INSIDE WORKINGS OF IMF AND

WORLD BANK
IMF: An organization that claims to to promote international economic cooperation, international
trade, employment, and exchange rate stability.
World Bank: An international financial institution stating poverty reduction through foreign
investment, international trade and facilitating capital investment, as its goal
An organization and a financial institution, created under the disguise of helping the poor nations,
while in reality, these entities are causing nothing but crisis, failures and suffering, stripping away
the national assets and destroying the economies in the name of privatization and liberalization.
The information provided in this article, is based on investigation conducted byGregory Palast ( a
renowned journalist and a top investigator who obtained documents marked, confidential and
restricted from an unidentified World bank employee), and a shocking inside story revealed
by Joseph Stiglitz (Winner of Nobel prize in Economics) ex-chief economist of the World Bank.
Joseph Stiglitz was an insider, a whistle blower who was fired from World Bank in 1999. He was
not allowed quiet retirement, while US Treasury Secretary Larry Summers demanded a public
excommunication for Stiglitz having expressed his first mild dissent from globalization World
Bank style.
Please remember that Stiglitz cannot simply be dismissed as a conspiracy nutter. The man was inside
the game a member of Bill Clintons cabinet, chairman of the Presidents council of economic
advisers. In April 2001, Greg conducted an exclusive interview of Stiglitz and it was published as an
article The IMFs Four Steps to Damnation in The Observer (London) and another version in The
Big Issue thats the magazine that the homeless flog on platforms in the London Underground.
Big Issue offered equal space to the IMF, whose deputy chief media officer wrote:
I find it impossible to respond given the depth and breadth of hearsay and misinformation in
[Palasts] report.
Of course it was difficult for the Deputy Chief to respond. The information (and documents) came
from the unhappy lot inside his agency and the World Bank.
The inside workings of the IMF, the World Bank, and the banks 51% owner, the US
Treasury.
Theres an assistance strategy for every poorer nation, designed, says the World Bank, after careful
in-country investigation. But according to insider Stiglitz, the Banks investigation involves little
more than close inspection of five-star hotels. It concludes with a meeting with a begging finance
minister, who is handed a restructuring agreement pre-drafted for voluntary signature.

Each nations economy is analysed, then the Bank hands every minister the same four-step
programme.
Step One is privatization. Instead of objecting to the sell-offs of state industries, some politicians,
using the World Banks demands to silence local critics, happily floggs their electricity and water
companies, because of the possibility of receiving heavy commissions for shaving a few billion off the
sale price. Carefully selected individuals are promoted through impression management with the
help of media campaigns and money to influence to change voters perception. The same faces keep
on rotating, with no alternate choices for public to chose their Representatives. This happened in the
case of the biggest privatisation of all, the 1995 Russian sell-off. The US-backed oligarchs stripped
Russias industrial assets, with the effect that national output was cut nearly in half. The US
Treasury view was: This was great, as we wanted Yeltsin re-elected. We DONT CARE if its a
corrupt election.
Step Two is capital market liberalization. In theory this is a hot money cycle that allows
investment capital to flow in and out. Cash comes in for speculation in real estate and currency, then
flees at the first whiff of trouble. A nations reserves can drain in days. A selective group, mainly the
shareholders of major corporations and banks, controls the broad money supply, while chosen
individuals are appointed for key positions at central banks. These individuals play key role in
facilitating cash flow, following the specific guidelines dictated by IMF. For example in case of
Indonesia and Brazil, the money simply flew out. And when that happens, to seduce speculators into
returning a nations own capital funds, the IMF demands these nations raise interest rates to 30%,
50% and 80%. The result is predictable; Higher interest rates demolish property values, savage
industrial production and drain national treasuries.
At this point, the IMF drags the gasping nation to Step Three: market-based pricing a
fancy term for raising prices on food, water, oil, electricity and cooking gas. This leads, predictably,
to Step-Three-and-a-Half the IMF riot. The IMF riot is painfully predictable. When a nation is,
down and out, [the IMF] squeezes the last drop of blood out of them. They turn up the heat until,
finally, the whole cauldron blows up, as when the IMF eliminated food and fuel subsidies for the
poor in Indonesia in 1998. Indonesia exploded into riots. There are other examples the Bolivian
riots over water prices and the riots in Ecuador over the rise in cooking gas prices imposed by the
World Bank. These riots were totally expected.
According to several documents obtained from inside the World Bank, based on Interim Country
Assistance Strategy for Ecuador, the Bank several times suggests with cold accuracy that the
plans could be expected to spark social unrest. Thats not surprising. The secret report notes that
the plan to make the US dollar Ecuadors currency has pushed 51% of the population below the
poverty line.

The IMF riots (means peaceful demonstrations dispersed by bullets, tanks and tear gas) cause new
flights of capital and government bankruptcies This economic arson has its bright side for
foreigners, who can then pick off remaining assets at fire sale prices. A pattern emerges. There are
lots of losers but the clear winners seem to be the western banks and US Treasury.
Finally arrives step four free trade. This is free trade by the rules of the World Trade
Organisation and the World Bank, like the Opium Wars in nineteenth century which too was about
opening markets. As in the nineteenth century, Europeans and Americans today are kicking down
barriers to sales in Asia, Latin American and Africa while barricading their own markets against the
Third World s agriculture. In the Opium Wars, the West used military blockades. Today, the World
Bank can order a financial blockade, which is just as effective and sometimes just as deadly.
The two major concerns about IMF and World Bank plans;
Because the plans are devised in secrecy and driven by an absolutist ideology, never open for
discourse or dissent, they undermine democracy
These plans usually dont work. For example, under the guiding hand of IMF structural assistance
Africas income dropped by 23%.
Did any nation avoid this fate? Yes, Botswana, by telling IMF to go packing. This information
was provided by Joseph Stiglitz who proposes radical land reform: an attack on the 50% crop rents
charged by the propertied oligarchies worldwide.
Why didnt the World Bank and IMF follow his advice?
Because if you challenge [land ownership], that would be a change in the power of the elites. Thats
not high on their agenda.
What drove Joseph Stiglitz to put his job on the line was the failure of the banks and US Treasury to
change course when confronted with the crises, failures, and suffering perpetrated by their four-step
monetarist mambo.
Its a little like the Middle Ages, says the economist, When the patient died they would say well, we
stopped the bloodletting too soon, he still had a little blood in him.
Maybe its time to remove the bloodsuckers.