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by | Dec 13, 2001 | Archives

A reader begs me to confirm that this article is not true.. I regret….

Dear International Friend,

Wind lashed rain slides in sheets across wet pavement onto tires that whine in a damp melancholy song. London is the City of Cities, so many millions, a congestion of centuries, cultures and history spread over so many square miles. Having lived here for so many years this feels like a second home, memories of damp feet, warmed by the hum of a big black box of a taxi's fan and oily diesel rattle.

Merri and I are in London visiting our daughters, Francesca and Eleanor, for some pre-Christmas shopping. Walking, hiding from the rain in cozy tea shops and cafes, fighting traffic, crowds and soaking up the megapolis spirit.

While there I read one of my favorite papers, The Observer. One writer for this paper is Greg Palast who is the subject of a message recently sent to me from one of our readers who wrote:

“Please read this one email. I believe someone in your position shouldreally know about this and if you can say it is not true, I would be happyto hear it. Elaine”

My reply? Elaine, regrettably the story below was written by Gregory Palast and reflects information that is true.

Gregory Palast, an American journalist, abandoned his native land of America when the mainstream press declined to publish his ground breaking, hard-hitting exposes, known for stripping bare abuses of power. The Mirror calls him “The Liar” and Prime Minister Tony Blair says his reports contain, “Not one shred of evidence.” Gregory Palast's undercover investigations of corruption within the Blair Government for Britain's Observer have made him, “New Labor's Public Enemy Number One” (Harper & Queen). Nevertheless, Palast has won the Financial Times David Thomas Prize (1997), investigative story of the Year (1998, Indus. Society), was nominated by the UK Press Association as Business Writer of the Year (1999), and for 2000, selected his report on the US elections as political story of the year.

Palast has begun a series of investigative reports for BBC-TV's premier news broadcast where, as “Newsnight's own Sam Spade,” he is required to wear a trilby and a raincoat that look like something cast off by Lt. Columbo. Palast's column, “Inside Corporate America” appears fortnightly in The Observer (UK), Foro Prohibido (Bolivia, in Spanish) and the Sunday Times (S. Africa).

In the US, Palast directed government investigations of fraud and racketeering, including the successful civil prosecution of the builders of the Shoreham nuclear plant (New York) and, for the Chugach Natives of Alaska, investigation of fraud in the grounding of the Exxon Valdez.As an advisor to trade unions in Latin America, Palast helped found three organizations to protect the rights of utility workers and consumers (in Chicago, Brazil and Britain). His lectures on public control of private industry (University of Sao Paolo, London School of Economics, Cambridge University Department of Applied Economics) form the basis of his book, REGULATION AND DEMOCRACY, to be published this year by the United Nations International Labor Organization.

Here is why Greg's report makes so much sense. In 1998, on the thirtieth anniversary of my international career, we issued a special report reviewing the global economy over the last thirty years. That report noted how the driving conflict of this era had been communism versus capitalism. After the Cold War ended, the new drive became the struggle between rich and the poor. The rich versus poor within nations and the rich nations versus the poor. The institutions that fought this war on behalf of the Western World were the IMF, World Bank and the Breton Woods Agreement which essentially tried to mold every nation into a capitalistic democracy of the US.

The two problems the report noted were first that the world did not have infinite resources and could not support every nation operating in the model. We do not have enough wood, timber, air and gas so everyone can have two cars, three TVs. A house, two computers and all the other junk so many of us carry around. In other words, the Western world is selling (and coercing) the globe on a goal it cannot currently have.

The second problem is even worse. The model does not work. The Western world is not a happier place because of its material success. Suicides are not down. Illness has not gone away. Life spans have not leaped. Quality of life, happiness, joy bliss is not growing. We are not reducing our enemies and increasing our friends!

That's the downside. But do not despair!!! Good is coming from this because the old models that are being replaced were not good either and as all this muddle takes place, the energy of the dream society is growing. Plus in the industrialized world the death of demand is taking place. This why making do and flexibility is so important.

We can through our international businesses help make the world a better place, at least a little, in spite of this broken system. Time and the resiliency of nature and humanity will take care of the rest.

Here is the article Palast wrote:


How crises, failures, and suffering finally drove a Presidentialadviser to the wrong side of the barricades. Gregory Palast-The Observer

It was like a scene out of Le Carré: the brilliant agent comes infrom the cold and, in hours of debriefing, empties his memory of horrors committedin the name of an ideology gone rotten.

But this was a far bigger catch than some used-up Cold War spy. Theformer apparatchik was Joseph Stiglitz, ex-chief economist of the WorldBank. The new world economic order was his theory come to life.

He was in Washington for the big confab of the World Bank andInternational Monetary Fund. But instead of chairing meetings of ministers andcentral bankers, he was outside the police cordons. The World Bank firedStiglitz two years ago. He was not allowed a quiet retirement: he wasexcommunicated purely for expressing mild dissent from globalisation World Bank-style.

Here in Washington we conducted exclusive interviews with Stiglitz,for The Observer and Newsnight, about the inside workings of the IMF, theWorld Bank and the bank's 51% owner, the US Treasury.

And here, from sources unnamable (not Stiglitz), we obtained a cache ofdocuments marked, 'confidential' and 'restricted'.

