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Indira Gandhi was forced into elections, in which key issues were the
IMF and the domestic “austerity” measures the IMF invariably imposed
in return for international loans. Indira was pushed out and was
replaced with a regime friendlier to the globalist agenda. Engdahl
writes, “the heavy hand of Henry Kissinger was present . . . in close
coordination with the British.”2
India™s recent economic history was detailed in a 2005 article by a
non-partisan research group in Mumbai, India, called the Research
Unit for Political Economy (R.U.P.E.). It states that India™s development
was supposed to have been carried out free of powerful foreign and
domestic private interests; but the economy wound up tailored to those
very interests, which the authors describe darkly as “large domestic

Web of Debt

and foreign capitalists; landlords and other feudal sections; big traders
and other parasitic forces.” The government embarked on a policy of
engaging in investment by expanding external and internal debt. Loan
money was accepted from the IMF even when there was no immediate
compulsion to do it. Annual economic growth increased, but it was
largely growth in the “unproductive” industries of finance and
defense. External debt ballooned from $19 billion in 1980, to $37 billion
in 1985, to $84 billion in 1990, culminating in a balance of payments
crisis in 1990-91 and a crippling IMF “structural adjustment” loan.
After 1995, the policies advocated by the World Bank were reinforced
by the stringent requirements of the newly-formed World Trade
Organization. According to the R.U.P.E. group:
For the people at large the development of events has been
devastating. The relative stability of certain sections “ middle
peasants, organised sector workers, educated employees and
teachers “ evaporated; and those whose existence was already
precarious plummeted. It took time for people to arrive at the
perception that what was happening was not merely a series of
individual tragedies, but a broader social calamity linked to
official policy. As they did so, they expressed their anger in
whatever way they could, generally by throwing out whichever
party was in power . . . .
Yet the [new government] follows, indeed must follow,
broadly the same policies as its predecessor. Any attempt to
slow the pace is met with rebukes and pressure from imperialist
countries and the domestic corporate sector. Indeed, there is no
longer any need for them to intervene explicitly. With the last
14 years of financial liberalisation, the country is now
enormously vulnerable to volatile capital flows. This fact alone
would rule out any serious populist exercise: for the resources
required would have to be gathered either from increased
taxation or from fiscal deficits, either of which would alienate
foreign speculators and could precipitate a sudden outflow of

Chapter 28 - Recovering the Jewel of the British Empire

Miracles for Investors, Poverty for Workers

Like other Third World countries, India has been caught in the
trap of accepting foreign loans and investment, making it vulnerable
to sudden capital flows, subjecting it to the whims and wishes of foreign
financial powers. Countries that have been lured into this trap have
wound up seeking financial assistance from the IMF, which has then
imposed “austerity policies” as a condition of debt relief. These
austerities include the elimination of food program subsidies, reduction
of wages, increases in corporate profits, and privatization of public
industry. All sorts of public assets go on the block “ power companies,
ports, airlines, railways, even social-welfare services. Canadian critic
Wayne Ellwood writes of this “privatization trap”:
Dozens of countries and scores of public enterprises around the
world have been caught up in this frenzy, many with little choice.
. . . [C]ountries forced to the wall by debt have been pushed into
the privatization trap by a combination of coercion and
blackmail. . . . How much latitude do poor nations have to reject
or shape adjustment policies? Virtually none. The right of
governments . . . to make sovereign decisions on behalf of their citizens
“ the bottom line of democracy “ is simply jettisoned.4
In theory, these structural adjustment programs also benefit local
populations by enhancing the efficiency of local production, something
that supposedly happens as a result of exposure to international
competition in investment and trade. But their real effect has been
simply to impose enormous hardships on the people. Food and
transportation subsidies, public sector layoffs, curbs on government
spending, and higher interest and tax rates all hit the poor
disproportionately hard. 5 Helen Caldicott, M.D., co-founder of
Physicians for Social Responsibility, writes:
Women tend to bear the brunt of these IMF policies, for they
spend more and more of their day digging in the fields by hand
to increase the production of luxury crops, with no machinery
or modern equipment. It becomes their lot to help reduce the
foreign debt, even though they never benefited from the loans in
the first place. . . . Most of the profits from commodity sales in
the Third World go to retailers, middlemen, and shareholders in
the First World. . . . UNICEF estimates that half a million children
die each year because of the debt crisis.6

