50 years — no more!
dermational Viewpoint #258 July 1994
IN OCTOBER 1994, the general assembly of the International Monetary Fund (IMF) and World Bank will be held in Madrid -coinciding with the 50th anniversary of their founding. Controlled by countries from the North, responsible for dictating the rules which govern the relationship between the Centre and Periphery, the IMF and World Bank are the two most powerful institutions in the world. One only has to pay attention to the media to understand the real nature of the relationship between Centre and Periphery. The news we receive overwhelms us: famine in Africa, misery and epidemics in South America, the brutal exploitation of the inhabitants of South-east Asia, the downfall of the majority of the former Eastern Bloc countries... But how did all this come about? Where do we stand? And what are the perspectives for the future? DOCUMENT*
MADRID ASSEMBLY!
CONFIGURATION of "World
Economy" and the new international division of
Labour THE gap between the North and teenth and sixteenth centuries, when the possibilities for colonising other areas in the world were realised after the circumnavigation of Africa and the "discovery" of America. The differences in development between European societies and those in the Periphery were limited, even though the military superiority and navigational capability of the colonial powers was far superior.
The process of colonisation, which in many cases resulted in the subjugation or extermination of entire nations and cultures, transformed these Peripheral territories into providers of raw materials — minerals, wood, cotton, rubber — to furnish the needs of the North. This trend was further intensified by the industrialisation of the Northern economies and continued until the second half of this century, notwithstanding the decolonialisation process which began last century.
In 1944, the winners of World War II designed a new economic world order at the Bretton Woods Conference, creating the IMF, World Bank and the General Agreement on Tariffs and Trade (GATT), under the hegemony of the United States of America (USA).
As a result Peripheral territories became increasingly integrated in and dependent upon a world market which caters to the interests of the Centre; a market which demands increasing quantities of natural and agro-alimentary resources. More concretely, in agriculture there has been an intensification of monocultures controlled by "agro-business", , which adopt techniques which are both polluting and energy-consuming. These monocultures are destined to become the food reserves of the Centre, to the detriment of a more diversified type of agriculture destined for self-consumption. (...)
(Further), a new international division of labour has been developing since the late 1960s, when the Central industrialisation model of the post-war era became obsolete. This division consists in transferring certain labour-intensive, low-tech and highly-polluting industries to the new industrialised countries located in the Far East (Hong Kong, Singapore, South Korea,Taiwan, Malaysia, Thailand, Indonesia, and recently China) and to a lesser extent countries such as Mexico, Brazil and Chile. The hyper-exploitation which exists in these countries, especially of women, and less stringent environmental safeguards, help lower production costs and thus allow the Centre to maintain its level of consumption. The end result has been a decrease of employment in the Centre. The growing numbers of unemployed in the highly mechanized agricultural and industrial sectors cannot be absorbed by the service sector, thus converting unemployment into a structural trait in these countries, in deep contrast to the full employment situation of the 1950s and 1960s.
In this new "world economy", a result of the intensification of global economic ties and in particular the new Centre-Periphery relationships, the institutions created at Bretton Woods play a vital rôle.
The IMF ensures that the exchange rates remain fairly constant in order to assure the growth of international trade, and provides financial liquidity for international transactions.
The World Bank, which financed the reconstruction of Western Europe after the Second World War, is in charge of financing huge transportation, hydraulic, energy and agricultural projects, which have
* The manifesto was first produced by the Aedenat network in Spain in June 1993. They can be contacted at AEDENAT, C/ Campomanes 13, 28013 Madrid, Spain. It has been edited for reasons of style and space.
1. The IMF is the international organisation which validates depreciations and appreciations of foreign exchange rates, establishes the conditions for conversion of weak currencies into strong ones and provides short term loans to consolidate trade balances.
International Viewpoint #258 July 1994 enormous environmental impact in Third World countries. These projects allow the South to play its new rôle in the NorthSouth relationship.
Last, but not least, GATT establishes new world trade rules which oblige local markets to open up to world economic interests, thus benefiting the growth of the great multinational companies.
PROBLEM of foreign debt: a crushing burden for countries of the Periphery
The two energy crises in the 1970s led to skyrocketting oil prices. The enormous influx of capital — petrodollars — into the OPEC countries obliged them to place a large amount into the Western world's financial system. Commercial banks in the Central countries began to advance loans to countries from the Periphery, because the massive amounts of capital could not be absorbed by the Centre, which was in the midst of applying adjustment policies in order to cope with the economic and energy crisis. The loans were either diverted to Swiss bank accounts, financed colossal public works which did nothing for local development or used to buy weapons.
The careless expenditure of these loans was ultimately responsible for the foreign debt crisis of the 1980s, when many countries found themselves unable to repay. In 1982 Mexico was the first country to declare itself insolvent, but nearly all the countries of the Periphery became trapped by the "debt problem". The consequences were serious for Third World governments, which had to inflict hardship upon their populations.
