Dr Bankenstein's Monsters: The World Bank, the IMF and the Aliens Who Ate Ecuador   Get this: I was standing in front of the New York Hilton Hotel f| during the big G7 confab in 2000, the meeting of presidents, f prime ministers and their financiers, when the limousine carrying International Monetary Fund director Horst Kohler zoomed by and hit a bump. Out of the window flew a report titled "Ecuador Interim Country Assistance Strategy." It was marked "Confiden­tial. Not for distribution." You may suspect that's not how I got this document, but you can trust me that it contains the answer to a very puzzling question. Inside the Hilton, Professor Anthony Giddens explained to an earnest crowd of London School of Economics alumni that "Glob­alization is a fact, and it is driven by the communications revolu­tion."   Wow. That was an eye-opener! The screeching green-haired freakers outside the hotel demonstrating against the International Monetary Fund had it all wrong. Globalization, Giddens seemed to say, is all about giving every villager in the Andes a Nokia Internet-enabled mobile phone. (The man had obviously memo­rized his Thomas Friedman.) Why on earth would anyone protest against this happy march into the globalized future?   So I thumbed through my purloined IMF "Strategy for Ecua­dor" searching for a chapter on connecting Ecuador's schools to the World Wide Web. Instead, I found a secret schedule. Ecuador's government was ordered to raise the price of cooking gas by 80 per­cent by November 1, 2000.*   Also, the government had to elimi­nate twenty-six thousand jobs and cut real wages for the remaining workers by 50 percent in four steps and on a timetable specified by the IMF. By July 2000, Ecuador had to transfer ownership of its biggest water system to foreign operators, then grant British Petro­leum rights to build and own an oil pipeline over the Andes.   That was for starters. In all, the IMF's 167 detailed loan condi­tions looked less like an "Assistance Plan" and more like a blue­print for a financial coup d'etat.   The IMF would counter that it had no choice. After all, Ecua­dor was flat busted, thanks to the implosion of the nation's com­mercial banks. But how did Ecuador, once an OPEC member with resources to spare, end up in such a pickle?   For that, we have to turn back to 1983, when the IMF forced the nation's government to take over the soured private debts Ecuador's elite owed to foreign banks. For this bailout of U.S. and local financiers, Ecuador's government borrowed $1.5 billion from the IMF.   For Ecuador to pay back this loan, the IMF dictated price hikes in electricity and other necessities. And when that didn't drain off enough cash, yet another "Assistance Plan" required the state to eliminate 120,000 workers.   Furthermore, while trying to pay down the mountain of IMF obligations, Ecuador foolishly "liberalized" its tiny financial mar­ket, cutting local banks loose from government controls and let­ting private debt and interest rates explode. Who pushed Ecuador into this nutty romp with free market banking?   Hint: The initials are I-M-F—which made liberalization of the nation's banking sector a condition of another berserker assis­tance plan. The facts of this nasty little history come from yet an­other internal IMF report that flew my way marked "Please do not cite." Pretend I didn't.   How the IMF Cured AIDS   The IMF and its sidekick, the World Bank, have lent a sticky help­ing hand to scores of nations. Take Tanzania. Today, in that African state, 1.3 million people are getting ready to die of AIDS. The IMF and World Bank have come to the rescue with a brilliant neo-liberal solution: require Tanzania to charge for what were pre­viously free hospital appointments. Since the Bank imposed this requirement, the number of patients treated in Dar es Salaam's three big public hospitals has dropped by 53 percent. The Bank's cure is working!     The IMF World Bank helpers also ordered Tanzania to charge fees for school attendance, then expressed surprise that school en­rollment dropped from 80 percent to 66 percent.   Altogether the Bank and IMF had 157 helpful suggestions for Tanzania. In April 2000, the Tanzanian government secretly agreed to adopt them all. It was sign or starve. No developing na­tion can borrow hard currency from any commercial bank without IMF blessing (except China, whose output grows at 5 percent per year by studiously following the reverse of IMF policies).   