“Free trade” agreements have aided capitalist globalization and secured corporate profits perhaps more than any other type of legal mechanism. As mentioned investor-state dispute settlement clauses in “free trade” agreements allow corporations to sue for potential “lost profits” in World Bank tribunals when the governments decide to expropriate a resource or company or when they kick a company out for environmental damage. Essentially, this makes them more powerful than governments. But World Bank and other multilateral development banks do far more than this.
International “lending” institutions (also called “multilateral development banks” or MDBs) like the United States Agency for International Development (USAID), the Inter-American Development Bank (IDB), the Bank of Central African States, the Asian Development Bank, the International Monetary Fund (IMF), the US Export and Import Bank, (EX-IM) and World Bank represent themselves as “humanitarian” organizations when in reality the money they do “lend” only goes to massive development projects like the construction of dams, roads, airports, pipelines, oil wells, power plants, and other infrastructure that destroy the environment, extract resources, displace indigenous peoples, profit only corporations tied to these institutions, and saddle the taxpayers where the projects are located with massive debt they can never pay off. This provides the empires where these institutions call home enormous geopolitical influence and bargaining power to further their economic and ideological interests, (including via the construction of military bases). It’s very evident just by looking at MDBs that imperialism and colonialism never died. They’ve just been re-branded as “humanitarian aid” and “development.”
Structural adjustment programs, (or SAPs) which are loans or agreements to lower interest rates on existing loans provided by the IMF and World Bank to countries in financial crisis make these “strings attached” much more apparent. They openly require countries implement policies like deregulation of corporate industry, privatization of public industries and resources, slashing of wages, devaluation of currency, elimination of food subsidies, other austerity measures, (resulting in the exacerbation of health epidemics) and increases in the prices of public services to get loans. When these conditions are taken into account, the notion that these institutions serve their stated purpose of “poverty reduction” and “welfare” becomes laughable though there’s nothing funny about devastating impacts these loans and their conditions have on people and the planet. In 1999 the World Bank and IMF replaced SAPs with “Poverty Reduction Strategy Papers,” which are almost identical except in name and are just a more effective euphemism.
The money these institutions “lend” isn’t really loaned at all to the countries they’re supposedly funding because the majority of the capital goes to contracts awarded to corporations these lending institutions have cronyist relationships with to build massive projects that only benefit the wealthiest and most powerful elite of the country. Author John Perkins explains in his book, Confessions of an Economic Hitman,“A condition of such loans is that engineering and construction companies from our own country must build all these projects. In essence, most of the money never leaves the United States; it is simply transferred from banking offices in Washington 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 [economic hitman] 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,” pg. xx.
Increases in GNP or GDP, which reflect more money made by elites only, are enough for these institutions to call their projects “successes.” And the only reason many of these countries seek aid in the first place is that “donor” countries bomb them into the stone age. For example, a report by Acbar, a coalition of international aid agencies working in Afghanistan, including Oxfam, Christian Aid, Islamic Relief, and Save the Children explains 40% of the $10 billion in “aid” awarded to Afghanistan was spent on “corporate profits and consultancy fees”.1 Four out of the five corporations awarded the largest contracts worth hundreds of millions from USAID to build in Afghanistan are based in the US: KBR, (subsidiary of Halliburton, formerly run by Bush’s VP, Dick Cheney from 1995 to 2000) the Louis Berger group, Chemonics International, and Dyncorp International. Chemonics is, in fact, headquartered in Washington D.C. It was reported in 2003 that Halliburton also “won a contract, which could be worth $7 billion and could last up to two years, to make emergency repairs to Iraq’s oil infrastructure.”2
From 1995 to 2002 Halliburton was awarded $2.5 billion to build and oversee military bases under the Logistics Civil Augmentation Program. Charles M. Smith, Chief of HQ, Army Field Support Command in charge of supervising the government’s contract with Kellogg Brown & Root, former subsidiary of Halliburton, was fired in 2004 for refusing to provide KBR the $1 billion it requested simply for housing and feeding soldiers in Iraq. (KBR has also bribed Nigerian officials for government contracts, evaded taxes by hiring workers through shell companies in the Caymans, engaged in human trafficking, hired employees who gang raped co-workers, and operated burn pits in Iraq, in which they burned a plethora of toxic substances.)