Web of Debt

Countries have been declared “economic miracles” even when their
poverty levels have increased. The “miracle” is achieved through a
change in statistical measures. The old measure, called the gross
national product or GNP, attributed profits to the country that received
the money. The GNP included the gross domestic product or GDP
(the total value of the output, income and expenditure produced within
a country™s physical borders) plus income earned from investment or
work abroad. The new statistical measure looks simply at GDP. Profits
are attributed to the country where the factories, mines, or financial
institutions are located, even if the profits do not benefit the country
but go to wealthy owners abroad.7
In 1980, median income in the richest 10 percent of countries was
77 times greater than in the poorest 10 percent. By 1999, that gap had
grown to 122 times greater. In December 2006, the United Nations
released a report titled “World Distribution of Household Wealth,”
which concluded that 50 percent of the world™s population now owns
only 1 percent of its wealth. The richest 1 percent own 40 percent of all
global assets, with the 37 million people making up that 1 percent all
having a net worth of $500,000 or more. The richest 10 percent of
adults own 85 percent of global wealth. Under current conditions,
the debts of the poorer nations can never be repaid but will just con-
tinue to grow. Today more money is flowing back to the First World in the
form of debt service than is flowing out in the form of loans. By 2001,
enough money had flowed back from the Third World to First World
banks to pay the principal due on the original loans six times over.
But interest consumed so much of those payments that the total debt
actually quadrupled during the same period.8

China and India: Ahead of the Pack

The statistics for most Third World countries are dismal, but India
has done better than most. China, which is politically still Communist,
is technically part of the “Second World,” but it too has had serious
struggles with poverty. Advocates of the free-market approach rely
largely on data from China and India to show that the approach is
working to reduce poverty, but as Christian Weller and Adam Hersh
wryly observed in a 2002 editorial:
[T]o use India and China as poster children for the IMF/World
Bank brand of liberalization is laughable. Both nations have
sheltered their currencies from global speculative pressures (a serious

Chapter 28 - Recovering the Jewel of the British Empire

sin, according to the IMF). Both have been highly protectionist
(India has been a leader of the bloc of developing nations resisting
WTO pressures for laissez-faire openness). And both have relied
heavily on state-led development and have opened to foreign
capital only with negotiated conditions.9
The declines in poverty in China and India occurred largely before
the big strides in foreign trade and investment of the 1990s. Something
else has contributed to their economic resilience, and one likely
contributor is that both countries have succeeded in protecting their
currencies from speculators. Both were largely insulated from the
Asian crisis of the 1990s by their governments™ refusal to open the
national currency to foreign speculation. In India, as in in China,
private banking has made some inroads; but in 2006, 80 percent of
India™s banks were still owned by the government.10 Government
ownership has not made these banks inefficient or uncompetitive. A
2001 study of consumer satisfaction found that the State Bank of India
ranked highest in all areas scored, beating both domestic and foreign
private banks and financing institutions.11

A Country of Many States and Disparities

Differing assessments of how India is faring may be explained by
the fact that it is a very large country divided into many states, with
economic policies that differ. In a June 2005 article in the London
Observer, Greg Palast noted that in those Indian states where globalist
free trade policies have been imposed, workers have been reduced to
sweatshop conditions due to murderous competition between workers
without union protection. But these are not the states where Microsoft
and Oracle are finding their highly-skilled computer talent. In those
states, says Palast, the socialist welfare model is alive and thriving:
The computer wizards of Bangalore (in Karnataka state) and
Kerala are the products of fully funded state education systems
where, unlike the USA, no child is left behind. A huge apparatus
of state-owned or state-controlled industries, redistributionist tax
systems, subsidies of necessities from electricity to food, tight
government regulation and affirmative action programs for the
lower castes are what has created these comfortable refuges for
Oracle and Microsoft.

