* PDF on naomiklein.org: budhoo.pdf
* Book on archive.org: Enough is Enough
* Selected quotes from Enough is Enough
Resignation letter of Davison Budhoo from the IMF. May 18, 1988. Part 1 of 6.
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2. SIX INDICTMENTS AGAINST OUR OPERATIONS IN TRINIDAD AND TOBAGO
3. A BIRD'S EYE VIEW OF SUBSEQUENT PARTS OF THIS LETTER
4. A FINAL OBSERVATION BEFORE I PROCEED TO RELEASE PARTS II-VI OF THIS LETTER
Mr. Camdessus
Managing Director
International Monetary Fund
Washington, D.C.
May 18, 1988.
Dear Mr. Camdessus,
Davison L. Budhoo: Part I of Open Letter of Resignation From the Staff of the International Monetary Fund: Reason for this Letter and a Summary of its Contents
1. THE MILIEU
(a) Why I have to Forego the Code of "Proper Fund Staff Behavior" and Write this Letter
Today I resigned from the staff of the International Monetary Fund after over twelve years, and after 1000 days of official Fund work in the field, hawking your medicine and your bag of tricks to governments and to peoples in Latin America and the Caribbean and Africa. To me resignation is a priceless liberation, for with it I have taken the first big step to that place where I may hope to wash my hands of what in my mind's eye is the blood of millions of poor and starving peoples. Mr. Camdessus, the blood is so much, you know, it runs in rivers. It dries up too; it cakes all over me; sometimes I feel that there is not enough soap in the whole world to cleanse me from the things that I did do in your name and in the names of your predecessors, and under your official seal.
But I can hope, can't I? Certainly I can hope. I can hope that there is compassion and indignation in the heart of my world, and that people can stand up and take notice of what I have to say, and listen to your reply. For you will have to reply, because the charges that I make are not light charges - they are charges that touch at the very heart of western society and westem morality and post-war inter-governmental institutionalism that have degenerated into fake and sham under the pretext of establishing and maintaining international economic order and global efficiency. You think that's all there are to my charges? No, there is more; much more. The charges that I make strike at the very soul of man and at his conscience. You know, when all the evidence is in, there are two types of questions that you and me and others like us will have to answer. The first is this: - will the world be content merely to brand our institution as among the most insidious enemies of humankind? Will our fellow men condemn us thus and let the matter rest? Or will the heirs of those whom we have dismembered in our own peculiar Holocaust clamor for another Nuremberg?
I don't mind telling you that this matter has haunted me; it has haunted me particularly over the past five years. It has haunted me because I know that if I am tried I will be found guilty, very guilty, without extenuating circumstance.
But beyond the question of guilt, there is a far more operational matter that bothers me; it is this: what devil is there in us that will allow us to go this far into a shame and an ignominy without screaming out a protest as human beings and as men of conscience? How could we have allowed ourselves for so long to defend the indefensible?
When I ask myself that question I become disoriented. I become disoriented because I cannot cope with the consequences of the answer that I know will surface one day. Put simply, that answer will doubtlessly focus on the total preoccupation of Fund people, and Fund inspired people, with personal material gratification and with the lust for, and abuse of power placed so inadvertently, yet so completely, in their hands. It is the timeless story of human beings, faced with an exceptional opportunity to further the cause of mankind, turning around and destroying everything worth preserving because of some indefinable quirk in our Nature.
It is the timeless story of the descent of another century of history into hell. Doubtlessly you feel outraged that I speak thus, and that I ask questions that raise the spectre of personal culpability of those who labor within our institution, and that I make what you may see as meaningless, but dramatic and eye-catching generalizations about our work and history's verdict on it. Perhaps you wish to say to me "You are mad to suggest that the Fund, or anyone associated with it, has committed such awful crimes." Well, maybe I am mad, Mr. Camdessus, to look at our operations with eyes of candor and to feel terror, rather than satisfaction, at the sight of us doing things of Dracula that we so blithely do. But I cannot help being mad thus; I cannot help feeling what I feel; I cannot help being squeamish. I guess you can say that there was always a Mr. Hyde within me, and even as I did your Dr. Jekyl work I kept looking over my shoulder at his kind face. And one day he said to me: "Take stock of yourself; the image of the Beast is blot- ting out all else. Your soul is becoming shrivelled up; you are becoming dispossessed of all traces of your humanity." And I replied: "It cannot be; I will never accept to be thus; I will fight tooth and nail to return to the Human Fold."
This Letter is the start of my fight back to that Fold, and in writing it, and in doing other things that I must henceforth do, I have to forego the conventional stereotype of Fund Staff "proper" behavior. Put bluntly, as from today I refuse to accept the Fund-imposed censorship on our activities in the Third World. I have also stopped obeying your directive that reports and memoranda and other printed matter that document these activities be regarded as unexceptionally confidential and "hush-hush". Equally, I reject the Fund's tradition- al stance that the world has no right to know details of our methodology, or be made privy to the secrets of our success in doing what we do. More comprehensively and catalytically, as from today I tear off the mask of studied ambiguity that your organization did give me twelve years ago. As from today, Conscience becomes my only guide.
(b) The Purpose of this Letter
In guilt and self-realization of my own worthlessness as a human being, what I would like to do most of all is to so propel myself that I can get the man-in-the- street of North and South and East and West and First and Second and Third and Fourth and All Other Worlds to take an interest in what is happening to his single planet, his single habitat, because our institution was allowed to evolve in a particular way in late twentieth- century international society, and allowed to become the supra- national authority that controls the day-to- day lives of hundreds of millions of people everywhere. More specifically, I would like to enlighten public opinion about our role and our operations in our member countries of the Third World. I would like...
Do I hear you bristling with disapproval? Yes, I do. "Enlightening public opinion" are nasty words in the vocabulary of the Fund; I know it; I know it. Well, not so for me. In my new dictionary, "enlightening public opinion" spells the only means to salvation. For if I can do that-if I can get people to begin to comprehend the universality and the depth of our perversion - I would have achieved something rare and precious for the starving and dispossessed two-thirds of mankind from whose ranks I come, and for whose cause I must now fight.
