The IMF after DSK

The IMF after DSK

Sunday 22 May 2011

by: Mark Weisbrot, Center for Economic and Policy Research

Dominique Strauss-Kahn, the leader of the International Monetary Fund, appears in court for an arraignment over allegations that he had sexually assaulted a maid in New York, May 16, 2011. On Wednesday, May 18, 2011, Strauss-Kahn resigned as head of the IMF while denying any wrongdoing. (Photo: Michael Appleton / The New York Times)

Now that Dominique Strauss-Kahn has re­sig­ned from his posi­tion as man­ag­ing di­rec­tor of the In­ter­nation­al Moneta­ry Fund (IMF), it is worth tak­ing an ob­jec­tive look at his lega­cy there. Until his ar­rest last week on char­ges of at­tempted rape and sexu­al as­sault, he was wide­ly praised as hav­ing chan­ged the IMF, in­creased its in­flu­ence and moved it away from the poli­cies that – ac­cord­ing to the fund's critics – had caused so many pro­blems for de­velop­ing co­unt­ries in the past. How much of this is true?

Strauss-Kahn took the helm of the IMF in Novemb­er of 2007, when the IMF's in­flu­ence was at a low point. Total outstand­ing loans at that time were just $10bn, down from $91bn just four years ear­li­er. By the time he left this week, that numb­er had boun­ced back to $84bn, with agreed-upon loans three times larg­er. The IMF's total capit­al had quad­rupled, from about $250bn to an un­preceden­ted $1tn. Clear­ly, the IMF had re­sour­ces that it had never had be­fore, most­ly as a re­sult of the fin­an­ci­al crisis and world re­cess­ion of 2008-2009.

Howev­er, the de­tails of these chan­ges are im­por­tant. First, the col­lap­se of the IMF's in­flu­ence in the de­cade prior to 2007 was one of the most im­por­tant chan­ges in the in­ter­nation­al fin­an­ci­al sys­tem since the break­down of the Bret­ton Woods sys­tem of fixed ex­chan­ge rates in 1971. Prior to the 2000s, the IMF headed up a power­ful creditors' car­tel that was able to tell many de­velop­ing co­unt­ry govern­ments what their most im­por­tant economic poli­cies would be, under the threat of being de­nied credit not only from the fund but also from other, then larg­er lend­ers such as the World Bank, re­gion­al lend­ers and some­times even the private sec­tor. This made the fund not only the most im­por­tant avenue of in­flu­ence of the US govern­ment in low- and middle-income co­unt­ries – from Rwan­da to Rus­sia – but also the most im­por­tant pro­mot­er of neoliber­al economic "re­forms" that trans­for­med the world economy from the mid 1970s on­ward. These re­forms co­in­cided with a sharp slow­down of economic growth in the vast major­ity of low- and middle-income co­unt­ries for more than 20 years, with con­sequent­ly re­duced pro­gress on soci­al in­dicators such as life ex­pec­tan­cy and in­fant and child mor­tal­ity.

The IMF's big com­eback dur­ing the world re­cess­ion did not bring the middle-income co­unt­ries that had run away from it back to its orbit. Most of the middle-income co­unt­ries of Asia, Rus­sia, as well as Latin America, stayed away, most­ly by pil­ing up suf­ficient re­ser­ves so that they did not have to bor­row from the fund, even dur­ing the crisis. As a re­sult, even a low-income co­unt­ry like Bolivia, for ex­am­ple, was able to re­national­ise its hy­drocar­bon in­dust­ry, in­crease soci­al spend­ing and pub­lic in­vest­ment, and lower its re­tire­ment age from 65 to 58 – th­ings it could never do while it was li­v­ing under IMF ag­ree­ments con­tinuous­ly for 20 years prior. Most of the IMF's new in­flu­ence and lend­ing would land in Europe, which ac­counts for about 57% of its cur­rent outstand­ing loans.

As for chan­ges in IMF poli­cy, these have been re­lative­ly small. A re­view of 41 IMF ag­ree­ments made dur­ing the world fin­an­ci­al crisis and re­cess­ion found that 31 of them con­tained "pro-cyclical" poli­cies: that is, fisc­al or moneta­ry poli­cies that would be ex­pec­ted to furth­er slow the economy. And in Europe, where the IMF has most of its lend­ing, the poli­cies at­tached to the loan ag­ree­ments for Greece, Ir­eland and Por­tug­al are de­cided­ly pro-cyclical – mak­ing it ex­treme­ly dif­ficult for these econom­ies to get out of re­cess­ion. The IMF's in­flu­ence on Spain, which does not yet have a loan ag­ree­ment, is similar. And in Lat­via, the IMF pre­sided over an Argentine-style re­cess­ion that set a world his­tor­ical re­cord for the worst two-year loss of out­put (about 25%) – a com­plete dis­ast­er.

To be fair, some chan­ges at the fund dur­ing the tenure of Strauss-Kahn were sig­nificant. For the first time ever, dur­ing the world re­cess­ion of 2009, the IMF made avail­able some $283bn-worth of re­ser­ves for all mem­b­er co­unt­ries, with no poli­cy con­di­tions at­tached. The fund also made some li­mited credit avail­able with­out con­di­tions, though only to a few co­unt­ries. The bi­ggest chan­ges were in the re­search de­part­ment, where there was toleran­ce for more open de­bate. For ex­am­ple, there were IMF pap­ers that end­or­sed the use of capit­al con­trols by de­velop­ing co­unt­ries under some cir­cumstan­ces, and ques­tion­ing wheth­er centr­al banks were un­neces­sari­ly slow­ing growth with in­fla­tion tar­gets that may be too low.

But as can be seen from what is hap­pen­ing in the per­ip­her­al Eurozone co­unt­ries, the IMF is still play­ing its tradition­al role of apply­ing the mediev­al economic medicine of "bleed­ing the patient". To be fair to both Strauss-Kahn and the fund, neith­er the man­ag­ing di­rec­tor nor an­yone else at the IMF is ul­timate­ly in sole char­ge of poli­cy, es­pecial­ly with re­spect to co­unt­ries that are im­por­tant to the peo­ple who rea­l­ly run the in­stitu­tion. The IMF is run by its gover­nors and ex­ecutive di­rec­tors, of whom the over­whel­ming­ly dominant aut­horit­ies are the US treasu­ry de­part­ment, which in­cludes heavy re­presen­ta­tion from Goldman Sachs, and, secon­dari­ly, the European pow­ers.

Until decision-making at the IMF un­der­goes a dramatic chan­ge, we can ex­pect only very small chan­ges in IMF poli­cy. This can be seen most clear­ly in the cur­rent case of Greece: Strauss-Kahn was aware that the fisc­al tighten­ing or­dered by the European aut­horit­ies and the IMF waspre­vent­ing Greece from gett­ing out of re­cess­ion; but while he pus­hed for "soft­er" con­di­tions, he was power­less to chan­ge the lend­ing con­di­tions from punish­ment to ac­tu­al help. That's ul­timate­ly be­cause the European aut­horit­ies (European Com­miss­ion and European Centr­al Bank), not the IMF, are call­ing the shots – al­though Strauss-Kahn en­coun­tered plen­ty of re­sis­tance with­in the fund it­self, too.

The vot­ing shares of the IMF have chan­ged only mar­ginal­ly, de­spite all the re­forms of the last five years. The share of "em­erg­ing mar­ket and de­velop­ing co­unt­ries" – with the vast major­ity of the world's popula­tion – has gone from 39.4% to 44.7%, while the G7 co­unt­ries have 41.2%, in­clud­ing 16.5% for the US (down from 17.0% pre-reform).

But the vot­ing and gover­nance struc­ture is not cur­rent­ly the main ob­stac­le to chang­ing IMF poli­cy. At this point, the de­velop­ing co­unt­ries – and we should add in the vic­timised co­unt­ries of the eurozone – are not using their poten­ti­al in­flu­ence with­in the fund. Their re­presen­tatives are main­ly going along with the de­cis­ions of the G7. If any numb­er of these co­unt­ries were to band togeth­er in a size­able bloc for chan­ge with­in the fund, there could be some real re­forms at the IMF.

Such an out­come can be seen from the last de­cade of struggle with­in the World Trade Or­ganisa­tion, where de­velop­ing co­unt­ries have often not ac­cepted the G7 con­sen­sus, and have suc­cessful­ly bloc­ked the negotia­tion and im­plemen­ta­tion of rules that would hurt them – de­spite the fact that the WTO rules have been, from the out­set, stac­ked against de­velop­ing co­unt­ries. It is true that the WTO op­erates by con­sen­sus rath­er than a quota-based vot­ing struc­ture, but that is not the key dif­fer­ence bet­ween it and the IMF. The key dif­fer­ence is in the role of de­velop­ing co­unt­ries and their re­presen­tatives.

There is talk now of re­plac­ing Strauss-Kahn with an open, merit-based pro­cess of selec­tion, break­ing with the 67-year tradi­tion of re­serv­ing the posi­tion for a European – most often, a French – of­fici­al. At the mo­ment, such chan­ge does not ap­pear li­ke­ly to happ­en. It would be a step for­ward, but it would be only a sym­bolic chan­ge, and the odds are good that the next man­ag­ing di­rec­tor – of whatev­er national­ity – will be to the right of Strauss-Kahn. Real chan­ge at the IMF is in the hands of the govern­ments of most of the world – but only if they dare to or­gan­ise it.

This ar­ticle original­ly ap­peared in the Guar­dian UK.

The IMF after DSK

Sunday 22 May 2011

by: Mark Weisbrot, Center for Economic and Policy Research

Dominique Strauss-Kahn, the leader of the International Monetary Fund, appears in court for an arraignment over allegations that he had sexually assaulted a maid in New York, May 16, 2011. On Wednesday, May 18, 2011, Strauss-Kahn resigned as head of the IMF while denying any wrongdoing. (Photo: Michael Appleton / The New York Times)

Now that Dominique Strauss-Kahn has resigned from his position as managing director of the International Monetary Fund (IMF), it is worth taking an objective look at his legacy there. Until his arrest last week on charges of attempted rape and sexual assault, he was widely praised as having changed the IMF, increased its influence and moved it away from the policies that – according to the fund's critics – had caused so many problems for developing countries in the past. How much of this is true?

