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Thread: Is the IMF an New Form of Colonialism ? - Joseph Stiglitz says "Yes"

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    Default Is the IMF an New Form of Colonialism ? - Joseph Stiglitz says "Yes"



    Stiglitz, in "Globalism and its Discontents", raises the question of whether the IMF is a part of a new form of colonialism.
    Page 40-41 he talks about this picture of an IMF head standing over President Suharto of Indonesia, while the latter signs a "Letter of Intent and Memorandum", like the Irish one.

    He says "The IMF is not particularly interested in hearing the thoughts of its "Client countries" on such topics as development strategy or fiscal austerity. All too often, the Fund's approach to developing countries has the feel of a colonial ruler. A picture can be worth a thousand words, and a single picture snapped in 1998, shown throughout the world, has engraved itself in the minds of millions, particularly in those former colonies.

    The IMF's managing director, Michel Camdessus (the head of the IMF is referred to as its "Managing Director"), a short, neatly dressed former French Treasury bureaucrat, who once claimed to be a Socialist, is standing with a stern face and crossed arms over the seated and humiliated president of Indonesia. The hapless president was being forced, in effect, to turn over economic sovereignty of his country to the IMF in return for the aid his country needed. In the end, ironically, much of the money went not to help Indonesia but to bail out the "colonial powers" private sector creditors. (Officially, the "ceremony" was the signing of a letter of agreement, an agreement effectively dictated by the IMF, though it often still keeps up the pretense that the letter of intent comes from the country's government).

    Defenders of Camdessus claim the photograph was unfair, that he did not realize that it was being taken and that it was viewed out of context. But that it the point - in day to day interactions, away from cameras and reporters, this is precisely the stance that the IMF bureaucrats take, from the leader of the organisation down. To those in developing countries, the picture raised a very disturbing question: had things really changed since the "official" ending of colonialism a half century ago ? When I saw the picture, images of other signings of "agreements" came to mind. I wondered how similar this scene was to those marking the "opening up of Japan" with Admiral Perry's gunboat diplomacy or the end of the Opium Wars or the surrender of the maharajas in India."

    Stiglitz, with insider knowledge, says that the IMF has consistently indulged in "mission creep" and moved from macroeconomics into privatisation, labour markets, pensions, and so on and into development strategies.
    The outcome for IMF'd countries is generally favourable to international corporations and private creditors, and devastating contraction of incomes and of indigenous production for the recipients.

    In Europe, the ECB and the EU Commission turned to the IMF not only for additional funds, but also for "expertise" has it had no model for rescue of troubled economies itself and as, fundamentally, the EU is also a pro-market institution that has protection and promotion of private profit as it's dominant priority.

    The IMF makes more effort at PR these days, but the famous Chopra walk across Dublin, on their arrival in Dublin to "audit our books" although clearly intended to be workmanlike and economical (no limos), just oozed with arrogance.

    Last edited by C. Flower; 16-05-2011 at 10:05 AM.

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    Default Re: Is the IMF an New Form of Colonialism ? - Joseph Stiglitz says "Yes"

    Thanks for that.
    And not to dilute the topic of the thread by spreading the net too wide, but is Sovereignty itself under attack from several angles ?
    I mean, in terms of the Queen's visit the angle seems to be more about euthanising Ireland's historical urge to Nationhood (McWilliams on the benefits of Empire [isn't he a chameleon ?], two other hour-long programmes to the same effect....) A virtual fascistic response from the police, and a general tactic from the media to portray all protestors as being memebers of RIRA....or Al Quaida; which brings us on to Obama's visit - of which much the same can be said.
    And look at America's increasingly barefaced policy of installing US-amiable governments in other Nations.
    But getting back to Ireland - it seems to me that we are being increasingly clubbed by fascist tactics from our own politicians and media into foregoing what was always so obvious that it was taken for granted - that self-determination and sovereignty were inviolate. We are 'Ireland Inc': a labour pool, with a pool of resources to be preyed upon (and not by home-grown parasites, but by outside forces).
    But, to relate this to your post; what is the actual relation between the IMF and the EU ? How far are their ambitions in common ? Is the latter a wing of the former or do both owe allegiance to a further network or organisation ?