Stiglitz helped translate one, a 'country assistance strategy'.There's an assistance strategy for every poorer nation, designed, says theWorld Bank, after careful in-country investigation.

But according to insider Stiglitz, the Bank's 'investigation'involves little more than close inspection of five-star hotels. It concludes with ameeting with a begging finance minister, who is handed a 'restructuring agreement'pre-drafted for 'voluntary' signature.

Each nation's economy is analysed, says Stiglitz, then the Bankhands every minister the same four-step programme.

Step One is privatisation. Stiglitz said that rather than objectingto the sell-offs of state industries, some politicians – using the WorldBank's demands to silence local critics – happily flogged their electricity and watercompanies. 'You could see their eyes widen' at the possibility ofcommissions for shaving a few billion off the sale price.

And the US government knew it, charges Stiglitz, at least in thecase of the biggest privatisation of all, the 1995 Russian sell-off. 'The USTreasury view was: “This was great, as we wanted Yeltsin re-elected. We DON'T CARE if it's a corrupt election.” '

Stiglitz cannot simply be dismissed as a conspiracy nutter. The manwas inside the game – a member of Bill Clinton's cabinet, chairman of thePresident's council of economic advisers.

Most sick-making for Stiglitz is that the US-backed oligarchsstripped Russia's industrial assets, with the effect that national output was cutnearly in half.

After privatisation, Step Two is capital market liberalisation. Intheory this allows investment capital to flow in and out. Unfortunately, as inIndonesia and Brazil, the money often simply flows out.

Stiglitz calls this the 'hot money' cycle. Cash comes in forspeculation in real estate and currency, then flees at the first whiff of trouble. Anation's reserves can drain in days.

And when that happens, to seduce speculators into returning anation's own capital funds, the IMF demands these nations raise interest rates to30%, 50% and 80%.

'The result was predictable,' said Stiglitz. Higher interest ratesdemolish property values, savage industrial production and drain nationaltreasuries.

At this point, according to Stiglitz, the IMF drags the gaspingnation to Step Three: market-based pricing – a fancy term for raising prices onfood, water and cooking gas. This leads, predictably, to Step-Three-and-a-Half: whatStiglitz calls 'the IMF riot'.

The IMF riot is painfully predictable. When a nation is, 'down andout, [the IMF] squeezes the last drop of blood out of them. They turn up theheat until, finally, the whole cauldron blows up,' – as when the IMF eliminatedfood and fuel subsidies for the poor in Indonesia in 1998. Indonesia explodedinto riots.

There are other examples – the Bolivian riots over water prices lastyear and, this February, the riots in Ecuador over the rise in cooking gasprices imposed by the World Bank. You'd almost believe the riot was expected.

And it is. What Stiglitz did not know is that Newsnight obtainedseveral documents from inside the World Bank. In one, last year's InterimCountry Assistance Strategy for Ecuador, the Bank several times suggests -with cold accuracy – that the plans could be expected to spark 'social unrest'.

That's not surprising. The secret report notes that the plan to makethe US dollar Ecuador's currency has pushed 51% of the population below thepoverty line.

The IMF riots (and by riots I mean peaceful demonstrations dispersedby bullets, tanks and tear gas) cause new flights of capital and governmentbankruptcies. This economic arson has its bright side – for foreigners, who canthen pick off remaining assets at fire sale prices.

A pattern emerges. There are lots of losers but the clear winnersseem to be the western banks and US Treasury.

Now we arrive at Step Four: free trade. This is free trade by therules of the World Trade Organisation and the World Bank, which Stiglitz likensto the Opium Wars. 'That too was about “opening markets”,' he said. As in thenineteenth century, Europeans and Americans today are kicking down barriers tosales in Asia, Latin American and Africa while barricading our own marketsagainst the Third World 's agriculture.

In the Opium Wars, the West used military blockades. Today, theWorld Bank canorder a financial blockade, which is just as effective and sometimesjust as deadly.

Stiglitz has two concerns about the IMF/World Bank plans. First, hesays, because the plans are devised in secrecy and driven by an absolutistideology, never open for discourse or dissent, they 'undermine democracy'.Second, they don't work. Under the guiding hand of IMF structural 'assistance'Africa's income dropped by 23%.

Did any nation avoid this fate? Yes, said Stiglitz, Botswana. Theirtrick? 'They told the IMF to go packing.' Stiglitz proposes radical land reform: an attack on the 50% crop rents charged by the propertied oligarchies worldwide.

Why didn't the World Bank and IMF follow his advice?

'If you challenge [land ownership], that would be a change in thepower of the elites. That's not high on their agenda.'

Ultimately, what drove him to put his job on the line was thefailure of the banks and US Treasury to change course when confronted with the crises,failures, and suffering perpetrated by their four-step monetarist mambo.

'It's a little like the Middle Ages,' says the economist, 'When thepatient died they would say well, we stopped the bloodletting too soon, he stillhad a little blood in him.'

Maybe it's time to remove the bloodsuckers.

Ø can still view BBC TV's, THEFT OF THE PRESIDENCY, at BBC Newsnight;

Read A BLACKLIST BURNING FOR BUSH The (London) Observer;,3858,4103063,00.html



US media failures at SILENCE OF THE LAMBS;

and on Bush family finances: BEST DEMOCRACY MONEY CAN BUY;