Strauss-Kahn took the helm of the IMF in November of 2007, when the IMF's influence was at a low point. Total outstanding loans at that time were just $10bn, down from $91bn just four years earlier. By the time he left this week, that number had bounced back to $84bn, with agreed-upon loans three times larger. The IMF's total capital had quadrupled, from about $250bn to an unprecedented $1tn. Clearly, the IMF had resources that it had never had before, mostly as a result of the financial crisis and world recession of 2008-2009.

However, the details of these changes are important. First, the collapse of the IMF's influence in the decade prior to 2007 was one of the most important changes in the international financial system since the breakdown of the Bretton Woods system of fixed exchange rates in 1971. Prior to the 2000s, the IMF headed up a powerful creditors' cartel that was able to tell many developing country governments what their most important economic policies would be, under the threat of being denied credit not only from the fund but also from other, then larger lenders such as the World Bank, regional lenders and sometimes even the private sector. This made the fund not only the most important avenue of influence of the US government in low- and middle-income countries – from Rwanda to Russia – but also the most important promoter of neoliberal economic "reforms" that transformed the world economy from the mid 1970s onward. These reforms coincided with a sharp slowdown of economic growth in the vast majority of low- and middle-income countries for more than 20 years, with consequently reduced progress on social indicators such as life expectancy and infant and child mortality.

The IMF's big comeback during the world recession did not bring the middle-income countries that had run away from it back to its orbit. Most of the middle-income countries of Asia, Russia, as well as Latin America, stayed away, mostly by piling up sufficient reserves so that they did not have to borrow from the fund, even during the crisis. As a result, even a low-income country like Bolivia, for example, was able to renationalise its hydrocarbon industry, increase social spending and public investment, and lower its retirement age from 65 to 58 – things it could never do while it was living under IMF agreements continuously for 20 years prior. Most of the IMF's new influence and lending would land in Europe, which accounts for about 57% of its current outstanding loans.

As for changes in IMF policy, these have been relatively small. A review of 41 IMF agreements made during the world financial crisis and recession found that 31 of them contained "pro-cyclical" policies: that is, fiscal or monetary policies that would be expected to further slow the economy. And in Europe, where the IMF has most of its lending, the policies attached to the loan agreements for Greece, Ireland and Portugal are decidedly pro-cyclical – making it extremely difficult for these economies to get out of recession. The IMF's influence on Spain, which does not yet have a loan agreement, is similar. And in Latvia, the IMF presided over an Argentine-style recession that set a world historical record for the worst two-year loss of output (about 25%) – a complete disaster.

To be fair, some changes at the fund during the tenure of Strauss-Kahn were significant. For the first time ever, during the world recession of 2009, the IMF made available some $283bn-worth of reserves for all member countries, with no policy conditions attached. The fund also made some limited credit available without conditions, though only to a few countries. The biggest changes were in the research department, where there was tolerance for more open debate. For example, there were IMF papers that endorsed the use of capital controls by developing countries under some circumstances, and questioning whether central banks were unnecessarily slowing growth with inflation targets that may be too low.

But as can be seen from what is happening in the peripheral Eurozone countries, the IMF is still playing its traditional role of applying the medieval economic medicine of "bleeding the patient". To be fair to both Strauss-Kahn and the fund, neither the managing director nor anyone else at the IMF is ultimately in sole charge of policy, especially with respect to countries that are important to the people who really run the institution. The IMF is run by its governors and executive directors, of whom the overwhelmingly dominant authorities are the US treasury department, which includes heavy representation from Goldman Sachs, and, secondarily, the European powers.

Until decision-making at the IMF undergoes a dramatic change, we can expect only very small changes in IMF policy. This can be seen most clearly in the current case of Greece: Strauss-Kahn was aware that the fiscal tightening ordered by the European authorities and the IMF waspreventing Greece from getting out of recession; but while he pushed for "softer" conditions, he was powerless to change the lending conditions from punishment to actual help. That's ultimately because the European authorities (European Commission and European Central Bank), not the IMF, are calling the shots – although Strauss-Kahn encountered plenty of resistance within the fund itself, too.

The voting shares of the IMF have changed only marginally, despite all the reforms of the last five years. The share of "emerging market and developing countries" – with the vast majority of the world's population – has gone from 39.4% to 44.7%, while the G7 countries have 41.2%, including 16.5% for the US (down from 17.0% pre-reform).

But the voting and governance structure is not currently the main obstacle to changing IMF policy. At this point, the developing countries – and we should add in the victimised countries of the eurozone – are not using their potential influence within the fund. Their representatives are mainly going along with the decisions of the G7. If any number of these countries were to band together in a sizeable bloc for change within the fund, there could be some real reforms at the IMF.

Such an outcome can be seen from the last decade of struggle within the World Trade Organisation, where developing countries have often not accepted the G7 consensus, and have successfully blocked the negotiation and implementation of rules that would hurt them – despite the fact that the WTO rules have been, from the outset, stacked against developing countries. It is true that the WTO operates by consensus rather than a quota-based voting structure, but that is not the key difference between it and the IMF. The key difference is in the role of developing countries and their representatives.

There is talk now of replacing Strauss-Kahn with an open, merit-based process of selection, breaking with the 67-year tradition of reserving the position for a European – most often, a French – official. At the moment, such change does not appear likely to happen. It would be a step forward, but it would be only a symbolic change, and the odds are good that the next managing director – of whatever nationality – will be to the right of Strauss-Kahn. Real change at the IMF is in the hands of the governments of most of the world – but only if they dare to organise it.

This article originally appeared in the Guardian UK.

The IMF after DSK

Sunday 22 May 2011

by: Mark Weisbrot, Center for Economic and Policy Research

Dominique Strauss-Kahn, the leader of the International Monetary Fund, appears in court for an arraignment over allegations that he had sexually assaulted a maid in New York, May 16, 2011. On Wednesday, May 18, 2011, Strauss-Kahn resigned as head of the IMF while denying any wrongdoing. (Photo: Michael Appleton / The New York Times)

Now that Dominique Strauss-Kahn has resigned from his position as managing director of the International Monetary Fund (IMF), it is worth taking an objective look at his legacy there. Until his arrest last week on charges of attempted rape and sexual assault, he was widely praised as having changed the IMF, increased its influence and moved it away from the policies that – according to the fund's critics – had caused so many problems for developing countries in the past. How much of this is true?

Strauss-Kahn took the helm of the IMF in November of 2007, when the IMF's influence was at a low point. Total outstanding loans at that time were just $10bn, down from $91bn just four years earlier. By the time he left this week, that number had bounced back to $84bn, with agreed-upon loans three times larger. The IMF's total capital had quadrupled, from about $250bn to an unprecedented $1tn. Clearly, the IMF had resources that it had never had before, mostly as a result of the financial crisis and world recession of 2008-2009.

However, the details of these changes are important. First, the collapse of the IMF's influence in the decade prior to 2007 was one of the most important changes in the international financial system since the breakdown of the Bretton Woods system of fixed exchange rates in 1971. Prior to the 2000s, the IMF headed up a powerful creditors' cartel that was able to tell many developing country governments what their most important economic policies would be, under the threat of being denied credit not only from the fund but also from other, then larger lenders such as the World Bank, regional lenders and sometimes even the private sector. This made the fund not only the most important avenue of influence of the US government in low- and middle-income countries – from Rwanda to Russia – but also the most important promoter of neoliberal economic "reforms" that transformed the world economy from the mid 1970s onward. These reforms coincided with a sharp slowdown of economic growth in the vast majority of low- and middle-income countries for more than 20 years, with consequently reduced progress on social indicators such as life expectancy and infant and child mortality.

The IMF's big comeback during the world recession did not bring the middle-income countries that had run away from it back to its orbit. Most of the middle-income countries of Asia, Russia, as well as Latin America, stayed away, mostly by piling up sufficient reserves so that they did not have to borrow from the fund, even during the crisis. As a result, even a low-income country like Bolivia, for example, was able to renationalise its hydrocarbon industry, increase social spending and public investment, and lower its retirement age from 65 to 58 – things it could never do while it was living under IMF agreements continuously for 20 years prior. Most of the IMF's new influence and lending would land in Europe, which accounts for about 57% of its current outstanding loans.

As for changes in IMF policy, these have been relatively small. A review of 41 IMF agreements made during the world financial crisis and recession found that 31 of them contained "pro-cyclical" policies: that is, fiscal or monetary policies that would be expected to further slow the economy. And in Europe, where the IMF has most of its lending, the policies attached to the loan agreements for Greece, Ireland and Portugal are decidedly pro-cyclical – making it extremely difficult for these economies to get out of recession. The IMF's influence on Spain, which does not yet have a loan agreement, is similar. And in Latvia, the IMF presided over an Argentine-style recession that set a world historical record for the worst two-year loss of output (about 25%) – a complete disaster.

To be fair, some changes at the fund during the tenure of Strauss-Kahn were significant. For the first time ever, during the world recession of 2009, the IMF made available some $283bn-worth of reserves for all member countries, with no policy conditions attached. The fund also made some limited credit available without conditions, though only to a few countries. The biggest changes were in the research department, where there was tolerance for more open debate. For example, there were IMF papers that endorsed the use of capital controls by developing countries under some circumstances, and questioning whether central banks were unnecessarily slowing growth with inflation targets that may be too low.