If only I can light a little spark of concern for the Third World from the First World, Mr. Camdessus! If only I can make others to see that the poor and the destitute are not the expendable garbage heap that our institution thinks they are! (what a garbage heap, Mr. Camdessus! What a large expendable garbage heap of three billion souls!). If only I can...
(c) What this Letter is, and isn't
Wait, Mr. Camdessus, wait! Don't breathe a sigh of relief. Don't say: "Oh, another do-gooder filled with delusion and a pitiable sense of self-importance! Another geezer striving vainly for melodramatics! Another geezer wasting my time. Now that I know who he is and what he is after, let me call in the High Priests of the Fund. They will take care of him; they will clean up the little mess that he did make. What a life! It's all in a day's work." Mr. Camdessus, don't say these things; don't devalue my substance thus, as we devalue the currency of every Third World country that we latch on to. You know, contrary to what may be your impression after reading the first few pages of this Letter, I do not deal in wild accusations and uninformed guesses; I do not deal in diatribe. I deal in cold, stark facts-facts and specifics of time and place and Fund policies and Fund conditionalities and Fund missions and Fund meetings and Fund negotiations and Fund-related fraud, and... And Fund-related fraud?
Yes, Sir, Fund-related fraud. You know, the term "fraud" is not mine; it was first used by your predecessor, Mr. de Larosiere; I merely pick-up from where he left off. And in so doing, I shall put under the micro- scope each element of the type of fraud to which he did refer, I shall dissect every element separately to show where the cancer lies. Want an example of the technique? Want me to illustrate the method of approach that I will use to dis- sect our dealings in member countries?
Well, I'll respond immediately by delving into our activities in the member country of Trinidad and Tobago, a small, twin-island state in the Eastern Caribbean. I will summarize here, briefly, what we did do there from 1985 to the present time. (In Parts II and III of this Letter I describe these activities, blow by blow, in great detail.) And I'll guarantee you one thing-viz: that when I've had my say, no one in the Fund will want to laugh again today, or tomorrow, or the day after tomorrow for that matter.
2. SIX INDICTMENTS AGAINST OUR OPERATIONS IN TRINIDAD AND TOBAGO
I hereby file accusation against the Fund in its dealings with Trinidad and Tobago on six counts, viz:
(i) We manipulated, blatantly and systematically, certain key statistical indices so as to put ourselves in a position where we could make very false pronouncements about economic and financial performance of that country. In doing so, we created a situation whereby the country was repeatedly denied access to international commercial and official sources of financing that otherwise would have been readily available. Our deliberate blocking of an economic lifeline to the country through subterfuge served to accentuate tremendously the internal and external financial imbalances within the economy springing from the dramatic downturn in the price of oil;
(ii) The nature of our ill-will, and the depth of our determination to continue on a course of gross irregularities, irrespective of economic consequences for the country and its peoples, are clearly shown by the fact that your senior staff bluntly refused in 1987 to correct even one iota of the wrong that we had done over 1985/86;
(iii) Congruent with action outlined in (i) and (ii), the staff has waged within the Fund an aggressive cam- paign of misinformation and derision about economic performance in Trinidad and Tobago. The insidious- ness of that campaign is dramatically highlighted in the deliberately wild allegations made in the Briefing Paper to the last consultation mission - a paper that was cleared and approved by your good self in late June, 1987;
(iv) As the country continues to resist our Deadliest Medicine that would put it in a position to enter into a formal stand-by arrangement with us, we continue to resort to statistical malpractices and unabashed misin- formation so as to bring it to heel. Among several misdeeds, we have influenced the World Bank, apparent- ly against the better judgement of its own mission staff, to come out in support of our trumped-up policies and stances for the country;
(v) In our seemingly inexplicable drive to see Trinidad and Tobago destroyed economically first, and con- verted thereafter into a bastion of Fund orthodoxy, we have applied, and are applying, intolerable pressures on the government to take action to negate certain vital aspects of the arrangements, as enshrined in the constitution of the country, through which the government functions, and within whose framework fundamental rights of the people are recognized and protected, and norms of social justice and economic equity maintained;
(vi) Our policy package for Trinidad and Tobago-i.e. the conditionality that we are demanding for any Fund program, and the measures that we are asking the authorities to implement as a necessary precondition for a loosening of the iron grip that we now hold on the fortunes of the country in so far as its recourse to international capital markets and official bilateral donors are concerned - can be shown, even in a half-ob- jective analysis, to be self-defeating and unworkable. That policy package can never serve, under any set of circumstances, the cause of financial balance and economic growth. Rather, what, in effect, we are as- king the Government of Trinidad and Tobago to do is to self-destruct itself and unleash unstoppable economic and social chaos. In this respect, this Letter invites you to appoint urgently an independent expert group to look into all aspects of the charges made in Parts II and III of the Letter;
Self-defeating and unethical as it may seem, what we have done and are doing in Trinidad and Tobago is being repeated in scores of countries around the world, particularly in Latin America and the Caribbean and Africa. Sometimes we operate with greater restraint, sometimes with less, but the process and the result are always the same: a standard, pompous recital of doctrinaire Fund "advice" given uncompromisingly and often contemptuously and in utter disregard to local conditions and concerns and susceptibilities. It is the norm now rather than the exception, that when our "one-for-all and all-for-one" Fund cap doesn't fit the head for which it is intended, we cut and shave and mangle the head so as to give the semblance of a fit. Maybe we bust up the head too much in Trinidad and Tobago, but have no illusions that the way we operate through- out the world - the narrow and irrelevant epistemology underlying our work, the airs and affectations and blases and illusions of superiority of our staff vis-Á-vis government officials and politicians in the developing world, our outrageous salaries and perks and diplomatic immunities and multiple "entitlements", the ill-gotten, inadvertent power that we revel in wielding over prostrate governments and peoples- can only serve to accentuate world tensions, expand even further the already bulging ranks of the poverty-striken and destitute of the South, and stunt, worldwide, the human soul, and the human capacity for caring and upholding norms of justice and fairplay.
