Preface,
Introduction
excerpted from the book
The Globalization of Poverty and
the New World Order
by Michel Chossudovsky
Global Research, 2003, paperback
[first edition 1997]
pxxi
Barely a few weeks after the military coup in Chile on September
11, 1973, overthrowing the elected government of President Salvador
Allende, the military Junta headed by General Augusto Pinochet
ordered a hike in the price of bread from 11 to 40 escudos, a
hefty overnight increase of 264%. This economic shock treatment
had been designed by a group of economists called the "Chicago
Boys" [Chicago trained economists and disciples of Milton
Friedman].
... While food prices had skyrocketed,
wages had been frozen to ensure "economic stability and stave
off inflationary pressures." From one day to the next, an
entire country was precipitated into abysmal poverty: in less
than a year the price of bread in Chile increased thirty-six times
and eighty-five percent of the Chilean population had been driven
below the poverty line.
... Through the tampering of prices, wages
and interest rates, people's lives had been destroyed; an entire
national economy had been destabilized.
... The military takeover in Argentina
[1976] was a "carbon copy" of the CIA-led coup in Chile.
Behind the massacres and human rights violations, "free market"
reforms had ... been prescribed ... under the supervision of Argentina's
New York creditors.
... The experience of Chile and Argentina
under the "Chicago Boys" was a dress rehearsal of things
to come. In due course, the economic bullets of the free market
system were hitting try after country. Since the onslaught of
the debt crisis of the 1980s, the same IMF economic medicine has
routinely been applied in more than 150 developing countries.
pxxii
[In the 1980s] most of the military regimes in Latin America had
been replaced by parliamentary "democracies", entrusted
with the gruesome task of putting the national economy on the
auction block under the World Bank sponsored privatization programs.
pxxii
[In the 1990s] Peru had been punished for not conforming to IMF
diktats: the price of fuel was hiked up by 31 times and the price
of bread increased more than twelve times in a single day. The
IMF in close consultation with the US Treasury had been operating
behind the scenes. These reforms - carried out in the name of
"democracy" - were far more devastating than those applied
in Chile and Argentina under the fist of military rule.
pxxiii
From the early 1990s, Rwanda had been destroyed as a functioning
national economy; its once vibrant agricultural system was destabilized.
The IMF had demanded the "opening up" of the domestic
market to the dumping of US and European grain surpiuses.
pxxiii
A New World Order has been installed destroying national sovereignty
and the rights of citizens. Under the new rules of the World Trade
Organization (WTO) established in 1995, "entrenched rights"
were granted to the world's largest banks and multinational conglomerates.
Public debts have spiraled, state institutions have collapsed,
and the accumulation of private wealth has progressed relentlessly.
pxxiv
The decision to invade Iraq had nothing to do with "Saddam's
weapons of mass destruction" or his alleged links to Al Qaeda.
Iraq possesses 11 percent of the World's oil reserves, i.e. more
than five times those of the US. The broader Middle East-Central
Asian region (extending from the tip of the Arabian peninsula
to the Caspian sea basin) encompasses approximately 70% of the
World's reserves of oil and natural gas.
... A 1995 US Central Command document
confirms that "the purpose of US engagement [in Iraq] is
to protect US vital interest in the region - uninterrupted, secure
US/Allied access to Gulf oil".
pxxiv
In liaison with the US administration and the Paris Club of official
creditors, the IMF and World Bank are slated to play a key role
in Iraq's post-war "reconstruction". The hidden agenda
is to impose the US dollar as Iraq's proxy currency(in a currency
board arrangement, similar to that imposed on Bosnia-Herzegovina
under the 1995 Dayton Accord). In turn, Iraq's extensive oil reserves
are slated to be taken over by the Anglo-American oil giants.
Iraq's spiralling external debt will be
used as an instrument of economic plunder. Conditionalities will
be set. The entire national economy will be put on the auction
block. The IMF and the World Bank will be called in to provide
legitimacy to the plunder of Iraq's oil wealth.
*
The deployment of America's war machine
purports to enlarge America's economic sphere of influence in
an area extending from the Mediterranean to China's Western frontier.
The US has established a permanent military presence not only
in Iraq and Afghanistan, but it has military bases in several
of the former Soviet republics as well. In other words, militarization
supports the conquest of new economic frontiers and the worldwide
imposition of the "free market" system.
pxxv
State resources in the US have been redirected towards financing
the military-industrial complex and beefing up domestic security
at the expense of funding much needed social programs which have
been slashed to the bone.
pxxv
In the wake of September 11, 2001, through a massive propaganda
campaign, the shaky legitimacy of the "global free market
system" has been reinforced, opening the door to a renewed
wave of deregulation and privatization, resulting in corporate
take-overs of most, if not all, public services and state infrastructure
(including health care, electricity, water and transportation).