But as can be seen from what is happening in the peripheral Eurozone countries, the IMF is still playing its traditional role of applying the medieval economic medicine of "bleeding the patient". To be fair to both Strauss-Kahn and the fund, neither the managing director nor anyone else at the IMF is ultimately in sole charge of policy, especially with respect to countries that are important to the people who really run the institution. The IMF is run by its governors and executive directors, of whom the overwhelmingly dominant authorities are the US treasury department, which includes heavy representation from Goldman Sachs, and, secondarily, the European powers.

Until decision-making at the IMF undergoes a dramatic change, we can expect only very small changes in IMF policy. This can be seen most clearly in the current case of Greece: Strauss-Kahn was aware that the fiscal tightening ordered by the European authorities and the IMF waspreventing Greece from getting out of recession; but while he pushed for "softer" conditions, he was powerless to change the lending conditions from punishment to actual help. That's ultimately because the European authorities (European Commission and European Central Bank), not the IMF, are calling the shots – although Strauss-Kahn encountered plenty of resistance within the fund itself, too.

The voting shares of the IMF have changed only marginally, despite all the reforms of the last five years. The share of "emerging market and developing countries" – with the vast majority of the world's population – has gone from 39.4% to 44.7%, while the G7 countries have 41.2%, including 16.5% for the US (down from 17.0% pre-reform).

But the voting and governance structure is not currently the main obstacle to changing IMF policy. At this point, the developing countries – and we should add in the victimised countries of the eurozone – are not using their potential influence within the fund. Their representatives are mainly going along with the decisions of the G7. If any number of these countries were to band together in a sizeable bloc for change within the fund, there could be some real reforms at the IMF.

Such an outcome can be seen from the last decade of struggle within the World Trade Organisation, where developing countries have often not accepted the G7 consensus, and have successfully blocked the negotiation and implementation of rules that would hurt them – despite the fact that the WTO rules have been, from the outset, stacked against developing countries. It is true that the WTO operates by consensus rather than a quota-based voting structure, but that is not the key difference between it and the IMF. The key difference is in the role of developing countries and their representatives.

There is talk now of replacing Strauss-Kahn with an open, merit-based process of selection, breaking with the 67-year tradition of reserving the position for a European – most often, a French – official. At the moment, such change does not appear likely to happen. It would be a step forward, but it would be only a symbolic change, and the odds are good that the next managing director – of whatever nationality – will be to the right of Strauss-Kahn. Real change at the IMF is in the hands of the governments of most of the world – but only if they dare to organise it.

This article originally appeared in the Guardian UK.

The IMF after DSK

Sunday 22 May 2011

by: Mark Weisbrot, Center for Economic and Policy Research

Dominique Strauss-Kahn, the leader of the International Monetary Fund, appears in court for an arraignment over allegations that he had sexually assaulted a maid in New York, May 16, 2011. On Wednesday, May 18, 2011, Strauss-Kahn resigned as head of the IMF while denying any wrongdoing. (Photo: Michael Appleton / The New York Times)

Now that Dominique Strauss-Kahn has resigned from his position as managing director of the International Monetary Fund (IMF), it is worth taking an objective look at his legacy there. Until his arrest last week on charges of attempted rape and sexual assault, he was widely praised as having changed the IMF, increased its influence and moved it away from the policies that – according to the fund's critics – had caused so many problems for developing countries in the past. How much of this is true?

Strauss-Kahn took the helm of the IMF in November of 2007, when the IMF's influence was at a low point. Total outstanding loans at that time were just $10bn, down from $91bn just four years earlier. By the time he left this week, that number had bounced back to $84bn, with agreed-upon loans three times larger. The IMF's total capital had quadrupled, from about $250bn to an unprecedented $1tn. Clearly, the IMF had resources that it had never had before, mostly as a result of the financial crisis and world recession of 2008-2009.

However, the details of these changes are important. First, the collapse of the IMF's influence in the decade prior to 2007 was one of the most important changes in the international financial system since the breakdown of the Bretton Woods system of fixed exchange rates in 1971. Prior to the 2000s, the IMF headed up a powerful creditors' cartel that was able to tell many developing country governments what their most important economic policies would be, under the threat of being denied credit not only from the fund but also from other, then larger lenders such as the World Bank, regional lenders and sometimes even the private sector. This made the fund not only the most important avenue of influence of the US government in low- and middle-income countries – from Rwanda to Russia – but also the most important promoter of neoliberal economic "reforms" that transformed the world economy from the mid 1970s onward. These reforms coincided with a sharp slowdown of economic growth in the vast majority of low- and middle-income countries for more than 20 years, with consequently reduced progress on social indicators such as life expectancy and infant and child mortality.

The IMF's big comeback during the world recession did not bring the middle-income countries that had run away from it back to its orbit. Most of the middle-income countries of Asia, Russia, as well as Latin America, stayed away, mostly by piling up sufficient reserves so that they did not have to borrow from the fund, even during the crisis. As a result, even a low-income country like Bolivia, for example, was able to renationalise its hydrocarbon industry, increase social spending and public investment, and lower its retirement age from 65 to 58 – things it could never do while it was living under IMF agreements continuously for 20 years prior. Most of the IMF's new influence and lending would land in Europe, which accounts for about 57% of its current outstanding loans.

As for changes in IMF policy, these have been relatively small. A review of 41 IMF agreements made during the world financial crisis and recession found that 31 of them contained "pro-cyclical" policies: that is, fiscal or monetary policies that would be expected to further slow the economy. And in Europe, where the IMF has most of its lending, the policies attached to the loan agreements for Greece, Ireland and Portugal are decidedly pro-cyclical – making it extremely difficult for these economies to get out of recession. The IMF's influence on Spain, which does not yet have a loan agreement, is similar. And in Latvia, the IMF presided over an Argentine-style recession that set a world historical record for the worst two-year loss of output (about 25%) – a complete disaster.

To be fair, some changes at the fund during the tenure of Strauss-Kahn were significant. For the first time ever, during the world recession of 2009, the IMF made available some $283bn-worth of reserves for all member countries, with no policy conditions attached. The fund also made some limited credit available without conditions, though only to a few countries. The biggest changes were in the research department, where there was tolerance for more open debate. For example, there were IMF papers that endorsed the use of capital controls by developing countries under some circumstances, and questioning whether central banks were unnecessarily slowing growth with inflation targets that may be too low.

But as can be seen from what is happening in the peripheral Eurozone countries, the IMF is still playing its traditional role of applying the medieval economic medicine of "bleeding the patient". To be fair to both Strauss-Kahn and the fund, neither the managing director nor anyone else at the IMF is ultimately in sole charge of policy, especially with respect to countries that are important to the people who really run the institution. The IMF is run by its governors and executive directors, of whom the overwhelmingly dominant authorities are the US treasury department, which includes heavy representation from Goldman Sachs, and, secondarily, the European powers.

Until decision-making at the IMF undergoes a dramatic change, we can expect only very small changes in IMF policy. This can be seen most clearly in the current case of Greece: Strauss-Kahn was aware that the fiscal tightening ordered by the European authorities and the IMF waspreventing Greece from getting out of recession; but while he pushed for "softer" conditions, he was powerless to change the lending conditions from punishment to actual help. That's ultimately because the European authorities (European Commission and European Central Bank), not the IMF, are calling the shots – although Strauss-Kahn encountered plenty of resistance within the fund itself, too.

The voting shares of the IMF have changed only marginally, despite all the reforms of the last five years. The share of "emerging market and developing countries" – with the vast majority of the world's population – has gone from 39.4% to 44.7%, while the G7 countries have 41.2%, including 16.5% for the US (down from 17.0% pre-reform).

But the voting and governance structure is not currently the main obstacle to changing IMF policy. At this point, the developing countries – and we should add in the victimised countries of the eurozone – are not using their potential influence within the fund. Their representatives are mainly going along with the decisions of the G7. If any number of these countries were to band together in a sizeable bloc for change within the fund, there could be some real reforms at the IMF.

Such an outcome can be seen from the last decade of struggle within the World Trade Organisation, where developing countries have often not accepted the G7 consensus, and have successfully blocked the negotiation and implementation of rules that would hurt them – despite the fact that the WTO rules have been, from the outset, stacked against developing countries. It is true that the WTO operates by consensus rather than a quota-based voting structure, but that is not the key difference between it and the IMF. The key difference is in the role of developing countries and their representatives.

There is talk now of replacing Strauss-Kahn with an open, merit-based process of selection, breaking with the 67-year tradition of reserving the position for a European – most often, a French – official. At the moment, such change does not appear likely to happen. It would be a step forward, but it would be only a symbolic change, and the odds are good that the next managing director – of whatever nationality – will be to the right of Strauss-Kahn. Real change at the IMF is in the hands of the governments of most of the world – but only if they dare to organise it.

This article originally appeared in the Guardian UK.

The IMF after DSK

The IMF after DSK

The IMF after DSK

Sunday 22 May 2011

by: Mark Weisbrot, Center for Economic and Policy Research

Dominique Strauss-Kahn, the leader of the International Monetary Fund, appears in court for an arraignment over allegations that he had sexually assaulted a maid in New York, May 16, 2011. On Wednesday, May 18, 2011, Strauss-Kahn resigned as head of the IMF while denying any wrongdoing. (Photo: Michael Appleton / The New York Times)

Now that Dominique Strauss-Kahn has resigned from his position as managing director of the International Monetary Fund (IMF), it is worth taking an objective look at his legacy there. Until his arrest last week on charges of attempted rape and sexual assault, he was widely praised as having changed the IMF, increased its influence and moved it away from the policies that – according to the fund's critics – had caused so many problems for developing countries in the past. How much of this is true?

Strauss-Kahn took the helm of the IMF in November of 2007, when the IMF's influence was at a low point. Total outstanding loans at that time were just $10bn, down from $91bn just four years earlier. By the time he left this week, that number had bounced back to $84bn, with agreed-upon loans three times larger. The IMF's total capital had quadrupled, from about $250bn to an unprecedented $1tn. Clearly, the IMF had resources that it had never had before, mostly as a result of the financial crisis and world recession of 2008-2009.

