Committee for the Abolition of Illegitimate Debt

Eric Toussaint is a historian and political scientist, president of CADTM (Committee for the Abolition of Third World Debt), member of the International Council of the World Social Forum, and of the scientific committee of ATTAC in France. He is the author of Your Money or Your Life. The Tyranny of Global Finance. He is coauthor with Damien Millet of The Debt Scam. IMF, World Bank and the Third World Debt, VAK publication, Mumbai, 2003, 150 pages.

In a speech she gave at the 7^th World Economic Forum at Saint-Petersburg on 18 June 2003, Anne Krueger, former Chief Economist of the World Bank World Bank
WB The World Bank was founded as part of the new international monetary system set up at Bretton Woods in 1944. Its capital is provided by member states’ contributions and loans on the international money markets. It financed public and private projects in Third World and East European countries.

It consists of several closely associated institutions, among which :

1. The International Bank for Reconstruction and Development (IBRD, 189 members in 2017), which provides loans in productive sectors such as farming or energy ;

2. The International Development Association (IDA, 159 members in 1997), which provides less advanced countries with long-term loans (35-40 years) at very low interest (1%) ;

3. The International Finance Corporation (IFC), which provides both loan and equity finance for business ventures in developing countries.

As Third World Debt gets worse, the World Bank (along with the IMF) tends to adopt a macro-economic perspective. For instance, it enforces adjustment policies that are intended to balance heavily indebted countries’ payments. The World Bank advises those countries that have to undergo the IMF’s therapy on such matters as how to reduce budget deficits, round up savings, enduce foreign investors to settle within their borders, or free prices and exchange rates.

during the Reagan presidency, now First Deputy Managing Director of the IMF IMF
International Monetary Fund Along with the World Bank, the IMF was founded on the day the Bretton Woods Agreements were signed. Its first mission was to support the new system of standard exchange rates.

When the Bretton Wood fixed rates system came to an end in 1971, the main function of the IMF became that of being both policeman and fireman for global capital: it acts as policeman when it enforces its Structural Adjustment Policies and as fireman when it steps in to help out governments in risk of defaulting on debt repayments.

As for the World Bank, a weighted voting system operates: depending on the amount paid as contribution by each member state. 85% of the votes is required to modify the IMF Charter (which means that the USA with 17,68% % of the votes has a de facto veto on any change).

The institution is dominated by five countries: the United States (16,74%), Japan (6,23%), Germany (5,81%), France (4,29%) and the UK (4,29%).
The other 183 member countries are divided into groups led by one country. The most important one (6,57% of the votes) is led by Belgium. The least important group of countries (1,55% of the votes) is led by Gabon and brings together African countries.

http://imf.org , summarised remarkably well the arguments put forward by the champions of corporate driven globalisation (
http://www.imf.org/external/np/speeches/2003/061803.htm). What she said was clearly in line with the strategies of the World Bank/ IMF/ WTO WTO
World Trade Organisation The WTO, founded on 1^st January 1995, replaced the General Agreement on Trade and Tariffs (GATT). The main innovation is that the WTO enjoys the status of an international organization. Its role is to ensure that no member States adopt any kind of protectionism whatsoever, in order to accelerate the liberalization global trading and to facilitate the strategies of the multinationals. It has an international court (the Dispute Settlement Body) which judges any alleged violations of its founding text drawn up in Marrakesh.

trio. Disproving claims that the IMF has become more considerate of human rights, Krueger took up the sheer, unconditional defence of the neo-liberal programme.

In her introduction, she expresses her pleasure at finding herself in a city founded three centuries ago as an open door between Russia and the West, the global market
and modernity. “It would be fair to say that global trade, the drive to open the Russian economy, was one of Peter the Great’s principal motives in founding this great city”. From the outset, she refers to the alter-globalisation protesters who have always existed, because “fear of change has always been with us. There have always been those resistant to new and novel ideas and who wanted to reject the unfamiliar”.

She adds that innovators found different ways of dealing with protesters - gentle or harsh, according to the period. She clearly does not condemn harsher ways.

“Sometimes persuasion is the best way of overcoming such prejudice. (Author’s note: that of the protesters). At other times, those who wanted to embrace the new and the different have used the stick rather than the carrot. Peter the Great wanted to use St Petersburg to modernise Russia. New, Western ideas were in, old traditional ideas were out. I’m told that beards, as symbols of the old order, were taxed”.

Anne Krueger goes on to give an edifying historical overview of trade and globalisation. She proclaims her belief in the Ricardian theory of comparative advantages, explaining that it is not merely an attitude of mind, but a true reflection of actual phenomena. Convinced that “international trade has a long and honourable pedigree”, she glosses over the 16^th Century, the era of the great voyages of discovery, as “a period of rapid, constant change and, significantly, of contact between people across huge distances” without the slightest reference to the pillage and crimes against humanity that characterised the period.

She refers to the 19^th Century with the same enthusiasm, emphasising that “the export of capital from Britain in particular fuelled growth across the British Empire and in the new world.”, with no hint of a reference to the crimes of colonialism. Again, she sings the praises of the migration of thirty-six million Europeens between 1871 and 1915 mainly to the Americas, without any allusion to the
Irish famine caused by capitalist development and the victory of free trade.