Furthermore, after bombing Iraq, under orders from the Bush administration USAID awarded US corporation Bechtel a $1.8 billion dollar contract to rebuild Iraq in April of 2003. According to John Perkins,“Bechtel has longstanding ties to the national security establishment… One director is George P. Shultz, who was secretary of state under President Ronald Reagan. Before joining the Reagan administration, Mr. Shultz, who also serves as a senior counselor to Bechtel, was the company’s president, working alongside Caspar W. Weinberger, who served as an executive at the San Francisco based company before his appointment as defense secretary. This year,  President Bush appointed Bechtel’s chief executive, Riley P. Bechtel, to serve on the President’s Export Council,” – Confessions of an Economic Hitman, 2003, pg 252. George Shultz was also “secretary of the treasury and chairman of the Council on Economic Policy under Nixon.”
After the Gulf War, Bechtel was also paid $1.5 billion to repair Kuwait’s infrastructure. All of the five corporations (Halliburton, Bechtel, Fluor, Parsons, and Louis Berger) invited to bid on a $600 million contract to rebuild Iraq during the Bush administration were US companies with close ties to the administration. USAID even “awarded a $4.8m contract to rebuild Iraq’s only deep water port, which is under British military control, to an American company, Stevedoring Services of America.”3 Perkins explains in his book,“We have convinced ourselves that all economic growth benefits humankind, and that the greater the growth, the more widespread the benefits…. Thanks to the biased “sciences” of forecasting, econometrics, and statistics, if you bomb a city and then re-build it, the data shows a huge spike in economic growth,” pg 255-256.
USAID and World Bank
USAID was founded by JFK in 1961 by executive order. Congress authorizes USAID’s programs via the Foreign Assistance Act. Though it is supposed to be an “independent agency” the President, the Secretary of State, and the National Security Council have control over much of its programs. USAID operates without the consent of the people who are supposed to be “benefiting” from their funding. Common people of Bolivia don’t get to decide whether or not they receive USAID loans. The government of Bolivia doesn’t even get to decide. In fact, USAID sometimes lends money to political parties that seek to overthrow their governments usually because they are unfriendly to the American government’s economic interests.
The Depression and WWII catalyzed the creation of World Bank and the IMF and the General Agreement on Tariffs and Trade (GATT) to reconstruct Europe after devastation of the war. The US President picks the President of World Bank so it’s not a “world bank” at all but a US bank. The World Bank represents 188 countries but like the ADB, the countries that provide the most funding get the most influence and pick the leadership and senior management. As the USG has the ability to veto World Bank decisions, it prohibits World Bank from doing anything contrary to the government’s interests.
Author Naomi Klein explains World Bank revealed itself as a sham “when it forced school fees on students in Ghana in exchange for a loan; when it demanded that Tanzania privatise its water system; when it made telecom privatisation a condition of aid for Hurricane Mitch; when it demanded labour ‘flexibility’ in Sri Lanka in the aftermath of the Asian tsunami; when it pushed for eliminating food subsidies in post-invasion Iraq. Ecuadoreans care little about Wolfowitz’s girlfriend; more pressing is that in 2005 the World Bank withheld a promised $100m after the country dared to spend a portion of its oil revenues on health and education. Some anti-poverty organisation. 4 Further examples include a 1983 World Bank loan to Malawi for education that increased schooling fees drastically, even though prior to the loan, college was completely free, including room and board. The World Bank actually wrote a paper, arguing that raising school fees would help the poor.5
As another example, in 1998 the Delhi Jal Board, Delhi’s city water supplier, reached out to World Bank for a $2.5 million loan to help improve their water supply network and stop water losses. World Bank suggested hiring a consultant for the project and 35 companies were initially considered. After the Delhi Jal Board ranked the bid from PricewaterhouseCooper headquartered in the UK tenth out of the 35 and thus disqualified, World Bank brought it back into consideration by citing the World Bank clause that one of the companies being considered must be from a developing country. (As mentioned, PricewaterhouseCooper is headquartered in the UK but they have operations all over the world, including India though this hardly means it is a company from a developing country.) In the final round of evaluations, the board again rejected the company and World Bank demanded all of the companies bids be resubmitted and a new evaluation board be formed. But PricewaterhouseCooper failed to live up to the expectations of the new board as well. World Bank then demanded that the most unfavorable evaluation made by member of the board, RK Jain, be erased, at which point the company finally qualified and the board agreed to hire PricewaterhouseCooper as a consultant on the project, seeing no other option.6 Conveniently for the World Bank, PricewaterhouseCooper explained privatization of the city’s water was the “only option” to “improve” the water system, increasing consumer’s water bills sixfold. A few years later, a Right to Information request was submitted by Indian politician, Arvind Kejriwal, and the NGO Parivartan in 2005, revealing that privatization of Delhi’s water supply would provide four administrations of the water zones over $25,000 per month, increasing water tariffs by nine times and the budget by 60%.7 After the investigation’s findings became public, the Delhi Jal Board withdrew the loan application to World Bank. However, water privatization has continued in India. For example, the water company Degremont was contracted to build the Sonia Vihar water treatment plant, which has been functioning since 2006. Within the contract is a guarantee clause, which forces tax payers to continue to pay for the utility whether or not the company delivers water.
