Fleecing the New Zealand Lamb
by Harry Saloor
The Management School of Restorative Business http://www.restorative-business.org
Fleecing the NZ lamb is one thing; cutting its meat to the bone and bleeding it dry is another. Once again the IMF and
its hunting party seem to be brandishing their guns and polishing their carving knives (cleaning off the blood of
African, Asian and Latin American nations). Their bloodhounds are going into a killing frenzy caused by the smell of
fresh blood. Wounded by the high value of kiwi (NZ dollar), bleeding because of the rising interest rates, and hindered
by the rising oil prices (inevitable consequence of Peak Oil - ultimately, the dependency on fossil fuel would prove to
be New Zealand’s undoing) their new prey, NZ economy, is limping.
Perhaps the Argentina model could help explain the stages that the NZ economy seems to be undergoing. Argentina’s GDP
composition by sector (agriculture 5%, industry 28%, services 67%) in 2000 (before its recession deepened) compares with
New Zealand’s GDP composition.
Argentina is a vast country, rich in natural resources with a sophisticated and highly educated population. Like New
Zealand, Argentina was a prosperous country by capitalistic standards. Yet more than 51% of Argentines now live below
the poverty line (the Argentine peso is now worth one third of its dollar-pegged value in 1991).
So what went wrong? Argentina’s economy died because IMF made them “an offer they couldn't refuse.” To spill their
blood, IMF demanded that Argentina cut its budget deficit on the eve of Argentina’s deepening recession in 2001.
After the second round of “Tequila Effect” in Latin America, IMF was about to transform the tango into a 4-step dance
macabre in Argentina. In “The Best Democracy Money Can Buy” Greg Palast describes the 4 steps as follows.
Step One Privatization. That is stripping the nation’s assets. Or “Briberization” as Palast quotes Stiglitz, former
chief economist of the World Bank. Palast writes, “Rather than object to the sell-offs of state industries, [Stiglitz]
says national leaders—using the World Bank’s demand to silence local critics—happily flog their electricity and water
companies.” Added to Stiglitz’ list of privatized national assets are the oil pipelines, roads, waterways, ports and
national parks (could they?) which are equally under the threat of privatization.
For more information on the “Necessity Test”, “efficiency principle”, GATS tribunal and the rejection of defense of
“safeguarding public interest” see .
Step Two Capital Market Deregulation. “After briberization, Step 2 of the IMF/World Bank’s one-size-fits-all
rescue-your-economy plan is Capital Market Liberalization. This means repealing any nation’s law that slows down or
taxes money jumping over the borders.” Palast adds, “Cash comes in for speculation in real estate and currency, then
flees at the first whiff of trouble. A nation’s reserves can drain in days, hours. And when that happens, to seduce
speculators into returning a nation’s own capital funds, the IMF demands these nations to raise interest rates…”
Invariably, the higher interest rates further stifle the nation causing a downward spiral in property values, increasing
unemployment, declining industrial production, economic stagnation and depleted national treasuries.
Step Three Market-Based Pricing. “At this point, the IMF drags the gasping nation [into] Market-Based Pricing, a fancy
term for raising prices on food, water and domestic gas.” In Latin Americas IMF also included a built in module “The IMF
Riot,” Palast says, which was predictable.
Losers are the ordinary people, naturally. Also predictable are the winners: the World Bank (51 percent owned by the U-S
Treasury) and its commercial partners - international financiers and currency speculators.
Step Four Free Trade. At this stage, the last of the nation’s assets are up for grabs for next to nothing. WTO, World
Bank and IMF (a three-headed dragon) set the rules and conditions in complete secrecy. People complain bitterly and
might even demonstrate for a day or two because the last of the family silver, or the “grandma’s jewels” as one reporter
put it, were handed over to offshore entities owned by faceless strangers, who might as well be reptiles from another
dimension. But the details become much more nauseating once some of the ugly reasons behind the privatization and free
trade emerge, when people suddenly wake up to the bitter reality of having to pay extortionate rates to the faceless
aliens for their local services - the very utilities that their community previously paid for and operated.