However, the details of these changes are important. First, the collapse of the IMF's influence in the decade prior to 2007 was one of the most important changes in the international financial system since the breakdown of the Bretton Woods system of fixed exchange rates in 1971. Prior to the 2000s, the IMF headed up a powerful creditors' cartel that was able to tell many developing country governments what their most important economic policies would be, under the threat of being denied credit not only from the fund but also from other, then larger lenders such as the World Bank, regional lenders and sometimes even the private sector. This made the fund not only the most important avenue of influence of the US government in low- and middle-income countries – from Rwanda to Russia – but also the most important promoter of neoliberal economic "reforms" that transformed the world economy from the mid 1970s onward. These reforms coincided with a sharp slowdown of economic growth in the vast majority of low- and middle-income countries for more than 20 years, with consequently reduced progress on social indicators such as life expectancy and infant and child mortality.

The IMF's big comeback during the world recession did not bring the middle-income countries that had run away from it back to its orbit. Most of the middle-income countries of Asia, Russia, as well as Latin America, stayed away, mostly by piling up sufficient reserves so that they did not have to borrow from the fund, even during the crisis. As a result, even a low-income country like Bolivia, for example, was able to renationalise its hydrocarbon industry, increase social spending and public investment, and lower its retirement age from 65 to 58 – things it could never do while it was living under IMF agreements continuously for 20 years prior. Most of the IMF's new influence and lending would land in Europe, which accounts for about 57% of its current outstanding loans.

As for changes in IMF policy, these have been relatively small. A review of 41 IMF agreements made during the world financial crisis and recession found that 31 of them contained "pro-cyclical" policies: that is, fiscal or monetary policies that would be expected to further slow the economy. And in Europe, where the IMF has most of its lending, the policies attached to the loan agreements for Greece, Ireland and Portugal are decidedly pro-cyclical – making it extremely difficult for these economies to get out of recession. The IMF's influence on Spain, which does not yet have a loan agreement, is similar. And in Latvia, the IMF presided over an Argentine-style recession that set a world historical record for the worst two-year loss of output (about 25%) – a complete disaster.

To be fair, some changes at the fund during the tenure of Strauss-Kahn were significant. For the first time ever, during the world recession of 2009, the IMF made available some $283bn-worth of reserves for all member countries, with no policy conditions attached. The fund also made some limited credit available without conditions, though only to a few countries. The biggest changes were in the research department, where there was tolerance for more open debate. For example, there were IMF papers that endorsed the use of capital controls by developing countries under some circumstances, and questioning whether central banks were unnecessarily slowing growth with inflation targets that may be too low.

But as can be seen from what is happening in the peripheral Eurozone countries, the IMF is still playing its traditional role of applying the medieval economic medicine of "bleeding the patient". To be fair to both Strauss-Kahn and the fund, neither the managing director nor anyone else at the IMF is ultimately in sole charge of policy, especially with respect to countries that are important to the people who really run the institution. The IMF is run by its governors and executive directors, of whom the overwhelmingly dominant authorities are the US treasury department, which includes heavy representation from Goldman Sachs, and, secondarily, the European powers.

Until decision-making at the IMF undergoes a dramatic change, we can expect only very small changes in IMF policy. This can be seen most clearly in the current case of Greece: Strauss-Kahn was aware that the fiscal tightening ordered by the European authorities and the IMF waspreventing Greece from getting out of recession; but while he pushed for "softer" conditions, he was powerless to change the lending conditions from punishment to actual help. That's ultimately because the European authorities (European Commission and European Central Bank), not the IMF, are calling the shots – although Strauss-Kahn encountered plenty of resistance within the fund itself, too.

The voting shares of the IMF have changed only marginally, despite all the reforms of the last five years. The share of "emerging market and developing countries" – with the vast majority of the world's population – has gone from 39.4% to 44.7%, while the G7 countries have 41.2%, including 16.5% for the US (down from 17.0% pre-reform).

But the voting and governance structure is not currently the main obstacle to changing IMF policy. At this point, the developing countries – and we should add in the victimised countries of the eurozone – are not using their potential influence within the fund. Their representatives are mainly going along with the decisions of the G7. If any number of these countries were to band together in a sizeable bloc for change within the fund, there could be some real reforms at the IMF.

Such an outcome can be seen from the last decade of struggle within the World Trade Organisation, where developing countries have often not accepted the G7 consensus, and have successfully blocked the negotiation and implementation of rules that would hurt them – despite the fact that the WTO rules have been, from the outset, stacked against developing countries. It is true that the WTO operates by consensus rather than a quota-based voting structure, but that is not the key difference between it and the IMF. The key difference is in the role of developing countries and their representatives.

There is talk now of replacing Strauss-Kahn with an open, merit-based process of selection, breaking with the 67-year tradition of reserving the position for a European – most often, a French – official. At the moment, such change does not appear likely to happen. It would be a step forward, but it would be only a symbolic change, and the odds are good that the next managing director – of whatever nationality – will be to the right of Strauss-Kahn. Real change at the IMF is in the hands of the governments of most of the world – but only if they dare to organise it.

This article originally appeared in the Guardian UK.

The IMF after DSK

Sunday 22 May 2011

by: Mark Weisbrot, Center for Economic and Policy Research

Dominique Strauss-Kahn, the leader of the International Monetary Fund, appears in court for an arraignment over allegations that he had sexually assaulted a maid in New York, May 16, 2011. On Wednesday, May 18, 2011, Strauss-Kahn resigned as head of the IMF while denying any wrongdoing. (Photo: Michael Appleton / The New York Times)

Now that Dominique Strauss-Kahn has resigned from his position as managing director of the International Monetary Fund (IMF), it is worth taking an objective look at his legacy there. Until his arrest last week on charges of attempted rape and sexual assault, he was widely praised as having changed the IMF, increased its influence and moved it away from the policies that – according to the fund's critics – had caused so many problems for developing countries in the past. How much of this is true?

Strauss-Kahn took the helm of the IMF in November of 2007, when the IMF's influence was at a low point. Total outstanding loans at that time were just $10bn, down from $91bn just four years earlier. By the time he left this week, that number had bounced back to $84bn, with agreed-upon loans three times larger. The IMF's total capital had quadrupled, from about $250bn to an unprecedented $1tn. Clearly, the IMF had resources that it had never had before, mostly as a result of the financial crisis and world recession of 2008-2009.

However, the details of these changes are important. First, the collapse of the IMF's influence in the decade prior to 2007 was one of the most important changes in the international financial system since the breakdown of the Bretton Woods system of fixed exchange rates in 1971. Prior to the 2000s, the IMF headed up a powerful creditors' cartel that was able to tell many developing country governments what their most important economic policies would be, under the threat of being denied credit not only from the fund but also from other, then larger lenders such as the World Bank, regional lenders and sometimes even the private sector. This made the fund not only the most important avenue of influence of the US government in low- and middle-income countries – from Rwanda to Russia – but also the most important promoter of neoliberal economic "reforms" that transformed the world economy from the mid 1970s onward. These reforms coincided with a sharp slowdown of economic growth in the vast majority of low- and middle-income countries for more than 20 years, with consequently reduced progress on social indicators such as life expectancy and infant and child mortality.

The IMF's big comeback during the world recession did not bring the middle-income countries that had run away from it back to its orbit. Most of the middle-income countries of Asia, Russia, as well as Latin America, stayed away, mostly by piling up sufficient reserves so that they did not have to borrow from the fund, even during the crisis. As a result, even a low-income country like Bolivia, for example, was able to renationalise its hydrocarbon industry, increase social spending and public investment, and lower its retirement age from 65 to 58 – things it could never do while it was living under IMF agreements continuously for 20 years prior. Most of the IMF's new influence and lending would land in Europe, which accounts for about 57% of its current outstanding loans.

As for changes in IMF policy, these have been relatively small. A review of 41 IMF agreements made during the world financial crisis and recession found that 31 of them contained "pro-cyclical" policies: that is, fiscal or monetary policies that would be expected to further slow the economy. And in Europe, where the IMF has most of its lending, the policies attached to the loan agreements for Greece, Ireland and Portugal are decidedly pro-cyclical – making it extremely difficult for these economies to get out of recession. The IMF's influence on Spain, which does not yet have a loan agreement, is similar. And in Latvia, the IMF presided over an Argentine-style recession that set a world historical record for the worst two-year loss of output (about 25%) – a complete disaster.

To be fair, some changes at the fund during the tenure of Strauss-Kahn were significant. For the first time ever, during the world recession of 2009, the IMF made available some $283bn-worth of reserves for all member countries, with no policy conditions attached. The fund also made some limited credit available without conditions, though only to a few countries. The biggest changes were in the research department, where there was tolerance for more open debate. For example, there were IMF papers that endorsed the use of capital controls by developing countries under some circumstances, and questioning whether central banks were unnecessarily slowing growth with inflation targets that may be too low.

But as can be seen from what is happening in the peripheral Eurozone countries, the IMF is still playing its traditional role of applying the medieval economic medicine of "bleeding the patient". To be fair to both Strauss-Kahn and the fund, neither the managing director nor anyone else at the IMF is ultimately in sole charge of policy, especially with respect to countries that are important to the people who really run the institution. The IMF is run by its governors and executive directors, of whom the overwhelmingly dominant authorities are the US treasury department, which includes heavy representation from Goldman Sachs, and, secondarily, the European powers.

Until decision-making at the IMF undergoes a dramatic change, we can expect only very small changes in IMF policy. This can be seen most clearly in the current case of Greece: Strauss-Kahn was aware that the fiscal tightening ordered by the European authorities and the IMF waspreventing Greece from getting out of recession; but while he pushed for "softer" conditions, he was powerless to change the lending conditions from punishment to actual help. That's ultimately because the European authorities (European Commission and European Central Bank), not the IMF, are calling the shots – although Strauss-Kahn encountered plenty of resistance within the fund itself, too.

