Pakistan and WB-IMF Lender's Trap

California, Monday, May 13, 2019 | Extended on Sunday, June 2, 2019
Please watch the first half of Dr. Shahid Masood's current affairs program on GNN today, May 13, 2019, for his focus on explaining the WB-IMF lender's trap. I wrote the following in March 2007, firstly in the context of my interlocution of HEC on meaningful higher education reforms that dates my cautionary-conversations with its Chairman and Executive Director, Atta ur Rahman and Sohail Naqvi, in August 2005. And secondly as the outcome of my participation in WSF in 2006. I had, even earlier, described Globalization and its discontents in Chapter 2 of my 2003 maiden book titled: Prisoners of the Cave, dismantling the many hegemonic tools of the American empire and its fiction of War on Terror. None of this is, or ever was, a state secret. It is open for all to witness empirically.
If I, a common man, expert in nothing, knew about international predatory finance as a weapon of neoliberalism to strangulate nations in a web of debt, and explained it to the establishment rulers of Pakistan as far back as 2005, for prime minister Imran Khan to be caught in the same debt-trap today in 2019 despite all his earlier protestations, and for the newsmedia to be regurgitating the same sorry facts that surely every barber in town must now know it without having any impact on policy and decision making, tells me that either my country, Pakistan, is run by con men and mercenaries, or it is run by imbeciles, fools and useful idiots galore. Perhaps a combination of both. It is certainly not ruled by the courage of their convictions that is evidently only worn on the forehead.
I really don't wish to believe this obvious conclusion. But I am forced to face the fact that Pakistan is / was / has been deliberately and continually destroyed piece-meal by its own establishment morons and mercenaries through empire's economic terrorism that wields both domestic corruption and international finance as weapons of mass destruction. Just another incantation of the East India Company that employs its cultivated stooges and new generations of corrupt feudal lords to administer its slave colonies. Pakistan is still quite firmly entrenched in America's colonial project even under Imran Khan as its stooge pigeon.
This is merely the prelude to dismembering or at least disarming Pakistan by embroiling her in manufactured domestic discontent on the one hand, and international shenanigans on the other to bring war upon its doorsteps. Once brought to the Russian Roulette Table, all seated at it can only lose. As I sadly observed in my un sent letter of anguish to Pakistan's Chief of Army Staff and to DG ISPR (never sent the letter): “My dear general sahib and Pakistan's military high command, sirs, you cannot eat atom bombs.” What would have been the point of writing to Pakistan's military the obvious that hasn't already been stated time and again, as for instance in my 2007 Open Letter to Pakistani General: Re-Imagining Pakistan's Defenses. Every taxi driver in town knows the prescription. Aspires to it. The common Pakistani would gladly fight for it. But not the rulers.
Watching from California, I share the painful exercise of pulling my remaining hair out at the imbeciles and mercenaries in charge of my country with the millions of Pakistanis facing the hard brunt of it on ground zero! I have yet to witness any rulers suffer the same pain.
Oh, you want solutions instead of hearing the rehash of the obvious and the self-evident? Here it is: Open Guidance to Imran Khan - Reimagining Pakistan : Project ReGenesis by Zahir Ebrahim ( https://tinyurl.com/Open-Guidance-to-Imran-Khan ). It is even more pertinent now with the rise of The New Ruling State of the World, poised to attack both Iran and Pakistan.
Survival with dignity on the grand chessboard can only be had in a perpetual MAD stalemate in which a balance of terror is carefully maintained, like two scorpions trapped in a bottle.
The efficacy of balance of terror for stalemate was openly admitted to by the advocates of unilateral terror for their unfettered exercise of primacy on the grand chessboard under the pretext of 9/11:
'A half a century ago, in the midst of the Cold War, Prime Minister Winston Churchill noted in the House of Commons the “sublime irony” that in the nuclear age, “safety will be the sturdy child of terror and survival the twin brother of annihilation.” The Cold War is long over and new approaches to defense are overdue. As President Bush has stated, “We are no longer divided into armed camps, locked in a careful balance of terror.…Our times call for new thinking.” '
That new thinking was to brazenly exercise unilateral terror. Its obvious antidote is to bring back the balance of terror. That exercise in ensuring safety from predators can only be brought about by nations that are not colonies of empire and are willing to forge together in common cause in full spectrum alliance. Divide and conquer is an art as old as hegemony, as old as empire, and necessary for achieving full spectrum dominance. The unhidden agenda for Eretz Yisrael that is decimating Muslim lands, coupled with the oligarchic agenda for world government to be seated in Jerusalem, cannot be countered by cowardly slaves, sheep and mental midgets excelling in stupidity.