A similar situation occurred in the Philippines. After water was privatized in Metro Manila, Philippines, the International Finance Corporation (IFC) of World Bank provided millions in loans to the private suppliers. Unsurprisingly, prices for water treatment, transport, storage, and collection of waste water increased substantially. Consumer costs for water skyrocketed by 700 percent.8 The IFC also lent $23 million to build the fourth largest gold mine in the world in Cajamarca Peru, land stolen from indigenous peoples in the pristine Amazon rainforest. The Colorado based Newmont Mining corporation, Buenaventura, a Peruvian company, and the French government owned company, Bureau de Recherches Géologiques et Minières (BRGM) assumed co-ownership. But when BRGM tried to sell some of its shares to a rival of Newmont, Newmony senior executive, Larry Kurlander enlisted Vladimiro Montesinos, the Peruvian intelligence chief on CIA payroll found guilty of a litany of crimes to push the French company out. Montesinos also told Peruvian Supreme Court Justice and former classmate, Jaime Beltran Quiroga if he favored Newmont in his decision on the dispute, the US would back Peru in its dispute with Ecuador over its borders. Newmont spilt 151 kilograms of mercury in June 2000 in the town of Chropampa and two nearby villages, poisoning more than 900 people. The company has also contaminated water sources with cyanide, killing a plethora of animals and plantlife. At least two activists have been killed by Newmont’s private security for opposing the mine, including Edmundo Becerra Corina and Isidro Llanos Canvar, a local farmer.
World Bank’s consulting in Bolivia is an even more egregious example. Due to hyperinflation in Bolivia in the 1980s, the government sought a loan from World Bank to avoid an economic crash. Under instructions from World Bank, the government of Bolivia privatized its railways, national airlines, fossil fuel industry, and telecommunications and stopped providing subsidies for water. World Bank offered to provide a loan to La Paz and Cochabamba but only with the condition that the two cities privatize their water supply. The city of Cochabamba agreed and put SEMAPA, the state controlled water supplier, up for auction. Only one party was willing to bid: Aguas del Tunari, a consortium between the British company, International Waters, a subsidiary of Bechtel, Abengoa of Spain, and four Bolivian companies. Access to piped water in Cochabamba actually decreased from 70% to 60% of the population as a result. But residents fought back by blocking highways, lynching mayors, and fighting the police and the military and won. Bechtel was kicked out of Bolivia but the parasitical company later sued for $2.5 million.9
The World Bank has also devastated Ecuador with its loans for oil projects and attempted to privatize Petroecuador, Ecuador’s state owned oil enterprise that has also granted Shell and Texaco oil concessions. Ecuador, in fact, has a city named after the oil giant Shell in the Amazon Jungle and oil shipments account for half of Ecuador’s exports. John Perkins explains, “In the years since I first went there, in 1968, this tiny country had evolved into the quintessential victim of the corporatocracy. My contemporaries and I, and our modern corporate equivalents, had managed to bring it to virtual bankruptcy. We loaned it billions of dollars so it could hire our engineering and construction firms to build projects that would help its richest families. As a result, in those three decades, the official poverty level grew from 50 to 70 percent” and “under- or unemployment increased from 15 to 70 percent, public debt increased from $240 million to $16 billion, and the share of national resources allocated to the poorest citizens declined from 20 percent to 6 percent. Today, Ecuador must devote nearly 50% of its national budget simply to paying off its debts,” pg 239- 240. Journalist Sandy Tolan further explains, “[Of each] $100 of crude taken out of the Ecuadorian rain forests, the oil companies receive $75. Of the remaining S25, three-quarters must go to paying off the foreign debt. Most of the remainder covers military and other government expenses — which leaves about $2.50 for health, education, and programs aimed at helping the poor. Thus, out of every $100 worth of oil torn from the Amazon, less than $3 goes to the people who need the money most, those whose lives have been so adversely impacted by the dams, the drilling, and the pipelines, and who are dying from lack of edible food and potable water.”10 However, indigenous Ecuadorians did fight back: “On May 7, 2003, a group of American lawyers representing more than thirty thousand indigenous Ecuadorian people filed a $1 billion lawsuit against ChevronTexaco Corp. The suit asserts that between 1971 and 1992 the oil giant dumped into open holes and rivers over four million gallons per day of toxic wastewater contaminated with oil, heavy metals, and carcinogens, and that the company left behind nearly 350 uncovered waste pits that continue to kill both people and animals.”
