Preface,

Introduction

excerpted from the book

The Globalization of Poverty and the New World Order

by Michel Chossudovsky

Global Research, 2003, paperback [first edition 1997]

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Barely a few weeks after the military coup in Chile on September 11, 1973, overthrowing the elected government of President Salvador Allende, the military Junta headed by General Augusto Pinochet ordered a hike in the price of bread from 11 to 40 escudos, a hefty overnight increase of 264%. This economic shock treatment had been designed by a group of economists called the "Chicago Boys" [Chicago trained economists and disciples of Milton Friedman].

... While food prices had skyrocketed, wages had been frozen to ensure "economic stability and stave off inflationary pressures." From one day to the next, an entire country was precipitated into abysmal poverty: in less than a year the price of bread in Chile increased thirty-six times and eighty-five percent of the Chilean population had been driven below the poverty line.

... Through the tampering of prices, wages and interest rates, people's lives had been destroyed; an entire national economy had been destabilized.

... The military takeover in Argentina [1976] was a "carbon copy" of the CIA-led coup in Chile. Behind the massacres and human rights violations, "free market" reforms had ... been prescribed ... under the supervision of Argentina's New York creditors.

... The experience of Chile and Argentina under the "Chicago Boys" was a dress rehearsal of things to come. In due course, the economic bullets of the free market system were hitting try after country. Since the onslaught of the debt crisis of the 1980s, the same IMF economic medicine has routinely been applied in more than 150 developing countries.

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[In the 1980s] most of the military regimes in Latin America had been replaced by parliamentary "democracies", entrusted with the gruesome task of putting the national economy on the auction block under the World Bank sponsored privatization programs.

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[In the 1990s] Peru had been punished for not conforming to IMF diktats: the price of fuel was hiked up by 31 times and the price of bread increased more than twelve times in a single day. The IMF in close consultation with the US Treasury had been operating behind the scenes. These reforms - carried out in the name of "democracy" - were far more devastating than those applied in Chile and Argentina under the fist of military rule.

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From the early 1990s, Rwanda had been destroyed as a functioning national economy; its once vibrant agricultural system was destabilized. The IMF had demanded the "opening up" of the domestic market to the dumping of US and European grain surpiuses.

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A New World Order has been installed destroying national sovereignty and the rights of citizens. Under the new rules of the World Trade Organization (WTO) established in 1995, "entrenched rights" were granted to the world's largest banks and multinational conglomerates. Public debts have spiraled, state institutions have collapsed, and the accumulation of private wealth has progressed relentlessly.

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The decision to invade Iraq had nothing to do with "Saddam's weapons of mass destruction" or his alleged links to Al Qaeda. Iraq possesses 11 percent of the World's oil reserves, i.e. more than five times those of the US. The broader Middle East-Central Asian region (extending from the tip of the Arabian peninsula to the Caspian sea basin) encompasses approximately 70% of the World's reserves of oil and natural gas.

... A 1995 US Central Command document confirms that "the purpose of US engagement [in Iraq] is to protect US vital interest in the region - uninterrupted, secure US/Allied access to Gulf oil".

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In liaison with the US administration and the Paris Club of official creditors, the IMF and World Bank are slated to play a key role in Iraq's post-war "reconstruction". The hidden agenda is to impose the US dollar as Iraq's proxy currency(in a currency board arrangement, similar to that imposed on Bosnia-Herzegovina under the 1995 Dayton Accord). In turn, Iraq's extensive oil reserves are slated to be taken over by the Anglo-American oil giants.

Iraq's spiralling external debt will be used as an instrument of economic plunder. Conditionalities will be set. The entire national economy will be put on the auction block. The IMF and the World Bank will be called in to provide legitimacy to the plunder of Iraq's oil wealth.

*

The deployment of America's war machine purports to enlarge America's economic sphere of influence in an area extending from the Mediterranean to China's Western frontier. The US has established a permanent military presence not only in Iraq and Afghanistan, but it has military bases in several of the former Soviet republics as well. In other words, militarization supports the conquest of new economic frontiers and the worldwide imposition of the "free market" system.

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State resources in the US have been redirected towards financing the military-industrial complex and beefing up domestic security at the expense of funding much needed social programs which have been slashed to the bone.

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In the wake of September 11, 2001, through a massive propaganda campaign, the shaky legitimacy of the "global free market system" has been reinforced, opening the door to a renewed wave of deregulation and privatization, resulting in corporate take-overs of most, if not all, public services and state infrastructure (including health care, electricity, water and transportation).

*
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In the US, Great Britain and most countries of the European Union ... the foundations of an authoritarian state apparatus have emerged with little or no organized opposition from the mainstay of civil society.

