IMF Confidential: The Secret Documents the Masters of the Universe Would Rather You Not See ... Project Censored 2004 Award Winner
Harper's Magazine
Thursday, October 9, 2003
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by Greg Palast
Harper's Magazine
Green-haired protesters in the streets of Seattle were ridiculed for their belief that the World Bank, the International Monetary Fund, and the world's finance ministers enter into secret agreements to impoverish developing nations. Here, in fact, is one such agreement: Argentina's "Country Assistance Strategy Progress Report" from June 2001. This document, nominally produced by the World Bank, represents the interlocking directives of both the Bank and the IMF, as well as, indirectly, the wishes of both institutions' largest patron, the United States Treasury Department. Marked "Confidential" or "Official Use Only," these reports are seldom publicized to the citizenry bound up in their stipulations. And yet for the 100-plus that rely on IMF and World Bank loans-countries such as Argentina, Tanzania, Ecuador, Sierra Leone-such agreements serve as de facto legislation, meticulous in detail and ideological in thrust. Although couched as loan conditions or as helpful development advice, these reports more closely resemble the minutes of a financial coup d'etat....
To reduce its deficit per IMF decree, Argentina had cut $3 billion from government spending-a cut that was necessary, the authors note here, to "accomodat
the increase in interest obligations." These obligations, the report did not need to add, were largely to foreign creditors, including the IMF and World Bank themselves. Since 1994, in fact, Argentina's budget deficits had been entirely attributable to interest payments on foreign loans. Excluding such payments, spending had remained constant at 19 percent of GDP. Despite the visible harm caused by cuts, the new plan ordered more. This, the report promised, would "greatly improve the outlook for the remainder of 2001 and 2002, with growth expected to recover in the later half of 2001." The Bank was slightly off the mark. By December 2001, Buenos Aires' middle class, unaccustomed to hunting the streets for garbage to eat, joined the poor in mass demonstrations.
How had Argentina arrived at such an impasse? In the 1990s the nation was the poster child for globalization, having followed without question the IMF and World Bank program. The "reform" plan for Argentina, as for every nation, has four steps. The first of these, capital market liberalization, was achieved by 1991's "Convertibility Plan," which pegged the Argentine peso in a one-to-one relationship with the U.S. dollar. This peg was designed both to keep inflation low and to make deficit spending difficult, in hopes of attracting and comforting foreign investors. Liberalized markets free capital to flow in and out across borders. But once Argentina's economy began to wobble, money simply flowed out....
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