Word Bank’s “development” project in Thaba-Tseka, Lesotho is another example. Lesotho was under British rule until 1966. The World Bank produced a highly inaccurate report on the country in 1975 in an attempt to justify massive loans. The report claims that Lesotho has no infrastructure or industry when, in fact, both are (and were at that time) highly present due to British colonization. The reports also claims “agriculture provides a livelihood for 85 percent of the people” when in reality only six percent came from crop production. The majority of their income still comes from work in South Africa (primarily in mines). Construction of the Thaba-Tseka project center led to construction of a new police station, a prison, an immigration control office, a new army base with more troops, and generally a tighter government grip on the populace.11 Similarly, after the dissolution of the Soviet Union, World Bank sought to privatize all of Russia’s state assets. Protests against this and the autocratic rule of Russian President Yeltsin were answered by the military with the use of tanks, killing hundreds under orders from Yeltsin.
The World Bank has also financially supported numerous US backed dictatorships. For example, when Augusto Pinochet took power in Chile via coup, the World Bank loaned $100 million to Chile in the first two years of his rule. The USG also directly supplemented this with $680 million in loans. During the first five years of the Reagan administration, MDB and US loans to Pinochet’s Chile totaled $3 billion, including $430 million from the World Bank.12 The World Bank and the IMF also loaned billions to one of the most notorious dictators of all time, Mobutu Sese Seko, former President of the Democratic Republic of Congo, guilty of torturing and killing dissidents (including Patrice Lumumba’s Minster of Education whose eyes were gouged out and limbs were amputated along with his genitals) and taking power via a coup. Mobutu stole much of the money loaned to the Congo for himself. The IMF also loaned money to Romania’s dictator Nicolae Ceaușescu who was later convicted of genocide. As a condition of a $1.5 billion loan to Romania under Ceaușescu in 1981, the government was required to raise food and gas prices, resulting in massive food shortages and a decline in the availability of hot water and heat. Most apartments had hot water only one day per week as a result. Government cuts to electricity also caused the deaths of dozens of infants in neonatal intensive care units. The World Bank is only able to get away with these rapacious, insidious acts because it requires sovereign immunity from the countries it provides loans to, which means they are legally unaccountable and immune to all prosecution for their wrongdoing.
The IMF along with the International Bank of Reconstruction and Development, (now a part of World Bank) was established in July 1944 by forty-four allied nations gathered at the Bretton Woods Conference, meeting to regulate international commerce after WWII. Representatives of the USG, which controlled 2/3 of the world’s gold at that time insisted that these institutions rely on both gold and the US dollar as a reserve currency, essentially making them arms of Wall Street and allowing the USG to borrow money at much lower rates than any other country. When Nixon did away with gold-backed currency, these institutions then relied exclusively on US fiat currency.
There are 189 member countries of the IMF but the USG still wields the most influence by far as it provides the most capital. The USG casts more than 16% of the votes on all IMF decisions. The fund primarily lends money to countries to pay off their debts from previous loans from other international monetary agencies like the World bank, so often not one dime actually goes to social welfare programs and the conditions of their loans often stipulate governments must actually reduce spending on social welfare. Such was the case with their loans to Argentina.
Argentina’s recession of 1998 to 2002 was directly caused by the IMF and government corruption. During the 1990s the IMF continually lent the state money with no concern for their growing debt and its impacts on common Argentinians. The IMF, in turn, demanded the government institute austerity measures to reduce the debt. The De la Rúa administration backed by former president Clinton cut $1.4 billion from the budget in the first weeks of 1999 and in June 2000 taxes were increased by $2 billion. (In an interview with La Nacion, Clinton said these cuts showed “strong leadership” and he asked Argentinians to support them.) The government also slashed retirement benefits and in July of 2001, the state cut the salaries of civil servants by 13%. In August some were paid with IOUs instead of money. Unemployment grew rapidly and affected 20% of the population by December. In the same month the IMF demanded a further cut of 10% to the federal budget. Pensions were cut by $240 million and union control of their health care plans was revoked. Many Argentinians began to withdraw their money from their bank accounts after losing confidence in the local economy and government, to which the government responded by instituting the Corralito, (which means corral, animal pen, or enclosure). The Corralito empowered the government to seize all civilian bank accounts in an attempt to pay government debts and prevent a bank run and capital flight, (a mass withdrawal of money driven by fears the bank will collapse). As a result, common Argentinians began to riot in the streets of Salta, Chaco, and Neuquen where police responded brutally, the offices of Repsol-YPF oil were burned down, and 60% of the entire workforce of Argentina – 7.2 million people – went on strike.