*
pxxv
In the US, Great Britain and most countries of the European Union
... the foundations of an authoritarian state apparatus have emerged
with little or no organized opposition from the mainstay of civil
society.
pxxv
Some of the key issues of the 21st century [include] the merger
boom and the concentration of corporate power, the collapse of
national and local level economies, the meltdown of financial
markets, the outbreak of famine and civil war and the dismantling
of the Welfare State in most Western countries.
p1
[The] "globalization of poverty" - which has largely
reversed the achievements of post-decolonization was initiated
in the Third World coinciding with the debt crisis of the early
1980s and the imposition of the IMF's deadly economic reforms.
p1
The New World Order feeds on human poverty and the destruction
of the natural environment. It generates social apartheid, encourages
racism and ethnic strife, undermines the rights of women and often
precipitates countries into destructive confrontations between
nationalities.
p1
In the former Soviet Union, directly resulting from the IMF's
deadly "economic medicine" initiated in 1992, economic
decline has surpassed the plunge in production experienced at
the height of the Second World War, following the German occupation
of Belarus and parts of the Ukraine in 1941 and the extensive
bombing of Soviet industrial infrastructure. From a situation
of full employment and relative price stability in the 1970s and
1980s, inflation has skyrocketed, real earnings and employment
have collapsed and health programmes have been phased out.
p3
During the Reagan-Thatcher era, harsh austerity measures resulted
in the gradual disintegration of the Welfare State. The economic
stabilization measures ... contributed to depressing the earnings
of working people and weakening the role of the state. Since the
1990s, the economic therapy applied in the developed countries
contains many of the essential ingredients of the structural adjustment
programmes imposed by the IMF and the World Bank in the Third
World and Eastern Europe.
p3
Since the 1990s, the economic therapy applied in the developed
countries contains many of the essential ingredients of the structural
adjustment programmes imposed by the IMF and the World Bank in
the Third World and Eastern Europe.
p3
During the Reagan-Thatcher era, harsh austerity measures resulted
in the gradual disintegration of the Welfare State. The economic
stabilization measures ... contributed to depressing the earnings
of working people and weakening the role of the state.
p3
The accumulation of large public debts in Western countries has
provided the financial elites with political leverage as well
as the power to dictate government economic and social policy.
Under the sway of neoliberalism, public expenditures are trimmed
and social welfare programs are undone. State policies promote
the deregulation of the labor market: deindexation of earnings,
part-time employment, early retirement and then imposition of
so-called "voluntary" wage cuts.
p3
The rules of personnel management in the United States are: "bust
the unions, pit older workers against younger, call in the scabs,
slash wages and cut company paid medical insurance".
p3
Since the 1980s, a large share of the labor force in the United
States has been driven out of high pay unionized jobs into low
pay minimum wage jobs. Thirdworldization of Western cities ...
is, in many respects, comparable to that of the Third World.
p4
The environment of major metropolitan areas is marked by social
apartheid: the urban landscape is compartmentalized along social
and ethnic lines. In turn, the state has become increasingly repressive
in managing social dissent and curbing civil unrest.
p4
The achievements of the early post-war period [World War I] have
largely been reversed through the derogation of unemployment insurance
schemes and the privatization of pension funds. Schools and hospitals
are being closed down creating conditions for the outright privatization
of social services.
p4
In Latin America and Eastern Europe, criminal syndicates have
invested in the acquisition of state assets under the IMF-World
Bank sponsored privatization programmes According to the United
Nations, total worldwide revenues of the "transnational criminal
organizations" (TCOs) are of the order of one trillion dollars,
representing an amount equivalent to the combined G DP of the
group of low income countries (with a population of 3 billion
people). The United Nations estimate includes the trade in narcotics,
arms sales, smuggling of nuclear materials, etc. as well as the
earnings derived from the Mafia-controlled services economy (e.g.
prostitution, gambling, exchange banks, etc..
... In Latin America and Eastern Europe,
criminal syndicates have invested in the acquisition of state
assets under the IMF-World Bank sponsored privatization programmes.
... Criminal groups routinely collaborate
with legal business enterprises investing in a variety of "legitimate"
activities, which provide not only a cover for the laundering
of dirty money but also a convenient procedure for accumulating
wealth outside the realm of the criminal economy.
... According to one observer [Daniel
Brandt, "Organized Crime Threatens the New World Order",
Namebase Newsline, Ohio, no 8, January-March 1995],"organized
crime groups outperform most Fortune 500 companies... with organizations
that resemble General Motors more than they resemble the traditional
Sicilian Mafia".
p4
A political consensus has developed; governments throughout the
world have unequivocally embraced the neoliberal policy agenda.
The same economic prescriptions are applied worldwide. Under the
jurisdiction of the IMF, the World Bank and the WTO, the reforms
create an "enabling environment" for global banks and
multinational corporations.
p5
The IMF, the World Bank and the WTO are mere bureaucracies. They
are regulatory bodies operating under an intergovernmental umbrella
and acting on behalf of powerful economic and financial interests.