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    Default Maidir Le: Re: Is the IMF an New Form of Colonialism ? - Joseph Stiglitz says "Yes"

    Quote Originally Posted by matt View Post
    Thanks for that.
    And not to dilute the topic of the thread by spreading the net too wide, but is Sovereignty itself under attack from several angles ?
    I mean, in terms of the Queen's visit the angle seems to be more about euthanising Ireland's historical urge to Nationhood (McWilliams on the benefits of Empire [isn't he a chameleon ?], two other hour-long programmes to the same effect....) A virtual fascistic response from the police, and a general tactic from the media to portray all protestors as being memebers of RIRA....or Al Quaida; which brings us on to Obama's visit - of which much the same can be said.
    And look at America's increasingly barefaced policy of installing US-amiable governments in other Nations.
    But getting back to Ireland - it seems to me that we are being increasingly clubbed by fascist tactics from our own politicians and media into foregoing what was always so obvious that it was taken for granted - that self-determination and sovereignty were inviolate. We are 'Ireland Inc': a labour pool, with a pool of resources to be preyed upon (and not by home-grown parasites, but by outside forces).
    But, to relate this to your post; what is the actual relation between the IMF and the EU ? How far are their ambitions in common ? Is the latter a wing of the former or do both owe allegiance to a further network or organisation ?

    If you look at the threads on Strauss Kahn's situation, that question is being answered. There is both agreement and rivalry between the US and EU leaders. There is an agreement between both organisations that the corporate world and finance capital are what matter and that a crisis is a good opportunity to drive through "reform" - cut pensions, wages, working conditions, etc. and to force the fire sale of public assets. There is also competition between the two blocks.

    Historically, the IMF has been the creature of the US, in spite of a recent emphasis on EU involvement.

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    Default Re: Is the IMF an New Form of Colonialism ? - Joseph Stiglitz says "Yes"

    Sovereignty is a redundant concept at this stage to be honest- the power of supranational bodies like the IMF, the EU and the World Bank is greater than any but the largest countries on earth, but this trend in itself has been accelerated by neo-liberal capitalist ideology which demands the removal of all financial and currency controls, thus increasing the power of the banks and financial sector generally. Given the power of the financial markets to undermine democratic governments through barely legal instruments like Credit Default Swaps, rushes of hot money like those that swamped this economy and which brought down the Asian economies in 1997/98, and of course by betting on sovereign debt, one has to ask what can even one country do against this enormous power. The EU has robbed this country and every state in it (with the exception of the Germans, possibly) of the ability to deal with the financial markets as equals- I'm sure everyone has seen videos of frantic politicians saying they'll do certain measures, like cutting education expenditure or privatising x,y & z to 'satisfy the markets', but it's never enough. They are like a pack of blind wolves, wherever they smell profits to be made they convene and savage the unfortunate target for short term profit, regardless of whether it's in their long-term interest or not.

    To my mind, the IMF and the other groups like it represent the hard face of these markets: they are the 'lenders of last resort', or are like creditor appointed receivers (a receiver is empowered to do anything necessary to realise their security, so the comparison is apt to my mind) whose security is an entire country, they are the ones who go in when the markets are either finished with a country, having brought it to it's knees as we were through interest rate rises, and the question is to decide how best to divy up the resources and public infrastructure according to the interests of the markets, or where the levels of debt piled on a developing country are too much for its economy to sustain anymore and the question is what can be salvaged for the parasites from the rubble. This is not a new colonialism, it is fair to say that it is a new disguise for the old colonialism which is too weak to maintain control through hard power, ie boots on the ground and guns, so instead they use the financial markets and economic power to keep the neo-colonial world firmly under control and producing in the interest of the old colonisers.
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    'Our goal is to conquer state power for the Irish working class'
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    Default Maidir Le: Re: Maidir Le: Re: Is the IMF an New Form of Colonialism ? - Joseph Stiglitz says "Yes"