In a 2007 report by Actionaid entitled “Confronting the Contradictions”13, the NGO explains that as a condition of IMF loans to “17 countries in Asia, Central America and sub-Saharan Africa, including Malawi [and] Sierra Leone” the IMF required their governments to cap public sector wage bills. Countries that have received IMF loans that required the imposition of austerity measures include Benin, Burkina Faso, Burundi, Chad, the Democratic Republic of Congo (DRC), Ghana, Kenya, Malawi, Mali, Mozambique, Niger, Senegal, Sierra Leone, Zambia, Nepal, Azerbaijan, Tajikistan, Dominica, Guyana, Honduras, and Nicaragua. The IMF caps on public sector wage bills have limited the number of staff who can be hired in public hospitals, leading to poorer quality health care, growing health epidemics, and greater numbers of deaths. For example, a 2009 study on 21 countries that received IMF loans found that the loans were “associated with increased tuberculosis incidence, prevalence, and mortality rates by 13.9%, 13.2%, and 16.6%” and conversely the study found “a decrease in tuberculosis mortality rates of 30.7% (95% confidence interval, 18.3% to 49.5%) associated with exiting the IMF programs.”14 In Ghana the IMF required the government to cut spending on public services from 9% to 8.5% in 2005, despite the fact that the doctor to civilian ratio was 1:17,617 and the maternal mortality rate was 210 per 1000 births.15 The government also had to renege on a wage agreement it had made with registered nurses.
In Kenya the IMF forced the government to reduce its wage bill in 2004 from 9% of the GDP to 8.5% and further to 7.2% in 2007. They also required the government to reduce public staff by 21,000 personnel. In Zambia government per capita expenditure on health care was reduced in 1995 from $8.1 to $7.5 in 2002 due to pressure from the IMF, despite the fact that the doctor to civilian ratio was 1:17,589. In Malawi, these caps have hit the education sector especially hard. As a result of the wage caps, public schools are understaffed and cannot afford to hire teachers or to train them. Under instructions from the IMF, in 1998 Malawi prohibited wage increases and then prohibited public schools from hiring more teachers in 2003. In 2006 the wage bill was capped at 7.2% (in 2005 in Mozambique it was capped at just 6.5%) and the student to teacher ratio was 72:1. The same year only 27% of girls in Malawi finished primary school and no new teachers had received training in ten years. In Tajikstan the wage bill was capped at just 4.5%. In Pakistan and Chad a mere 2% of their GNP was spent on education as a result of the IMF. In 2007 the IMF demanded that there be no more than 33,122 teachers on the payroll in the whole of Sierra Leone as a condition of its loan to the country. The lack of educators and health-care workers in these countries is further driving them into economic and social destitution. The IMF claims health sectors are exempt from their required cuts but by cutting back the public sector budgets of entire countries, every public service is inevitably cut back. Further, the IMF has required countries to cut the corporate tax rate as a condition of its loans. Former Tanzanian President, Julius Nyerere, put it aptly when he said, “Who elected the IMF to be the ministry of finance for every country in the world?”
The IMF has also loaned Argentinian president, Carlos Saúl Menem, billions, much of which he stole to fund his lavish lifestyle, including the purchase of a bright red Ferrari Testarossa. As a condition of the loan, the IMF required reform of Argentinian labor laws and the repeal of laws that forced employers to negotiate terms with employees nationwide, as well as a provision that automatically renewed the terms of current labor contracts in cases when new ones are not agreed upon within a given period. The IMF also demanded an end to a law that provided unions the right to manage their own employee health plans so that they could force employees to defer to the free market to buy their own health care plans.16 With the minister of the economy, Domingo Cavall, Menem also privatized military factories, (and pardoned military leaders from the dictatorship who were convicted in 1985 in the Trial of the Juntas) the telecommunications industry, the airline industry, the postal service, water distribution, electricity, nuclear power plants, and the gas industry, and suspended pensions for the disabled likely due to pressure from the IMF.17 Some pension funds were also privatized. Layoffs and unemployment grew rapidly and riots broke out in Santiago del Estero, Jujuy, and San Juan as a result. Taxes were also increased, the wages of public sector workers were slashed, fuel prices were increased, and other harsh austerity measures were implemented.