3. A BIRD'S EYE VIEW OF SUBSEQUENT PARTS OF THIS LETTER
Each of the remaining five Parts of this Letter has been placed in appropriate safekeeping, pending release to you. In this section, a brief summary is given of each of these five Parts.
(a) Summary of Parts II and III
Parts II and III document, in considerable detail, the range of Fund wrongdoing in Trinidad and Tobago from 1985 to the present time, as summarized in Section 2 above. Part II deals with statistical malpractices and improprieties that we did perpetrate (items (i) through (iv) on page 4), whereas Part III provides evidence to support charges relating to non-statistical issues (items (v) and (vi) on pages 4 and 5). From the backdrop of our very shameful but wholly unrepentant behavior in Trinidad and Tobago over the period identified, two operational and highly relevant issues are brought into focus in later sections of Part III. The first of these reminds you that on-going Fund policy pays a lot of lip service to "evenhandedness" (or equality of treat- ment) in our relationships with member countries, but suggests that in actual practice this goal remains a dead letter. Firsthand evidence to support this latter position is brought to bear on a comparison that is made of our treatment of Trinidad and Tobago and Jamaica in 1987. The second matter aired is the question of what constitutes statistical fraud in the dealings of the Fund with member countries, and what are the penal- ties involved for entities caught redhanded in perpetrating such fraud, or otherwise indulging in statistical malpractices meant to mislead others or to misrepresent a true position. On this issue, you are urged to es- tablish immediately an independent investigative authority to look into all charges made in Parts II and III, and in the light of the findings of such authority, to take whatever remedial action is called for in relation to established Fund procedures, notwithstanding the fact that the culprit may prove to be the Fund itself, rather than miscreant member countries for which the penalties were intended in the first instance.
(b) Summary of Part IV
Part IV is divided into three sections. The first reviews the conceptual content and the theoretical under- pinning of our "program" for Trinidad and Tobago, irrespective of the statistical and other malpractices that we did commit in the process of trying to get the authorities to bite the bullet and accept that "program." The conclusion is that our "program" for Trinidad and Tobago is nothing but a hotchpotch of irreconcilable and conflicting elements and objectives. The accusation is made that the internal logic of our "program" spells comprehensive economic disorder in Trinidad and Tobago and all enfolding disintegration of the fabric of na- tional life-economic, political, and social. Evidence is brought to show that our action in Trinidad and Tobago does not relate to any clear set of economic principles, however misguided or inappropriate such principles may be, and that we are just striking out wildly at everything and anything in our path, without reason or ra- tionale or sensitivity to an aftermath.
The second section of Part IV asks the question: why should this be the case? How, in fact did we get into the game of giving farcical advice to member countries? In seeking an answer, another question is brought to the fore; it is this: Is the Fund staff running amok with the wholly unexpected and unexceptional authority that they wield? Are we churning out despair after despair, hunger after hunger, death after death, in the name of Bretton Woods epistemology merely to satisfy a lust for power and punish those who run against the grain of our personal or "professionalized" political ideology, while rewarding those who think as we do?
This question takes us back to the very origin of the Fund; an attempt is made to unravel the various ele- ments of Fund history and epistemology to see how and if, to what extent and at what stage, our quest for a better functioning world became ensnarled into our personal ambitions and our burgeoning group psychosis. On the above matters a set of inter-related conclusions are drawn. The first is that the Fund, which was established primarily to serve developed countries by overseeing the return of the industrialized world to or- derly multilateral trade and payments arrangements, has never been able to come to terms with the problems of the developing world, which are fundamentally different - ie; a economic growth and diversification, and broad social change along the whole spectrum of income distribution, quality of life, social security and politi- cal instability and economic waste, and poverty and hunger and disease and desperation. Always, and under all conditions that may be encountered, the conceptual backdrop that we brought to bear on our work, and the body of economic principles that guided our action, sprang overwhelmingly from the nineteenth century vision of Pax Britanica, now writ large as Pax Atlantica - ie; "perfect competition" and "world allocation of resources" and "international division of labor" and "general equilibrium in the (western) world economy" to be achieved through the instrumentality of unbridled and "free" pricing systems domestically and Gold-Stan- dard determined exchange rates internationally. As far as we were concerned, all the difficult dynamics and unforeseen phenomena of the developing world in the fifties and sixties and seventies and eighties of this century had no meaning whatsoever, they could be ignored or dismissed or shrugged off without the batting of an eye or the furling of a brow. Unwilling and unable to meet emerging Third World needs, we became the Neanderthaler of the twentieth century.
Why was this the case?
The third section provides the following answer, viz; sometime in the course of Fund history, our original epistemology became transformed from a system of verifiable concepts, theoretically open to change and adaptation, to a totally closed and vainglorious doctrine that has nothing to do with economic theory, but everything to do with the Nature of Man. More specifically, at some stage the Fund staff - the seeming "non- descript technocrat" who was hardly ever mentioned in our Articles of Agreement - managed to "steal" the Fund and began using it as his own personal tool to propel and shape the emergence of what I choose to call a New Nobility on Earth, wielding power and influence and control over the lives of hundreds of millions of hapless people in a New Late-Twentieth Century Dark Age, epitomized by a Continual and Never-Ending State of Tyranny and Dictatorship and Oppressiveness. Even more specifically, at some stage in Fund his- tory, Pax Atlantica gave way to Pax Honeypot when the latter is defined to mean the easily identifiable and endless stock of almost unbelievable goodies and material Things of Life provided by the captive Fund to its triumphant and rampaging and insatiable staff. Pax Honeypot has become the be-all and end-all of every- thing done by the Fund in the Third World; it is the basis of all our motivation and all our objectives in countries such as Trinidad and Tobago that we would rape, and where we would commit statistical fraud, and mash up the constitution and bring poor people to further and further grief and destitution.
The following general conclusions are drawn, after close perusal of evidence.
