It's interesting that these core members of the global elite are
throwing stones at their own institution. What is outrageous is that
they are completely side-stepping their own personal culpability for
having used it to drive globalization with all of its ill side-effects.
The fact that they succinctly describe the damage done by the IMF
clearly dispenses their typical claim of "ignorance." Are they setting
the stage to disband the IMF in favor of another, more powerful monetary
authority? Time will tell.
Argentina: A Case Study of Privatization
In 2001, the IMF handed a bailout package to Argentina, valued at $8
billion. The major beneficiaries were the European megabanks, which held
about 75 percent of the country's foreign debt. The money river flowed
like this: IMF gives $8 billion (about $1.6 billion of which was tax
money collected from hard working Americans) to Argentina; Argentina
buys U.S. Treasury bills (U.S. gets the dollars back after being
"monetized"); Argentina delivers Treasury Bills to creditor banks who
graciously agree to retire their worthless Argentinian bonds.
Less than a decade earlier, the IMF and the World Bank backed Argentina
in the largest water privatization project in the world. In 1993, Aquas
Argentinas was formed between Argentina's water authority and a
consortium that included the Suez group from France (largest private
water company in the world) and Aquas de Barcelona of Spain. The new
company covered a region populated by over 10 million inhabitants.
Now, after 10 years of higher water rates, decreased quality of water
and sewage treatment, and neglected infrastructure improvements, the
consortium is breaking its 30-year contract and pulling out. Bitterness
between Aqua and government officials runs deep because of broken
promises and political backlash.
The aftermath of Aqua Argentina is recorded in the November 21, 2005
online edition of the Guardian:
More than 1 million residents in the rural Argentinian province of Santa
Fe are facing an anxious wait to discover if their taps will still flow
or their toilets flush over the next few weeks.
Since 1995, the province has had its water supply and sewage services
provided by a consortium led by the French multinational Suez; now the
giant utility wants out, and plans to leave within the month.
The decision, which follows the high-profile collapse of other water
privatisation schemes in countries including Tanzania, Puerto Rico, the
Philippines and Bolivia, has again raised questions about the viability
of privatising utilities in the developing world.
Suez is also preparing an early departure from its formerly lucrative
concession in the Argentine capital, Buenos Aires. The deal, struck in
1993, marked the largest water privatisation project in the world.
In both cases, the French utility is terminating its 30-year contract a
third of the way through. Suez cannot get the concessions to turn a
profit - at least not under the terms of its current agreements.
The French utility giant snapped up both service agreements in the
mid-1990s when Argentina was undergoing a massive reform of its public
sector, largely at the behest of the World Bank and other lending
Aqua Argentina milked the market as long as it could, and then simply
bailed out. And, why not? The profit dried up and it's not their
Global statistics show that some 460 million people around the world
must rely on private water corporations like Aqua Argentina, compared to
only 51 million in 1990. The IMF (and World Bank) levered the extra 400
million people into privatized contracts with water mega-companies from
Europe and the U.S. Now that the cream has been skimmed off the top of
the milk, these same companies are excusing themselves from the party --
leaving a shambles, angry customers and incapable governments still
saddled with the billions of dollars of debt incurred (at their
insistence) to start privatization in the first place.
[Note: In February 2003, CBC News in Canada produced an in depth report
Water for Profit:
how multinationals are taking control of a public resource that
included features and segments that were delivered across five days of
This report does not pretend to be an exhaustive analysis of the IMF.
There are many facets, examples and case studies that could be explored.
In fact, many critical analysis books have been written about the IMF.
The object of this report was to show generally how the IMF fits into
globalization as a critical member in the triad of global monetary
powers: The IMF, the BIS and the World Bank.
Despite even establishment calls for the dissolution of the IMF, it
continues to operate unhindered and with virtually no accountability.
This is reminiscent of the BIS continuing to operate even after its
dissolution was officially mandated after WWII.
For the purpose of this report, it is sufficient to conclude that...