In 2013 Menem was found guilty of smuggling weapons to Ecuador and Croatia but was granted immunity from prosecution as he was a senator at the time. Meanwhile, his minister of defense served five years in prison. In 2015 Menem was finally found guilty of embezzlement of $466 million and sentenced to 4 1/2 years in prison but still is not likely to face prison time due to congressional immunity. No one from the IMF has faced any punishment for lending him money.
The ADB, the Bank of Central Africa, and the US EX-IM Bank
The Asian Development bank, (ADB) established in 1966 and located in Metro Manila Philippines has 67 members, 48 of which are located in Asia and the Pacific. Members that contribute the most monetarily, specifically Japan and the US, receive the most votes and wield the greatest influence, which means the countries that need the most aid have the least say over to whom and where the loans are allocated. The ADB has funded numerous environmentally devastating projects, including Thailand’s 2,625 megawatt (MW) Mae Moh coal-fired power station, the largest coal fired plant in Southeast Asia that annually produces more than four million tons of carbon dioxide, 4.3 million tons of fly ash, 39 tons the neurotoxin, mercury, and 1.6 million tons of sulfur gas per day according to Greenpeace, causing frequent acid rains, 42,000 local cases of breathing ailments within the first two months of 1992, nausea, inflammation of the nasal cavities and eyes, as well as severe respiratory diseases and lung cancer within a 7 kilometer radius of the plant. 200 deaths have been attributed to the plant, including six from blood poisoning. (Jessica Rosien, 2004) The fly ash emitted from the plant has also destroyed local farm lands along with the acid rain. Further, 30,000 people were displaced to make room for construction of the plant. The State Natural Resources and Environmental Policy and Planning Office found high levels of respirable chromium, arsenic, and manganese in virtually every water source within the locality of the plant in October 2003. High levels of lead have also been found by Greenpeace. Farmers have sued for damages and the lawsuits have been their only recourse for compensation.
The ADB along with World Bank has also pushed for privatization of the National Food Authority of the Philippines, which bars private corporations from importing rice. The ADB seeks to lift this ban and quantitative restrictions on rice, (the Philippine government lifted restrictions on all other crops under pressure from the WTO) which would allow massive, subsidized, private transnational corporations to flood the market with cheap rice, putting local, small farmers out of business and creating a reliance on these foreign corporate powers that have to ship food in on massive, polluting ships. This has led to a rice shortage in the Philippines and similar ADB policies in surrounding countries have had the same impact on the rest of Southeast Asia.
The Bank of Central African States (Banque des États de l’Afrique Centrale) oversees the economies and issues currency for six African countries: Cameroon, Chad, the Central African Republic, Equatorial Guinea, Gabon, and the Republic of the Congo. According to a memo published by WikiLeaks, Gabonese officials (including the President of Gabon, Omar Bongo, and his son and successor Ali Bongo) working for the Bank of Central African States stole $36 million over five years from the bank to finance France’s political parties18 Only the governor of the bank, Philibert Andzembe, was fired by Ali Bongo, despite his own involvement, for his part in the theft.
Another corrupt, crony capitalist “lending” institution is the US Export / Import Bank (EX-IM) that subsidizes US exports. EX-IM egregiously favors US corporations it has ties with. According to economist, lawyer, and journalist, James Henry, ”In 2000 86% of the US EX-IM bank’s $7.7 billion in new foreign export credits and guarantees went to just ten politically influential US companies, including Enron, Halliburton, GE, Boeing, Bechtel, United Technologies, Schlumberger, and Raytheon.” 65% of EX-IM’s loans in 2007 and 2008 [amounting to $5.5 billion in 2008 and $4.5 billion in 2007] were awarded to corporations buying Boeing’s aircraft according to the Pew Charitable Trusts.19 In 2012 a shocking 82.7% of EX-IM’s loans amounting to $12.2 billion went exclusively to Boeing.20 Obama called this “economic patriotism.” These loans are paid for by American taxpayers who see none of the benefits.
