The debts taken in our name
Publishing Date: June 19th 2013
Why does Pakistan routinely consider IMF-style austerity which decision-makers and well-off don’t suffer? Because, as well known, those with ulterior motives don’t have to repay. Mostly the hapless taxpayers do. Every time another loan is taken, it never eases economic problems. In fact, money doesn’t even change hands. It’s just a ledger entry in Washington of what’s lent by the IMF and immediately ‘returned’ to pay the current year’s usury.
What we should say instead is: “Sorry guys, our people are suffering unbearably. We’ll pay you later when we can.” We’ve paid off the principal anyway, as have dozens of countries, some several times over. If Argentina, Ecuador, even Dubai, can default, why can’t we? A moratorium would be a much-needed, learning exercise.
Why is it, the more our governments borrow on our behalf, the more indebted we get? When leading financial experts including those who’ve worked within the World Bank-IMF system have denounced crippling terms as dubious and unnecessary, why can’t we extricate ourselves? Hundreds of reports documenting IMF methods and consequences over the past four decades are readily available: on structural adjustment hacking social spending – health, education, water, sanitation, literally snatching food from children’s mouths.
A question never asked of our governments or lenders – why are objectives and terms of loans taken in the name of the people, not debated with the people, and so secretive? Even the pro-market Economist of London called it an international loan shark – because the system is rigged to scuttle repayment. Like any money-lender, they just want to collect interest forever.
In 1988, economist Davison Budhoo revealed in his 22-page resignation letter – more of an expose of IMF ‘expertise’ – after his 11 years with it: “When we went on a mission, we did not even have the scope to innovate, to look at the country and make projections, that you thought were reasonable... there was already a briefing paper before we entered the country. We were told what we were expected to do, and give conditionality in terms of what the fiscal deficit was and how much it should be reduced; even before we entered the mission... we were expected to structure our findings in relation to the figures in the briefing paper, which were put there without any research, and were predetermined. So the conditionality was also predetermined... In this sense, every IMF mission is fraudulent even today...”
Usurious earnings also support ostentatious lifestyles. As Budhoo described: “...The salary/allowances package of a median missionary staffer would be in the region of five to ten times the budgeted salary of almost every Third World head of state, and some one thousand times the per capita income of that of two-thirds of mankind that he is paid so handsomely to crush down into further destitution.” It’s easier to be conscience-free yes-men than to resign over principles.
Christine Lagarde, the current head of IMF, draws $400,000 annually, excluding perks. Third World people lose their livelihoods, go hungry, just to shoulder the lifestyles of 9,000 World Bank and 2,500 IMF personnel. As economist Jeffrey Sachs once said: “the Fund’s usual prescription is budgetary belt tightening to countries that are much too poor to own belts”.
Usury was forbidden by all major religions until some invented ways around it. The Muslim governments ignore it for supposed “lack of choice”. If countries can’t pay up, public assets are often sold to do so. Nor do IMF ethics see privatization of natural resources or essential services as human rights violations.
Even investor Warren Buffet calls them “the financial weapons of mass destruction”. So why do we put up with parasitism – or ‘Odious Debt’ as it’s aptly known? Unfortunately, few who understood the system blow the whistle – they were too comfortable in their overpaid lifestyle.
Governments inheriting past debts, when occasionally trying to frame the right policies, find their hands tied because IMF takes first priority before spending for food, jobs, poverty alleviation, and maybe some development. Even 40 years ago, total Third World debt was $135 billion; it quadrupled in 6 years. In another 12 years, debtors paid $1.6 trillion, and still left with almost as much in new interest-debt! Borrowing repeatedly to pay off interest ensures permanent debt-slavery.
Reduced to penury and fed up, the Latin American countries launched BANCOSUR (Bank of the South), their own development bank, sans dollars and outside interference. Initiated by Hugo Chavez in 2007 after Venezuela fully paid off the WB/IMF debt – thanks to nationalizing and retaking their oil – it will be fully operational this year. Is that possible here regionally? Will the new government focus on strictly enforcing transparency and accountability, without which corruption can’t be eliminated? Or are we doomed by our own leaders collaborating with post-independence colonizers?