    Quote Originally Posted by matt View Post
    Is that a website or blog (forgive the ignorance) ?
    Is there a link ?
    Apologies

    Our threads here - including this one on the politics of the Strauss Kahn affair -

    http://www.politicalworld.org/showthread.php?t=8153

    My point is that the relationship between the EU and IMF is to some extent co-operative, but also reflects the ongoing power struggle between the EU and IMF and with other power blocs.

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    Default Re: Is the IMF an New Form of Colonialism ? - Joseph Stiglitz says "Yes"

    Quote Originally Posted by antiestablishmentarian View Post
    Sovereignty is a redundant concept at this stage to be honest- .
    Just to take you up on that point there - and I think I know what you mean, as I feel fairly exasperated with everything myself, - but you should never allow those words 'Sovereignty is a redundant concept' enter your head, roll off your tongue, or otherwise fall from your pen or fingers - regardless of whether or not you are speaking about the general (unspoken) political consensus, or declaiming it like a poetic lament.
    Even to allow the thought utter itself in that finished, concrete form - as a reality that has happened, to which we have already succumbed - gives it strength.
    Even if you are the last man standing, the declaration of your Sovereignty should be your battle cry. For that's what it really is; it's real value goes way beyond Nationalism (which is only the partial realisation of it as a functional manifestation), but is the declaration of your liberty.
    There is the Sovereignty of the Community, which is represented by the Nation, the Sovereignty of the Family, which is the smaller community of your family and friends, and the Sovereignty of the Individual, which is the freedom of your Soul.
    Last edited by matt; 17-05-2011 at 12:13 AM.

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    Default Re: Is the IMF an New Form of Colonialism ? - Joseph Stiglitz says "Yes"

    I'm with Joseph Stiglitz on this one.

    Current Government policy seems to be aimed at same.

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    Default Re: Is the IMF an New Form of Colonialism ? - Joseph Stiglitz says "Yes"

    Quote Originally Posted by matt View Post
    Just to take you up on that point there - and I think I know what you mean, as I feel fairly exasperated with everything myself, - but you should never allow those words 'Sovereignty is a redundant concept' enter your head, roll off your tongue, or otherwise fall from your pen or fingers - regardless of whether or not you are speaking about the general (unspoken) political consensus, or declaiming it like a poetic lament.
    Even to allow the thought utter itself in that finished, concrete form - as a reality that has happened, to which we have already succumbed - gives it strength.
    Even if you are the last man standing, the declaration of your Sovereignty should be your battle cry. For that's what it really is; it's real value goes way beyond Nationalism (which is only the partial realisation of it as a functional manifestation), but is the declaration of your liberty.
    There is the Sovereignty of the Community, which is represented by the Nation, the Sovereignty of the Family, which is the smaller community of your family and friends, and the Sovereignty of the Individual, which is the freedom of your Soul.
    Just noticed this post from matt. I'm not a believer in the soul, but having sat down and talked with, and stood and protested with, people who have been under the IMF thumb for decades, I can relate it to the feeling they had of being utterly infantilised and dehumanised by the process, to the point where they were ready to go out into protests and get shot at to resist.

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    Default Re: Is the IMF an New Form of Colonialism ? - Joseph Stiglitz says "Yes"

    Leaving aside ideological considerations, and I know that's not easy, the fundamental problem with the IMF is that it leads to countries being managed rather than governed. That's something that should be borne in mind whenever anyone suggests that we should have a cabinet of 'experts'.