EX-IM also funds ecocidal projects. For example, in 2009 EX-IM loaned ExxonMobil $3 billion to finance the Papua New Guinea Liquid Natural Gas (LNG) project, which caused a landslide that killed 25 people. The government of Papua New Guinea called in the military to quell dissent after the disaster. In 2010 EX-IM also loaned $917 million to finance the 3960 megawatt coal-fired Sasan Ultra Mega Power Project in India. The following year they loaned $805 million for the 4,800 megawatt Kusile coal-fired power plant in South Africa. In 2012 the bank funded Australia Pacific LNG’s projects inside the Great Barrier Reef World Heritage Area, despite the fact that this violated several environmental and cultural heritage laws, for which several environmental groups sued the bank. (The Overseas Private Investment Corporation was also sued for its investment in the project. OPIC’s CEO, VP, President, and board of directors are all nominated by the President of the USG.) The same year they also provided a $1.8 billion loan for the Queensland Curtis LNG project. The only time EX-IM has invested in green energy companies is when these companies are tied to EX-IM. For example, a comparatively scant $33.6 million was loaned to Abengoa, of which Bill Richardson, a member of the advisory committee of EXIM, is a also a member of the board of directors.
Another example is the Inter-American Development Bank (IDB). Established in 1959, the IDB has 48 member countries and is the largest source of capital for “development” projects in Latin America and the Caribbean. The IDB approved financing of the Camisea fossil fuel project in the Peruvian Amazon near the Urubamba River, the largest energy project in Peru, which Jon Sohn of Friends of the Earth said “violates international environmental standards and US law.” According to the bank’s own estimates the project generates “1.1 million tonnes of carbon dioxide per year.” While US taxpayers were made to suffer from the decision, US oil giant Hunt Oil, (which has a 25.2% stake in the project and made significant contributions to the Bush campaigns) South Korean oil giant SK Corporation, Spanish oil giant Repsol, and Algerian oil giant Sonatrach gained millions. (Pluspetrol and Tecpetrol are also invested.) Royal Dutch Shell was the first to discover the oil there in 1986 but their project to drill the area with Mobil was canceled in 1998 due to strong opposition. The initial project was so destructive, even EX-IM refused to finance it due to environmental concerns.
The IDB has also financed the Initiative for the Integration of South American Regional Infrastructure, a series of transportation, energy, and telecommunications projects that ripped through the heart of the Amazon and displaced many indigenous peoples. As a part of this initiative, the IDB financed the Madeira dam project located in the Brazilian state of Rondônia, which produced two massive dams: Santo Antonio (3,150 MW) and Jirau (3,300 MW) at a cost of $14 billion. According to the IDB Watch, a publication of civil society groups “After the preliminary license for the dams was granted in July 2007 a 600% increase in deforestation rates was reported in the area.”21 In 2008 Roberto Vellutini, the Director of the IDB’s Infrastructure and Environment Department, told a conference of environmental experts that the bank planned to finance Columbia’s production of “green goal” by providing wind power and bio-diesel for trucks servicing Cerrejon Coal, the world’s largest open pit coal mine, another pathetic attempt at greenwashing. According to IDB Watch“A recent analysis of IDB energy lending found that the Bank supported 49 fossil fuel pipeline, power,and sectoral reform projects with $6.27 billion in financing from the time of the Earth Summit of 1992 through March 2004. These IDB-backed projects were estimated to generate over three billion tons of carbon dioxide emissions, more than twice the amount of such man-made emissions for all of South America, Central America,and Mexico in the year 2000.“22
These banks are only so successful in their rapacious debt enslavement in part because of intergovernmental organizations like the World Trade Organization (WTO), which favors the richest countries and corporations by protecting and subsidizing (in the form of lop-sided tariffs) exports from rich countries and increasing the costs of exporting products from less developed countries, making them reliant on cheap imports and opening them up to development by massive transnational companies from richer countries. Less developed countries are generally excluded from the WTO’s biggest decisions, which are made exclusively by the richest and most industrialized countries in closed door meetings. The WTO’s Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs) also limits less developed countries from using technology created abroad.
MDBs are also helped by “free trade agreements,” discussed in the previous section and crony capitalist financial consultants (like John Perkins before he quit) with ties to the banks and the corporations they recommend. The consulting firms’ job is essentially to inflate the projections of GNP growth from a loan that is being considered to convince the government considering it to take it. This confluence of corporate and state power allows for endless buck-passing. Governments want to shift the blame away from themselves and Perkins explains in his book exactly how they are able to do this:““U.S. intelligence agencies — including the NSA — would identify prospective EHMs, who could then be hired by international corporations. These EHMs would never be paid by the government; instead, they would draw their salaries from the private sector. As a result, their dirty work, if exposed, would be chalked up to corporate greed rather than to government policy. In addition, the corporations that hired them, although paid by government agencies and their multinational banking counterparts (with taxpayer money), would be insulated from congressional oversight and public scrutiny, shielded by a growing body of legal initiatives, including trademark, international trade, and Freedom of Information laws,” pg 22.