(1) We get away with our works of Dracula hiding behind the mask of Superior Technocracy and a Greater Wisdom striving for "financial balance" and "structural adjustment" in the Third World. But the mask is be- coming more and more tattered, outside observers and victims of our scorched earth policy themselves are beginning to see us as we really are. But our response to criticism is greater self-righteousness and greater indignation and sense of effrontery that anyone can dare to question our works and our methods. Can't they see that we are the only wise ones and that they are the fools?
(i) The Fund is soulless, not because there is no scope for humanized behavior and compassion in an institution dedicated to optimum world efficiency and a more effective use of foreign financial resources in developing countries, but because its founders, in chasing their improbable dream of Pax Atlantica, over- looked all scope for exercising compassion and alleviating social injustice in certain parts of the internation- al system that they were creating. Compassion and social justice were crying needs; they are the very roots on which we should have nurtured an evolving and pragmatic Fund philosophy for the Third World. But our Founding Fathers denied us access to them, and shrivelled our soul. So later on, when we "stole" the Fund, All Things Just and Humane became our Absolute Antithesis; we were as clinically and completely materialis- tic and single-minded in pursuit of Our Own Gratification (Pax Honeypot) as they were in pursuit of Pax At- lantica.
(ii) In a very meaningful way, our staff perversion is the logical consequence of our Founding Fathers' credo, just as the latter is the logical consequence of the prevailing 1944 international ethos of Superior Man and Inferior Man, and the westem man and his system to be saved and nurtured, and the southern man to be overlooked and cast aside, in so far as his needs and aspirations as individuals and groups and nations are concerned.
And it is this theme - the theme of the southern man remaining in oppression under post-war multi- lateralism, spearheaded by the Fund, as he had been under seventeenth and eighteenth and nineteenth century colonialism - that occupies the fourth section of Part IV. More specifically, representative examples are given of the modus operandi of Fund staff as the New Nobility of Earth, out to protect and expand Pax Honeypot, and to smother all opposition to their hegemony, from whatever quarter such opposition may come. Initially, the spotlight turns to "internal" power distribution among the staff, with "core" staff from the West call- ing the shots and laying down, virtually on their own, Fund law at 700 19th Street, N.W., Washington D.C. Subsequently, the field of enquiry widens from "intermal" matters to "external" authority wielded by sectors of our staff. In particular, the nature of power that we hold in countries of the Third World, and the methods that we use to make our power effective and self-sustaining, are brought to the fore.
On "internal" matters you are asked to take a close look at the implications of the rampant and multi- faceted racism that is now an extremely operative factor in Fund staff calculations; as you are fully aware, this "internal" worm eating at our soul has created its own system of internal injustices and double standards and rank arbitrariness within the Fund, particularly in relation to staff promotion and job assignments. But, unfortunately, that is only the tip of the iceberg; the matter runs far deeper than staff issues. Indeed, racism makes itself felt in a wide range of organizational practice, some of which are eminently inexcusable, given our international nature. Among these is the classification of South Africa as a "European country" ad- ministered by our highly segregated, virtually "white staff only can work here" European Department.
But however outrageous our internal practice and organizational arrangements, they fade into insig- nificance when compared with the sheer temerity and dare-devil grossness of the methods and procedures that we use to keep Third World governments and peoples under our heel. And in this respect the most ob- vious point to be made is that we are Judge and Jury and Maker of All Relevant Laws Pertaining to the Crime Committed and Administrator of the Penal Code and Executor of the Sentence.
Yes, yes, Mr. Camdessus, in scores of developing countries that are unfortunate enough to fall within our grasp, we hold simultaneously and completely in our hand Legislative and Executive and Judicial powers over wide-ranging matters relating to national economic and financial policies. We do our own "tainted" evaluation of economic and financial performance (an evaluation that is subsequently accepted as Bible Truth by our Executive Board and by the international community); we write our own Letter of Intent under the name of the Minister of Finance and present it to him for signature; we administer the "program" specified in the Letter of Intent (this includes determining whether or not the country has met the "performance criteria" that we have established, and whether, therefore, it is eligible, on "target" dates, to draw down the financial resources that we had committed, and that other supporting institutions had promised).
The whole process of determining what is "right" for the country, to formulating that "rightness" into a legal document that specifies "conditionality" and "performance criteria", to administering and monitoring the "program", to determining whether or not the country is eligible to draw, to alerting the international com- munity as to whether or not we did see fit to create yet another "outcast country" or "leprosy case", is per- formed not only solely by the Fund, or by the relevant Division of the appropriate Department of the Fund, but in most instances by a single staff member acting on your behalf and with your authority. Such a staff member would hold, for all intents and purposes, the economic fate of the country concerned, and of its peoples, in his hand; as such he becomes transformed from a human being to the Unstoppable Supra-Na- tional Authority; all his own personal prejudices and arbitrariness and hang-ups and self-interest and lust for power and mad desire to control the destiny of peoples and of nations become essential elements of that Unstoppable Authority.
It is a telling commentary on the nature of our operations in the developing world to be able to say, without any fear of contradiction - I wish you would contradict, Sir, so I can reply - that for forty years we took a par- ticular stance and acted in a particular way that showed a total disregard and absolute contempt for the doctrine of the separation of powers- a doctrine that constitutes the true basis of everything fair and just and decent in western political and economic and social systems. Amazingly, our contemptuous disregard for, and easy dismissal of the most treasured tenets of westem society, have somehow been accepted by the Third World as "normal" and "right" practice by the Fund. You know, it is Lord Acton who observed that "all power corrupts, and absolute power corrupts absolutely." That maxim could never have been truer than when applied to us. The Third World, in accepting our absolute power and our absolute corruption, is also instrumen- tal in writing its own obituary.
(c) Summary of Part V
Part V of the Letter is devoted to a definition of the actual size and depth of our Treasured Honeypot that is the Be All and End-All of Everything for Fund staff, and to an investigation of how we use the Honeypot as a means for neutralizing and defusing "outside" elements that potentially could threaten or frustrate the ex- ercise of our Absolute Authority in the developing world.
