As Third World forms its own big banks, good luck to average people

Noam Chomsky: In South America, national transportation systems don't have much to do with each other. The rich, mostly white, Europeanized elite minority send out resources and capital and have chateaus on the Riviera. For the first time, both of those kinds of disintegration, internal to the countries and among the countries, are being confronted.

In Bolivia, the elite is sitting on most of the hydrocarbon reserves. When the indigenous majority took political power for the first time, in a democratic election of the kind we can't imagine here, the West condemned President Morales as moving towards dictatorship. The elite are making moves toward autonomy, maybe secession.

The Bank of the South is a step towards integration. Argentina had been the poster child of the IMF. They had followed its policies, which led to economic collapse. They did pull out, by rejecting the advice of the IMF. They restructured their debts and Venezuela helped pay a substantial part. Brazil also paid off its debt and rid itself of the IMF.

The IMF is losing its reserves. It was functioning on debt collection and if countries restructure their debt or refuse to pay it, they're in trouble. The debt, in my opinion, was illegal in the first place. For example, if I lend you money, and you tell me at one point, sorry I can't pay anymore, I can't call on your neighbors to pay it off. But that's the way the IMF works. They lend money to a dictatorship, he says he can't pay it off, they say okay the population will pay for it. It's called structural adjustment.

The World Bank faces the same kind of conflicts. In Bolivia, their effort to privatize water led the indigenous population to finally take power. Economics says you ought to pay the market price, true value, except that means poor people, which is most of the population, can't drink.

JJS: He’s assuming (a) an absence of public recovery of land rent, allowing absentee ownership of land by the most grasping, thereby impoverishing most people, and (b) that drinkers pay an elite for water, rather than pay a water provider that would pay the population a dividend. Then a poor household could always afford to drink, would pay the least, and the biggest water users -- agri-business, mining, industry -- would pay the most.

The peasants forced the international water companies, Bechtel and others, to pull out. The World Bank had to pull out of that project. On the other hand, some of the things they do are constructive.

In Asia, at the time of the financial crisis in 1997-98, Japan wanted to create a substantial reserve in the Asian Development Bank. That would enable countries to survive without selling off their assets to the West. The United States blocked it. But they can't do that anymore. The reserves in the Asian countries are too high.

M. Shank: With these institutions springing up as alternatives to the IMF and the World Bank, what will emerge regarding currencies?

N. Chomsky: It's already happening. Kuwait has moved toward a basket of currencies, the United Arab Emirates and Dubai toward their own development funds. Saudi Arabia, that's the big important one, if they join it'll become a major independent center of investment in the rich countries and to some extent in the region, particularly North Africa. It's a limited move; they don't want to anger the United States.

The elites rely on the United States. China and Japan sell to the US market. They don't want to undermine it. So they buy treasury bonds instead of more profitable investments. But it's a fragile situation. They're beginning to turn elsewhere.

Shank: The West resists countries nationalizing their oil and gas but that trend continues. Can oil- and-gas rich countries get together and establish an alternative market?

Chomsky: OPEC to some extent does. But they have to face the West. In 1974 the oil-rich countries made the first move toward oil independence. US commentators were saying the oil should be internationalized for the world. American agricultural wealth shouldn't be internationalized, but the oil of Saudi Arabia, yes. The more extreme people said it's a scandal that we're letting them get away with running their resources. Harsh measures may be necessary for "protection of our resources" -- which happen to be in some other country.

The Clinton doctrine presented to Congress was that the United States has the unilateral right to use military force to protect markets and resources. The Bush doctrine said we've got to have a pretext, like we've got to claim they're a threat. Clinton doctrine didn't even need any pretext.

You're going to have to look far in the political spectrum to find any deviation from this. The United States spends more on the military than the rest of the world put together. That's not to defend the borders.

MS: Do you think India will swing towards Russia and China or will it continue to cozy up with the US post-nuclear agreement?

NC: The Indians are playing a double game. With China they're improving trade relations and joint investment. They haven't been accepted as members but they're official observers in the Shanghai Cooperation Organization (SCO), which is mainly China-based that could become a counter to NATO. It includes the Central Asian states and Russia. Other observers are Pakistan and Iran.

The United States wanted to join as an observer. It was rejected. The SCO has officially declared that US forces should leave the Middle East. And it's part of a move toward developing an Asian Energy Security grid and other steps that will integrate that region and allow it to move toward independence from Western control. South Korea and Japan have not yet joined, but that's not graven in stone either.

Also see:

Corrupt World Bank, IMF in Tailspin
http://www.progress.org/2007/imf03.htm

Poverty in the Midst of Plenty
http://www.progress.org/2007/africa29.htm

IMF and World Bank Are Spinning Out of Control
http://www.progress.org/archive/imf27.htm

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As Third World forms its own big banks, good luck to average people Chomsky: Poorer Countries Find Ways to Escape US Dominance

As Third World forms its own big banks, good luck to average people

Chomsky: Poorer Countries Find Ways to Escape US Dominance