Some déjà vu follows – until such time when a people shall emerge who will display the courage to throw the tea overboard. A heavy price of course shall have to be paid for journeying on that road to independence and safety --- the sublime irony of state in which power is only deterred by power and the fear of its own annihilation. Not divine platitudes. Nor the bleating entreaties of sheep for mercy. A lesson of history that Muslims, and Pakistanis in particular, all waiting for Allah, have yet to internalize in their policy calculus against all predators.
Oh Allah, the Ruler of Creation, take me away from this world for there is no intelligent life down here --- only primates and sheep. We may have descended from the tree top, we have yet to lose our tail.


March 15, 2007, Seeding a genuine Education System Transformation in Pakistan
You came to HEC in 2002, got a carte blanche with a certified blank check drawn on the World Bank - and not by reducing the defense budget as you have mistakenly, perhaps out of ignorance of the inner workings of the national financing structure, claimed in your interview with the Chronicle. An interesting claim by you that can be trivially shown to be false considering our debt financed economy. Please stop fooling yourselves and others by bringing up bombastic GDP numbers in isolation, look at GDP/cumulative-debt ratio, what percentage of GDP is being taken out of the country by foreign multinational investors by depleting our foreign currency reserves, and what percentage of GDP is actually going for debt servicing also from the foreign currency reserves. Whatever remains after the debt is subtracted is what we net earned domestically - not GDP! Living on debt is not earned money my dears! Your claims are just number and accounting wizardry that I am perhaps more familiar with than the Chronicle reporter who interviewed you and did not have the wherewithal to challenge any of your statements, perhaps more interested in maintaining congeniality, than giving you a proper grilling. Our minuscule social spending and large defense expenditures come largely from debt deferment while it continues accumulating interest. All mostly pseudo secretive stuff that few in the public really know about in actual quantitative numbers but most senior and privileged persons in the Finance Ministry and the State Bank, I can assure you, as every single former and current Finance Minister, knows it at least qualitatively, and if they are any good at their jobs, they will also know the exact numbers and what was signed away in the fine prints for the further privilege of borrowing for some more silly toys and things, but mainly to pay just the rapidly accumulating interest without defaulting - the classic lenders' trap! So what indeed can you show for this blank check today that the lenders will return to demand their pound of flesh soon enough for, with the next tranche of structural adjustment schemes and new demands for the privatization of our public commons sacredly held in trust by the state for the common good of all our peoples, other than beautiful glossy slides and amazing magical numbers? Even you are now compelled to seek admissions for your kids elsewhere - almost five precious years wasted! Pathetic? You tell me!
... I had energetically pointed out to you (Sohail) in the course of our often long and passionate conversations on nation building and our own imperatives, that we were a debt financed nation, and all this money for these PC-1 projects, while ostensibly coming from the national exchequer, will likely never leave New York or London or Paris, and for which yours and mine children and grandchildren will be beholden to the lenders through their collective noses. Your response, and I approximately quote from memory using almost your own words which I still distinctly recall as they had taken me by surprise coming from such an intelligent man like you (Sohail): "I have blinders on with a very narrow focus, I am here to do good work and I don't care where the money comes from so long as the Government keeps releasing it, it's their problem to worry about, not mine!" My response? And I quote from memory: "We cannot build sandcastles on the beach and not be cognizant of the tide!" Indeed, I had further pointed out that we were being deliberately encouraged to spend these borrowed monies on various and sundry white elephants, which the lenders well knew were white elephants and will never bear any fruits, to purposely keep us a debt laden dependent nation. I even gave you this famous cliché, again quoting from memory: "they would continue lending us money if we told them we needed it for a thousand men to dig up a trench, and another thousand to fill it back up, and needing to repeat that cycle a thousand times!", repeatedly cautioning you that these PC1-s were no different, that they will eventually be financed with an outstretched begging bowl, and will serve their interests perfectly, but none of ours!
