“We make or break human life every day of every year as probably no other force on earth has ever done in the past or will ever do again.”
The above rather dramatic quote comes courtesy of one Davison L Budhoo, a former International Monetary Fund economist who in 1988 broke ranks with the Fund, publishing a scathing 150-page resignation letter. In it he accused the organization of corruption, self-interest and deceit.
Not that the Fund, then headed by Frenchman Michel Camdessus, was particularly fazed by the allegations. In those days there was no Internet, so the story didn’t exactly go “viral”; in fact, it barely got a mention in the mainstream or financial press. As such, following a spattering of articles in a few specialist newspapers and magazines, Buddhoo’s accusations were quickly forgotten.
The IMF breathed a sigh of relief, brushed off its Brook Brothers jacket and continued about its business. No inquiry or investigation was launched, no changes were made to the Fund’s operational policies and no heads rolled.
Such aversion to change has become a defining characteristic of the Fund. The result is that while the global economy may have changed beyond all recognition in the last 35 years, with countries like China, India and Brazil rising to the fore, the IMF’s role within it seems to have remained locked in time. The only difference of note (apart from the fact that, in the ballsy, perma-tanned Christine Lagarde, it has its first ever female managing director) is that instead of preying primarily on the world’s poorest, weakest and most defenceless nations — many of which have since become big creditors — the IMF, now a protagonist in Europe’s dreaded Troika, has its sights set on much bigger trophies.
The chicken, it seems, has finally come home to roost. Now it is Europe’s turn to feel the sharp taste of the Fund’s medicine. Slowly but surely the hapless inhabitants of struggling eurozone countries such as Greece, Portugal and Ireland are beginning to realize what many Africans, Asians, Latin Americans and Eastern Europeans learnt through bitter painful experience in the seventies, eighties and nineties — namely that when the IMF, armed with its balance sheets and a calculator, comes calling, you’d better hope you’re out.
For the IMF is, in plain speaking terms, the global banksters’ number one enforcer — a role it has executed (pun intended) with fervor and aplomb ever since the Bretton Woods agreement (though it wasn’t until Nixon’s launch of the floating exchange regime in 1971 that the organisation began forcefully dictating economic policy to supposedly sovereign nations).
The Fund is essentially to the big global banks and corporations what Luca Brasi was to Vito Corleone or, to cite a real-world example, what Francesco Raffaele Nitto was to Al Capone. But rather than use real violence, or even the threat of violence, the IMF’s henchmen have far subtler means at their disposal, as John Perkins, the author of the best-selling book Confessions of An Economic Hitman, explains:
“One of my jobs as an economic hit man was to identify countries that had resources like oil and arrange huge loans for those countries from the World Bank and sister organizations. But the money would never go to the actual country; instead it would go to our own corporations to build infrastructure projects in that country like power plants and industrial parks; things that would benefit a few very wealthy families.
“So then the people of the country would be left holding this huge debt that they couldn’t repay… That’s when the IMF comes in [saying] ‘We’ll help you restructure your loan, but in order to do that you have to meet certain conditionalities. You have to sell your oil or whatever the coveted resource is at a cheap price, to the oil companies without restrictions.’ Or they would suggest the country sell electric utilities, water and sewage, maybe even its schools and jails to private multi-national corporations.”
According to Perkins, it was only when a national leader took a rare principled stand, refusing to sell off all of their country’s resources to international conglomerates at bargain basement prices, that the real goons, or what Perkins calls “the Jackals,” would be sent in, as is alleged to have happened in the highly suspicious deaths, in the early eighties, of Panama’s leader Omar Efraín Torrijos Herrera and Jaime Roldos, the democratically elected president of Ecuador.
Much of the damage the IMF inflicts on national and regional economies stems from its frequent use of flawed statistical data, which often just so happens to suit its own interests (or at least those of its “bosses”), invariably at the expense of its supposed clients’.
The Fund’s programme in Trinidad and Tobago in the late seventies and early eighties, in which Budhoo, the IMF whistle-blower, participated, is a perfect case in point. In his resignation letter Budhoo asserted:
“We manipulated, blatantly and systematically, certain key statistical indices so as to put ourselves in a position where we could make very false pronouncements about (the) economic and financial performance of that country… Quite frankly, our ‘program’ is nothing but a hotchpotch of irreconcilable and conflicting elements and objectives; it reduces economics to a farce.”
Even when the inaccuracy of the IMF’s statistics was exposed by the Fund’s own statisticians, the IMF neither owned up, nor apologized to the Trinidad and Tobagan government. Nor did it publicly correct its misinformation despite the implications of its judgement for foreign investment.
As well it might, for the IMF knows full well that when it comes to its woefully wayward forecasting and deeply flawed track-record, it is protected by a code of silence, or as the Italian mafia would put it, Omerta. As such, the mainstream media always treats the Funds with the gentlest of kid gloves, rarely, if ever, questioning its methods or mission.
But this is no longer 1988 and thanks to the rise of the Internet and the tireless investigative efforts of new online media outlets, more and more people are beginning to see through the obfuscation to the stark reality of the IMF’s less-than-kosher role in the global economy — and not a moment too soon, for it seems that the IMF’s remedial problems with basic maths are part of a much broader degenerative condition, as zerohedge recently reported:
“That the IMF is the most unwavering optimist despite fundamentals, facts and reality has been well-documented… Over the past year’s six outlook revisions, the IMF has been forced to downgrade, with quarterly precision, its overly optimistic forecasts for virtually every part of the world, from the US, to the Euroarea, to China, and of course, the entire world” (click here to see Zerohedge’s graphic presentation of the IMF’s fumbling predictions skills in all their glory).
A Vast Trail of Ruin
When the IMF was founded, in 1945, it was granted two defining missions: to oversee the fixed exchange rate arrangements between countries, thus helping national governments manage their exchange rates and allowing these governments to prioritize economic growth; and to provide short-term capital to aid balance-of-payments.
Which all sounds well and good, and there can be no doubting that the fund played a crucial role in helping stabilise the post-war global economy. However, since becoming an essential tool of the neoliberal agenda in the 1970s, the IMF has failed to help a single country get its economy back on the straight and narrow. As Buddhoo told the New Internationalist, “I dare anyone in the Fund to point to a country and say it is much better off economically today because of a Fund program.”
The tragic reality is that the IMF’s ideologically-driven program of structural reforms and iron-clad conditionalities has left in its wake a vast trail of economic destruction, political instability, poverty, hunger and sickness. Once a country gets caught in its vice-like grip, economic decline and decay is all but guaranteed, as Greece, Portugal and Ireland are now learning.
And what with the list of European countries falling victim to the Troika’s not-so-short-but-pretty-damned-sharp shock treatment continuing to grow by the month, one can only wonder where the trail of carnage will end.