She next discusses those who oppose globalisation, mentioning that they have not grasped that, from time immemorial, “large-scale welfare gains are often accompanied by localised, short-term losses. Technological progress inevitably means some jobs will become redundant”. Her intention is to indicate that people who oppose globalisation only see the marginal, temporarily negative effects of a powerful, progressive movement.

20^th Century Globalisation

Anne Krueger stresses that growth in the 20^th Century was far greater than in the 19^th Century. She presents globalisation as a true-life fairy story where the latest arrivals benefit from the advantages of the most advanced nations.

For example, she attributes the great success of South Korea to the fact that it took total advantage of the opportunities offered by globalisation whereas India, more wary, had much slower growth.

In fact, reality largely contradicts these affirmations, since the success of South Korea was due above all to a combination of anti- liberal measures (strong State intervention, development of the domestic market, reduction of the income gap, protectionism, pay rises.). It was when it had ended strict control of capital movements and implemented reforms in line with globalisation that it hit a crisis in 1997-1998. As for India, thanks to its mistrust of totally opening up the economy, it was able to protect itself from the worst effects of the Asian crisis of
1997-1998. Indeed, later in her speech, we shall see that she cites India as an example of poverty reduction, in complete contradiction with the passage mentiond
above.

The Benefits of Growth

Anne Krueger explains that living conditions have greatly improved over the lastdecades. Infant mortality has fallen, literacy has increased, there are fewer poor people, and the gap in life expectancy between rich and poor countries has narrowed. Not once during her speech does Anne Krueger mention that in a large number of countries, populations have undergone a deterioration of living conditions over the last twenty years.

Blind Faith in Growth and the Productivist Model

Anne Krueger further explains that there are more and bigger oil reserves today than there were in 1950, and that no irreparable damage has been caused to the planet’s
environment. She claims that as time goes by, we shall find more oil reserves; and in the same optimistic vein, that after a normal phase of environmental degradation,
the situation will improve in line with the objective laws of economy.

“Take the perennial concern that rapid growth depletes our fuel resources and once that happens growth will come to a complete dead stop. World oil reserves today are higher today than in 1950. Then the world’s known reserves of oil were expected to be enough for only 20 more years of consumption. We were expected to run out by 1970. It did not happen. Today, our known reserves are enough to keep us going for another 40 years at our present rate of consumption. There is no doubt that by the time 2040 arrives research and development will have delivered new breakthroughs in energy production and use”.

“Nor have we done irreparable harm to the environment. The evidence shows quite convincingly that economic growth brings an initial phase of deterioration in some aspects: but that this is followed by a subsequent phase of improvement. The turning point at which people begin choosing to invest in cleaning up and preventing pollution occurs at a per capita GDP GDP
Gross Domestic Product Gross Domestic Product is an aggregate measure of total production within a given territory equal to the sum of the gross values added. The measure is notoriously incomplete; for example it does not take into account any activity that does not enter into a commercial exchange. The GDP takes into account both the production of goods and the production of services. Economic growth is defined as the variation of the GDP from one period to another. of about $5000”.

Anne Krueger warns against condemning “sweat-shops”or child labour out of hand.

Faced with protesters who, she says, have no faith in moral relativism, she does not hesitate to warn against condemning out of hand the so-called (sic) “sweatshop factories”. She explains that sweatshop workers in Vietnam saw their pay multiplied by five in a very short time, which "completely transformed for the better the lives
of those workers and their families“. She adds that giving those workers a ”decent wage“ by industrial country standards ”would completely erode any competitive
advantage for businesses using unskilled labour on the international market". In the same way, she says, one should beware of condemning child labour out of hand,
for, as she puts it, “the alternatives are so much worse: starvation or malnutrition”. According to Krueger, there is no need to prohibit child labour since, thanks to growth, it will disappear unaided. She maintains that worries that citizens and governments are losing control to the MNCs and capital flows are misplaced. Her response to the criticism that the benefits of globalisation are not fairly distributed to all, is that inequality is not the main problem and “there is no evidence that globalization has any systematic impact on a country’s income inequality”.

“The evidence suggests that world inequality is declining” (Anne Krueger)

She declares, “the news is actually very encouraging. The evidence suggests that world inequality is declining”.

Note that she attributes the reduction of poverty to the “phenomenal growth of China and India” without mentioning that these two countries, with the planet’s largest populations, are among those who hesitate the most to completely open up their economies.

Anne Krueger finishes with a long eulogy of the Doha agenda. She says that governments in general are afraid to completely open up their economies because of the job losses it will inevitably cause. Some governments "find it hard to resist pressure from special interest Interest An amount paid in remuneration of an investment or received by a lender. Interest is calculated on the amount of the capital invested or borrowed, the duration of the operation and the rate that has been set. groups. It is always a mistake, though. Interfering with the market inevitably produces distortions. Protecting one group of
workers, from foreign competition, say, can have the effect of penalising others-in the same country. Without exception, such protection, whatever form it takes, puts
up the price for consumers".

As her final argument, she declares that if Russia wants to double its per capita revenue in ten years, the only way to do it would be by joining the WTO, which would mean totally opening up its economy. With a dazzling demonstration of ignorance and/or bad faith, she adds, “I know of no economy that has achieved income-doubling in a decade that has not been integrating with the international economy as it did so”. She concludes, “our central role is to facilitate the process of globalization. In a very real sense, that is what we exist for”.