On size and depth of the Honeypot, details are given of salary and other emoluments, including our mul- tifarious allowances and subsidies. On this matter, it is concluded that the salary/allowances package of a median "missionary" staff member would be in the region of from five to ten times the budgeted salary of al- most every Third World head of state, and some one thousand times the per capita income of that two thirds of mankind that he is paid so handsomely to crush down into further destitution.
The salaries/allowances package, of course, tells only part of the story, beyond it, there is an amazing set of perquisites and "intangibles" that come with the job. These include diplomatic immunities and our United Nations Laissez Passer, Royalty and First Class travel everywhere we go, generous allowances for overnight stays in Europe and elsewhere on our way to perform our "missionary" work in Africa and Asia and Latin America, high class night-clubbing in Sin Cities of the world, personal secretaries on each and every of our missions, G5 Visas for maids that we bring in from Paraguay and Mexico and Jamaica and Greece and everywhere else, the very generous Group Life Insurance and Medical Benefits Plans, and the even more generous Pensions Scheme. And most satisfying of all, the realization dawning on us that we have finally made it to Ultimate Paradise.
Honeypot, of course, transcends the staff; we make others to partake of the Good Things of Life, depend- ing on the extent to which we perceive them either as a threat to our own Unmolested Gratification, or as an aid to help us win even greater personal material benefits. Specifically, we share our Honeypot with our Ex- ecutive Board and its staff, who sit at our headquarters in Washington, and whose "typical" salary/allowances package is even heftier than ours. Drawn hopelessly into our malestrom, and obviously Very Pleased with Everything Pertaining to Honeypot's Form and Style and Substance, the Board of Executive Directors- appointed by member governments as a political entity to "direct" the Fund - has become a quiescent, al- most anesthetized body; it operates mostly as a rubber stamp to endorse our action and initiatives that are designed, invariably, to maintain our political and economic hegemony in Third World countries. In addition to having their teeth drawn by the faceless bureaucrat whose original purpose was to implement autonomous decisions of the Executive Board (what a reversal of function!), your attention is drawn to the consequences of a set of anomalies and conflicts of interest involving the government appointed staff of Executive Direc- tors in their relations with "regular" Fund staff.
That we, faceless bureaucrats, protect our flanks by going far beyond the Executive Board and its staff is illustrated and documented carefully in the final section of Part V. In this respect, a representative set of action on our part involving "external" entities is highlighted viz: (a) the "carrot" (involving, of course, use of our ubiquitous Honeypot) that we offer to senior government officials, and middle-level government officials to be soft on us, and/or to actively collaborate as we construct our bogus programs based on "fixed" statis- tics so as to sell such "right" programs to national political directorates; (b) the cosmetic measures taken to defuse international criticism and give the illusion that the Fund is responding meaningfully to the needs of developing countries. Specifically, recent institutional innovations within the management structure of the Fund - ie; the establishment of the Group of Twenty Four and the Development and Interim Committees - are discussed from the perspective of the realistic role and function of such entities within the context of a burgeoning staff supremacy at all levels in Fund decision making processes. Equally, the true purpose of the periodic appointment of "Wise Men" (compliments of Honeypot) to do "new thinking" and undertake "inde- pendant analysis" and "objective evaluation" of our successes and failures is brought to your attention. "Wise Men" rise and fall with equally indecent haste, they say the lines that we did want them to say and then they go away. And in the aftermath, the only thing that ever becomes strengthened is the already impregnable position of the faceless Fund technocrat, and his accountability to no one but himself.
In general, the conclusion of this Part of the Letter is as follows: any outside shock wave that conceivab- ly may serve to alter, even by one iota, the Established Order of Things, or the Equanimity of Our High Priests (senior staff) or the Irresistible Logic of the Fund in Reducing Everything to a Common Denominator of Greed and Personal Ambition, or Maintenance of the Status Quo and Further Enhancement of the Power of the New Nobility, must be expunged, necessarily and unexceptionally, from the system. However, we don't do our expunging with high visibility action or with fanfare. A willingness to ride out the criticism, or the protest, or the concern expressed by others is what is called for. Seeming reasonableness and propriety and "sweet talk" become the order of the day; we seem to feed the hog even as we stab him in the back. There is no in- tellectual effort, no honest search for solutions, no new thinking whatsoever. Mediocrity and an absolute slavish imitation of High Priests who have "made it" in the Fund; stultifying conformity and an amazing per- fection of the art of "yesmanship" - these are the essential elements of a true Fund Person. Hypocrisy un- derlies everything that we do; certainly core elements of our staff have had centuries of experience in practicing it on subject peoples. And the world is no closer today to an amelioration of the ills of Imperial Em- pire than it was at the time of Queen Victoria. Therein lies the bequeathment of the West and the tragedy of the South. Therein, too, lies the entire history and insidiousness of the Fund.
(d) Summary of Part VI
This Part has eight sections. The first section comes back to a fundamental question raised in Part IV, viz: can the Fund reform itself so that it serves the true interests of developing countries without negating critically its role as the major plank of an international management system for economic stability and growth and for the financing of such stability and growth? In searching for an answer, a comprehensive listing is made of "reform proposals" made by your good self and by your predecessors over the past several years to change the nature and the modules of Fund operations and facilities, presumably with a view to sensitizing the institution to the needs and characteristics of developing countries. All aspects of the agenda for change and reform that you have articulated recently are classified under four headings viz: (a) resource mobilization by the Fund (eg: establishment of the Enhanced Structural Adjustment Facility financed by developed countries); (b) resource transfer by the Fund (eg: establishment of an External Contingency Mechanism to be combined with the existing Compensatory Financing Facility for assisting countries to over- come unforeseen external shocks); (c) terms and conditions for resource transfer by the Fund (eg; estab- lishment of an interest subsidy facility and proposals for "relaxing" Fund conditionality); (d) the effect on developing countries of resource transfer under stated terms and conditions (eg: impact on the poor and economically underprivileged).
