Greece/Cyprus . . . A Sinister Experiment

I have just finished an incredible and comprehensively researched book by Ernst Wolff that has made me realise how naïve I have been about the forces that control our world. It’s called Pillaging the World, The History and Politics of the IMF and like me, will change your thinking about how the world works.

The IMF was birthed out of negotiations between the US and UK in 1940, designed to create a new world monetary order. Officially the job of the IMF, as a supposed independent body, was to bring stability to global financial systems and help out troubled countries in crisis who were members of its ‘club’.

The UK was subsequently pushed to one side and it was then designed primarily to represent the interests of the US and secure economic world domination, becoming the real force behind the development and growth of neoliberalism.

To conceal this purpose it has always been presented as an independent body, supported by a policy of only having non-Americans as its public face, (MD Christine Lagarde is excellent as a European and a striking woman with considerable financial expertise). The people who actually pull the strings remain clouded in secrecy.

Current membership of the IMF stands at 188 countries, who have voting rights based upon their financial contribution to the ‘club’. The starting capital for the fund was $8.8 billion of which the US deposited by far the largest amount of $2.9 billion, thereby rendering the voting rights of the other members worthless.

The original statute of intention included the telling condition:

‘To provide member countries facing balance of payment difficulties with temporary access to the Fund’s general resources and under adequate safeguards.’ (My italics)

As lender of last resort the IMF quickly realised it could attach conditions to all loans, over and above the crippling compound interest that is levied. Loans are not subject to parliamentary approval and treated as classified information that is not intended for the public eye. Because of these aggressive conditions global corporations are able to move in and reap vast profits from buying up a country’s assets at rock bottom prices.

In the 1970’s, Chile sought the IMF’s help, when the fascist dictator Augusto Pinochet offered suppression in return for loans, which included repression of any political and trade union opposition and the crushing of all labour disputes.

There followed a drastic limitation of money supply, cuts in government spending, layoffs of public sector workers, privatization of healthcare and education, wage cuts and tax increases on working people, whilst lowering tariffs and corporate taxes.

The net result was to drive unemployment from 3% to 18.7% in just 2 years and push inflation to 341%, plunging the poorest into abject poverty. Meanwhile the richest 10% amassed 36.5% of national income, taking their overall share to 46.8%. Here we see a perfect example of how the growing divide between rich and poor is being achieved.

And so the template for ‘austerity’ measures was established and cleverly packaged as a necessity by government to ensure responsible financial management of sovereign budgets in difficult times. The IMF thus remained below the radar as the stern measures took hold and governments endured the backlash from the population, with some protection by the media.

What the IMF learned from this ‘Shock Therapy’, as it became known in Chile, was that whilst the population responded with anger and demonstrations, this aggression eventually died away from lack of momentum and so the abusive treatment could be continued, with the gradual financial destruction of the country.

This scenario has been repeated in the decades since in other countries including Russia, Yugoslavia, South Africa (with the support of Nelson Mandela and the ANC!), Iceland (yes Iceland!) and many others.

In Argentina it took just four years for the most prosperous country in Latin America to become a poorhouse. Such was the level of abuse that it raised international concern but sadly, like all other protest, eventually died down as the lenders and government rode out the storm, with the critical support of international media propaganda as their constant companion.

As confidence in this ability to ride out controversy has grown we now see more abusive measures considered and introduced, as has been the case in Cyprus and Greece recently. It was in Cyprus that the IMF first introduced the concept of ‘bail-in’, where savers and investors money held in banks can be converted into bank assets when a bank goes bust.

Having got away with it in Cyprus and also in Greece, it has now been rolled out across the EU as the Bank Recovery and Resolution Directive legislation legalises the theft of savers money in event of another (inevitable) banking collapse. The IMF knows it has nowhere near enough reserves to protect its members when this catastrophe occurs and so it has simply harnessed the collective wealth of the EU (our taxes) to do the job instead!

As this abusive law enforcement is enacted even more sinister actions are being contemplated by way of levying a ‘wealth tax’, not on the wealthy but on those within the population who have net assets, such as a house that is mortgage free or whose value exceeds the mortgage debt. Here a ‘one off’ tax (yeah right!) of possibly 10% would again provide the financial wherewithal to safeguard bank insolvency caused by constant Casino banking practices.

What jumps out from the pages of this book is the IMF’s understanding of our lack of tenacity when rebelling, simply waiting for us to run out of steam, before applying more aggressive measures and using their media propaganda to divert our anger. (Remember Greece and how irresponsible the Greek people were made to look after the scandal of debt became clear. How ferocious the troika became when a referendum was called against their wishes.)

It gives an insight into how this powerful organisation operates and how they prioritise their desire to remain hidden from the mainstream, keeping us in ignorance and unable to understand what we are trying to confront.

Occupy demonstrated how corporate and political abuse has turned global and that we are now able to respond globally. What Occupy highlighted was that vision and leadership are also needed to maintain direction and momentum. Perhaps the Greek people have recognised this in voting Alex Tsipras back into power, in spite of his supposed ‘U-turn’.

Awareness is everything, as the IMF have shown in riding out our demonstrations. By becoming more aware of how they function we level the playing field. That is, I would suggest, our primary need now, to understand as much about them as they understand about us, by removing the veils and this books contribution is outstanding.

Awareness and greater understanding always lead to change.


Until the next time


Thinking from his Book: Global Magna Carta. Returning Power to the 99% . . . If They Want It! By J T Coombes