"The Euro Area programs had created the perception that European member countries had excessive weight in the IMF's decisions relative to their economic power," according to the report.
Aid to poor countries has little effect on economic growth, and policies that rely on such claims should be reexamined, two former International Monetary Fund economists wrote in a paper released in 2007.
"We find little evidence of a robust positive correlation between aid and growth," wrote Raghuram Rajan, who stepped down as IMF chief economist at the end of 2006, and Arvind Subramanian, who left the IMF in 2007.
Confessions of an Economic Hitman
This reminds me of John Perkin's book "Confessions of an Economic Hitman." Perkin was an IMF official. Perkins says he was actually an "Economic Hit Man" and his job was to convince countries that are strategically important to the United States to accept enormous loans for infrastructure development and to make sure that the lucrative projects were contracted to U.S. corporations.
He cooked the books in a gigantic international con game. More specifically, he produced and defended grossly inflated projections of economic growth that were then used to justify super-sized infrastructure projects financed with debts to foreign banks that could never be repaid.
Intentionally making un-payable loans to foreign governments may seem the work of fools, but the money flowed directly into the bottom lines of well-connected U.S. construction and energy companies like Bechtel and Halliburton, and the perpetual debts gave the U.S. government a stranglehold over the economic and political resources of the indebted nations.
The leaders of these countries would also have bolstered political power because they were credited with bringing industrial parks, power plants and airports to their people.
The problem is that these countries simply cannot handle the debt of these loans and their poorest citizens are deprived of health, education and other social services for several decades as these countries struggle economically to overcome their huge debts.
Of particular interest is Perkins' story of his role in the deal that tied Saudi Arabia to U.S. interests, created a financial and political alliance between the House of Saud and the House of Bush, and led to a partnership that channeled billions of dollars to Osama bin Laden.
Under this agreement, the Saudis hold their oil earnings in U.S. Treasury bonds. The Treasury Department pays the interest on these bonds directly to favored U.S. corporations, with which it contracts to modernize Saudi Arabia's physical infrastructure. In return the U.S. government uses its political and military clout to keep the Saudi royal family in power.
According to Perkins, the Saudi agreement was to be a model for Iraq, but Saddam Hussein refused to play - which explains why George W. Bush was so intent on invading Iraq to remove him from office. The war was simply a different means to the same outcome. Effective control of Iraqi oil reserves was transferred to U.S. hands. Bechtel, Halliburton and other corporate Bush cronies received billions in new contracts.
Doug Bandow, the author of "Perpetuating Poverty: The World Bank, the IMF, and the Developing World", wrote in 1995: "There is a biblical proverb that says: 'the tender mercies of the wicked are cruel.'" Perpetuating Poverty demonstrates this to be true on an international scale. Fifty years and hundreds of billions of dollars of aid from Western governments tunneled through the IMF, the World Bank, and a number of other multilateral aid agencies have had an impact on world poverty: it has helped keep the Third World poor just that poor.