Web of Debt

. . . What made this all possible was not capitalist competitive
drive (there was no corporate “entrepreneur” in sight), but the
state™s investment in universal education and the village™s
commitment to development of opportunity, not for a lucky few,
but for the entire community. The village was 100% literate,
100% unionized, and 100% committed to sharing resources
through a sophisticated credit union finance system.12
Conditions are much different in the state of Andhra Pradesh,
where farming has been the target of a “poverty eradication” pro-
gram of the British government. Andhra Pradesh has the highest
number of farmer suicides in India. These tragedies have generally
followed the amassing of unrepayable debts for expensive seeds and
chemicals for export crops that did not produce the promised returns.
An April 2005 article in the British journal Sustainable Economics
traced the problem to a project called “Vision 2020”:
[T]he UK™s Department for International Development (DFID)
and World Bank were financing a project, Vision 2020 [which]
aimed to transform the state to an export led, corporate
controlled, industrial agriculture model that was thought likely
to displace up to 20 million people from the land by 2020. There
were no ideas or planning for what such displaced millions were
to do and despite these fundamental and profound upheavals
in the food system, there had been little or no involvement of
small farmers and rural people in shaping this policy.
Vision 2020 was backed by a loan from the World Bank and
was to receive £100 million of UK aid, 60% of all DFID™s aid
budget to India. . . . There were about 3000 farmer suicides in
Andhra Pradesh in the 4 years prior to the May 2004 election
and since the election there have been 1300 further suicides.13
Vendana Shiva, one of the article™s co-authors, later put the num-
ber of farmer suicides at 150,000 in the decade before 2006.14 Shiva
and co-authors noted that India™s farmers, who make up 70 percent
of the population, voted out the existing coalition government in May
2004; but the new leaders too had to take their marching orders from
the World Bank, the World Trade Organization (WTO) and multina-
tional corporations. They observed that a growing number of laws
and policies are being pushed through the legislature that threaten to
rob the poor of their seeds, their food, their health and their liveli-
hoods, including:

Chapter 28 - Recovering the Jewel of the British Empire

A new patent ordinance that introduces product patents on seeds
and medicines, putting them beyond people™s reach. Prices in-
crease 10- to 100-fold under patent monopolies. Since India is also
the source of low-cost generic medicines for Africa, the introduc-
tion of patent monopolies in India is likely to increase debt and
poverty globally.
New policies for water privatization have been introduced, includ-
ing privatization of Delhi™s water supply, pushing water tariffs up
by 10 to 15 times. The policies threaten to deprive the poor of their
fundamental right to water, diverting scarce incomes to pay wa-
ter bills that are 10 times higher than needed to cover the cost of
operations and maintenance.
The removal of regulations on prices and volumes, allowing giant
corporations to set up private markets, destroying local markets
and local production. India produces thousands of crops on mil-
lions of farms, while agribusiness trades in only a handful of com-
modities. Their new central role in much less regulated Indian
markets is likely to result in destruction of diversity and displace-
ment of small producers and traders.
India™s poor, however, are not taking all this lying down. Following
Gandhi™s example of mass non-cooperation with oppressive British
laws, they have organized a nation-wide movement against the patent
ordinance. Communities are creating “freedom zones” to protect
themselves from corporate invasion in areas such as genetically
modified seeds, pesticides, unfair contracts, and monopolistic markets.
The grassroots movement has called for a rethinking of GATT (the
General Agreement on Tariffs and Trade), which led to the creation of
the WTO in 1995. The WTO requires the laws of every member to
conform to its own and has the power to enforce compliance by
imposing sanctions.15

The WTO and the NWO

The United States is also a member of the WTO. Critics warn that
Americans could soon be seeing international troops in their own
streets. The “New World Order” that was heralded at the end of the
Cold War was supposed to be a harmonious global village without
restrictions on trade and with cooperative policing of drug-trafficking,


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