The IMF and World Bank have effectively controlled Tanza­nia's economy since 1985. Admittedly, when they took charge they found a socialist nation mired in poverty, disease and debt. The IMF's love-the-market experts wasted no time in cutting trade barriers, limiting government subsidies and selling off state indus­tries. The World Bank's shadow governors worked wonders. Ac­cording to World Bank watcher Nancy Alexander of Citizens' Network on Essential Services (Maryland), in just fifteen years Tanzania's GDP dropped from $309 to $210 per capita, literacy fell and the rate of abject poverty jumped to 51 percent of the popula­tion. Yet, the World Bank did not understand why it failed to win the hearts and minds of Tanzanians for its free market game plan. In June 2000, the Bank reported in frustration, "One legacy of so­cialism is that most people continue to believe the State has a fun­damental role in promoting development and providing social services."   When Larry Landed   It wasn't always thus, this affection for pricing, not people. The World Bank and IMF were born in 1944 with simple, laudable mandates—to fund postwar reconstruction and development proj­ects (the World Bank) and lend hard currency to nations with temporary balance-of-payments deficits (the IMF).   Then, beginning in 1980, the Banks seem to take on an alien form. In the early 1980s, Third World nations, hemorrhaging after the fivefold increase in oil prices and a like jump in dollar interest payments, brought their begging bowls to the IMF and World Bank. But instead of debt relief, they received Structural Assis­tance Plans listing an average of 114 "conditionalities" in return for loans. While the particulars varied from nation to nation, in every case the rollover of debts dangled from edicts to remove trade barriers, sell national assets to foreign investors, slash social spending and make labor "flexible" (read "crush your unions").   Some say the radical and vicious change in the Banks' policies after 1980 resulted from Ronald Reagan's election that year as president, the quickening of Mrs. Thatcher's powers in England and the ascendancy of "neo-liberal" (free market) policy. My own theory is that the IMF and World Bank were taken over by a space alien named Larry. It's obvious that "Larry" Summers, once World Bank chief economist, later U.S. treasury secretary, is in reality a platoon of extraterrestrials sent here to turn much of the human race into a source of cheap protein.   So what have the aliens accomplished with their structural as­sistance free market prescriptions? Samuel Brittan, the Financial Times' globalization knight errant, declares that new world capital markets and free trade have "brought about an unprecedented in­crease in world living standards." Brittan cites the huge growth in GDP per capita, life expectancy and literacy in the less-developed world from 1950 to 1995.   Now hold on a minute. Before 1980, virtually every nation in his Third World survey was either socialist or welfare statist. They were developing on the "Import Substitution Model" by which lo­cally owned industry was built through government investment and high tariffs, anathema to the free marketeers. In those Dark Ages (1960-80) of increasing national government control and new welfare schemes, per capita income grew 73 percent in Latin America and 34 percent in Africa. By comparison, since 1980, the Reagan/Thatcher model has seen Latin American growth come to a virtual halt—growth of less than 6 percent over twenty years— and African incomes decline by 23 percent.   Now let's count the corpses: From 1950 to 1980, socialist and welfare statist policies added more than a decade of life expectancy to virtually every nation on the planet. From 1980 to today, life under structural assistance has gotten brutish and decidedly shorter. Since 1985, in fifteen African nations the total number of illiterate people has risen and life expectancy fallen—which Brittan attrib­utes to "bad luck, [not] the international economic system." In the former Soviet states, where IMF and World Bank shock plans hold sway, life expectancy has fallen off a cliff—adding 1.4 million a year to the death rate in Russia alone. Tough luck, Russia!   Admittedly, the World Bank and IMF are reforming. No longer do they issue the dreaded "Structural Assistance Plans." No, they now call them "Poverty Reduction Strategies." Doesn't that make you feel better?   In April 2000, the IMF reviewed the fruits of globalization. In its "World Outlook" report, the Fund admitted that "in the recent decades, nearly one-fifth of the world population has regressed. This is arguably," the IMF concedes, "one of the greatest eco­nomic failures of the 20th Century." And that, Professor Giddens, is a fact.     * 'It annoys me something fierce when I expose some institution and they don't respond with a complaint, comment or a lawsuit. But from the IMF and World Bank honchos—nothing. Turns out I hadn't looked on the right continent: in fact, the World Bank wrote a long response to this expose and published it in an African news­paper. That was odd. Odder still, in defense of their wacko, destructive plans for Ecua­dor, they simply denied the documents existed. Figure 4.1 shows a page from one of the documents that doesn't exist.

When Profits is the Name of the Game