the government institutions which can't function anymore. The bailouts seem to be aimed exclusively at securing the investments of these foreign speculators.

More profoundly than that, many of the crises--and the Asian financial crisis of 1997-98 and now the Argentine crisis are very good examples--were caused as a result of, principally, IMF policy that was aimed exclusively at pleasing the financial community in the United States.

So, for instance, in Asia, we saw the IMF demanding the removal of all capital controls and financial controls, which exposed Asia to this incredible speculative flow of what's called hot money--short-term funds--allowing the Wall Street brokers to launch ferocious speculative attacks on the currencies of the Asian countries and bring those countries to their knees.

The removal of all regulations, which the IMF demanded, had nothing whatsoever to do with the welfare of the nations concerned. The only possible reason for the stringency of its demands is that it was being lobbied to make those demands by Wall Street. The only beneficiary of those policies were the brokers who made a very large amount of money after the East Asian collapse.

We see this pattern repeated time and again, and you have to ask after a while: "Who is driving this?" The only possible answer that comes to mind is that these very exclusive financial interests in the West are driving this. And they are systematically destroying economies all over the world.

ONE OF the messages coming out of the United Nations' Earth Summit in Johannesburg a few weeks ago is that institutions like the IMF and World Bank were recognizing past mistakes and trying to be more inclusive. What do you think of this?

THERE ARE two problems with the idea. The first is that it's impossible to see how they can reform themselves if they continue to refuse to acknowledge the scope of the mistakes they have made in the past. Neither institution has done that.

They've acknowledged certain minor errors. They've acknowledged errors of implementation. They've acknowledged that they've gone a little bit too far in some respects. But they haven't faced up to the systematic failure of their policies--and the fact that their policies have been, in many cases, far more destructive than beneficial to the interests of the poor.

Until they can do that, why on earth should we trust them when they say that they will do better in the future?

The second issue here is that both the World Bank and the IMF are constitutionally destined to fail. Partly, this is because they are controlled by the rich world, working on the poor, so they are as undemocratic as you can get. And in the absence of democracy, one can only expect failure. Also, because they are effectively enforcing a debt-based global financial system, which can only lead to more debt.

The IMF and World Bank were created in response to the failure of the original proposal before Bretton-Woods, made by the economist John Maynard Keynes, for a self-correcting international financial system, where both creditors as well as debtors were obliged to clear both imbalances of trade and international debt.

That was thrown out, principally because of lobbying by the United States, which was at the time the world's largest creditor. And a wholly inadequate system--namely, the World Bank and the IMF--was put in its place. However much you tinker with that system, it will remain wholly inadequate.

THE U.S. government's "war on terrorism" has had a big impact on the global justice movement, especially in the U.S. How do you see the relationship between the war and global justice issues?

I THINK these are intimately connected, and I take a lot of heart from the fact that many people who previously were campaigning exclusively on issues of corporate power have widened the scope of their campaigning to take a powerful stand against war.

There's no question that these interests are connected. It's partly because of corporate power that you have a president called George Bush at all. We know the extent to which campaign contributions help to steer the result in American elections.

It's partly because the administration feels the need to secure oil reserves that we have this prospect of war. And one of the reasons it feels that need is that it's an administration run by oilmen and heavily influenced by oilmen.

It's also mindful of the extraordinary power of what Dwight Eisenhower called the "military-industrial complex"--the amazing lobbying power that the defense industry has in the United States, and indeed in other countries such as the United Kingdom. While that's not the whole reason why George Bush wants to go to war, there's no question that it's part of the reason.

So it's intimately connected with the struggle that those of us in the global justice movement have been involved in already.

HOW DO you think "global justice" can be achieved?

I'M WORKING on just this myself at the moment--and looking at just what democracy would look like if it were applied to international relations.

What would a democratic world order look like, as opposed to the ultra-undemocratic world order we have at the moment--the World Bank and IMF controlled by a few rich nations, the G-8 nations bringing a great deal of weight when they get together in their meetings, the UN Security Council controlled by the world's five biggest arms traders, the World Trade Organization effectively controlled by shadowy teams of corporate lawyers who are utterly unaccountable to the public.

I'm looking at what the alternatives might look like, and I'm writing a book at the moment that will be out in August next year called The Age of Consent. And I'm saying that what we need to work towards is a global economic order based on consent, rather than the current one based on coercion.

So I have various models that I'm currently developing with that in mind.

WHAT ROLE does the grassroots organizing of the global justice movement play in all this?

IF YOU read the new book by Joseph Stiglitz, Globalization and Its Discontents, you will see that he--the man who was previously the chief economist of the World Bank--makes a very clear case that it's only because of protest that these issues are on the agenda at all in the rich nations.

Protests--like the ones that were seen in Seattle, and Prague and Genoa, and Washington in previous years--have alerted the rich world to the appalling injustices being meted out by institutions such as the IMF and the World Bank. And that raising of consciousness is the first step toward political change.

So I would say that the protests are absolutely essential step towards creating a just world order.

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