End Excerpt


March 12, 2007, Letter to the Editor, The Chronicle of Higher Education
From where I see it, your reporter was rather mild in her criticism of HEC. Lot's of facts and figures have been put out by HEC, and they are all over HEC's website. But the reality on the ground is that I still don't have a single good multidisciplinary university where I might send my own kids. And I wanted to have them study in Pakistan, but where? In the single one of a kind specialized engineering universities that the West itself has rejected as a model of education as it steps into the challenges of the 21st century (please see this EE Times article “Engineering education prepares for 2020- Keynote address Leah Jameison, IEEE 2007 President, Feb 1, 2007)? But we are building 6 or 9 more of these silly things for billions of rupees! Instead of overhauling our existing infrastructure, perhaps employing the enormous amount of intellectual capital freely available in opencourseware - universities giving away their crown jewels for free, an unheard of phenomenon in the past (please see “The great giveaway- Education Guardian, Jan 17, 2007) - we are instead borrowing funds from the World Bank to finance our development or siphoning it off from our other national projects in our debt financed economy! The only thing the World Bank constructively does is enable an inextricable lenders trap upon the developing nations through its WB-IMF structural adjustment lending schemes. That this view is shared by many informed critics of the World Bank, including substantiated by disclosures by former World Bank consultants in exposes such as “A Game As Old As Empire” and “Confessions of an Economic Hitman” (both available from Amazon.com), discredits the World Bank as an "unbiased" source of evaluation of its own funded programs, even as mildly critical as they are of HEC.
So who must evaluate? Who is an objective source of evaluation? How about the local consumers themselves? Why do we need foreigners to tell us how we are doing? Are we so far gone that we cannot even evaluate our own programs? Does the United States go to ask Europe how they are doing for their own domestic policies? Should any self-respecting nation (solely) rely upon the World Bank and other outsiders to tell them how they are doing?

Therefore, recognizing this fact of self-reliance of a developing nation being an axiomatic imperative of its free peoples in order to stay a free peoples, as a parent-consumer, I have provided a very detailed first hand evaluation to HEC, which they unfortunately felt compelled to respond with the same sort of meaningless World Bank kudos that one of their writers noted in her letter to the editor of the Chronicle. My detailed evaluation and feedback, written as an ordinary plebeian Pakistani consumer of education, who is compelled to educate his own kids abroad because he can't find a decent school system in Pakistan, who seeks for others' kids what he seeks for his own kids, and who consulted for two weeks in the summer of 2005 for HEC and knows its Chairman and Executive Director well and is their friend and well wisher rather than an antagonist, can be provided to the Chronicle if they wish to print it without modification and with its full context intact. It might make an interesting feature length case study or cover story, all 19 pages of it, for how not to transform an education system in developing nations with World Bank funding, how not to operate its execution in military style dictatorial and entirely unaccountable manner, and how indeed to create the essential infrastructures necessary to genuinely seed such transformations in a third world developing nation.
End Excerpt


February 4, 2007, Letter to Activists, Introducing A Game As Old As Empire
When participating at WSF 2006 in Karachi in a forum, I had made this seemingly strange statement:
Neoliberalism and Neoconservatism are two sides of the same imperial coin”.
In one other forum on water privatization, I had noted something equally bizarre to the effect (in Urdu):
deception is a key component in this game and you have to assume this as your working premise when you investigate or evaluate any proposal that is put your way on why or how water privatization will be beneficial to you - they wage war by way of deception”.
It was simply remarkable how many people had thronged around me afterwards to learn more and ask for elaboration. That's when I realized that the real intellectual underpinnings behind the impetus towards globalization and the neoliberal agenda were not being addressed to their full unraveling and disambiguation anywhere. All of a sudden I seem to be the only one talking about it in these terms, often needing to even challenge the perceptions of many of the learned panelists themselves whom I felt were speaking at the most superficial levels - the outer most visible layer of the onion.
... People in general are ill equipped with the intellectual tools to either comprehend this problem of globalization in its multifaceted dimensions, or [to] take on addressing its root causes. Grass-roots the world over has become synonymous with action in the streets, or working in the field doing good works and deeds. Few read, even fewer dig even when they might read.
