In
the expanded second edition of Chossudovsky’s international
best-seller, the author outlines the contours of a New World Order
which feeds on human poverty and the destruction of the environment,
generates social apartheid, encourages racism and ethnic strife and
undermines the rights of women. The result as his detailed examples
from all parts of the world show so convincingly, is a globalization
of poverty.
This
book is a skillful combination of lucid explanation and cogently
argued critique of the fundamental directions in which our world is
moving financially and economically.
In
the enlarged second edition, the author reviews the causes and
consequences of famine in Sub-Saharan Africa, the dramatic meltdown
of financial markets, the demise of State social programs and the
devastation resulting from corporate downsizing and trade
liberalisation.
Preface
to the Second Edition
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”.
At
the time of the military coup, I was teaching at the Institute of
Economics of the Catholic University of Chile, which was a nest of
Chicago trained economists, disciples of Milton Friedman. On that
September 11, in the hours following the bombing of the Presidential
Palace of La Moneda, the new military rulers imposed a 72-hour
curfew. When the university reopened several days later, the “Chicago
Boys” were rejoicing. Barely a week later, several of my colleagues
at the Institute of Economics were appointed to key positions in the
military government.
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.
These
events affected me profoundly in my work as an economist. Through the
tampering of prices, wages and interest rates, people’s lives had
been destroyed; an entire national economy had been destabilized. I
started to understand that macro-economic reform was neither
“neutral” – as claimed by the academic mainstream – nor
separate from the broader process of social and political
transformation. In my earlier writings on the Chilean military Junta,
I looked upon the so-called “free market” as a well organized
instrument of “economic repression”.
Two
years later in 1976, I returned to Latin America as a visiting
professor at the National University of Cordoba in the northern
industrial heartland of Argentina. My stay coincided with another
military coup d’état. Tens of thousands of people were arrested
and the Desaparecidos were assassinated. The military takeover in
Argentina was a “carbon copy” of the CIA-led coup in Chile.
Behind the massacres and human rights violations, “free market”
reforms had also been prescribed – this time under the supervision
of Argentina’s New York creditors.
The
International Monetary Fund’s (IMF’s) deadly economic
prescriptions applied under the guise of the “structural adjustment
program” had not yet been officially launched. 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 country 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. From my earlier work in Chile, Argentina and Peru, I
started to investigate the global impacts of these reforms.
Relentlessly feeding on poverty and economic dislocation, a New World
Order was taking shape.
Meanwhile,
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. In 1990, I returned to the
Catholic University of Peru where I had taught after leaving Chile in
the months following the 1973 military coup.
I
had arrived in Lima at the height of the 1990 election campaign. The
country’s economy was in crisis. The outgoing populist government
of President Alan Garcia had been placed on the IMF “black list”.
President Alberto Fujimori became the new president on the 28th of
July 1990. And barely a few days later, “economic shock therapy”
struck – this time with a vengeance. 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. In
the 1980s and 1990s I traveled extensively in Africa. The
field research for the first edition was, in fact, initiated in Rwanda
which, despite high levels of poverty, had achieved self-sufficiency
in food production. 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
surpluses. The objective was to “encourage Rwandan farmers to be
more competitive”. (See Chapter 7.)
From
1992 to 1995, I undertook field research in India, Bangladesh and
Vietnam and returned to Latin America to complete my study on Brazil.
In all the countries I visited, including Kenya, Nigeria, Egypt,
Morocco and The Philippines, I observed the same pattern of economic
manipulation and political interference by the Washington-based
institutions. In India, directly resulting from the IMF reforms,
millions of people had been driven into starvation. In Vietnam –
which constitutes among the world’s most prosperous rice producing
economies – local-level famines had erupted resulting directly from
the lifting of price controls and the deregulation of the grain
market.
Coinciding
with the end of the Cold War, at the height of the economic crisis, I
traveled to several cities and rural areas in Russia. The
IMF sponsored reforms had entered a new phase – extending their
deadly grip to the countries of the former Eastern bloc. Starting in
1992, vast areas of the former Soviet Union, from the Baltic states
to Eastern Siberia, were pushed into abysmal poverty.
Work
on the first edition was completed in early 1996, with the inclusion
of a detailed study on the economic disintegration of Yugoslavia.
(See Chapter 17.) Devised by World Bank economists, a “bankruptcy
program” had been set in motion. In 1989-90, some 1100 industrial
firms were wiped out and more than 614,000 industrial workers were
laid off. And that was only the beginning of a much deeper economic
fracturing of the Yugoslav Federation.
Since
the publication of the first edition in 1997, the World has changed
dramatically; the “globalization of poverty” has extended its
grip to all major regions of the World including Western Europe and
North America.
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.
The
US-led wars on Afghanistan (2001) and Iraq (2003), mark an important
turning point in this evolving New World Order. As the second edition
goes to print, American and British forces have invaded Iraq,
destroying its public infrastructure and killing thousands of
civilians. After 13 years of economic sanctions, the war on Iraq
plunged an entire population into poverty.
War
and globalization go hand in hand. Supported by America’s war
machine, a new deadly phase of corporate-led globalization has
unfolded. In the largest display of military might since the Second
World War, the United States has embarked upon a military adventure,
which threatens the future of humanity.
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.
This
war, which has been in the planning stage for several years,
threatens to engulf a much broader region. A 1995 US Central Command
document confirms that “the purpose of US engagement. . . is to
protect US vital interest in the region – uninterrupted, secure
US/Allied access to Gulf oil” .
In
the wake of the invasion, Iraq’s economy has been put under the
jurisidiction of the US military occupation government led by retired
General Jay Gardner, a former CEO of one of America’s largest
weapons producers.
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. (See Chapter 17.) 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.
Global
Depression
The
onslaught of the US-led war is occurring at the height of a global
economic depression, which has its historical roots in the debt
crisis of the early 1980s. America’s war of conquest has a direct
bearing on the economic crisis. 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.
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).
Moreover,
in the US, Great Britain and most countries of the European Union,
the legal fabric of society has been overhauled. Based on the repeal
of the Rule of Law, the foundations of an authoritarian state
apparatus have emerged with little or no organized opposition from
the mainstay of civil society.
The
new chapters added to this second edition address some of the key
issues of the 21st century : 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.
In
Part 1, a new Introduction and a chapter entitled “Global
Falsehoods” have been added. Also in Part 1, the impacts of “free
markets” on women’s rights are examined. In Part II, on
sub-Saharan Africa, the chapter on Rwanda has been expanded and
updated following fieldwork conducted in 1996 and 1997. Two new
chapters, respectively, on the 1999- 2000 famine in Ethiopia and on
Southern Africa in the post-Apartheid era have been added. The
chapter on Albania in Part 5, focuses on the role of the IMF in
destroying the real economy and precipitating the breakdown of the
country’s banking system.
A
new Part 6 entitled “The New World Order” includes five chapters.
Chapter 18 centers on the “structural adjustment program” applied
in Western countries under the surveillance of the World’s largest
commercial and merchant banks. The ongoing economic and financial
crisis is reviewed in Chapters 19 and 20. Chapters 21 and 22 examine,
respectively, the fate of South Korea and Brazil in the wake of the
1997-1998 financial meltdown, as well as the complicity of the IMF in
furthering the interests of currency and stock market speculators.
Source: Global Research