Michel Chossudovsky the Globalization of Poverty AndNew World Order

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Michel Chossudovsky the Globalization of Poverty AndNew World Order

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  • The Globalization

    New World Order Michel Chossudovsky

  • THE GLOBALIZATION OF POVERTY AND THE NEW WORLD ORDER

    Second Edition

  • Also by Michel Chossudovsky

    War and Globalisation The Truth Behind September 11

  • The Globalization of Poverty and the New World Order

    Second Edit ion

    Michel Chossudovsky

    Global Research

  • The Globalization of Poverty and the New World Order Second Edition. Copyright 2003 by Michel Chossudovsky. All rights reserved Global Research, Center for Research on Globalization (CRG).

    No part of this book may be used or reproduced in any manner whatsoever without written permission of the publisher.

    Global Research is a division of the Centre for Research on Globalization (CRG) 101, boul. Cardinal-Leger, P.O. Box 51004, Pincourt (Quebec) J7V 9T3 Canada

    For more information contact the publisher at the above address or by email at our website at www.globalresearch.ca

    SECOND EDITION Cover Artwork by Paul Marcus, 2003 Cover Graphics by Richard Corey and Blaine Machan Printed and bound in Canada Printed on acid free paper ISBN 0-9737147-0-0

    Library of Congress Cataloging-in-Publication Data Chossudovsky, Michel

    The Globalization of Poverty and the New World Order / Michel Chossudovsky / 2nd ed. Includes bibliographical references and index ISBN 0-9737147-0-0 (paperback) First ed. published under the title: The Globalisation of Poverty: Impacts of IMF and World Bank Reforms

    1. International Monetary Fund - Developing countries. 2. International Monetary Fund - Europe, Eastern. 3. World Bank - Developing countries. 4. World Bank -Europe, Eastern. 5. Poverty - Developing countries. 6. Poverty - Europe, Eastern. I. International Monetary Fund. II. World Bank. III. Title.

    HG3881.5158 C47 2003 339.4'6 - dc20 2003-22287

    National Library of Canada Cataloguing in Publication Chossudovsky, Michel

    The Globalization of Poverty and the New World Order / Michel Chossudovsky / 2nd ed. Includes bibliographical references and index ISBN 0-9737147-0-0 First ed. published under the title: The Globalisation of Poverty: Impacts of IMF and World Bank Reforms

    1. International Monetary Fund - Developing countries. 2. International Monetary Fund - Europe, Eastern. 3. World Bank - Developing countries. 4. World Bank -Europe, Eastern. 5. Poverty - Developing countries. 6. Poverty - Europe, Eastern. I. Title.

    HG3881.5 158 C47 2003 339.4'6 C2003-902648-5

  • To my daughters Maya and Natacha

  • Content Preface to the Second Edition xxi

    Introduction 1 The Post Cold War Recession 1 Demise of the "Asian Tigers" 2 Poverty and Economic Dislocation in the West 3 A Thriving Criminal Economy 4 Wall Street Bankers behind the Scenes 5 The Cheap Labor Economy 5 Accumulation of Wealth, Distortion of Production 7 Overproduction: Increased Supply, Reduced Demand 8 Global Integration, Local Disintegration 8 Destroying the Local Economy 9 War and Globalization 10 Disarming the New World Order 11

    PARTI

    GLOBAL POVERTY AND MACRO-ECONOMIC REFORM

    Chapter 1 The Globalization of Poverty 17

    Global Geopolitics 17 Social Polarization and the Concentration of Wealth 18 IMF Economic Medicine 19 Economic Genocide Destroying the National Economy 20 The Dollarization of Prices 23 The "Thirdworldization" of the Former Eastern Bloc 23 The Role of Global Institutions 24 Entrenched Rights for Banks and

    Multinational Corporations 24

    ix

  • Chapter 2 Global Falsehoods 27

    Manipulating the Figures on Global Poverty 28 Defining Poverty at "a Dollar a Day" 29 The United Nations' Poverty Figures 29 Double Standards in the "Scientific" Measurement of Poverty 30 Concealing Country-level Realities 32

    Chapter 3 Policing Countries Through Loan "Conditionalities" 35

    The Global Debt 35 A Marshall Plan for the Rich Countries 42 Policy-based Lending 42 Enlarging the Debt 43 The IMF "Shadow Program" 44 The Policy Framework Paper 45 The IFIs' Lending Facilities 47 International Monetary Fund 47 World Bank 47 Phase One: "Economic Stabilization" 47 Destroying A Nation's Currency 47 The Social Consequences of Devaluation 48 The "Dollarization" of Domestic Prices 49 The Deindexation of Wages 49 Analyzing the Impact of Devaluation 50 Taking Control of the Central Bank 50 Destabilizing a Nation's Public Finances 51 The Budget Deficit: A Moving Target 51 Engineering the Collapse of State Investment 52 Price Liberalization 53 The Pricing of Petroleum Products and Public Utilities 53 Phase Two: "Structural Reform" 54 Trade Liberalization 54

