The International Monetary Fund (IMF), traditionally responsible for helping countries to meet their balance of payments requirements and setting currency standards, has been a key instrument in prying open markets for foreign investors and bailing them out in the case of a financial crisis. The IMF's crowbar is a set of investment liberalization measures which rob countries of their economic sovereignty.
As James Tobin, the Nobel Laureate economist who proposed a tax on all international currency transactions puts it: "It is hard to escape the conclusion that the countries' currency distress is serving as the opportunity for an unrelated agenda -- including the obtaining of trade concessions for US corporations and expansion of investment possibilities."57
And indeed, the recent IMF "recovery packages" for the shattered economies of South Korea, Thailand, and Indonesia included a number of provisions that might have been taken straight from the text of the MAI. These included requirements that the indebted governments guarantee the following: the right for all foreign investors to establish investments in every sector of the economy; the weakening of labour and environmental standards to attract investment; the removal of safeguards in stock markets that limit flash sell-offs and capital flight; and prevention against the adoption of regulations which would restrict or control foreign investment in their countries. Today, with the Asian economies more exposed, TNCs are buying out local companies at bargain prices, and at the same time gaining new market territory for themselves.
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© Corporate Europe Observatory, February 1998
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