The voting shares of the IMF have changed only marginally, despite all the reforms of the last five years. The share of "emerging market and developing countries" – with the vast majority of the world's population – has gone from 39.4% to 44.7%, while the G7 countries have 41.2%, including 16.5% for the US (down from 17.0% pre-reform).

But the voting and governance structure is not currently the main obstacle to changing IMF policy. At this point, the developing countries – and we should add in the victimised countries of the eurozone – are not using their potential influence within the fund. Their representatives are mainly going along with the decisions of the G7. If any number of these countries were to band together in a sizeable bloc for change within the fund, there could be some real reforms at the IMF.

Such an outcome can be seen from the last decade of struggle within the World Trade Organisation, where developing countries have often not accepted the G7 consensus, and have successfully blocked the negotiation and implementation of rules that would hurt them – despite the fact that the WTO rules have been, from the outset, stacked against developing countries. It is true that the WTO operates by consensus rather than a quota-based voting structure, but that is not the key difference between it and the IMF. The key difference is in the role of developing countries and their representatives.

There is talk now of replacing Strauss-Kahn with an open, merit-based process of selection, breaking with the 67-year tradition of reserving the position for a European – most often, a French – official. At the moment, such change does not appear likely to happen. It would be a step forward, but it would be only a symbolic change, and the odds are good that the next managing director – of whatever nationality – will be to the right of Strauss-Kahn. Real change at the IMF is in the hands of the governments of most of the world – but only if they dare to organise it.

This article originally appeared in the Guardian UK.

The IMF after DSK

Sunday 22 May 2011

by: Mark Weisbrot, Center for Economic and Policy Research

Dominique Strauss-Kahn, the leader of the International Monetary Fund, appears in court for an arraignment over allegations that he had sexually assaulted a maid in New York, May 16, 2011. On Wednesday, May 18, 2011, Strauss-Kahn resigned as head of the IMF while denying any wrongdoing. (Photo: Michael Appleton / The New York Times)

Now that Dominique Strauss-Kahn has resigned from his position as managing director of the International Monetary Fund (IMF), it is worth taking an objective look at his legacy there. Until his arrest last week on charges of attempted rape and sexual assault, he was widely praised as having changed the IMF, increased its influence and moved it away from the policies that – according to the fund's critics – had caused so many problems for developing countries in the past. How much of this is true?

Strauss-Kahn took the helm of the IMF in November of 2007, when the IMF's influence was at a low point. Total outstanding loans at that time were just $10bn, down from $91bn just four years earlier. By the time he left this week, that number had bounced back to $84bn, with agreed-upon loans three times larger. The IMF's total capital had quadrupled, from about $250bn to an unprecedented $1tn. Clearly, the IMF had resources that it had never had before, mostly as a result of the financial crisis and world recession of 2008-2009.

However, the details of these changes are important. First, the collapse of the IMF's influence in the decade prior to 2007 was one of the most important changes in the international financial system since the breakdown of the Bretton Woods system of fixed exchange rates in 1971. Prior to the 2000s, the IMF headed up a powerful creditors' cartel that was able to tell many developing country governments what their most important economic policies would be, under the threat of being denied credit not only from the fund but also from other, then larger lenders such as the World Bank, regional lenders and sometimes even the private sector. This made the fund not only the most important avenue of influence of the US government in low- and middle-income countries – from Rwanda to Russia – but also the most important promoter of neoliberal economic "reforms" that transformed the world economy from the mid 1970s onward. These reforms coincided with a sharp slowdown of economic growth in the vast majority of low- and middle-income countries for more than 20 years, with consequently reduced progress on social indicators such as life expectancy and infant and child mortality.

The IMF's big comeback during the world recession did not bring the middle-income countries that had run away from it back to its orbit. Most of the middle-income countries of Asia, Russia, as well as Latin America, stayed away, mostly by piling up sufficient reserves so that they did not have to borrow from the fund, even during the crisis. As a result, even a low-income country like Bolivia, for example, was able to renationalise its hydrocarbon industry, increase social spending and public investment, and lower its retirement age from 65 to 58 – things it could never do while it was living under IMF agreements continuously for 20 years prior. Most of the IMF's new influence and lending would land in Europe, which accounts for about 57% of its current outstanding loans.

As for changes in IMF policy, these have been relatively small. A review of 41 IMF agreements made during the world financial crisis and recession found that 31 of them contained "pro-cyclical" policies: that is, fiscal or monetary policies that would be expected to further slow the economy. And in Europe, where the IMF has most of its lending, the policies attached to the loan agreements for Greece, Ireland and Portugal are decidedly pro-cyclical – making it extremely difficult for these economies to get out of recession. The IMF's influence on Spain, which does not yet have a loan agreement, is similar. And in Latvia, the IMF presided over an Argentine-style recession that set a world historical record for the worst two-year loss of output (about 25%) – a complete disaster.

To be fair, some changes at the fund during the tenure of Strauss-Kahn were significant. For the first time ever, during the world recession of 2009, the IMF made available some $283bn-worth of reserves for all member countries, with no policy conditions attached. The fund also made some limited credit available without conditions, though only to a few countries. The biggest changes were in the research department, where there was tolerance for more open debate. For example, there were IMF papers that endorsed the use of capital controls by developing countries under some circumstances, and questioning whether central banks were unnecessarily slowing growth with inflation targets that may be too low.

But as can be seen from what is happening in the peripheral Eurozone countries, the IMF is still playing its traditional role of applying the medieval economic medicine of "bleeding the patient". To be fair to both Strauss-Kahn and the fund, neither the managing director nor anyone else at the IMF is ultimately in sole charge of policy, especially with respect to countries that are important to the people who really run the institution. The IMF is run by its governors and executive directors, of whom the overwhelmingly dominant authorities are the US treasury department, which includes heavy representation from Goldman Sachs, and, secondarily, the European powers.

Until decision-making at the IMF undergoes a dramatic change, we can expect only very small changes in IMF policy. This can be seen most clearly in the current case of Greece: Strauss-Kahn was aware that the fiscal tightening ordered by the European authorities and the IMF waspreventing Greece from getting out of recession; but while he pushed for "softer" conditions, he was powerless to change the lending conditions from punishment to actual help. That's ultimately because the European authorities (European Commission and European Central Bank), not the IMF, are calling the shots – although Strauss-Kahn encountered plenty of resistance within the fund itself, too.

The voting shares of the IMF have changed only marginally, despite all the reforms of the last five years. The share of "emerging market and developing countries" – with the vast majority of the world's population – has gone from 39.4% to 44.7%, while the G7 countries have 41.2%, including 16.5% for the US (down from 17.0% pre-reform).

But the voting and governance structure is not currently the main obstacle to changing IMF policy. At this point, the developing countries – and we should add in the victimised countries of the eurozone – are not using their potential influence within the fund. Their representatives are mainly going along with the decisions of the G7. If any number of these countries were to band together in a sizeable bloc for change within the fund, there could be some real reforms at the IMF.

Such an outcome can be seen from the last decade of struggle within the World Trade Organisation, where developing countries have often not accepted the G7 consensus, and have successfully blocked the negotiation and implementation of rules that would hurt them – despite the fact that the WTO rules have been, from the outset, stacked against developing countries. It is true that the WTO operates by consensus rather than a quota-based voting structure, but that is not the key difference between it and the IMF. The key difference is in the role of developing countries and their representatives.

There is talk now of replacing Strauss-Kahn with an open, merit-based process of selection, breaking with the 67-year tradition of reserving the position for a European – most often, a French – official. At the moment, such change does not appear likely to happen. It would be a step forward, but it would be only a symbolic change, and the odds are good that the next managing director – of whatever nationality – will be to the right of Strauss-Kahn. Real change at the IMF is in the hands of the governments of most of the world – but only if they dare to organise it.

This article originally appeared in the Guardian UK.

The IMF after DSK

Sunday 22 May 2011

by: Mark Weisbrot, Center for Economic and Policy Research

Dominique Strauss-Kahn, the leader of the International Monetary Fund, appears in court for an arraignment over allegations that he had sexually assaulted a maid in New York, May 16, 2011. On Wednesday, May 18, 2011, Strauss-Kahn resigned as head of the IMF while denying any wrongdoing. (Photo: Michael Appleton / The New York Times)

Now that Dominique Strauss-Kahn has resigned from his position as managing director of the International Monetary Fund (IMF), it is worth taking an objective look at his legacy there. Until his arrest last week on charges of attempted rape and sexual assault, he was widely praised as having changed the IMF, increased its influence and moved it away from the policies that – according to the fund's critics – had caused so many problems for developing countries in the past. How much of this is true?

Strauss-Kahn took the helm of the IMF in November of 2007, when the IMF's influence was at a low point. Total outstanding loans at that time were just $10bn, down from $91bn just four years earlier. By the time he left this week, that number had bounced back to $84bn, with agreed-upon loans three times larger. The IMF's total capital had quadrupled, from about $250bn to an unprecedented $1tn. Clearly, the IMF had resources that it had never had before, mostly as a result of the financial crisis and world recession of 2008-2009.

However, the details of these changes are important. First, the collapse of the IMF's influence in the decade prior to 2007 was one of the most important changes in the international financial system since the breakdown of the Bretton Woods system of fixed exchange rates in 1971. Prior to the 2000s, the IMF headed up a powerful creditors' cartel that was able to tell many developing country governments what their most important economic policies would be, under the threat of being denied credit not only from the fund but also from other, then larger lenders such as the World Bank, regional lenders and sometimes even the private sector. This made the fund not only the most important avenue of influence of the US government in low- and middle-income countries – from Rwanda to Russia – but also the most important promoter of neoliberal economic "reforms" that transformed the world economy from the mid 1970s onward. These reforms coincided with a sharp slowdown of economic growth in the vast majority of low- and middle-income countries for more than 20 years, with consequently reduced progress on social indicators such as life expectancy and infant and child mortality.