    X

  • Divestiture and Privatization of State Enterprises 55 Tax Reform 55 Land Tenure and the Privatization of Agricultural Land 55 Deregulation of the Banking System 56 Liberalizing Capital Movements 57 Recycling Dirty Money towards Debt Servicing 57 "Poverty Alleviation" and the "Social Safety Net" 58 "Good Governance": Promoting Bogus Parliamentary Institutions 58 The Consequences of Structural Adjustment 59 The IMF Tacitly Acknowledges Policy Failure 60 The Counterfactual Argument 60 The Social Impact of Macro-economic Reform 61 The Restructuring of the Health Sector 62 The Resurgence of Communicable Diseases 62

    Chapter 4 The World Bank and Women's Rights 65

    The World Bank's Gender Perspective 65 Derogating Women's Educational Rights 66 Cost Recovery in Health 67 Hidden Agenda 67

    Chapter 5 The Global Cheap-Labor Economy 69

    Introduction 69 Macro-economic Reform Supports the Relocation of Industry 70 Industrial Export Promotion 71 Global Adjustment 72 "Decomposition" of National Economies 72 World Unemployment 73 Declining Wages 74

    XI

  • Plant Closures and Industrial Delocation in the Developed Countries 74 The Worldwide Compression of Consumer Spending 75 Relocation within Trading Blocs 76 The Dynamic Development of Luxury Consumption 77 The Rentier Economy 78 The Globalization of Manufacturing 79 Import-led Growth in the Rich Countries 79 The Appropriation of Surplus by non-Producers 80 An Example: the Garment Industry 81 Wages and Labor Costs in the Developed Countries 82 Mobile and Immobile Sectors 90 The Immobility of Labor 90 The Sectors of non-Material Production 90 The Impact of the Scientific Revolution 91 The Delocation of the Services Economy 91

    PART II

    SUB-S AHARAN AFRICA

    Chapter 6 Somalia: the Real Causes of Famine 95

    The IMF Intervention in the Early 1980s 95 Towards the Destruction of Food Agriculture 96 Collapse of the Livestock Economy 96 Destroying the State 97 Famine Formation in sub-Saharan Africa: The Lessons of Somalia 99 Concluding Remarks 100

    X l l

  • Chapter 7

    Economic Genocide in Rwanda 103

    Part A The IMF and the World Bank set the Stage 103

    The Legacy of Colonialism 104 The Economy since Independence 106 The Fragility of the State 107 The IMF-World Bank Intervention 107

    Part B Installing a US Protectorate in Central Africa 111

    Militarization of Uganda 112 Militarization and the Ugandan External Debt 112 Financing both Sides in the Civil War 113 Postwar Cover-up 115 In the Wake of the Civil War: Reinstating the IMF's Deadly Economic Reforms 115 Post War "Reconstruction and Reconciliation" 116 Civil War in the Congo 117 American Mining Interests 118 Concluding Remarks 118

    Chapter 8 "Exporting Apartheid" to sub-Saharan Africa 125

    The Expropriation of Peasant Lands 126 Derogating Customary Land Rights 128 Afrikaner Farms in Mozambique 128 Creating "Rural Townships" 130 Foreign Aid Supports the Establishments of White Farms 131 Fostering Ecotourism 132 Carving up the National Territory 133

    x m

  • Chapter 9 Wreaking Ethiopia's Peasant Economy, Destroying Biodiversity 137

    Crisis in the Horn 137 The Promise of the "Free Market" 138 Wrecking the Peasant Economy 139 Laundering America's GM Grain Surpluses 141 Biodiversity up for Sale 142 Impacts of Famine 143

    PART III

    SOUTH AND SOUTHEAST ASIA

    Chapter 10 India: The IMF's "Indirect Rule" 149

    Introduction 149 Crushing the Rural and Urban Poor 151 "Eliminating the Poor" through Starvation Deaths 152 The IMF Supports Caste Exploitation 154 Poverty Supports Exports to the Rich Countries 154 Towards Political Collapse 155 The IMF's Indirect Rule 155

    Chapter 11 Bangladesh: Under the Tutelage of the "Aid" Consortium 159

    The 1975 Military Coup 159 The Establishment of a Parallel Government 160 Establishing a Bogus Democracy 160 Supervising the Allocation of State Funds 161 Undermining the Rural Economy 162 Dumping US Grain Surpluses 162 Undermining Food Self-Sufficiency 163 The Fate of Local Industry 163 The Recycling of Aid Money 164 "The Social Dimensions of Adjustment" 165

    xiv

  • Chapter 12 The Post-War Economic Destruction ofVietnam 167

    Rewriting the History of the War 168 The New Vietnam War 169 Reimbursing the "Bad Debts" of the Saigon Regime 170 Destroying the National Economy 171 Excluding Domestic Producers from their Own Market 173 Thwarting the Channels of Internal Trade 173 The Disintegration of the State's Public Finances 174 Collapse of State Capital Formation 175 Reintegrating the Japanese Empire 176 The Outbreak of Famine 177 Child Malnutrition 179 Into the Net of International Agri-business 180 Vietnam as a Major Exporter of Rice 180 The Concentration of Land 182 The Destruction of Education 183 Collapse of the Health System 185 The Resurgence of Infectious Diseases 186

    PART IV

    LATIN AMERICA

    Chapter 13 Debt and "Democracy" in Brazil 191

    Brazil's Debt Saga: Act I: Plan Collor 193 Act II: Conforming to "The Washington Consensus" 194 Act III: In the Aftermath of Collor's Impeachment 196 Act IV: A Mar