Even students at elite schools like my own, MIT, study poverty under a microscope in their laboratories (there is a poverty alleviation lab at MIT - do google it), and come up with the most interesting red herrings to pursue, such as reduce the birth rate for instance to solve poverty problem, or the newest fad in microcredit schemes. Both eminently reasonable propositions on the surface for many progressive minds to alleviate poverty. But as I had come to appreciate in computer science and as a practicing engineer in Silicon Valley, the highest order bits entirely determine where the page faults!
And here, what is incredible to me is that they entirely end up ignoring the giant elephants trumpeting on the newlywed's bed - debt cancellation of the third world; inequities of global trade treaties like WTO; economic conscription that generates a new class of labor camps in the wonderful duty-free zones where the employer reigns supreme and few labor laws that apply in the developed nations apply there; or that "free trade" has been the mantra of all dominant civilizations and mainly only favors them.
None of these are studied as the primal first cause of global poverty, or how poverty is harvested for the benefit of multinationals when they offshore, or the fact that the third world is deliberately being raped by supporting dictatorships and kingdoms that can be more easily controlled than any fractious genuine parliamentarians ever could.
These same geniuses with fancy PhD. degrees in economics will then head various World Bank and its sister organizations and often not have a clue. And when they do get a clue, they are so complicit that extricating themselves can become quite impossible. This is how empires are built in neoliberalism. We have already witnessed how empire is extended using neoconservatism. The distinguished New York Times columnist Thomas Friedman said it the best in his now famous “Manifesto for a Fast World”:
The hidden hand of the market will never work without a hidden fist - MacDonald's cannot flourish without McDonnell Douglas, the builder of the F-15. And the hidden fist that keeps the world safe for Silicon Valley's technologies is called the United States Army, Air Force, Navy and Marine Corps.”
And a major aspect of this "hidden hand" is what John Perkins disclosed and confessed to in his first book in 2005, the “Confessions of an economic hitman” - the notorious EHM. See page 101 (of the hardcover first edition, page numbering may be different in paperback) to be shocked beyond belief how an MIT statistician is employed to create a pseudo science to prove to the tin-pot dictators around the world why it would be beneficial to their nations' growth to take on more debt by falsely projecting enormous growth rates which can be used to pay back the debts easily!
Such growth projections of course never materialize - because they were conjured up out of thin air, and thence the tag team of WB-IMF get into their now infamous act of further structural-adjustment lending just to enable paying off the rapidly accumulating interest on the monstrous loans that now shackle every third world nation beyond belief. Can we relate this to our own nations taking on debts like a leaking ship?
End Excerpt


Excerpted from my maiden 2003 unpublished book: Prisoners of the Cave, updated 2005 for Internet Edition, published on the Web in April 2007
Begin Excerpt ( from Chapter 2 )
The economic policies we force them to adopt through our sophisticated machinations of sanctions and instruments of economic hegemony such as the WTO treaties, the World Bank, the IMF, and the ECA, as in almost every developing country in the world except Malaysia and Cuba who refused help from the World Bank and escaped.*2 Since the end of WWII, 104 stifling economic sanctions have been imposed on the civil populations of the world. “In 1998 alone, the US had sanctions against 75 countries, accounting for 52% of the world's population.*3 Then of course, there is the least talked about and totally unaccountable and unregulated ECA (Export Credit Agency), a lending agency to the developing world. It is a unique partnership between corporations and the American tax payers, and according to some experts, far worse than the world Bank.*4
The structural re-adjustments in poor countries pushed by these lending and aid agencies through corrupt dictatorships, oblige these developing nations to high interest loans for useless projects that are subsequently contracted out to multinational corporations, and in return for privatization of their national resources for a song. The corrupt leadership also nets a few million in the process and make palatial homes with it. While the poor are squeezed dry by higher taxes and even higher cost for their own natural resources. Privatization of drinking water in Cochabamba Bolivia at the hands of Bechtel Corporation, or electricity in India at the hands of Enron Corporation, is a glaring example of this.*5
This is a two prong economic assault on the developing countries – prevent them from making their own lower cost products indigenously, and destroy their existing indigenous low tech capacity to make them your perpetual consumers. It is necessary to briefly explore this incredible system of exploitation of the developing nations, where 3/4th to 4/5th of all humanity make their home. It might help you understand with clarity “why they hate us” more than a million hours of watching American mainstream news and Sunday morning talk shows.