The IMF's big comeback during the world recession did not bring the middle-income countries that had run away from it back to its orbit. Most of the middle-income countries of Asia, Russia, as well as Latin America, stayed away, mostly by piling up sufficient reserves so that they did not have to borrow from the fund, even during the crisis. As a result, even a low-income country like Bolivia, for example, was able to renationalise its hydrocarbon industry, increase social spending and public investment, and lower its retirement age from 65 to 58 – things it could never do while it was living under IMF agreements continuously for 20 years prior. Most of the IMF's new influence and lending would land in Europe, which accounts for about 57% of its current outstanding loans.

As for changes in IMF policy, these have been relatively small. A review of 41 IMF agreements made during the world financial crisis and recession found that 31 of them contained "pro-cyclical" policies: that is, fiscal or monetary policies that would be expected to further slow the economy. And in Europe, where the IMF has most of its lending, the policies attached to the loan agreements for Greece, Ireland and Portugal are decidedly pro-cyclical – making it extremely difficult for these economies to get out of recession. The IMF's influence on Spain, which does not yet have a loan agreement, is similar. And in Latvia, the IMF presided over an Argentine-style recession that set a world historical record for the worst two-year loss of output (about 25%) – a complete disaster.

To be fair, some changes at the fund during the tenure of Strauss-Kahn were significant. For the first time ever, during the world recession of 2009, the IMF made available some $283bn-worth of reserves for all member countries, with no policy conditions attached. The fund also made some limited credit available without conditions, though only to a few countries. The biggest changes were in the research department, where there was tolerance for more open debate. For example, there were IMF papers that endorsed the use of capital controls by developing countries under some circumstances, and questioning whether central banks were unnecessarily slowing growth with inflation targets that may be too low.

But as can be seen from what is happening in the peripheral Eurozone countries, the IMF is still playing its traditional role of applying the medieval economic medicine of "bleeding the patient". To be fair to both Strauss-Kahn and the fund, neither the managing director nor anyone else at the IMF is ultimately in sole charge of policy, especially with respect to countries that are important to the people who really run the institution. The IMF is run by its governors and executive directors, of whom the overwhelmingly dominant authorities are the US treasury department, which includes heavy representation from Goldman Sachs, and, secondarily, the European powers.

Until decision-making at the IMF undergoes a dramatic change, we can expect only very small changes in IMF policy. This can be seen most clearly in the current case of Greece: Strauss-Kahn was aware that the fiscal tightening ordered by the European authorities and the IMF waspreventing Greece from getting out of recession; but while he pushed for "softer" conditions, he was powerless to change the lending conditions from punishment to actual help. That's ultimately because the European authorities (European Commission and European Central Bank), not the IMF, are calling the shots – although Strauss-Kahn encountered plenty of resistance within the fund itself, too.

The voting shares of the IMF have changed only marginally, despite all the reforms of the last five years. The share of "emerging market and developing countries" – with the vast majority of the world's population – has gone from 39.4% to 44.7%, while the G7 countries have 41.2%, including 16.5% for the US (down from 17.0% pre-reform).

But the voting and governance structure is not currently the main obstacle to changing IMF policy. At this point, the developing countries – and we should add in the victimised countries of the eurozone – are not using their potential influence within the fund. Their representatives are mainly going along with the decisions of the G7. If any number of these countries were to band together in a sizeable bloc for change within the fund, there could be some real reforms at the IMF.

Such an outcome can be seen from the last decade of struggle within the World Trade Organisation, where developing countries have often not accepted the G7 consensus, and have successfully blocked the negotiation and implementation of rules that would hurt them – despite the fact that the WTO rules have been, from the outset, stacked against developing countries. It is true that the WTO operates by consensus rather than a quota-based voting structure, but that is not the key difference between it and the IMF. The key difference is in the role of developing countries and their representatives.

There is talk now of replacing Strauss-Kahn with an open, merit-based process of selection, breaking with the 67-year tradition of reserving the position for a European – most often, a French – official. At the moment, such change does not appear likely to happen. It would be a step forward, but it would be only a symbolic change, and the odds are good that the next managing director – of whatever nationality – will be to the right of Strauss-Kahn. Real change at the IMF is in the hands of the governments of most of the world – but only if they dare to organise it.

This article originally appeared in the Guardian UK.