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Some of the key issues of the 21st century [include] the merger boom and the concentration of corporate power, the collapse of national and local level economies, the meltdown of financial markets, the outbreak of famine and civil war and the dismantling of the Welfare State in most Western countries.

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[The] "globalization of poverty" - which has largely reversed the achievements of post-decolonization was initiated in the Third World coinciding with the debt crisis of the early 1980s and the imposition of the IMF's deadly economic reforms.

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The New World Order feeds on human poverty and the destruction of the natural environment. It generates social apartheid, encourages racism and ethnic strife, undermines the rights of women and often precipitates countries into destructive confrontations between nationalities.

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In the former Soviet Union, directly resulting from the IMF's deadly "economic medicine" initiated in 1992, economic decline has surpassed the plunge in production experienced at the height of the Second World War, following the German occupation of Belarus and parts of the Ukraine in 1941 and the extensive bombing of Soviet industrial infrastructure. From a situation of full employment and relative price stability in the 1970s and 1980s, inflation has skyrocketed, real earnings and employment have collapsed and health programmes have been phased out.

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During the Reagan-Thatcher era, harsh austerity measures resulted in the gradual disintegration of the Welfare State. The economic stabilization measures ... contributed to depressing the earnings of working people and weakening the role of the state. Since the 1990s, the economic therapy applied in the developed countries contains many of the essential ingredients of the structural adjustment programmes imposed by the IMF and the World Bank in the Third World and Eastern Europe.

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Since the 1990s, the economic therapy applied in the developed countries contains many of the essential ingredients of the structural adjustment programmes imposed by the IMF and the World Bank in the Third World and Eastern Europe.

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During the Reagan-Thatcher era, harsh austerity measures resulted in the gradual disintegration of the Welfare State. The economic stabilization measures ... contributed to depressing the earnings of working people and weakening the role of the state.

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The accumulation of large public debts in Western countries has provided the financial elites with political leverage as well as the power to dictate government economic and social policy. Under the sway of neoliberalism, public expenditures are trimmed and social welfare programs are undone. State policies promote the deregulation of the labor market: deindexation of earnings, part-time employment, early retirement and then imposition of so-called "voluntary" wage cuts.

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The rules of personnel management in the United States are: "bust the unions, pit older workers against younger, call in the scabs, slash wages and cut company paid medical insurance".

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Since the 1980s, a large share of the labor force in the United States has been driven out of high pay unionized jobs into low pay minimum wage jobs. Thirdworldization of Western cities ... is, in many respects, comparable to that of the Third World.

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The environment of major metropolitan areas is marked by social apartheid: the urban landscape is compartmentalized along social and ethnic lines. In turn, the state has become increasingly repressive in managing social dissent and curbing civil unrest.

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The achievements of the early post-war period [World War I] have largely been reversed through the derogation of unemployment insurance schemes and the privatization of pension funds. Schools and hospitals are being closed down creating conditions for the outright privatization of social services.

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In Latin America and Eastern Europe, criminal syndicates have invested in the acquisition of state assets under the IMF-World Bank sponsored privatization programmes According to the United Nations, total worldwide revenues of the "transnational criminal organizations" (TCOs) are of the order of one trillion dollars, representing an amount equivalent to the combined G DP of the group of low income countries (with a population of 3 billion people). The United Nations estimate includes the trade in narcotics, arms sales, smuggling of nuclear materials, etc. as well as the earnings derived from the Mafia-controlled services economy (e.g. prostitution, gambling, exchange banks, etc..

... In Latin America and Eastern Europe, criminal syndicates have invested in the acquisition of state assets under the IMF-World Bank sponsored privatization programmes.

... Criminal groups routinely collaborate with legal business enterprises investing in a variety of "legitimate" activities, which provide not only a cover for the laundering of dirty money but also a convenient procedure for accumulating wealth outside the realm of the criminal economy.

... According to one observer [Daniel Brandt, "Organized Crime Threatens the New World Order", Namebase Newsline, Ohio, no 8, January-March 1995],"organized crime groups outperform most Fortune 500 companies... with organizations that resemble General Motors more than they resemble the traditional Sicilian Mafia".

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A political consensus has developed; governments throughout the world have unequivocally embraced the neoliberal policy agenda. The same economic prescriptions are applied worldwide. Under the jurisdiction of the IMF, the World Bank and the WTO, the reforms create an "enabling environment" for global banks and multinational corporations.

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The IMF, the World Bank and the WTO are mere bureaucracies. They are regulatory bodies operating under an intergovernmental umbrella and acting on behalf of powerful economic and financial interests. Wall Street bankers and the heads of the world's largest business conglomerates are indelibly behind these global institutions.