Having listed thus your Agenda for Reform, an examination is made of items on the Agenda to see just how they tie in with the wide spectrum of issues raised in earlier parts of the Letter, and how they address the rank abuses of Fund staff in the Third World - abuses that have been carefully and systematically docu- mented throughout the Letter at a level of detail and specificality that can be checked and verified, and that can leave no scope for guesswork or equivocation. And in this respect, the conclusion is drawn that past and present "reform proposals" put forward by Fund Management are not really proposals for reform at all-cer- tainly they do not address matters highlighted in this Letter. Instead, they are shown to be the minimum jaw- boning that the Fund staff feels compelled to indulge in at any particular time, to take the heat out of criticisms about our operations in the Third World made by the Board of Governors and other "important" entities. In any event, your Reform Agenda is not new; the items identified - with one exception - have been depressingly recycled, with minor modification, at almost every Fund/World Bank Board of Governors gathering over the past twenty years.
We go through motions, Sir; we have our annual charade that we call the Fund/World Bank Board of Governors Meetings; we hand out the same "reform package" to the Ministers of Finance of the Third World, and they go home satisfied, having connived in all our trickery and participated in our game. Yes, yes, we move them around the chessboard like robots. We tell them "come back for the next bodacious meeting of the Development and Interim Committees in Sin City in the Spring; Fun and Games will start anew again." And so it goes on and on and on. And nothing changes in the developing world except more death and destitution for the people in the slums, and more power for the Fund. And with the passing of every meeting our staff becomes even more reinvigorated; they wield a sharper and more bloodied tool; an even more terrifying Executor's Axe stand poised for service everywhere in the South. And the children scream, Sir; my God, how they scream!
The only relatively new "reform proposal" on your agenda relates to the impact of Fund supported programs on poverty groups. This issue received some degree of formal recognition by the Fund in 1984 with discussion by the Executive Board of a staff paper purporting to show the impact of Fund programs on poverty levels and related matters. With slight modification the paper was published and circulated worldwide. This was unfortunate, for the paper was extremely defective technically and analytically, and its arguments highly dubious. The aim appeared to be to invent excuses from thin air, and to give the appearance of a Fund concern for this burning Third World issue - an issue that previously we had either ignored or brushed aside brusquely. In any event, the paper was seen for what it was; internationally, it was greeted with overwhelm- ing skepticism. This forced the authors to go back to the drawing board so as to try to come up with a more credible apology. The result was another paper issued to the Board in January, 1988, and another publica- tion circulated worldwide in May 1988.
The latter part of the second section analyses this "second attempt" paper at some depth. The conclusion is drawn that the paper can have no merit as an objective evaluation of the role of the Fund in deepening the level and extent of poverty in Third World countries and in redistributing national income in favor of highly privileged and elitist groups. In this respect, it is as equally laughable as its predecessor. More pointedly, the authors admit that they themselves had been instrumental in formulating the Fund programs being evaluated for a "poverty impact". Amazingly, those who had themselves participated in pushing our medicine down the throats of screaming victims were mandated by the Fund to judge the social damage of their work. But I should know better than to find this irregular or unfortunate in any way, given the level of ethics and morality characteristic of our institution.
Inadvertently, the paper did serve a very useful purpose. For at last Fund people have made some sort of pronouncement on the poverty issue, never mind how biased and self-serving such pronouncement may be. Now others can move on from a recognized Fund conceptual base and from a Fund related viewpoint to open up a worldwide dialogue on the true impact of Fund "adjustment programs" on poverty and income dis- tribution in the Third World. There is no way in which we can retreat back into our shell; there is no way in which we can conveniently put the poverty dimension of our work under wraps again. Pandora's box is wide open and we had better begin to recognize that immediately.
The section ends by examining a plethora of technical possibilities through which the poverty and in- come redistribution variable could be made to become an integral part of Fund programming and perfor- mance guidelines in Fund supported arrangements. One by-product of this exercise is the identification of a seemingly unbridgeable chasm between Pax Honeypot and all that it stands for, and the human values that we had ignored and had lost. Starkly brought into focus is the mind-boggling extent of our violation of basic human rights throughout the developing world for over the past five years in particular. (And don't raise your hand in protest, Sir, as I say this. The evidence is there, wait to read it).
The third section of Part VI asserts that however catalytic and causative are Fund programs as tools for deepening poverty and unleasing further destitution on the South, such programs represent only the periphery of an iniquitous and surprisingly comprehensive system within whose structure the Fund operates, and whose objectives it strives to achieve. That system is responsible for massive people-oriented economic crimes, and acts of almost unbelievable horror against the poorest sectors of society in countries of the South.
A plea is made to you to start a process whereby we can be made to retrace our steps back to the Bret- ton Woods Conference of 1944, holding to our chest the soiled and tattered rag of multilateralism that did represent dreams and aspirations of almost two generations of southern people - dreams and aspirations that did become a graveyard and an imposed monstrosity defiling our times and our world. We have to hold that tattered rag with a contrite heart; we must be made to realize that it is an intolerable burden on our soul. Somehow we must know that we have to make amends.
The remaining five sections of this Part deal with just how we can start the process of 'making amends'. Looking at evidence of Fund involvement in economic crimes other than through the intermediacy of our programs, the fourth section zeros in on the Fund's role in arms expenditures in Third World countries. With concurrence of the Fund, arms expenditures in developing countries rose from 7 billion in 1975 to over 14 billion in 1980 and above 21 billion in 1986. Between 1955-85, Third World military expenditures as a propor- tion of total world military expenditures rose from 3 percent to 20 percent. Yet in 1985 over 1 billion Third World people lived in what the United Nations has designated as absolute poverty, and over 500 million were in the throes of famine and incurable malnutrition. Throughout the entire post-war period, the Fund was con- tent to shut its eyes entirely to the Third World military expenditure binge, in deference to the arms exporters - its major shareholders. We have no qualms in forcing governments to crush millions upon millions of their own people to death - look at the extremely serious allegations made recently by UNICEF against us in this respect - but when it comes to arms merchandising we are hypocritical enough to throw our hands up in the air and talk of "national sovereignty". That just is not good enough.