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    Default Re: Is the IMF an New Form of Colonialism ? - Joseph Stiglitz says "Yes"

    Quote Originally Posted by Baron von Biffo View Post
    Leaving aside ideological considerations, and I know that's not easy, the fundamental problem with the IMF is that it leads to countries being managed rather than governed. That's something that should be borne in mind whenever anyone suggests that we should have a cabinet of 'experts'.
    Even more fundamentally, it has extraordinary powers over budget, privatisation, working conditions, etc., but has a much, much narrower agenda than a government - "fiscal control". It is basically interested in safeguarding the financial system above all, and in availing of the opportunity to reshape the local economy to open it up to the international corporate sector. It has no interest in, or responsibility for, the well-being of citizens.

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    Default Re: Is the IMF an New Form of Colonialism ? - Joseph Stiglitz says "Yes"

    Quote Originally Posted by C. Flower View Post
    Even more fundamentally, it has extraordinary powers over budget, privatisation, working conditions, etc., but has a much, much narrower agenda than a government - "fiscal control". It is basically interested in safeguarding the financial system above all, and in availing of the opportunity to reshape the local economy to open it up to the international corporate sector. It has no interest in, or responsibility for, the well-being of citizens.
    Which is precisely what I mean by management instead of government.

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    Default Re: Is the IMF an New Form of Colonialism ? - Joseph Stiglitz says "Yes"

    The IMF has allegedly been targetted by Anonymous for DOS attacks, in response to "the IMF treatment of Greece".

    http://roarmag.org/2011/06/anonymous...ck-imf-greece/

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    Default Re: Is the IMF an New Form of Colonialism ? - Joseph Stiglitz says "Yes"

    A very good piece today by Johan Hari of the London Independent which fits right in to this thread
    To understand this story, you have to reel back to the birth of the IMF. In 1944, the countries that were poised to win the Second World War gathered in a hotel in rural New Hampshire to divvy up the spoils. With a few honorable exceptions, like the great British economist John Maynard Keynes, the negotiators were determined to do one thing. They wanted to build a global financial system that ensured the money and resources of the planet were forever hoovered towards them. They set up a series of institutions designed for that purpose – and so the IMF was delivered into the world.
    Let’s look at how this plays out on the ground. In the 1990s, the small country of Malawi in Southeastern Africa was facing severe economic problems after enduring one of the worst HIV-AIDS epidemics in the world and surviving a horrific dictatorship. They had to ask the IMF for help. If the IMF has acted in its official role, it would have given loans and guided the country to develop in the same way that Britain and the US and every other successful country had developed – by protecting its infant industries, subsidising its farmers, and investing in the education and health of its people.
    That’s what an institution that was concerned with ordinary people – and accountable to them – would look like. But the IMF did something very different......
    http://www.independent.co.uk/opinion...l-2292270.html

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    Default Re: Is the IMF an New Form of Colonialism ? - Joseph Stiglitz says "Yes"

    Quote Originally Posted by PaddyJoe McGillycuddy View Post
    A very good piece today by Johan Hari of the London Independent which fits right in to this thread
    http://www.independent.co.uk/opinion...l-2292270.html
    This is really a wake-up call. People still are in a state of innocent disbelief that the IMF operation is colonialism by another name. I suppose we are used to occupying powers that come with armies. The IMF relies on the local police and army to put down the inevitable eventual riots that occur when they have pushed people below the poverty line and forced the fire sale of their national assets.

    The EU has 100% followed the IMF model - and explictly said when the first bailout package to Greece was put together last year - that the IMF was needed to put the terms and conditions of loans together as the EU had no experience in this.

    Its a fine article - I agree that the IMF should be put on trial, not just Strauss Kahn, and the whole institution closed down. As well as this report on Malawi the article has a very interesting account of Hungary and how they got out of IMF clutches.

    But the IMF did something very different. They said they would only give assistance if Malawi agreed to the ‘structural adjustments’ the IMF demanded. They ordered Malawi to sell off almost everything the state owned to private companies and speculators, and to slash spending on the population. They demanded they stop subsidising fertilizer, even though it was the only thing that made it possible for farmers – most of the population – to grow anything in the country’s feeble and depleted soil. They told them to prioritise giving money to international bankers over giving money to the Malawian people.

