Creature From Jekyll Island by G. Edward

' c a l l a b l e capital,' constitute a kind of FDIC insurance program but with no pretense at maintaining a reserve fund. (In that sense it is more honest than the real FDIC which does maintain the pretense but, in reality, is based on nothing more than a similar promise.) Based upon the small amount of seed money plus the far greater amount of 'credits' and 'promises' from governments of the industrialized countries, the World Bank is able to go into the commercial loan markets and borrow larger sums at extremely low interest rates. After all, the loans are backed by the most powerful governments in the world which have promised to force their taxpayers to make the payments if the Bank should get into trouble.

It then takes these funds and relends them to the underdeveloped countries at slightly higher rates, making a profit on the arbitrage.

The unseen aspect of this operation is that the money it processes is money which, otherwise, would have been available for investment in the private sector or as loans to consumers. It siphons off much-needed development capital for private industry, prevents new jobs from being created, causes interest rates to rise, and retards the economy at large.

THE HIDDEN AGENDA: WORLD SOCIALISM

Although most of the policy statements of the World Bank deal with economic issues, a close monitoring of its activities reveal a Preoccupation with social and political issues. This should not be surprising considering that the Bank was perceived by its founders as an instrument for social and political change. The change which it was designed to bring about was the building of world socialism, and that is exactly what it is accomplishing today.

96 THE CREATURE FROM JEKYLL ISLAND

This hidden agenda becomes crystal clear in the nature of what the Bank calls Sectoral Loans and Structural- Adjustment Loans. In the first category, only part of the money is to be used for the costs of specific projects while the rest goes to support policy changes in the economic sector. In the second group, all of the money is for policy changes and none of it is for projects. In recent years, almost half of the loans to underdeveloped countries have been in that category. What are the policy changes that are the object of these loans? They add up to one thing: the building of world socialism.

As the Fabians had planned it, the word socialism is not to be used. Instead, the loans are issued for government hydro-electric projects, government oil refineries, government lumber mills, government mining companies, and government steel plants. It is delivered from the hands of politicians and bureaucrats into the hands of other politicians and bureaucrats. When the money comes from government, goes to government, and is administered by government, the result will be the expansion of government.

Here is an example. One of the policy changes often required by the World Bank as a condition of granting a loan is that the recipient country must hold down its wages. The assumption is that the government has the power—and rightfully should have the power—to set wages! In other words, one of the conditions of its loan is that the state must be omnipotent.

Paul Roberts holds the William E. Simon Chair of Political Economy at the Center for Strategic and International Studies in Washington. Writing in Business Week, he says:

The entire 'development process' has been guided by the belief that reliance on private enterprise and equity investment is incompatible with economic and social progress. In place of such proven avenues of success, development planning substituted loans and foreign aid so that governments of the LDCs [Less Developed Countries] could control economic activity in keeping with plans drawn up by experts.

Consequently, economic life in the LDCs was politicized from the start. By endowing governments with extensive control over their economies, the U.S. set up conditions exactly opposite to those required for economic growth.1

1. 'How 'Experts' Caused the Third World Debt Crisis,' by Paul Craig Roberts, Business Week, November 2,1987.

NEARER TO THE HEART'S DESIRE

97

Ken Ewert explains further that the conditions imposed by the Fund are seldom free-market oriented. He says:

The Fund concentrates on 'macro-policies,' such as fiscal and monetary policies or exchange rates, and pays little attention to fundamental issues like private property rights and freedom of enterprise. Implicit ... is the belief that with proper 'macro-management' any economic system is viable....

Even more important, it has allowed governments the world over to expropriate the wealth of their citizens more efficiently (through the hidden tax of inflation) while at the same time aggrandizing their own power. There is little doubt that the IMF is an influence for world-wide socialism.1

An important feature of the Structural-Adjustment Loans is that the money need not be applied to any specific development project.

It can be spent for anything the recipient wishes. That includes interest payments on overdue bank loans. Thus, the World Bank becomes yet one more conduit from the pockets of taxpayers to the assets of commercial banks which have made risky loans to Third-World countries.

AUSTERITY MEASURES AND SCAPEGOATS