What the Fund could have done to curb military expenditures, but didn't do, is discussed at length; on this matter the issue of fungibility of Fund resources is brought to the forefront. Our cowardly refusal to un- dertake any sort of analysis of the arms issue, and its direct and predictable relationship to destitution and poverty in the South are also highlighted. The Letter pleads with you to try to shed for us the role of Whitewasher and Apologist on the military expenditure issue. While you cannot influence directly the arms export policies of our major shareholders, it is very much within your power to force the High Priests to un- dertake necessary research that could provide a base for a new and enlightened Fund position on military expenditures of Third World client states. And we should use our clout on Third World states in getting them to control the arms race, rather than forcing them to kill their own peoples for our sake.
Section five would be of particular interest to you; it deals with a theme that seems to be your own hobbyhorse; the theme of "financing versus adjustment". There is no phrase more abused and more misunderstood in the Fund than this one. We utter it loosely; to us it has really no technical connotation; it is just our blanket excuse for enslaving the South; it is Fund conditionality expressed more graphically.
So as to help provide you with a clearer perception of "financing versus adjustment" from the perspec- tive of both the Fund and its developing member countries, a rigorous analysis is undertaken of the mean- ing of the term, and a conceptual base built up to show how economic efficiency can be maximised, for all the parties concerned, through use of "financing" to achieve "adjustment." This really is the heart of the aid relationship; this is the raison d'etre of multilateralism.
It is concluded that internationally acceptable and verifiable criteria can be used to determine the relevance and fairness of Fund conditionality in every instance of use of Fund resources by Third World countries, with three critical elements meshed into a matrix solution, viz.; Fund concern about the revolving nature of its resources, some criterion of international economic efficiency in resource use by the Fund, and the social welfare function of the country seeking use of Fund resources. To date, the latter criterion has been ignored by the Fund as an operative factor in its financing relationship with developing member countries. By refusing Third World countries recourse to any objective and verifiable analytical system to determine the economic worthiness of financial assistance that it is providing, the Fund has turned all post-war devalop- ment economics, and all precepts underlying such economics, on their head.
In section six, the theme of the Fund turning post-war development economics on its head is tackled in a more comprehensive and systematic way. The issue hinges around the Fund's attempt to replace all development theory, from Arthur Lewis to A. Sen, with "Reaganomics" and Chicago School "monetarism". All current development theory recognizes that provision for, and administration of peoples' economic "entitle- ments" is an important purpose of economic management, even in the poorest countries of the South, and the ultimate rationale of government. But this is absolute anathema to Fund programs, and Fund theology. The analysis looks at the development experience of six southern countries and asks you to get your High Priests to make their choice of which of these countries have developed, and which have stagnated and regressed. I think we both know their answers in advance.
Sir, this Letter is optimistic enough, and imbued with sufficient faith to believe that there is scope for human beings, including those who run the Fund and who make decisions of life and death for the over- whelming masses of mankind, to move away from an edge - when that edge is pinpointed and its enormous dangers seen - and to seek safer ground that will allow exercise of an inherent humanity and a reaffirmation and rededication to norms of justice and fairplay. Even so, I am not so simplistic and so starry-eyed to think that the task of bringing the Fund back unto that safe ground is an easy, or an immediately attainable one. In this respect, there really are three interrelated, but conceptually different goals to be pursued in the wake of a new era of understanding on our part, and an acknowledgement by us of why and how we went astray. The first goal relates to wing clipping of our staff, or if one wants to be more blunt, to dismantlement of the modern day phenomenon of a New Nobility straddling the earth. The second involves a grappling and a com- ing to terms with the dynamics of the Third World; it also envisages establishment of a new and relevant epistemology that bursts, once and for all, the bubble of Pax Atlantica and ensures that Pax Honeypot will never be able to raise its head again as Fund credo. Finally, action must be taken to bring centerstage the politically-charged question of power distribution between Part I and Part II member countries within a reor- ganized international management system for world financial stabilization and economic and social develop- ment; or, alternatively stated, action must be taken to provide appropriate ways and means through which the Fund's changed philosophy and operational modules can become self-sustaining and its new mandate fulfilled. Sections seven and eight of Part VI deal exclusively with the first of these tasks; all else is left hang- ing in air for the time being.
The question of Fund staff wing clipping is discussed at various levels and from various angles, but two basic issues stand out, viz: (a) what can be done through direct means that impinge immediately on our over- heavy salaries and allowances and perquisites and "privileges", to reestablish some sort of balance and sanity in our remuneration and terms and conditions of employment? (This Letter screams out that rees- tablishment of such balance and sanity is an absolute requirement for the restoration of professionalism and perspective and fairplay and humanity in our institution); (b) irrespective of the Honeypot that provides its stream of endless material benefits to Fund people, what checks and balances mechanisms may be created within the organizational structure of the Fund, and in the structure of relationships between the Fund and developing member countries, so as to curb the "absolute" power presently wielded by Fund bureaucracy in the Third World, and ameliorate the growing tendency for wanton abuse of that power?
On the first of these issues not much is said; the hope is that you can fill in some gaps over the next few months, as you respond, one way or the other, to my charges. I suggest, however, that there is need for some new thinking, from major shareholders, on how to halt escalating salary/allowances for Fund staff and beyond that, how to make Fund staff minimally accountable to member countries for action and stances in the developing world-action and stances that appear so totally unreasonable on any meaningful criterion of economic reasonableness. Efforts in the past to curb staff excesses have been very weak and half-hearted, and singularly unsuccessful. Proposals are made on how they may be strengthened and made more effective in the immediate future.
On the second matter, there is a distinction between (a) "internal" checks and balances mechanisms to curb staff power and restore a semblance of sanity and order among different decision-making elements of Fund management, such as senior staff, Board of Executive Directors and Board of Governors, and (b) "external" checks and balances mechanisms to halt excesses and power abuse in developing member countries -abuses that have been meticulously documented in Parts II through V of this Letter.