Oil, Guns and Drugs: The Money Triangle of new Imperialism

	From Adolf Hitler to George Bush Jnr, US capitalism's unbroken link Pre-amble: When I started putting this essay together, it started out as investigation of Richard Armitage as a typical example of the kind of people employed to run the United States on behalf of their imperialist masters. Then I came across a piece written in 2000 by Michael Ruppert of Beyond the Wilderness, that broadened my inquiries as the article links Kellog Brown and Root, a subsidiary of Halliburton to the worldwide distribution of drugs via the global network that Halliburton owns or operates on behalf of the US government and various corporations including major oil companies. A network that evolved over time initially through the CIA's connection to the drug trade in the Golden Triangle but which has its roots in Nazi Germany over thirty years earlier and its connection to US big business. And in the post-war period, Brown Brothers Harriman were also involved in laundering Nazi money through a Dutch-based bank. And then synchronicity kicked in, as in the middle of writing this piece, I get emailed an article in the New Hampshire Gazette that expands on the piece I included in the ‘Bush Family Saga’ on Prescott Bush, Avril Harriman and Brown Brothers Harriman Bank and its connections to the Nazi Party that it now emerges continued until 1951. What the new information reveals is that the financial connections between US and German capitalism extended even further than had been known until the new documents were released. A central player in the US/Nazi big business connection was Standard Oil of New Jersey, the Rockefellar-owned corporation that during the 1930s merged with IG. Farben, one of the major backers of Hitler's National Socialist Party and supplier of the infamous gas Cyklon B used in the extermination camps. Standard Oil (now Exxon) also owned the oil concessions in Saudi Arabia (later to be renamed Aramco). Other major players involved in the Nazi business connection include General Motors, Ford and ITT. The Bush regime is part of an unbroken link that extends back to the founding of Hitler’s National Socialist Party through the funding it received from Brown Brothers Harriman Banking, Prescott Bush's bank and the subsequent link between this bank and Kellog Brown and Root, now a subsidiary of Halliburton and its connections to Bush through the Rumsfeld/Cheney connection and their connection to Halliburton. Brown Brothers Harriman Bank owned Dresser Industries, one of the world’s largest oil drilling companies that in 1998, under urging from Dick Cheney was purchased by Halliburton in an $8.1 billion dollar deal. The link is complete. And yes, it is the same Brown in Brown and Root as the Brown Brothers Harriman Bank. The point is, a clique of key big business interests extending back over several generations runs the US. And that if anyone doubted that, putting it down to wild ideas of a conspiracy, you have to be blind not see it now. That Bush’s wealth descends directly from backing the Nazi Party is incontrovertible and that the Bush family’s involvement in the trade in drugs and weapons as an intrinsic part of the 'war on communism', later to become the 'war on terror' that extends back thirty years is also incontrovertible. But why has the current Bush administration hired so many key individuals from the Reagan/Bush years including Richard Armitage, Colonel ‘Ollie’ North, Michael Ledeen, Otto Reich and others? What was so special about a bunch of guys at the centre of the Iran-contra scandal, money laundering operations, drug smuggling and other dirty dealings going back forty years? Enter Ruppert’s article. Ruppert’s piece illustrates the central role that Brown and Root/Halliburton have played as a global conduit for drugs and the central role that Halliburton/Brown and Root play in Bush’s imperial grab for power. In this context, Armitage suddenly looks like small fry, but consider this; the people who have carried out the imperial policies of subsequent US administrations that extend back to Roosevelt in the 1930s, are people like Armitage, without whom, executing the imperium’s plans could well be severely compromised. Why? A close-knit group of people, all with intimate ties to US intelligence services including the DEA, the CIA and the DIA as well as connections to the banking, oil and defense industries, are also people who are intimately connected to the global trade in drugs, weapons and laundered money. Links that extended to the Vatican Bank, (Banco Lavorno Nationale), BCCI and Nugan Hand. Key players in Iran-contra were also officers or had connections to these banks. Some were involved in laundering money for the CIA. The notorious S&L banking crashes of the 1980s also involved Bush family members. Deputy under-secretary of state Richard Armitage, the man who "enjoys killing" "[Richard] Armitage, a former Navy SEAL, who reportedly enjoyed combat missions and killing during covert operations in Laos during the Vietnam War, has never been far from the Bush family's side. Throughout his career, both in and out of government, he has been perpetually connected to CIA drug smuggling operations. Secretary of State Colin Powell, in a 1995 Washington Post story, called Armitage, "my white son." In 1990, then President Bush dispatched Armitage to Russia to aid in its "transition" to capitalism. Armitage's Russian work for Bush has been frequently connected to the explosion of drug trafficking under the Russian Mafias, which became virtual rulers of the nation afterwards. In the early 1990s Armitage had extensive involvement in Albania at the same time that the Albanian ally, Kosovo Liberation Army was coming to power and consolidating its grip, according to The Christian Science Monitor, on 70% of the heroin entering western Europe." http://www.fromthewilderness.com/free/ww3/oct152001.html Strictly speaking, when dealing with politics, the personalities of the people involved are supposedly less important than the context, the power relations, money, class and so forth. But when it comes to the cabal of individuals grouped around the Bush presidency, many of whom have a history of involvement with assassinations, terrorism, drugs, money laundering and other illegal activities, the motivations, the psychology of the individuals involved has a direct bearing on the nature of the activities. Such is the case with people like Richard Armitage although there are others such as Otto Reich, Michael Ledeen and Colonel ‘Ollie’ North. In fact, the list is so big, and stretches back through the administrations of several successive US presidents, that the relationship between the policies and the individuals has to be viewed as inseparable. One could justifiably argue that breaking the law in order to further US policies is now inseparable part of ‘doing business’. South East Asia, oil, guns and drugs; Nicaragua guns and drugs; Iran, oil and guns; Israel, guns and oil; Iraq, guns and oil; Saudi Arabia, guns and oil; Albania, drugs and oil; Russia oil and drugs, Central and South America, guns, drugs and oil. In all of these situations the name Richard Armitage crops up time and again over more than thirty years of loyal service to US capitalism. Outrageous? The global trade in cocaine and heroin is estimated at around $500 BILLION and no doubt this is an under-estimate. The US is the major market for drugs just as it is for oil and in turn it is the world’s number one seller of weapons. Is it any wonder that the three commodities go hand in hand and that the US should be at centre of the global trade in these three valuable commodities. "Noting the indiscreet arrogance of Wall Street in engaging in criminal behavior, I wrote in May's issue, after Citigroup's brazen acquisition of Mexico's drug money-laundering bank, Banamex, "It doesn't matter anymore whether the American public chooses to notice. The fait accompli is that drug money and criminal money are now out of the closet as the most important determinants of economic success for the US financial system. The careless arrogance of these moves only reveals the utter confidence in Washington, on Wall Street and in the banking system that no voices from the wilderness can stop it." Michael Ruppert http://www.fromthewilderness.com/free/ww3/oct152001.html What started out as an intrinsic component of the ‘war on Communism’ has its logical conclusion in the ‘war on terror' and oil, guns and drugs are the threads that tie the current Bush administration to over three decades of international piracy and terrorism that forms the backdrop for the current policies of the Bush regime. That the US uses the tactics that it accuses its enemies of using should come as no surprise, especially when we consider that the supposed enemies of the US are more often than not its creatures, some of whom have returned to haunt it and especially the cocaine barons. It should also come as no surprise that the corporate media in both the US and the UK have a vested interest in covering up this shameful past, for to do otherwise would expose the cosy relationship that exists between the media and corporate capitalism. Exposing it now would also expose the hypocrisy of the 4th estate and its complicity in deceiving us all. And even as I write, the BBC quotes Armitage as he calls for intensifying the ‘war on terrorism’ as though he were ‘just a diplomat’, completely ignoring the man’s past record and the total airbrushing of history in the classic Stalin mode that goes completely unchallenged. The same names crop up with tedious regularity and raise the issue that far from being the odd ‘bad apple’ or lose cannon, the individuals who now constitute the core of the Bush cabal, have been breaking the law, both domestic and international, in order to further the interests of US capitalism. But what we see now, is way beyond the ‘normal’ practices of furthering US foreign policy. What it formerly chose to hide, it is now brazenly advocates, indeed it forms the core of its policy as outlined in the PNAC and other strategic documents. But it’s the corporations that these individuals have or had an interest in such as Halliburton, Unocal, Boeing, Chevron, Enron before its demise, and a host of other defence, electronics and pharmaceuticals corporations, that have been the principal beneficiaries of the policies of the Bush regime and of previous US administrations, especially Halliburton and the subsidiary, Brown and Root, have both been connected to the drug trade: "A closer look at available research, including an August 2, 2000 report by the Center for Public Integrity (CPI) at www.public-i.org, suggests that drug money has played a role in the successes achieved by Halliburton under Cheney's tenure as CEO from 1995 to 2000. This is especially true for Halliburton's most famous subsidiary, heavy construction and oil giant, Brown and Root. A deeper look into history reveals that Brown and Root's past as well as the past of Dick Cheney himself, connect to the international drug trade on more than one occasion and in more than one way. This June the lead Washington, D.C. attorney for a major Russian oil company connected in law enforcement reports to heroin smuggling and also a beneficiary of US backed loans to pay for Brown and Root contracts in Russia, held a $2.2 million fund raiser to fill the already bulging coffers of presidential candidate George W. Bush. This is not the first time that Brown and Root has been connected to drugs and the fact is that this "poster child" of American industry may also be a key player in Wall Street's efforts to maintain domination of the half trillion dollar a year global drug trade and its profits. And Dick Cheney, who has also come closer to drugs than most suspect, and who is also Halliburton's largest individual shareholder ($45.5 million), has a vested interest in seeing to it that Brown and Root's successes continue." Moreover, it’s the connection between war, oil, drugs and US corporations that is the key to the Bush imperium, for without war, or preparing for one where would corporations like Halliburton be? Ever since 9/11 the profits of Halliburton have literally shot through the roof. Indeed, ever since 1990, with no country or entity to curb the ambitions of US imperialism, profits from wars of one kind or another have seen the rise of the warfare state that makes the profits made out of the Vietnam War pale into insignificance. And without the 'war on drugs', the US would not be in the position to use its economic and military clout to subvert the governments and economies of so many countries around the world. The line between the 'war on drugs' and the 'war on terror' has effectively dissolved. Linking the two wars is oil, the 'drug of choice' for US capitalism. "[E]verywhere there is oil there is Brown and Root. But increasingly, everywhere there is war or insurrection there is Brown and Root also. From Bosnia and Kosovo, to Chechnya, to Rwanda, to Burma, to Pakistan, to Laos, to Vietnam, to Indonesia, to Iran to Libya to Mexico to Colombia, Brown and Root's traditional operations have expanded from heavy construction to include the provision of logistical support for the U.S. military. Now, instead of U.S. Army quartermasters, the world is likely to see Brown and Root warehouses storing and managing everything from uniforms to rations to vehicles. "As described by the Associated Press, during "Iran-Contra" Congressman Dick Cheney of the House Intelligence Committee was a rabid supporter of Marine Lt. Col. Oliver North. This was in spite of the fact that North had lied to Cheney in a private 1986 White House briefing. Oliver North's own diaries and subsequent investigations by the CIA Inspector General have irrevocably tied him directly to cocaine smuggling during the 1980s and the opening of bank accounts for one firm moving four tons of cocaine a month. This, however, did not stop Cheney from actively supporting North's 1994 unsuccessful run for the U.S. Senate from Virginia just a year before he took over the reins at Brown and Root's parent company, Dallas based Halliburton Inc. in 1995. … "As the Bush Secretary of Defense during Desert Shield/Desert Storm (1990-91), Cheney also directed special operations involving Kurdish rebels in northern Iran. The Kurds' primary source of income for more than fifty years has been heroin smuggling from Afghanistan and Pakistan through Iran, Iraq and Turkey. Having had some personal experience with Brown and Root I noted carefully when the Los Angeles Times observed that on March 22, 1991 that a group of gunmen burst into the Ankara, Turkey offices of the joint venture, Vinnell, Brown and Root and assassinated retired Air Force Chief Master Sergeant John Gandy. "In March of 1991, tens of thousands of Kurdish refugees, long-time assets of the CIA, were being massacred by Saddam Hussein in the wake of the Gulf War. Saddam, seeking to destroy any hopes of a successful Kurdish revolt, found it easy