Colonizing the World's Economy
by Lenora Foerstel 3:05pm Mon Apr 10'00

After World War II, direct colonialism was replaced with a new globalized economy, set forth by the Bretton Woods conference in 1944, which gave birth to the International Monetary Fund, the World Bank, and the International Trade Organization.

Offering the myth of economic aid, Western nations have extended their control over the Third World and Eastern Europe under the umbrella of the International Monetary Fund. After World War II, the United States emerged as the dominant world power. As it became clear that the European nations could no longer maintain their colonies, a strategy for a new economic relationship between Europe, the United States and the Third World had to be formulated. In 1944, at the Bretton Woods conference in New Hampshire, the new economic structure was created. It was at this conference that the World Bank, the International Monetary Fund (IMF) and the International Trade Organization (ITO) were founded.

The IMF is an institution with a membership of 182 countries. Membership is open to any country that is willing to adhere to the IMF's charter of rights and obligations. A major obligation is for member governments to effect privatization and a market economy. This basically means that countries practicing a planned economy or any form of socialism cannot apply for membership, since they do not support the profit agendas pushed by multinational corporations. On joining the IMF, each member country contributes a certain sum of money called a "quota subscription," which is a sort of credit union deposit. The more a member contributes, the more that country can borrow. The richer the country, the larger its quota. Those who contribute most to the IMF, like the United States, are given the strongest voice in determining its policies. Each member country has a member and an alternate member represented on the board. These men are usually ministers of finance or heads of central banks, and they advise the IMF on what they believe is needed by Third World countries.

Like the IMF, the World Bank exercises a powerful influence on developing nations, often at the expense of their sovereignty. It is important to keep in mind that the World Bank makes a very high profit with each loan. The Bank has four bodies: International Bank for Reconstruction and Development (IBRD), The International Development Association (IDA), International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA). The IBRD raises its funds on the international capital market at low rates of interest and re-lends it to countries with a poor credit status at higher rates. "Some of the loan money has been known to go into lining the pockets of government officials and technocrats in exchange of creating a conducive environment for foreign private capital to operate and for handing over policy making power to the IMF-WB."(1)

When emerging Third World nations joined the United Nations in 1945 and accepted international financing under the control of the United Nations, a genuine enthusiasm developed as both sides felt that economic cooperation would lead to economic equity. Third World leaders did not repudiate the debt or treaty obligations that their former colonizers had committed them to. They decided to work within the boundaries of the market policies and conditions placed upon them. However, in 1950 the World Bank and the IMF, at the urging of the United States, announced that their policies would no longer be accountable to the United Nations. This gave the IMF and World Bank arbitrary power over the Third World economy.

In the late 1970s, the IMF developed a set of policies that would be required of any nation receiving a loan. When a nation applied for a loan, the IMF would present to that nation a plan for reform which came to be known as the "structural adjustment policies." Although these policies vary from country to country, there is one consistent demand made by the IMF: The government of the country seeking a loan is required to reduce its role in controlling its economy. This weakens that country's ability to provide the services and infra-structure needed by its citizens. In African countries, this meant sharp reductions in education and social services and the removal of tariffs protecting emerging industries which the World Bank considered inefficient.

"The IMF argued that Africa should continue doing what it apparently does best, the production of cheap raw materials for the developed world in exchange for more expensive goods. This means turning the clock back to a colonial relationship which independence was supposed to eradicate."(2) Civil rights leader Jessie Jackson denounced the effects of what he called "economic colonialism"on the developing world. "They no longer use bullets and ropes," he stated. "They use the World Bank and International Monetary Fund."(3)

The IMF and World Bank also force nations to devalue their currencies. This creates an abrupt price hike in food, medicine and fuel, and a dramatic compression of real earning for labor. As a result, "an entirely separate and parallel organizational structure unfolds, various non-governmental organizations (NGOs) funded by international 'aid programmes' have gradually taken over many of the functions of local level governments whose funds have been frozen as a result of the structural adjustment programme."(4) In 1978 the IMF sent a team to establish its quarters in what was then Zaire's central bank. The IMF became a mini-government dispatched to Zaires economy. Today the IMF operates such mini-governments in forty countries.(5) In 1996, the World Bank launched a program to bring privatization to Bosnia-Herzegovina. Today this country is run by the IMF, The World Bank and highly funded international NGOs, turning the country into a feudal system. The U.S. and its NATO allies are turning much of the rest of the Balkans into similar mini-states which, like Bosnia-Herzegovina, will be run by the IMF-World Bank and international NGOs.

Whereas the IMF and the World Bank control the economy of many nations, the World Trade Organization (WTO) organizes treaties which give European and U.S. investors unprecedented rights to intervene in all sections of a debtor nation's economy. In most cases, the foreign corporations are treated far better than local companies.

The early roots of the WTO grew within GATT (General Agreement Tariffs and Trade) after World War II as a institution to peacefully regulate world trade. In 1986 at the Uruguay Round meetings, GATT began to change its policies. Their new charter included a demand that corporations be allowed to freely invest anywhere in the world without restrictions imposed by environmental and safety standards. Included in the new charter's demands is the right to govern ownership of intellectual property (patterns, copyrights and trademarks). "Southern [Hemisphere] countries now have to compulsorily change their national patterns and other intellectual property laws to bring them in line with Northern norms, a move that is going to restrict the development of their domestic technological capacity and will result in future larger outflows of royalties and other technical payments to Northern corporations."(6)

WTO agreements on agriculture and TRIPS (Trade-Related Aspects of Intellectual Property Rights) had imperiled and denied womens rights as food producers and consumers. With the new intellectual trade agreements, women in the Third World are reduced to supplying cheap labor and are forced to buy foreign goods. The WTO treaties ignore the problem of two hundred million children around the world who are employed under starvation conditions while manufacturing cheap goods for the United States and other developed countries.In the United States, NAFTA ( North American Free Trade Agreement ) and an expansion of GATT have caused the elimination of more than 100,000 U.S. jobs. As U.S. industries moved into Mexico to exploit its cheap labor, Mexican workers lost their right to safe working conditions, clean environments and their right to form unions. "It is important that citizens around the world organize to disarm WTO," says Michel Chossudovsky. "There can be no other alternative but to reject the WTO as an illegal organization. In other words, the entire process must be rejected outright."(7)


  1. Radhika Lal, "IMF, Capital and Us: The Economics of Imperialism," Corporate Watch: The Watchdog on the Web, October
  2. 1996, p.3, 2.O. Anyadike, "Structural Adjustment: No Light at the End of Tunnel," Third World Resurgence, No. 28, January 1992, p.25
  3. B. Rich, "50 Years of World Bank Outrages," Third World Resurgence, No. 49, January 1994, p.25.
  4. Michel Chossudovsky, "Global Impoverishment and the IMF-World Bank: Economic Medicine, Third World Resurgence, No. 49, September, 1994, p.20.
  5. J. Kurtny, Endless Enemies, New York: Congdon and West, 1984.
  6. Martin Khor, "Labour Standards and Trade Protection," Third World Resurgence, No.45, May 1994, p.33.
  7. Michel Chossudovsky, "Seattle and Beyond: Disarming the New World Order," Emperor's Clothes Webpage,

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