Wall Street bankers and the heads of the world's largest business
conglomerates are indelibly behind these global institutions.
p5
"Semi-secret" organizations - which play an important
role in shaping the institutions of the New World Order - include
the Trilateral Commission, the Bildebergers and the Council on
Foreign Relations.
p6
[The] new international economic order feeds on human poverty
and cheap labor: high levels of national unemployment in both
developed and developing countries have contributed to depressing
real wages. Unemployment has been internationalized, with capital
migrating from one country to another in a perpetual search for
cheaper supplies of labor.
... World unemployment operates as a lever
which regulates labor costs at a world level: the abundant supplies
of cheap labor in the Third World and the former Eastern Bloc
contribute to depressing wages in the developed countries.
p7
Merrill Lynch, conservatively estimates the wealth of private
individuals managed through private banking accounts in offshore
tax havens at $ 3.3 trillion. The IMF puts the offshore assets
of corporations and individuals at $ 5.5 trillion, a sum equivalent
to 25 percent of total world income. The largely ill-gotten loot
of Third World elites in numbered accounts was estimated in the
1990s at $ 600 billion, with one third of that held in Switzerland.
p8
The tendency is towards overproduction on an unprecedented scale.
Corporate expansion can only take place through the concurrent
disengagement of idle productive capacity, namely through the
bankruptcy and liquidation of "surplus enterprises".
The latter are closed down in favor of the most advanced mechanized
production: entire branches of industry stand idle, the economy
of entire regions is affected, and only a part of the world's
agricultural potential is utilized.
p8
[The] global oversupply of commodities is a direct consequence
of the decline in purchasing power and rising levels of poverty.
... Oversupply contributes in turn to
further depressing the earnings of the direct producers through
the closure of excess productive capacity... Since the early 1980s,
overproduction of commodities leading to plummeting (real) commodity
prices has wreaked havoc particularly among Third World primary
producers, but also in the area of manufacturing.
p8
In developing countries, entire branches of industry producing
for the internal market are driven into bankruptcy on the orders
of the World Bank and the IMF. The informal urban sector - which
historically has played an important role as a source of employment
creation - has been undermined as a result of currency devaluations,
the liberalization of imports and commodity dumping.
p9
The world's largest corporations have experienced unprecedented
growth and expansion of their share of the global market. This
process, however, has largely taken place through the displacement
of pre-existing productive systems - i.e. at the expense of local-level,
regional and national producers.
p9
Survival of the fittest: enterprises with the most advanced technologies
or those with command over the lowest wages survive in a world
economy marked by overproduction.
p9
At the local level, small and medium sized enterprises are pushed
into bankruptcy or obliged to produce for a global distributor.
In turn, large multinational companies have taken control of local-level
markets through the system of corporate franchising. This process
enables large corporate capital (the franchiser) to gain control
over human resources, cheap labor and entrepreneurship. A large
share of the earnings of small local level firms and/or retailers
is thereby appropriated by the global corporation.
p10
The imposition of macro-economic and trade reforms under the supervision
of the IMF, World Bank and World Trade Organization (WTO) purports
to "peacefully" recolonize countries through the deliberate
manipulation of market forces. While not explicitly requiring
the use of force, the ruthless enforcement of the economic reforms
nonetheless constitutes a form of warfare.
p10
What happens to countries that refuse to "open up" to
Western banks and MNCs [multinational corporations], as demanded
by the World Trade Organization? The Western military-intelligence
apparatus and its various bureaucracies routinely interface with
the financial establishment. The IMF, the World Bank and the
WTO - which police country level economic reforms - collaborate
with NATO in its various "peacekeeping" endeavors.
p10
War and the "free market" go hand in hand... War physically
destroys what has not been dismantled through deregulation, privatization
and the imposition of "free market" reforms.
p11
The New World Order is based on the "false consensus"
of Washington and Wall Street, which ordains the "free market
system" as the only possible choice on the fated road to
a "global prosperity". All political parties including
Greens, Social Democrats and former Communists now share this
consensus .
p11
The Western military and security apparatus endorses and supports
dominant economic and financial interests - i.e. the build-up,
as well as the exercise, of military might enforces "free
trade... NATO coordinates its military operations with the World
Bank and the IMF's policy interventions, and vice versa. Consistently,
the security and defense bodies of the Western military alliance,
together with the various civilian governmental and intergovernmental
bureaucracies (e.g. IMF, World Bank, WTO) share a common understanding,
ideological consensus and commitment to the New World Order.
p12
The global media fabricates the news and overtly distorts the
course of events. This false consciousness" which pervades
our societies, prevents critical debate and masks the truth.
p12
The only promise of the "free market" is a world of
landless farmers, shuttered factories, jobless workers and gutted
social programs with "bitter economic medicine" under
the WTO and the IMF constituting the only prescription. We must
restore the truth, disarm the controlled corporate media, reinstate
sovereignty to our countries.
Globalization
of Poverty and New World Order
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