On "internal" mechanisms, proposals are made for the immediate establishment of those safeguards that had been built into the Fund's Articles of Agreement in 1944, but which had never been activated, main- ly because of the unforeseen "hijacking" of the Fund by its burgeoning bureaucracy, and the outstanding success achieved by the latter in stifling all other potential power points within the decision making structure of the Fund. In this respect, relatively meaningless "posturing" of the past and present, including creation of the basically toothless and captive Interim Committee and Development Committee and Group of Twenty Four, as discussed extensively in Part V, must give way to a fully independent Fund Council of broad decision making powers and wide geographic representation along lines laid down in our Articles of Agreement. The Council should not be made to operate on "advice" from Fund staff; it must spawn its own small but highly proficient body of technical expertise as a counterweight to the methods and approaches of what initially may prove to be the still all-pervading power of our Retreating Nobility. In any event, it must be expected that in the short term, establishment of an effective regime of "internal" checks and balances that reflects the reality of a previously "captive" institution, will involve, inevitably, some degree of experimentation and perhaps of seeming functional duplication over a "phasing in" period of from, say, three to five years.
On "external" checks and balances the following are proposed for implementation, concurrent with the effectuation of "internal" reform: (a) establishment of an Advisory and Review Commission to be shared with the World Bank. This organ will assume the functions of the now defunct Advisory Council that was enshrined in the Articles of Agreement of the Bank. More specifically, it will act as a final court of appeal in instances where disputes of a technical nature have arisen (e.g: statistical discrepancies, relevance of performance criteria, eligibility criteria for particular facilities) between Fund (or Bank) staff and the member country con- cerned; (b) establishment of a series of Regional Coordinating Committees - independent of Fund staff and appointed by the Board of Governors - to review on an annual basis economic progress in each member country, and to lay down general guidelines to Fund (or Bank) staff for future operations in individual countries and regions. Regional Coordinating Committees should review all Fund staff documents (including REDS and Staff Reports to the Board) with a view to determining the accuracy and objectivity of such documents, and pronouncing on the "evenhandedness" in Fund staff stances from one country to another. Detailed com- ments from the Regional Coordinating Committee concerned should always accompany each and every Staff Report that goes to the Board, whether such Staff Report seeks approval for use of Fund resources or not.
In addition to action that must be endorsed formally by appropriate elements of Fund management, proposals are made for the formation, by developing countries themselves, of a Watchdog Committee to oversee their interests in negotiations with the Fund (and World Bank). It is proposed that the Committee be selected from a panel of eminently qualified persons including political figures, religious leaders, economists, sociologists, jurists and trade unionists from both developed and developing countries. The rationale for the Committee is the existing overwhelming power of the Fund (and World Bank) in the Third World, vis-a-vis in- dividual governments and Ministries of Finance, and therefore the extremely weak position of such govern- ments and such Ministries in processes of multilateral economic negotiations on matters that determine their future, and the well-being or ill-being of their peoples at a particular point of time, and for several years there- after. The Committee, which may take up the cause of any particular country only at the specific request of the govemment concerned, will serve to redress a long outstanding imbalance that never ever should have been made to exist. While it will have no authority to adjudicate on Fund horrors and excesses of the past, its work, conceivably, could lead to a less tortured existence for the Third World in the future.
A general recommendation of Part VI is as follows: until the above regulatory an control mechanisms, or appropriate variants of them, are established and become operative, developing countries- especially those who at the present time deem themselves to be receiving particularly raw deals from the Fund and the World Bank-may consider a strategy of freezing all relations until further notice. This will release their energies to pursue single-mindedly the very urgent, prior task of creating the type of institutional adaptations, as described above, to protect their interests in the face of current gross excesses rampant within the system. In this connection, it is pointed out that while organizational innovation within the formal structure of the in- stitutions (e.g; establishment of an Advisory and Review Commission and of Regional Coordinating Committees) could be unduly delayed by non- Third World elements who may be opposed to the type of change contemplated, there is no reason why developing countries, perhaps through instrumentality of the G-77 or Non-Aligned Movement, or both, could not take immediate action on their own to bring into being the Watchdog Committee. Indeed, such a critical instrument for protecting the Third World could well be made to function within a six-month period, assuming that there is a reasonable degree of consensus, in the South, for its establishment.
4. A FINAL OBSERVATION BEFORE I PROCEED TO RELEASE PARTS II-VI OF THIS LETTER
Over and over again I've been told by people whose judgement I respect, that the Fund will do everything in its power to decimate me as an individual, and to destroy me as a professional economist, in the wake of this Letter. The overwhelming advice of those with my interests at heart is that I had better resist all dictates of conscience and keep my mouth shut. I refuse to do that; I will not be muzzled one iota; I will speak up; I have taken meticulous care in writing what I write; I am prepared to prove everything that I say - send me before the harshest judge and see what you will see. In any event, in the broad sweep, individuals are not important; Davison Budhoo is of no consequence. I'm a vessel and the message that I carry will get through; that's the only thing that matters; irrespective of what may happen to Davison Budhoo, the message, the whole message, will get through. And this Letter does not define anything close to the whole message; it is only the tip of an iceberg. And as to what lies beneath - well, time will tell. Soon enough, time will tell.
Follow your instincts, Sir, and let the High Priests go empty-handed for a change - at least, think very carefully before taking their advice on what to do about this Letter. For we are not speaking anymore about technical problems in international finance, amenable to technical and "convenient" solutions ("convenient" to who?) We're speaking about our role in shaping the destiny of humankind; about the horrendous part that we have played on the twentieth century world stage; about the legacy that we will leave to generation upon generation yet unborn; about man's inherent right to follow the callings of his conscience and man's efforts to try to save his soul; about the occasional sight of one individual throwing himself blindly at the feet of his fellowmen and begging for mercy and amelioration.
So think carefully Sir; think beyond the heat of an impassioned moment. Think as the man of compassion and vision that I believe you are.
Yours sincerely.
Davison L. Budhoo