From: Chantell Taylor <firstname.lastname@example.org>
Subject: MAI & the IMF Bailout
Date: 16 Jan 1998 18:23:05 GMT
To: Multiple recipients of list <email@example.com>
The International Monetary Fund (IMF) was originally designed to help countries with short term balance of payment problems with bridge loans. It also was to provide expertise to help such countries maximize growth, build middle classes and thus consumer markets.
Overtime, the IMF has developed into a governmentally-funded Enforcer for private banks.
As a condition for loans, it compels countries to permanently redesign their economies, laws and governments to prioritize servicing private bank's hard currency loans. For instance, countries are required to switch farm production from staple foods into fruit and vegetables for export. While in IMF "restructured" countries citizens go hungry, the exotic produce that replaced their staple foods floods into countries where it can earn hard currency which is then used to service bank loans, often in the same wealthy country.
The effect of the IMF conditions in Asia and Latin America has been expanded debt, destabalizing quick in- and out-flows of investment, lower currency values, slower economic growth, worse income distribution and elimination of middle classes, reduction of education and health services, weakening of labor law and increased hunger.
Now the same folks who designed the IMF rules which exacerbated the Mexican, Philippine and Thai meltdowns have a plan for the world's rich countries -- MAI.
The Multilateral Agreement on Investment is a powerful treaty containing many of the exact same rules the IMF imposes. It has been negotiated in tight secrecy since 1995 at the Paris Organization for Economic Cooperation and Development (OECD).
Perhaps the ugly results in Asia and Mexico of this model will give U.S. policy makers, voters and the press pause about whether a treaty imposing these failed policies here should be rushed to completion as planned this May.
Key among both IMF's required "structural adjustments" and the MAI's core terms are:
- Guarantee all foreign investors the right to establish investments in all economic sectors, including services such as banking, communication and construction.
- Remove safeguards in stock markets that limit flash sell offs
- Strip out other portfolio investment precautions, such as "speed bumps"
- Weaken labor and environmental standards to attract investment
- Eliminate non-market currency rate-setting systems
- Bar countries from adopting regulations which would restrict or control foreign investment in their countries.
What happens when countries strictly follow these IMF-MAI rules? We do not have to test out the MAI on ourselves to know. Now that we can see that the 1995 Mexican meltdown and bailout of banks invested there was NOT a fluke. Rather, as we can observe now with the demise of the Philippine and other IMF poster children economies, the IMF-MAI casino economy model is a failure that only avoids sinking altogether through regular bailouts.
Instead of replacing the failed IMF policies, the Clinton Administration wants U.S. taxpayer dollars for an IMF bailout and a treaty to bring the IMF rules to the U.S.?
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Public Citizen's Global Trade Watch