The reaction of the Centre to this state of affairs was to order the IMF to advance new loans in order to maintain the influx of money into the Periphery The purpose was two-fold: firstly, to dispel the danger of insolvency for the international finance system and secondly to enable the recipient countries to repay accrued interest. Another consequence of the crisis was the adoption of structural adjustment policies by the indebted countries. Further, the loans which originated in the private sector of Central countries were gradually transferred to their public sector, thus making their governments responsible for this huge debt.
The implementation of strict structural adjustment policies had a devastating effect on the Peripheral countries. The policies served further to open up the markets to world trade, thus benefiting the
Centre. However, the World Bank and IMF consider them necessary for future development. To summarise, foreign debt, which cannot be repaid, has become a mechanism of subjugation, enabling the Centre to impose its dictates on the Periphery, and making Third World economies increasingly dependent on the "free" world market. INCREASING world inequality and the underlying causes for growth in the Central countries during the 1980s
The world situation is worsening each year. The 1980s saw the widening of the gap between the Centre and the Periphery. In respect of Latin America, they have been called the "lost decade"; the "stolen decade" would seem more appropriate, given the acute worsening in the economic situation. Further, Africa has been completely abandoned, and Asia subjected to severe exploitation within the realms of the new international division of labour. All this is in contrast to the Centre's euphoria during the 1980s.
The "good" years experienced by the Centre cannot be attributed to an increase in industrial productivity, nor to increments in quality. There is also doubt concerning the role played by "new technologies" in its economic growth.
The Centre's euphoria was more coincidental with the so-called "financial bubble" — which began with the recycling of petrodollars and liberalisation of world financial markets - than with industrial production, thus creating an increasing gap between the world financial economy and the "real" economy. In addition, growth in the Centre has been aided by the increasing exploitation and pillage of Third World countries. (...) UNFEASABILITY of sustained growth in the Centre and the growing chaos of accumulated imbalances
Western growth in the past decade is both a direct and indirect product of the degradation and exploitation of countries in the southern Periphery. This growth has created unmanageable economic, social and environmental imbalances, not only in the Periphery but also in the Centre. More specifically, the environmental imbalances created by the present world productive model are beginning to hinder its own growth.
Unfortunately, this world economic model needs to grow continually if it is to concentrate wealth in certain social sectors in the Centre. Instead of reconsidering the whole situation, the chosen way out is a further globalisation of markets, as in the new GATT agreement, which pretends to liberalise local markets, thus converting the whole world into a huge free market benefiting large transnational companies, which will operate uncontrolled.3 This opening of world markets is selective because the Centre's markets are not open to products from the Periphery which could compete. Meanwhile the USA, the European Union (EU) and Japan are trying to extend their own areas of influence in the world markets.4 The same thing is happening in certain areas of the southern Periphery.
The present economic, social and environmental world imbalances will be further increased by (1) the tendency to reduce and restructure public expenditure in Central countries, according to IMF recommendations (its view being that public deficits must be reduced if sustained growth is to be promoted), (2) the obligation upon governments to spend public money on "productive" projects, such as public works (highways, engineering projects, telecommunications) and to reduce "unproductive" social expenditure (unemployment benefits, social aid, health, education) which hinders economic growth, and (3) changes to the financing of public expenditure, with the purpose of lessening the tax burden on those with large capital or private income, and shifting it on to wage earners and individuals
The official position is that liberalisation of labour markets will promote investment, activate growth and create jobs, allowing the redistribution of wealth — the "trickle-down" theory. However the contrary is true: increasingly, wealth flows in an upwards-only direction.
Consequently, internal imbalances within Central societies are threatening their "welfare states"; there has been a clear decrease in social aid. This is an extremely serious trend in large cities,
2. The World Bank does not finance the totality of the projects, but its backing allows other sorts of financing.
3. The new GATT agreements liberalise sectors which until now were protected, such as agriculture, services, intellectual property, foreign investments, banking systems etc. This has meant the plundering of entire sectors which were previously free from control by large transnational companies.
4. The Free Trade Treaty between the USA, Canada, and Mexico; the European Monetary Union as defined by the Maastricht Treaty and the European Economic AreaEC + EFTA; the Pacific economic area comprised of Japan, Taiwan, South Korea, Singapore and Hong Kong, plus the ASEAN countries, Australia and New Zealand.
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International Viewpoint #258 July 1994 where social structures are falling apart, new forms of poverty are appearing and the numbers of homeless and excluded are increasing. In addition, inequality between the Centre and the Periphery is now growing at an alarming rate. The World Bank actually considers this as the only way to achieve "development" in the Periphery, on the basis that only by opening-up Third World economies to the international market will growth be guaranteed - meaning a concentration of wealth in the Centre.