    So when in 2001 the IMF found out the Malawian government had built up large stockpiles of grain in case there was a crop failure, they ordered them to sell it off to private companies at once. They told Malawi to get their priorities straight by using the proceeds to pay off a loan from a large bank the IMF had told them to take out in the first place, at a 56 per cent annual rate of interest. The Malawian president protested and said this was dangerous. But he had little choice. The grain was sold. The banks were paid.

    The next year, the crops failed. The Malawian government had almost nothing to hand out. The starving population was reduced to eating the bark off the trees, and any rats they could capture. The BBC described it as Malawi’s “worst ever famine.” There had been a much worse crop failure in 1991-2, but there was no famine because then the government had grain stocks to distribute. So at least a thousand innocent people starved to death.

    At the height of the starvation, the IMF suspended $47m in aid, because the government had ‘slowed’ in implementing the marketeeing ‘reforms’ that had led to the disaster. ActionAid, the leading provider of help on the ground, conducted an autopsy into the famine. They concluded that the IMF “bears responsibility for the disaster.”

    Then, in the starved wreckage, Malawi did something poor countries are not supposed to do. They told the IMF to get out. Suddenly free to answer to their own people rather than foreign bankers, Malawi disregarded all the IMF’s ‘advice’, and brought back subsidies for the fertiliser, along with a range of other services to ordinary people. Within two years, the country was transformed from being a beggar to being so abundant they were supplying food aid to Uganda and Zimbabwe.

    The Malawian famine should have been a distant warning cry for you and me. Subordinating the interests of ordinary people to bankers and speculators caused starvation there. Within a few years, it had crashed the global economy for us all.

    In the history of the IMF, this story isn’t an exception: it is the rule. The organisation takes over poor countries, promising it has medicine that will cure them – and then pours poison down their throats. Whenever I travel across the poor parts of the world I see the scars from IMF ‘structural adjustments’ everywhere, from Peru to Ethiopia. Whole countries have
    Last edited by C. Flower; 03-06-2011 at 08:55 AM.

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    Default Re: Is the IMF an New Form of Colonialism ? - Joseph Stiglitz says "Yes"

    Great thread, so far. I was working in Malawi at the time of the IMF/World Bank 'intervention'; anecdotally the prick who was the IMF rep was a Canadian who always wore a panama hat and a linen jacket and used to tell me about the articles in the latest issue of Conde Nast Traveller.... and when I, the development worker, was in scrubber class on flights he would walk down to visit me from his first class seat, end of rant.

    The Malawi thing was just another event in the long term IMF/World Bank policy. I have worked in a number of underdeveloped (and half developed, such as Gulf countries) all of which were subject to the structural readjustment regime, i.e. reduce/remove all subsidies, implement market driven solutions, tie aid to trade.

    Stiglitz is right and the Independent (ironically owned or part owned by Ireland's own true capitalist, sir tony and family) is one of the few media outlets to say so.

    The IMF/World bank are capitalist institutions set up in the early post colonial/postwar era to provide an opportunity for the capitalists of the colonial powers. This structure has mutated into the ECB/EC which manages the money of the new colonies, such as oursleves, the Greeks and others....

    One of the immense ironies of the post colonial era is the continued existence of the CFA, the currency of the ex-French colonies, which was used to ensure that the newly liberated countries were required to buy from France, because the CFA was only exchangeable with the French Franc. When the € was intoduced the CFA was tied to it, ensuring a continuity of the scheme but now shared with our pals in Germany, NL, etc......

    The rermarks about the substitution of the banks and the hedge funds for governments are particularly relevent, almost nothing has been done post Lehman to change it. Basel 3 is due to be introduced, another waffly 'solution' to casino capitalism....

    Question is, will Stiglitz change anything? unlikely, imo.

    B
    Last edited by barrym; 03-06-2011 at 09:35 AM.

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