CIA Files
In
the newly
released archive
of 13 million pages by CIA, we found quite an impressive report
concerning the IMF changing strategies on debtor countries. The
report dates back to 1985, but what is even more impressive, is that,
it was predicting an increase of instability in those countries, as
well as, methods of reducing potential popular anger!
Specifically,
the report was monitoring IMF's changing policy to enforce strict
conditions and austerity on indebted countries that could cause
political unrest:
The
financial community's primary demand on LDC [Least Developed
Countries] debtors has shifted from simple adoption of an
IMF standby agreement to vigorous compliance with economic
performance targets. Not only
are nearly 90 percent of IMF drawings now tied to strong economic
policy conditions, but the IMF is enforcing these
conditions with closer scrutiny and greater resolve.
Compliance with IMF targets – the key to obtaining
official reschedulings and new money commitments from banks – is
becoming an increasingly important factor in pledges of bilateral and
multilateral assistance as well. We believe that debtors will
continue to improve their current account performance but will have
more difficulty meeting domestic performance targets set under IMF
guidance.
Greater emphasis on compliance will force governments
to attempt closer adherence to austerity programs than has been true
in the past. For some countries, this could lead to greater levels of
political unrest in the short term, especially in cases where
restrictive economic policies have been in place for some time.
Intensified compliance efforts have already led to civil unrest in a
number of LDCs with IMF-supported programs. Sporadic protests have
erupted over price hikes in Jamaica and the Dominican Republic, while
wage-related strikes have plagued Brazil. [...] we believe that in
countries like Soudan, with very narrow resource bases and other
political problems, the prospects for compliance with IMF programs
while maintaining political stability remain dim.
Argentina and Philippines are countries where we
might see increased political unrest this year as the governments
strive for compliance to qualify for needed debt restructuring. As
key interest groups – labor unions and student groups in
particular – are adversely affected by drastic changes in economic
policy, we anticipate more riots, protest demonstrations and
strikes.
Concerning the policies imposed by the IMF, the report clearly refers to the complete control of money flow through the central bank:
Standby arrangements almost always include performance
criteria expressed in terms of quantitative targets, which usually
are reviewed on a quarterly basis. The criteria normally take three
general forms: A ceiling on central bank lending and the
subceiling on lending to the central government [...] Limits on the
assets of the central bank, which are designed to limit the expansion
of money supply ...
Yet,
probably the most impressive, is that the report gives some guidance
to governments in order to limit potential unrest, including some
level of propaganda (Publicity campaigns can be initiated to
educate the people on the need for adjustment and on the long-run
benefits they can expect ...), manipulating prices and exchange
rates, methods of public disorientation (... the government can
attempt to move away from the passionate issues of price increases
into less sensitive areas such as divestment of publicly owned
enterprises.)
Another
type of public disorientation refers to easy victims and scapegoats,
like refugees!
Specifically:
Government leaders hoping to implement needed economic
measures and avoid political fallout face a limited number of
options:
- Publicity campaigns can be initiated to educate the people on the need for adjustment and on the long-run benefits they can expect. There are risks, however, if the government fails to make good on its promises.
- Exchange rates could be adjusted on a daily or weekly basis rather than through massive one-time devaluation, thereby partially diffusing a politically sensitive issue.
- Price increases can be implemented in stages to limit negative public reaction. In Egypt, for example, the Mubarak government initiated bread price increases only in wealthy neighborhoods in an attempt to avoid rioting reminiscent of 1977, when more than 100 people were killed.
- In politically tense situations, the government can attempt to move away from the passionate issues of price increases into less sensitive areas such as divestment of publicly owned enterprises.
- Civil anger can actually be directed away from the local government and toward the IMF and other foreign lenders. In Sudan, for example, the Nimeiri government is aided by the population's perception that international donors, the drought, and the influx of drought refugees are responsible for a large part of their economic ills.
These
specific instructions apparently proved unable to restrict the IMF
catastrophe in various regions during the 90s and until today. Their
aim was only to justify it. Well, it didn't work because the
catastrophe created by the IMF policies is more than evident,
everywhere.
The IMF is Extortion in 3 Letters.
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