Economic growth cannot be triggered by this strategy, for the problems affecting the economic production model cannot be treated by "therapeutic" remedies. This attempt to re-apply 1980s policies will throw the whole system off-
The Rio summit was a complete disaster. The "green" veneer which was applied to international economic policies, in order to appease public opinion in "Central" countries, in no way addressed the grave environmental and development problems which affect the whole world. Global Environmental Facilities (GEFS) were created to finance the costs of implementing the agreements incorporated in the Global Climate Change and Biodiversity Treaties signed in the Earth Summit; however, these agreements were not binding nor have they yet been ratified. The GEFs (which happen to be controlled by the World Bank) have only a tiny budget. TRANSFORMATION of Eastern
Europe in the market economy: A time-bomb activated by the IMF and
World Bank NOTHER threat is looming on the horizon in the form of the Eastern countries. These were heavily industrialised for the benefit of their governing elites and as a result have suffered enormous environmental problems. The long struggle for world domination after the Second World War has ended in favour of the West, following the fall of the bureaucratic socialist regimes, and the transformation of their centrally planned economies into "free" market economies is having tremendous social impact.
During the 1960s and 1970s the USSR assisted national liberation movements in a number of Third World countries, such as Vietnam, Cuba, Angola and Mozambique, thus decreasing Western influence in the southern Peripheral countries. The USA's financing of the arms race, which it precipitated in the 1980s, and which led to the 8 collapse of the Eastern European economies, increased debt-related problems in the Third World, due to its raising of interest rates and also the appreciation of the American dollar. The situation in the 1980s obliged some Eastern countries to open up to the "world economy". They were then forced to borrow money which they were unable to repay. The foreign debt in Eastern countries, although substantially less than that of the Third World, still amounts to US$200 billion, and is controlled by the IMF, which has thus been able to impose its structural adjustment policies on their economies.
Further, the G7 countries have delegated to technocrats from the IMF and World Bank the task of ensuring the transformation of the centralised Eastern economies into free market economies within the "world economy". These institutions are partly responsible for the misery emerging in the Eastern countries and are secretly conniving with the institutionalised mafias which are selling industrial infrastructures and raw materials to the Centre at bargain prices. It is rather strange to observe how the last "aid measures" approved by the G7 meeting in Tokyo included investment to improve the infrastructure for the exploitation of oil and gas fields in Siberia by Western companies. The rest of the aid package was for the privatisation of Eastern companies or the buying of surplus products from the Centre for their benefit.
Accordingly, in spite of their former military power, the rôle which these countries will play depends entirely upon the Centre. There will be a new Peripheral area: The "Eastern Periphery". The future role of these countries could be foreseen when they began their transition to free market economies. The mass media helped to mislead the Eastern European population into believing that it could achieve levels of Western consumption. The resulting euphoria helped to facilitate a rapid transition to a market economy and the rejection of the collapsing bureaucratic regimes. The new situation will foster ruthless competition between the eastern and southern Peripheries in the sale of raw materials or finished products to the
"DEMOGRAPHIC explosion", hyper-urbanization in the
Periphery and the increase in immigration to the Centre
The southern Periphery, and in particular Africa, is experiencing a massive increase in population. This "demographic explosion" is a result of both technical advances and a disruption of the traditional endogenous mechanisms which control population growth in these societies. In addition, hyper-urbanization is flourishing in the Third World, creating huge Megacities - urban settlements with a population exceeding 10 million inhabitants (such as São Paulo, Shanghai, Calcutta, and Bombay). These Megacities are a product of rocketting birthrates and the destruction of local agrarian economies and communities. The rules of the international market are forcing people to flee to the cities in an attempt to survive, creating all kinds of social conflict.
However, a new type of immigration is appearing on the world scene: Environmental migration, due to deterioration of habitats in the Periphery, which has forced millions of people to leave their countries,& creating unprecedented problems. To this must be added economic immigration, triggered by the vast differences in the pyramidal age structures between Centre and Periphery. This alone will be responsible for an enormous influx of cheap labour from the southern and eastern Peripheries into the northern fortresses, which will try to prevent it by economic, physical and even military means. Some influx will be allowed, however: the least appealing jobs will be carried out by immigrants and the best minds will also be recruited
The IMF obliges the main recipient countries to adopt an extremely repressive demographic policy as part of their structural adjustment policies. The policy is dictated by the Centre. It does not aim to eradicate poverty but rather to eliminate the poorer sectors of society. Demographic policies in the Periphery do not attempt to improve welfare levels, public health and education regarding birth control methods, to enable women to decide how many children they want. The most common birth control method in the Periphery (45%) is sterilisation. Meanwhile, the Centre is concerned about its declining birth rate and extinction of the "white race", and their
5. Capitalist and bureaucratic production models, in spite of their substantial differences, are both based upon the continual concentration of political and economic power, which means increasing growth and expansion.
