Tucked away deep in the new “National Security Strategy” that Bush released on March 16 was some bad news for Third World countries: Bush wants the IMF and World Bank to shove the free market even further down their throats.
Chapter VI of that document is entitled “Ignite a New Era of Global Economic Growth Through Free Markets and Free Trade.”
It boasts of all the new free trade agreements the Bush Administration has negotiated, and it vows to create a Middle East Free Trade Area by 2013. (It hopes to sign a free trade agreement with the United Arab Emirates, but that one may have been set back by the port controversy.)
The chapter warns of some challenges, including the fact that some countries have the audacity to “restrict the free flow of capital, subverting the vital role that wise investment can play in promoting economic growth.” This, even though countries like China, India, and Chile that place some controls on capital flow have had much greater economic success than others and did not suffer the turbulence caused by capital flight that many countries contended with in the late 1990s.
As for Third World countries with natural resources like oil, the chapter is quite clear: “The Administration will work with resource-rich countries to increase their openness, transparency, and rule of law,” it says. This will “attract the investment essential to developing their resources and expanding the range of energy suppliers.” By “diversifying the suppliers,” the Administration says its plan “diminishes the leverage of irresponsible rulers.”
In a section on “strengthening international financial institutions,” the document amazingly urges the IMF and the World Bank to do more of what they do wrong.
It tells the World Bank to place even “greater emphasis on investments in the private sector.”
And the IMF, which has been especially brutal, needs to be more so, the document suggests: “If crises occur, the IMF’s response must reinforce each country’s responsibility for its own economic choices. A refocused IMF will strengthen market institutions and market discipline over financial decisions.”
The IMF already crudely imposes extreme hardship on the vast majority of people in the countries where it intervenes. It extorts policy changes—like removing subsidies on such basic items as food and fuel—that virtually overnight slash people’s living standards, all in the name of “market discipline.”
As a result, the IMF is the leading cause of food riots the world over.
But the Bush Administration in this document betrays no awareness of the adverse impact the IMF’s policies have had on poverty or stability in the Third World.
Instead, it insists that the IMF get even tougher in its role as market whipmaster.
Under the lash, one country after another in Latin America has already rebelled.
There will be more to follow.