to kill thousands of the unwanted Kurds who had fled to the Turkish border seeking sanctuary. There, Turkish security forces, trained in part by the Vinnell, Brown and Root partnership, turned thousands of Kurds back into certain death. Today, the Vinnell Corporation (a TRW Company) is, along with the firms MPRI and DynCorp (FTW June, 00) one of the three pre-eminent private mercenary corporations in the world. It is also the dominant entity for the training of security forces throughout the Middle East. Not surprisingly the Turkish border regions in question were the primary transhipment points for heroin, grown in Afghanistan and Pakistan and destined for the markets of Europe." http://www.fromthewilderness.com/free/ciadrugs/bush-cheney-drugs.html These extracts are from an article written in 2000, three years before the US invaded Iraq and before Bush the smaller stole the election. It’s clear from the connections between all the players including Colin Powell, whose links to Iran-Contra and who is a close pal of Armitage, and the guns for drugs scandal, Halliburton, Brown and Root, Dyncorp, Vinnell Corporation go all the way back to old man Prescott Bush and his links to financing the German Nazi Party via Brown Brothers Harriman Bank that owned Dresser Industries that is now owned by Halliburton. Dresser built oil platforms in key drug routes around the world including the Gulf of Mexico. What better offloading location could one have than an oil platform. And clearly, the illegal nature of the activities of the Armitages of this world, mixing with drug smugglers, assassins, money launderers, covert arms dealers and the like, means that their actions are already thoroughly compromised. And this is critically important to my analysis because it exposes the so-called morality that the imperialists like to espouse as fundamental to their policies of supposedly supporting human rights, democracy and the like as a complete fraud. So who is Richard Armitage and why is Armitage and his peers — with involvements stretching back to the Vietnam War era and even before — suddenly back in ‘favour’? What is it that they bring to the Bush administration that makes them so important to have onboard? Power, drugs, guns, money and the connections that come with it are at the top of the list and as I hope to show, they go to the very heart of the totally corrupt regime that now runs America. Most important of all, it exposes the ruthless nature of the capitalist system, a system that takes ends justifying the means to the ultimate conclusion, that in order to preserve the system anything goes including the use of drugs as an integral part of projecting US economic and political power. Armitage is, I suppose, typical of the kind of person who does the dirty work of imperialism, whether it’s for money, prestige or personal satisfaction. (For a complete listing of Armitage’s financial investments see http://www.public-i.org/cgi-bin/WhosWhoSearch.asp?Display=Details&Person_ID=1007) The CIA’s involvement in drug running that started during the Vietnam War with Project Phoenix is perhaps the key to the current situation as the connections made during that period set the scene for later US involvement with the sale of drugs as means to further US foreign policy, whether as a source of finance for the illegal purchase and sale of weapons or as a means of destabilising countries and communities, or winning friends and influencing people. Colombia, Peru, Mexico, Afghanistan, Albania, Russia are just some of the countries whose economies and cultures have been taken over through the US policy of the ‘war on drugs’. "Project Phoenix…was financed in part with opium money. It has been alleged that the close relationship with SE Asian drug dealers continued after the US withdrawal from Vietnam, with Iran used as a conduit for drugs and money. It has also been reported that, as a sequel to Project Phoenix, an off-the-books assassination program was established in Iran. "The Phoenix or Phuong Hoang Operation was originally designed to "neutralize," that is assassinate or imprison, members of the civilian infrastructure of the [Vietnamese] National Liberation Front. Phoenix offices were set up from Saigon down to the district level. Their functions were to: (1) collate intelligence about the "Vietcong Infrastructure"; (2) interrogate civilians picked up at random by military units carrying out sweeps through villages; (3) "neutralize" targeted members of the NLF . . . The original Phoenix concept was quickly diluted, for two main reasons: (1) pressure from the top to fill numerical quotas of person to be neutralized; (2) difficulties at the bottom of identifying NLF civilian infrastructure, who were often indistinguishable from the general population, and the near impossibility of proving anyone membership in the NLF. The result was vastly to increase the numbers of innocent persons rounded up and imprisoned, indiscriminately murdered, and brutally tortured in an effort to show results . . . Between 1968 and 1972 hundreds of thousands of Vietnamese civilians were rounded up and turned over to the Vietnamese police for questioning. Such interrogation has usually been marked by brutal torture. http://www.vicpeace.org/stories/03/1070.html "After four tours with the U.S. Navy in Vietnam, Armitage joined the U.S. Defense Attaché's Office in Saigon in 1973, just in time to play a key role in "preparing" the botched evacuation of friendly South Vietnamese. Tens of thousands of loyal partners who had worked with the Americans were abandoned to advancing North Vietnamese Army and Viet Cong forces. Never one to admit failure or duplicity, Armitage covered his own posterior by accusing the Central Intelligence Agency of wrongly predicting that a deal for an orderly pullout could be arrived at with the advancing communists and then failing to provide enough notice that Saigon was about to fall. Fresh from the debacle in Southeast Asia, Armitage went to work as a consultant for the Defense Intelligence Agency, where the quality of his work, to say the least, did not improve." http://www.yellowtimes.org/article.php?sid=673 Following the US withdrawal from Vietnam in 1975, Armitage joined the Defense Intelligence Agency (DIA) and was posted to Tehran where he excelled at not predicting the overthrow of the Shah (the man he had been assigned to keep on the throne) and even went as far as accusing the Ayotollah Khomeini of being a friend of the Soviets. "Armitage became…a special consultant to the Department of Defense, working out of Bangkok and dealing with unrepatriated prisoners and the missing in action. Armitage also started a mysterious business called the Far East Trading Company. Meanwhile, from 1976 to 1979 in Iran, Richard Secord was supervising the sale of US military aircraft and weapons to Middle Eastern nations. During this same period, there are reports that Shackley, Clines, Secord, and Armitage set up several curious corporations and subsidiaries around the world including Lake Resources, Stanford Technology Trading Group, Compa[g]nie de Services Fiduciaria, CSF Investments and Udall Research Corporation." http://www.vicpeace.org/stories/03/1070.html In fact all the companies referred to above, were and those that still exist, are so-called proprietaries of the CIA, a fact that further reinforces the belief that during this period Armitage was in the employ of the CIA, and although we can only speculate as to his role during this period, it is generally believed that the front companies were used for CIA covert actions in Southeast Asia and later in Afghanistan and it's been suggested that the idea of using heroin as a weapon in the 'war against communism' in both Indo-China and Afghanistan was Armitage's idea. "His critics had alleged in the past that he was the author of the idea of using heroin to weaken the fighting capability of the communists in Indo-China and then in Afghanistan though the late Le Comte de Marenches, the head of the French External Intelligence Agency under Presidents George Pompidou and Giscard d'Estaing, had claimed that it was he who had given this idea to the Americans with specific reference to Afghanistan." http://www.saag.org/papers5/paper473.html 1978 saw him (officially) rejoining government when he joined the staff of Senator Robert Dole and then as an advisor to Reagan election campaign who rewarded his services in 1981 by appointing him Deputy Assistant Secretary of Defense for East Asia and Pacific Affairs and then in 1983 he became Assistant Secretary of Defense for International Security Affairs until 1989. His speciality was special forces operations and 'counter-terrorism'. Under George Bush Snr he was made 'Special Emissary' to King Hussein of Jordan during the 1991 Gulf War. But it's Armitage's role in the 'Secret Team' that was at the heart of the Iran-contra scandal during this period that kept him out of government until Bush the smaller grabbed the throne of state when Armitage was rewarded for his loyalty by being appointed as deputy secretary of state under his old friend Colin Powell. "Armitage…under investigation for his role in the Reagan administration's Iran-Contra scandal. Though he testified that he didn't know about the administration's secret sale of arms to Iran until November 1986, when they became public knowledge, independent counsel Lawrence Walsh's report laid out extensive evidence that he knew about them a year earlier. In fact, Armitage apparently opposed the arms sales as early as December 1985, on the grounds that Iranians were "sleazebags." Secord later testified that he met with Armitage then in an effort to change his mind. Armitage claimed not to remember meeting with Secord, though Armitage's own meeting logs show that he did. Armitage kept a December 6, 1985 document describing the legal ramifications of the Iran arms sales, entitled "Possibility for Leaks," locked in his Pentagon safe until June 1987, when it was belatedly turned over to Walsh and the congressional Iran-Contra committee. Armitage also attended a Pentagon meeting in August 1986 in which Oliver North outlined the covert activities in support of the Contras that he had been supervising through the National Security Council. Armitage denied remembering anything about this meeting as well. In his final report, Walsh said he declined to prosecute Armitage for his numerous dubious statements on these issues because he could not prove they were knowingly false." http://www.inthesetimes.com/issue/25/07/naureckas2507.html "The Bush cabinet is a virtual who's who of oil, defense and pharmaceutical bigwigs.1 The Bush family is itself closely tied financially to the bin Ladens.2 , 3 Both families are involved in the Carlyle Group.4 Bush Sr. sits on the board of Carlyle, a 12 billion Equity company with oil holdings and defense contracts.5 Dick Cheney was the former CEO of Halliburton Oil. Colin Powell is a major stockholder in several defense contractors. National Security Advisor Condoleeza Rice sat on the board of Chevron. Andrew Card, the Chief of Staff is from General Motors. Donald Rumsfeld, Secretary of Defense, was CEO of Searle Pharmaceuticals. Dick Armitage, the Deputy Secretary of Defense, has ties to the Russian mafia and is a board member of Carlyle. Robert Jordan, the Saudi ambassador, was a member of Baker Botts, a legal firm specializing in oil and defense (the Baker in Baker Botts is James Baker). Tony Principi, Secretary of Foreign Affairs, comes from Lockheed Martin. Gordan England, Secretary of the Navy, is tied to General Dynamics. James Roche, Secretary of the Air Force, is from Northrop Grumman. Gen. Thomas White, retired, Secretary of the Army, is from Enron Energy. Donald Evans, the Commerce Secretary, owns Colorado Oil Company. National Security Advisor Condoleezza Rice sat on the board of Exxon. And Mr. Carlucci, the Chief of Carlyle, sits on the Middle East Policy Council. 6 ""Several western oil companies [some represented by Richard Armitage] including Occidental, Shell and British Petroleum had their eyes riveted on Albania's abundant and unexplored oil deposits. Western investors were also gawking [at] Albania's extensive reserves of chrome, copper, gold, nickel and platinum"" http://www.fromthewilderness.com/free/regional/KLA1.html So we've come full circle, from the earliest days of the Bush family's involvement with Nazi Germany via Brown Brothers Harriman Bank and Standard Oil/IG Farben and later, Saudi Arabia (Aramco), through to the Vietnam War and the Golden Triangle where the trade in drugs started, and then to Iran and Iran-contra and the South American drug connection, and then onto Afghanistan and finally Iraq where Dresser Industries (Brown Brothers), Brown & Root, all come together under the aegis of the Bush emperium with Halliburton as the final link. Throughout it all, key individuals have played important roles in linking together oil, guns and drugs as part of a web of business and political connections designed to further the interests of big capital. The question is, how much longer can this web of deceit be kept hidden from the public? How much longer can the mass media ignore the crimes of a dynasty that extends back through three-quarters of a century? Notes 1 The Oil behind Bush and Son's Campaigns by Ranjit Devraj, Inter Press Services, 5 October 2001. http://www.globalresearch.ca/articles/DEV110A.html 2 George W. Bush's Dubious Friends , Intelligence Newsletter, 2 March 2000. http://globalresearch.ca/articles/INL110A.html 3 BUSHLADEN by Jared Israel, Emperor's Clothes; 8 October 2001. http://emperors-clothes.com/news/bushladen.htm 4 Judicial Watch: Bush/bin Laden Connection "has now turned into a scandal!", Jared Israel, Emperor's Clothes; 6 October 2001. http://emperors-clothes.com/news/jw.htm 5 The Carlyle Group , Alfred Mendes, Spectrezine. http://www.spectrezine.org/global/carlyle.htm 6 You've got to be Up Front , Mike McCormick, transcription of an interview with Stan Goff; October 24, 2001. http://narconews.com/goffmccormick1.html , http://www.radio4all.net/proginfo.php?id=3795 Some further References Tales from the Grassy Knoll: From 1911 to 9/11 Richard Armitage Links (more links to Armitage sources) William J Casey and Iran/contra My Dream and the Color of Suffering by Michael C Ruppert 'War is Horrible. But...': Speech by US Deputy Secretary of State Richard Armitage, January 21 Donald Rumsfeld and Richard Armitage: background notes The Bush 100: Richard Armitage Richard Armitage's Colorful Past The Dangers of Richard Armitage The Background is Oil The Dick Cheney Deep Data Dump It's a Lie by Michael C Ruppert Secret Agent Man: Iran-contra operative Richard Armitage is now Colin Powell's No.2 Kosovo Liberation Army and Albanian Sponsors Have Well Documented Roots in The Heroin Trade The Golden Triangle Texts CIA Behind the Bushes: The New Generation The Bush-Cheney Drug Empire Bank of New York Laundromat 911 Timeline by Michael C Ruppert
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