The Davos Farce
Posted on January 17th, 2017
By Garvin Karunaratne, Ph D.
At this very moment 2500 or more of the world’s most influential people are gathered in Davos, Switzerland to discuss the most pressing issues facing the world. This Economic Forum is “committed to improving the state of the world”.
It is ironical that the USA, the most important and influential of countries is represented by the outgoing leaders-Secretary of State John Kerry, Vice President Joe Bidden who cannot in any way commit to the path that the USA will take on under President Elect Donald Trump.
What is the World that Davos is trying to improve and develop?
Looking at the World today one finds that even the Developed Countries are facing major problems. The USA is yet to recover from the onslaught on its economy staged by its own financial institutions of repute. As Professor Joseph Stiglitz said,
” The financial markets have mismanaged themselves… They allocated hundreds of billions of dollars to mortgages beyond people’s ability to pay. They didn’t manage risk. They created risk While financing firms were messing up our economy they garnered for themselves over a third of all corporate profits.”(People First Economics: Ed Ranson & Baird.)
The current recession commenced in 2007 and all the king’s horses and all the king, men have failed to remedy the situation yet. Even today, full eight years since the economy grounded the citizens are unsure whether their own dollars held in reputable banks are safe. Home owners find that their homes have no value, a situation that is not faced by even citizens of the Third World. The USA is today a debted nation . In 2015 the national debt was as much as $ 18.8 trillion. The citizens voted for a new President who does not belong to either the Republicans or the Democrats the two parties that ruled again and again, and they hope for deliverance from bankruptcy which many face today.
Take Europe, the European Union is in grave trouble with Britain deciding to march out and some of its countries facing problems. Greece is in the dog house. With its economy in tatters. The Greek citizens are helpless, with rising unemployment, pay cuts and austerity demanded by the EU. Greece has to beg the European Union for funds. Funds are given and like in the case of the Third World countries funds given on loan are paid back to the creditors of the Developed Countries and Greece limps on till the next loans are due. It is a question of the richer EU countries benefiting.
“The benefits accruing to major European Countries due to the Greek Financial Crisis is immense. A Study by the Halle Institute for Economic Research states that Germany was able to balance its budget because of the Greek Crisis. ‘The Study attributed a significant part of Germany’s balanced budget to the Greek Crisis. Berlin stands to make money from the Crisis even if Greece reneges on its debt. The Study also concludes that while Germany benefited most, the US, Netherlands and France too benefited”(“Germany Profitted from the Greek Crisis: Study Reveals, USA Today 12/8/2015)
(From How the IMF Sabotaged Third World Development by Garvin Karunaratne)
The countries of the Third World are held in a firm grip through the debts they owe the Developed Countries, their IMF and banks. In the Sixties these countries were not in debt. They managed their outgoings with their incomes through a process of controlling their imports and allocating their hard earned foreign exchange in the national interest. Then came the IMF. As stated by me;
“ Whenever a country could not meet its financial commitments as did happen when the Middle East countries increased the price of oil threefold in the Early Seventies they flocked to the IMF for Aid. The IMF then imposed its conditions to be followed and the countries had no option other than to agree… The variety of conditions imposed comprised liberalizing the use of foreign exchange, taking the control of foreign exchange out of the hands of the Government. Instead it was to function as decided by the market forces of supply and demand which really meant that it was handled by the banks- the banks decided the exchange rate…This led to devaluation. Foreign Exchange use was liberalized… an entire decade of economic blunders by the IMF shows how the countries became burdened with debt with the result that they had to get more and more loans to service the debt.” (From: How the IMF Sabotaged Third World Development)
This process of bankrupting the Third World countries was organized by the donors themselves as confessed by John Perkins, a foreign consultant who admitted that he fabricated statistics and drafted programs where the foreign exchange provided went back somehow- through consultancies, and other charges back to the donor countries while leaving Ecuador indebted to the extent of the loan. (From Confessions of an Economic Hitman by John Perkins).
For the World Economic Forum to play a major role in development it had better address the economic problems that all countries- the Developed as well as the Third World countries face today. It is a new Paradigm for Development, a New World Order that is required to bring prosperity to all countries.
How the IMF Ruined Sri Lanka and Alternate Programs of Success, Godages, 2006
How the IMF Sabotaged Third World Development, Kindle,2017