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"Semi-secret" organizations - which play an important role in shaping the institutions of the New World Order - include the Trilateral Commission, the Bildebergers and the Council on Foreign Relations.

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[The] new international economic order feeds on human poverty and cheap labor: high levels of national unemployment in both developed and developing countries have contributed to depressing real wages. Unemployment has been internationalized, with capital migrating from one country to another in a perpetual search for cheaper supplies of labor.

... World unemployment operates as a lever which regulates labor costs at a world level: the abundant supplies of cheap labor in the Third World and the former Eastern Bloc contribute to depressing wages in the developed countries.

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Merrill Lynch, conservatively estimates the wealth of private individuals managed through private banking accounts in offshore tax havens at $ 3.3 trillion. The IMF puts the offshore assets of corporations and individuals at $ 5.5 trillion, a sum equivalent to 25 percent of total world income. The largely ill-gotten loot of Third World elites in numbered accounts was estimated in the 1990s at $ 600 billion, with one third of that held in Switzerland.

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The tendency is towards overproduction on an unprecedented scale. Corporate expansion can only take place through the concurrent disengagement of idle productive capacity, namely through the bankruptcy and liquidation of "surplus enterprises". The latter are closed down in favor of the most advanced mechanized production: entire branches of industry stand idle, the economy of entire regions is affected, and only a part of the world's agricultural potential is utilized.

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[The] global oversupply of commodities is a direct consequence of the decline in purchasing power and rising levels of poverty.

... Oversupply contributes in turn to further depressing the earnings of the direct producers through the closure of excess productive capacity... Since the early 1980s, overproduction of commodities leading to plummeting (real) commodity prices has wreaked havoc particularly among Third World primary producers, but also in the area of manufacturing.

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In developing countries, entire branches of industry producing for the internal market are driven into bankruptcy on the orders of the World Bank and the IMF. The informal urban sector - which historically has played an important role as a source of employment creation - has been undermined as a result of currency devaluations, the liberalization of imports and commodity dumping.

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The world's largest corporations have experienced unprecedented growth and expansion of their share of the global market. This process, however, has largely taken place through the displacement of pre-existing productive systems - i.e. at the expense of local-level, regional and national producers.

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Survival of the fittest: enterprises with the most advanced technologies or those with command over the lowest wages survive in a world economy marked by overproduction.

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At the local level, small and medium sized enterprises are pushed into bankruptcy or obliged to produce for a global distributor. In turn, large multinational companies have taken control of local-level markets through the system of corporate franchising. This process enables large corporate capital (the franchiser) to gain control over human resources, cheap labor and entrepreneurship. A large share of the earnings of small local level firms and/or retailers is thereby appropriated by the global corporation.

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The imposition of macro-economic and trade reforms under the supervision of the IMF, World Bank and World Trade Organization (WTO) purports to "peacefully" recolonize countries through the deliberate manipulation of market forces. While not explicitly requiring the use of force, the ruthless enforcement of the economic reforms nonetheless constitutes a form of warfare.

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What happens to countries that refuse to "open up" to Western banks and MNCs [multinational corporations], as demanded by the World Trade Organization? The Western military-intelligence apparatus and its various bureaucracies routinely interface with the financial establishment. The IMF, the World Bank and the WTO - which police country level economic reforms - collaborate with NATO in its various "peacekeeping" endeavors.

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War and the "free market" go hand in hand... War physically destroys what has not been dismantled through deregulation, privatization and the imposition of "free market" reforms.

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The New World Order is based on the "false consensus" of Washington and Wall Street, which ordains the "free market system" as the only possible choice on the fated road to a "global prosperity". All political parties including Greens, Social Democrats and former Communists now share this consensus .

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The Western military and security apparatus endorses and supports dominant economic and financial interests - i.e. the build-up, as well as the exercise, of military might enforces "free trade... NATO coordinates its military operations with the World Bank and the IMF's policy interventions, and vice versa. Consistently, the security and defense bodies of the Western military alliance, together with the various civilian governmental and intergovernmental bureaucracies (e.g. IMF, World Bank, WTO) share a common understanding, ideological consensus and commitment to the New World Order.

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The global media fabricates the news and overtly distorts the course of events. This false consciousness" which pervades our societies, prevents critical debate and masks the truth.

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The only promise of the "free market" is a world of landless farmers, shuttered factories, jobless workers and gutted social programs with "bitter economic medicine" under the WTO and the IMF constituting the only prescription. We must restore the truth, disarm the controlled corporate media, reinstate sovereignty to our countries.

Globalization of Poverty and New World Order

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