6. Clearly, 410 million people from the Eastern European countries could not enter the First World - the OECD countries comprise 850 million people - simply because the demand for raw materials and consumer products would be such that the world market would collapse
7. According to UN sources, the present 1.4 billion inhabitants of the southern Periphery will increase to 4 billion by
2025; 90% of this increase will be in urban areas.
8. 10 million Africans have abandoned their homes due to severe drought and 1 million Haitians (1/6 of the entire population) have fled their country in boats, leaving it deforested.
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International Viewpoint #258 July 1994 own demographic policies are geared to promote higher birth rates using the most advanced medical technology. IMF and World Bank policies as creators of an increasingly unequal world, with growing insecurity and environmental problems
To summarise, the IMF and World Bank are instrumental in imposing the interests of the Centre on the rest of the world. A world is being created in which there is no justice, where there are huge inequalities of wealth and which has adopted an economic model which is voracious of energy and raw materials and which has enormous negative environmental impact. A very unstable situation is developing with the proliferation of "low intensity conflicts"9 in the Periphery, social unrest developing in the metropolises of the Centre, Megacities in the Periphery becoming unmanageable, chaos taking hold in Eastern Europe and increasing tension in the boundaries between Centre and Periphery. To these must be added large-scale military conflicts such as the Gulf War. These will become more common in the future as the Centre will have to guarantee the increasing demand for scarce natural resources, for example oil, which are, to a large extent, located in the Periphery.
The world is becoming an extremely insecure place in which to live, despite huge global expenditure upon the police and military.
The solution to this dire situation is to
This meeting will be attended by the world's main white collar thieves; presidents of large banks, IMF and World Bank executives, Ministers of Finance and directors of large transnational companies.
WHY Madrid was chosen as the venue for the IMF and World Bank General Assembly
Every three years the General Assembly is held outside Washington.In 1994 it will be the turn of Madrid. Madrid is the capital of Spain, a country which could be considered as on the periphery of the Centre and halfway between the South and the North (even though it belongs to the economic, political and economic structures of the Centre), enjoying the more banal aspects of Western consumption but with a lesser quality of life.
Spain is a good example of how a country which belongs in some way to the Periphery can bridge the gap between the North and the South. Spain's readiness to carry out the structural adjustment plans proposed by the IMF and World Bank has been noted and has placed it on the list of "aspiring" countries. Its submissive attitude, geographical location and the fact that since the mid-1980s it has been a member both of NATO and the EU, converts it into a strategic region for Centre-Periphery relationships. This is probably why Madrid was chosen as the seat for the General
The effects of Centre-Periphery relationships have become increasingly evinow Spain's image of economic growth has attracted a large number of immigrants from both the East and the South, escaping from economic hardship in their own countries. This has created outbursts of racism and xenophobia which in the past were relatively rare.
Our attack on the IMF and the World Bank is directed at revealing the ultimate goals of these international organisations and initiating a debate on Centre-Periphery relationships amongst the active sectors which are attempting to bring about social change in Spain. The problems and solutions both have to be seen in the context of global inter-relationships. It would therefore be very helpful if other groups, organisations or indeed individuals can participate in this campaign. This would enable such actions to be carried out, for example, as a Counter-congress, a "trial" on the fifty years of IF and World Bank existence, public demonstrations and so forth. The preparations for these would also enable
The final goal of our campaign will be to demand the abolition of foreign debt, the dismantling of the IMF and the World Bank, and the creation of a new international economic order which will enable countries from the Periphery and the Centre to achieve self-sufficient development. However, the outcome of these demands will depend on the collective effort of all those participating in this endeavour. * redistribute wealth, implement a more self-sufficient pro-
Necesitamos toda la ayuda del mundo ductive model, confer more autonomy on the Perpara denunciar la política y los intereses iphery, use more que defienden el Banco Mundial y renewable el Fondo Monetario Internacional resources and reduce social inequality.
Only then will it be possible for there to be more equitable development, in equilibrium with the environment, and with more safety and solidarity for our troubled world.
We must therefore condemn the policies of the IMF and World Bank and accuse them of responsibility for present world disorder and unjust Centre-Periphery relationships. There will be a golden opportunity to denounce their activity when the general assembly of the IMF and World
Bank takes place in Madrid this October.
Aedenat Todo el mundo te lo agradecerá dent in Spain. The economic policies sanctified by the IMF and OECD have created an unemployment rate of over 22% within the active population, with 34% of its working population having only temporary jobs. The negative effects of the crisis are especially worrying for those on lower incomes, who are having to deal with reductions in unemployment benefits, health care and education. Yet up until
9. Euphemism for conflicts which do not involve the use of nuclear weapons.
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