The first aspect of this is imposed through various Free Trade Agreements and WTO regimes to ensure that items which are of necessity, such as essential medicines for killer diseases for instance, cannot be locally manufactured through intellectual property rights patent protection – thus ensuring that only the multinationals will be supplying the products at their own asking premiums to a captive audience for a very long time. If you don’t pay, you die. It is rather besides the point who invested what in developing the life saving drugs, as in this example. The entire system is designed to support this monopolistic endeavor by denying the fruits of Western labors to the developing nations, while harvesting them of all their own resources, with rules of the game that were also conveniently invented by the West. The American courts granted the idea of patent protection to all kinds of things – some even unpatentable things – but it was for their own domestic competition and the American’s own internal matter. Since when did American courts acquire jurisdiction over other countries? Since empire! What empire? The empire spawned by the Multinationals in whose interest it is to monopolize their products through the protection of the military and economic imperial reach of the hectoring hegemons.
The second aspect is how these multinationals destroy the domestic small time mom and pop producers just as they did in America, for the benefit of huge profits for their shareholders and stock market speculators on Wall Street. The multinationals come in and buy out the local companies and local producers. Once the local competition is wiped out, they reign supreme. Even if they want to, the local indigenous producers cannot compete with these giant corporations due to their fantastic economies of scale, high tech sophistication in manufacturing, slick psychological marketing, and enormous initial price competitiveness where the multinationals can out compete a local producer or a domestic self-sufficiency because of their other diversified businesses and products worldwide. They command so much surplus cash and leverage that they can cleverly circumvent the toothless anti-dumping clauses in trade agreements and other meaningless rules that the poor developing nations are sold on and made to sign on the dotted line. Just the sheer magnitude of resources they can bring to bear to wipe out local competition, ranging from preferential host government policies to outright buyouts at ten to hundred times the market value of the local businesses, can entirely destroy domestic producers. And thus the concomitant self-reliance of an independent nation, making everyone only abject consumers of multinationals in the name of progress and “modernity”.
Often the same products that they previously grew, raised, or produced themselves, admittedly sometimes of lesser quality due to their own low tech but independent and self-reliant ways, they are now obliged to purchase from the multinationals. They either become unemployed in the process, or through economic conscription, come into the service of their new pay masters – the New East India Companies of the New American Century. Admittedly some do benefit, and typically it is the same 1-2% educated and affluent class who are employed in managerial positions, or who can afford the luxuries of life. The common man just sweats more blood and tears to eke out a subsistence living. Thus “Multinationalism” finds natural allies among the ruling elite in any developing nation. And it is the same folks who also control the wealth, resources, and unaccountable power in the poor nation! They will create fantastic rationalizations for their support of the Multinationals, ranging from acquiescence to the fait-accompli of their presence in their nation (can’t beat ‘em, join ‘em), to “trickle down economics” that they learnt from their Western masters that George H. W. Bush Sr. once had the temerity to call “Voodoo economics”, to actively seeking and soliciting them as finance and trade ministers, bankers, and Chambers of Commerce of the nation. Avarice is nationalism blind – which is why we have “Multinationalism” today on a global scale. No one will deny these observations because they have become truisms today. Indeed, the wealthy commerce man in the developing nations would likely retort back: what century are you living in, this is reality today my friend, get with it, as I have experienced first hand in my interlocution of many a rich and powerful in the industry and society in my own developing country.
This is the world wide Wall Street based empire that America is crafting with the backing of its big military machine and economic muscle as the sole superpower. You either march to the American tune to secure an “American peace” for the Americans and their favored allies in the industrialized nations, or not at all. It is equally insidious how this marching is forced upon the poor and the lowly – how the developing nations are prevailed upon to open up the doors to their domestic markets. John Perkins, a former consultant for the World Bank, finally found the courage after trying for over a decade, to write about his role as an “economic hitman” for the World Bank in helping destroy developing nations’ indigenous economies world wide in the guise of “development”. His amazing book, Confessions of an Economic Hitman, must be made essential reading for all Americans. He explains how the developing nations are deliberately and systematically made beholden to the World Bank and the IMF, and then subsequently, in exchange for alleviating debt repayment, forced to make structural reforms towards privatization from state ownership and public commons held in the public trust for the benefit of the indigenous peoples.*6 Often times, these are accompanied with compromises in local government policies and rules regarding zoning, pollution, work standards, compensation, and remitting the enormous profits back to the home countries in the industrialized West, all of which favor the multinationals to the detriment of their own domestic industries, their own foreign currency reserves, and their own peoples.