The overall effects these institutions have on undeveloped and less developed countries is devastating. Perkins explains, “Third world debt has grown to more than $2.5 trillion, and the cost of servicing it — over $375 billion per year as of 2004 — is more than all third world spending on health and education, and twenty times what developing countries receive annually in foreign aid. Over half the people in the world survive on less than two dollars per day, which is roughly the same amount they received in the early 1970s. Meanwhile, the top 1 percent of third world households accounts for 70 to 90 percent of all private financial wealth and real estate ownership in their country,” pg xxii. What does this say about our priorities? The path we are on is misanthropic, ecocidal, and therefore suicidal; It must end.
The solution isn’t to reform these parasitical financial institutions. The solution is to destroy them. The first world and industrial civilizations must stop assuming they know better than indigenous peoples and other peoples of less developed countries. We all must have autonomy, the ability to rule our own lives, govern our own affairs, and make decisions about our own bodies and the land on which we directly work without impinging on the freedoms of other innocent people or harming ecosystems. We must all become sustainably self-reliant in our own voluntarily formed communities or homes by sustainably and humanely hunting, scavenging, raising animals, or practicing organic permaculture, collecting our own water, and using bio-construction to build shelters.
No big lending institution ever lends money out of good will or compassion. The goal is always social and economic control and profit. There are always strings attached. Rich people don’t become rich by giving their money away and we cannot be fooled by the disingenuous rhetoric about “humanitarian aid” and “sustainable development” that these institutions use as propaganda. The perpetual flow of exports and imports transported via fossil fuel burning vehicles and made mostly via fossil fuels driven by globalization and capitalism is killing our planet. We don’t need products shipped halfway around the world with the possible exception of medicines. We need biodiversity and a healthy, habitable planet. Even in the case of medicine, there are many viruses, illnesses, and disorders that are products of dense, industrial civilizations because they are essentially petri dishes of human waste that simply don’t exist in indigenous communities in the jungle because their ways of living are healthier and communities are far less dense. They eat fresh fruit and vegetables often working with the land or hunting and gathering or both for their own direct subsistence. They don’t work 9 to 5 jobs so they can buy genetically modified, preservative filled, pesticide sprayed produce monocropped 500 miles away and trucked out to a local grocery store. However, there are afflictions that affect both indigenous and non-indigenous peoples, such as broken bones, cancers, etc. (though these are less prevalent in the former). These afflictions require some infrastructure, energy, and metal surgical tools, which inevitably hurt the environment. But most of our interactions with the environment ought to be mutually beneficial instead of so one-sided and favoring a small group of powerful people. And it’s up to individual, voluntarily formed communities whether or not they want this infrastructure or any at all.
Fiat currency has no intrinsic value. Clean air, healthy food, potable water, and healthy, thriving biodiverse ecosystems, on the hand, do have massive intrinsic value. The best kind of aid that can be provided to communities genuinely struggling and seeking help is completely free education to empower themselves and become self-sufficient. We cannot rely on the charity of the super wealthy parasites in power who we ought to be fighting. The money that these banks have to lend doesn’t even rightfully belong to them. It was stolen from the Earth, common people, and other creatures on Earth. It’s rightfully all of ours or no one’s. Even genuine charity with no strings attached won’t save us as it’s unsustainable. It’s a band-aid as opposed to a solution that addresses the source of the problem. We don’t need massive infrastructure to achieve a high quality of live. In fact, massive infrastructure is diminishing our quality of life. We can all sustainably grow our own healthy, organic food. We can collect our own potable, clean water. We can shelter ourselves sustainably with natural materials. We can heal ourselves with medicinal plants and we can educate ourselves. We don’t need blood money and these parasitical institutions and their cronyist politicians to steal our money through taxation, policing, and militarization to line their own pockets and throw us back breadcrumbs in the form of meager social welfare programs in a pathetic attempt to justify their exploitation. Wiping out forests, displacing indigenous peoples, saddling taxpayers with billions in debt, and implementing austerity measures isn’t “development” or “growth”- it’s destruction. The idea that “development” is positive no matter what is being developed and what or who it is replacing is so pervasive and ecocidal within first-world civilizations. If people don’t come to understand this is a lie, we will never move forward. Another beautiful world is possible. But if we rely on the same paradigm and only talk about or attempt to make what we believe to be are “realistic reforms,” we will forever live in chains.
12 The Sydney Morning Herald, Page 17. Sydney, New South Wales. December 9, 1986. <<https://www.newspapers.com/newspage/121221705/>>