The IMF's Bottomless Bottom-Line Cruelty [View all]

How the IMF & the World Bank—in the name of progress—succeed in keeping poor countries poor.

Rob Larson

Everyone knows there are many extremely poor countries in the world, but people rarely talk about why. These nations are sometimes collectively called the Third World (being neither the Western First World or the Soviet-aligned Second World); the more recent euphemism is usually the “developing world.” Whatever the name, these states are imagined by most Westerners to be scary, struggling places, and they tend to take the blame for global woes like terrorism and unsanctioned migration. Some of our greatest billionaires polish their public personas by donating to charities that supposedly aid the people trapped in grinding poverty across parts of Africa, southern Asia, and Latin America.

These countries have been The Poor Countries for quite some time now. At the end of World War II, the great states of the developing world—like Brazil, Indonesia, India, and the Congo—were dramatically poorer than the developed world. Today, 75 years later, and after decades of “investment” and “development,” they’re still very poor. In fact, huge numbers of people in these large, resource-rich countries are much poorer than their ancestors. What the hell is going on here? Colonialism ended years ago—didn’t it? Or did it just change shape?

. . .

After the imperial powers were beaten, exhausted, and/or occupied during World War II, the developing world strove for independence—and the Europeans fought like mad to avoid giving it to them. From French Algeria to British India, the colonial powers used ungodly violence and torture on a huge scale against dissidents, keeping cruel pro-Western dictators in office as long as possible. As the developing countries of the Global South gradually won independence through long, bloody struggles, their traumatized societies came under what leftists often call “neocolonialism”—a system in which rich capitalist states install and support local dictators and strongmen, allowing Western companies to continue owning many of the same old crucial resources and selling products to profitable, effectively captive markets. This pattern widened after the Cold War, when the “fall of the Soviet bloc… [created] a new imperial age,” as the conservative Financial Times of London related, with “a system of indirect rule that has involved the integration of leaders of developing countries into the network of the new ruling class.”

From Regular Slavery to Debt Slavery
One of the most valuable tools used to keep developing countries from developing some real independence has been debt. The battle-scarred governments arising from the wars of independence—some authoritarian and some managing to remain partially republican—often wanted compensation from the former imperial powers, which they’re mostly still hoping for. This was in recognition of the scale of imperial crimes against the developing world, from the enormous violence unleashed against them to the massive wealth that was stripped to build up Western economies, plus the fact that choice resources like oil deposits and rich farmland often remained in the hands of citizens of the colonial powers. Europe and the United States refused, though they frequently indicated they were prepared to lend developing countries the money instead.

Despite requests for capital grants as reparations rather than lines of credit, many developing countries ended up borrowing money, ostensibly for development—investing in education, health, and domestic infrastructure to begin the journey to something more like the developed world’s standard of living. Often funds were needed to pay the developed powers “compensation” for nationalizing their assets, like the Suez Canal. Frequently these loans were organized by the World Bank, created by the Western powers after World War II to help provide development credit to the Third World. These loans for roads, bridges, schools and hospitals were supposed to be paid for by the countries’ great future economic growth, although notably the World Bank and Western investors favored projects that built on poor countries’ existing comparative trade advantages. This meant exporting basic commodities like bulk crops, or raw materials like oil and copper—largely leaving the higher valued-added processing and manufacturing to the developed world.



More:
https://www.currentaffairs.org/2022/02/the-imfs-bottomless-bottom-line-cruelty