While in America, the corporations worry about OSHA regulations and workman compensations, and in paying a fair wage for 40 hour work-week with essential healthcare to boot, there are usually no such standards for other human beings on the planet employed by these corporations, especially those in the production capacity. There, human labor is just a commodity to keep while it is useful and productive, and to discard when it has outlived its usefulness. I have witnessed these things first hand in my own country, in factories supplying to multinationals and export only businesses – and that includes pretty much everything one buys in supermarkets like Walmart, K-Mart, Costco, etc. in America. These inhuman work conditions are not implemented by the “White Man” himself, his hands and suits are too clean to mess with such exploitation directly, but by his dutiful proxy agents – the local employers and local ruling elite who lord over their own peoples in the service of their masters du-jour. While outside their factories in industrial areas they will have large posted signs saying “No Child Labor Used Here”, the villages are full of sub-contractors employing whosoever they want and in whatsoever work condition they want, especially for cottage industries that require small fingers and delicate hands. It’s the wink wink and nod nod of the ruling elite, and business as usual for everyone. None of these things are especially secret – they are in fact, right out in the open.
These new corporate marauders, not too unlike their imperial predecessor East India Company, come in with any crack in the door that is invariably there due to the corruption of petty dictators wielding absolute powers and ruling their public with an iron fist, and is then forced to be made open wider and wider with each new debt service deferment plan by the IMF, and each new loan for new monstrous “development” project from the World Bank and all its sister affiliates.
The impact of this economic slavery is quite obvious for everyone to see, it is not buried in secret and classified documents. All one has to do is to survey the developing world to examine who is doing business there, what is on the shelves in their stores and who has produced them, and where are all the profits from these products and services being repatriated to and in what currency. In the vast majority of cases, the trail of money will start at Wall Street, and end at Wall Street. The poor developing nations only consume like good consumers, and at the end of the year, are left with a huge foreign exchange deficit because that’s how profit made in local currencies is remitted in dollars and Euros and Yens back to the greedily awaiting stock holders in the developed nations. A poverty stricken developing nation, often having sufficient natural resources under its own soil to be self-reliant in many cases, is already in enormous debt to various lending agencies of the West under the guise of “development”. It is thus further unable to pay its huge debts due to the depletion of its foreign currency reserves after the multinationals have extracted their pound of flesh, and consequently continues on in the perpetual vicious lender’s trap of: here is some more money for debt servicing, now be a good boy and make the following changes in your laws so more big multinationals can come rape you further but we will call it privatization and market liberalization.
It is an amazing self-sustaining positive feedback loop from the minds of the money lenders, if I might be permitted to use my engineering parlance to describe their usurpative system. And as any engineer understands, all such loops are unsustainable and unstable. The best example of such unstability that actually reached critical mass due to the unbridled greed and ambitions of one such American Corporation, the Bechtel Corporation of San Francisco, is the oft repeated story of the brave peoples of Cochabamba in Bolivia. One could, if one had the courage, consider this economic onslaught and unprovoked aggression by the West, as much a call to arms in self defense as those early courageous patriots did who had the sense and the chutzpah to throw all that tea overboard. The British too were fighting a “war on terrorism” at that time for empire!
While all this is going on, the Americans are told by their politicians and parroted by their media that the US is the most generous and altruistic of nations, even though their own Ex. President Jimmy Carter finds the courage to tell the truth after leaving office that “We are the stingiest nation of all” to Christian Science Monitor.*7
End Excerpt


Thank you for reading, and more importantly, doing something useful with it.


First published Monday, May 13, 2019 | Last updated Sunday, June 2, 2019 5473


Pakistan and WB-IMF Lender's Trap - Globalization and its Discontents by Zahir Ebrahim | Project Humanbeingsfirst.org 14 / 14