The World Bank Report: What Does it Really Mean?
I don’t know what to call this: Ironic? Naive? A joke?
Despite an intensified campaign against poverty, World Bank programs have failed to lift incomes in many poor countries over the past decade, leaving tens of millions of people suffering stagnating or declining living standards, according to a report released Thursday by the bank’s autonomous assessment arm.
“Autonomous” in this case has to be translated as “clueless, out of the loop”. You see, what the “autonomous assessment arm” is criticizing happens to have been the goal of the World Bank from the beginning.
Among 25 poor countries probed in detail by the bank’s Independent Evaluation Group, only 11 experienced reductions in poverty from the mid-1990s to the early 2000s, while 14 had the same or worsening rates over that term. The group said the sample was representative of the global picture.”
Achievement of sustained increases in per capita income, essential for poverty reduction, continues to elude a considerable number of countries,” the report declared, singling out programs aimed at the rural poor as particularly ineffective. Roughly half of such efforts from 2001 to 2005 “did not lead to satisfactory results.” During that period, new World Bank loans and credits aimed directly at rural development totaled $9.6 billion, or about one-tenth of total bank lending, according to the group.
[T]he study found that growth has rarely been sustained, exposing the most vulnerable people — the rural poor — to volatile shifts in their economic fortunes. Per capita income rose continuously from 2000 to 2005 in only two in five of the countries that borrowed from the World Bank, the study reported, and it increased for the full decade, from 1995 to 2005, in only one in five.
The study emphasized that economic growth is, by itself, no fix: How the gains are distributed is just as important. In China, Romania, Sri Lanka and many Latin American countries, swiftly expanding economies have improved incomes for many, but the benefits have been limited by a simultaneous increase in economic inequality, putting most of the spoils into the hands of the rich and not enough into poor households, the study concluded.
“But..but…but…that’s what we wanted to do!”Indeed.
In a terrifying and important new book, Confessions of an Economic Hit Man, John Perkins, who for 30 years negotiated a lot of those deals in Third World countries while working for an international consulting firm on behalf of the World Bank and the International Monetary Fund, lets the cat all the way out of the bag – making poor countries poorer was precisely what the WB and IMF intended to do – and for very good reason, at least from their perspective.
This is what…EHMs do: we build a global empire. We are an elite group of men and women who utilize international financial organizations to foment conditions that make other nations subservient to the corporatocracy running our biggest corporations, our government, and our banks. Like our counterparts in the Mafia, EHMs provide favors. These take the form of loans to develop infrastructure – electric generating plants, highways, ports, airports, or industrial parks. A condition of such loans is that engineering and construction companies from our own country must build all those projects. [This is how Bechtel, Halliburton, KBR, etc, get all those overseas contracts - MA] In essence, most of the money never leaves the United States; it is simply transferred from banking offices in Washington to to engineering offices in New York, Houston, or San Francisco.
Despite the fact that the money is returned almost immediately to corporations that are members of the corporatocracy (the creditor), the recipient country is required to pay it all back, principal plus interest. If an EHM is completely successful, the loans are so large that the debtor is forced to default on its payments after a few years. When this happens, then like the Mafia we demand our pound of flesh. This often includes one or more of the following: control over United Nations votes, the installation of military bases, or access to precious resources such as oil or the Panama Canal. Of course, the debtor still owes us the money – and another country is added to our global empire. (emphasis added)
As you can see, equating the WB and IMF to the Mafia is not an overstatement but a fairly precise description of their activities: loansharking, blackmail, and extortion. As John explains, the people who perpetrate these crimes are – at the top, at least – perfectly aware of the result from them: a class split where the rich in each country get very much richer while the country’s poor sink into abject poverty – and so does its middle class.And here’s the kicker: his trainer, one Claudine, told him all this right at the beginning. Here’s a little bit of his account of what she said:
She told me that no one had given me specifics about my job because no one was authorized to – except her. Then she informed me that her job was to turn me into an economic hit man.
Claudine told me that there were two primary objectives of my work. First, I was to justify huge international loans that would funnel money back to [the consulting company] and other US companies…through massive engineering and construction projects. Second, I would work to bankrupt the countries that received those loans…so that they would be forever beholden to their creditors, and so they would present easy targets when we needed favors, including military bases, UN votes, or access to oil and other natural resources.
My job, she said, was to forecast the the effects of investing billions of dollars in a country. Specifically, I would produce studies that projected economic growth twenty to twenty-five years into the future and that evaluated the impacts of a variety of projects. For example, if a decision was made to lend a country $1 billion to persuade its leaders not to align with the Soviet Union, I would compare the benefits of investing that money in power plants with the benefits of investing in a new national railroad network or a telecommunications system. Or I might be told that the country was being offered the opportunity to receive a modern electric utility system, and it would be up to me to demonstrate that such a system would result in sufficient economic growth to justify the loan. The critical factor, in every case, was gross national product. The project that resulted in the highest average annual growth of GNP won. If only one project was under consideration, I would need to demonstrate that developing it would bring superior benefits to the GNP.
The unspoken aspect of every one of these projects was that they were intended to create large profits for the contractors, and to make a handful of wealthy and influential families in the receiving countries very happy, while assuring the long-term financial dependence and therefore the political loyalty of governments around the world. The larger the loan, the better. The fact that the debt burden placed on a country would deprive its poorest citizens of health, education, and other social services for decades to come was not taken into consideration.
Claudine and I openly discussed the deceptive nature of GNP. For instance, the growth of of GNP may result even when it profits only one person, such as an individual who owns a utility company, and even if the majority of the population is burdened with debt. The rich get richer and the poor grow poorer. Yet, from a statistical standpoint, this is recorded as economic progress.
After expressing some doubts about whether or not he was doing the right thing in embarking on such an occupation, Claudine explained the situation as harshly as she could.
“We’re a small, exclusive club,” she said. “We’re paid – well paid – to cheat countries around the globe of billions of dollars.”
Later she added: “You’ll have to choose. Your decision is final. Once you’re in, you’re in for life. Once you’re in, you can never get out.”
So while the outside world may look at the aforementioned report as the chronicle of a failed policy, Paul Wolfowitz and the other Insiders of the international investor class who support the WB will be drinking champagne and clapping themselves on the back for a job well-done. As far as they’re concerned, this “criticism” shows they succeeded in achieving their true goals.
Please. Read this book. You can get more info on John’s website.