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X-RAY analysis foreign aid: foreign aid is usually given only a skin-deep examination by the citizens who pay for it. Now peer into the guts of the system to see what you're paying for.

"If something sounds too good to be true, then it probably is!" This bit of motherly wisdom--used to avoid being defrauded by the unscrupulous--has many, many applications, not the least of which is to stop conniving, or completely uninformed, politicians from creating stupid policies or from committing stupid acts.

Keeping that thought in mind, we pay a brief visit to the book Confessions of an Economic Hit Man, by John Perkins. In the book, Perkins recounts a decade-long career in which he traveled to undeveloped countries and estimated how much economic growth would occur if modern electric power plants and transmission lines were built there--with foreign-aid money. It was his job to fudge the numbers and predict pie-in-the-sky estimates of tremendous economic growth. The fudged numbers assured that international and governmental organizations like U.S.A.I.D., the International Monetary Fund, and the World Bank would loan the countries money to build up their infrastructures.

Robin Hood?

His job sounds like that of a modern-day Robin Hood, deceiving the rich to aid the poor, spreading the wealth, except he aided not through sword and bow, but through statistics and convincing rhetoric.

Of course, after reading the admonition given at the beginning of this article, you know better than to believe that. In fact, the loans that were made to the undeveloped countries were never intended to aid the poor; they were meant to enrich a few international corporate executives and a handful of complicit people in those undeveloped countries--at the expense of the poor. The object was to ensure such huge loans to these countries that the countries could never pay them back, giving the loaning countries leverage to exploit the countries' natural resources--especially oil--and the countries' cheap labor.

Perkins describes the situation in Ecuador: "We loaned it billions of dollars so it could hire our engineering and construction firms to build projects to help its richest families. As a result, in ... three decades, the official poverty level grew from 50 to 70 percent, ... public debt increased from $240 million to $16 billion.... Today Ecuador must devote nearly 50 percent of its national budget simply to paying off its debts." Note that the donor countries dictate which companies will build the projects in the receiving countries, thereby transferring the bulk of the foreign-aid money to well-connected business elites from the donor countries.

That's the essence of the financial-aid shell game, played with international foreign aid (and, in a slightly modified version, with "free trade" agreements).

Are there likely many well-meaning people who call for foreign aid and who are involved in the collection and distribution of foreign aid? Yes. Do the people who profit from foreign-aid schemes likely see these people as a bunch of suckers? Also likely yes.

Enter onto the scene French President M. Jacques Chirac and the United Nations. That man and entity are leading the international push to increase foreign aid for a variety of "worthwhile" causes, loosely lumped together under the name Millennium Development Goals. If they have their way, aid money flowing through the UN would double from $50 billion to $100 billion per year.

To generate this level of funding, they propose a variety of fundraising tacks, the most notable being their plans for global taxation. Their fundraising plans are outlined in the Report of the Technical Group on Innovative Financing Mechanisms and in a report commissioned by Chirac, which is named after him. The proposed financing is broken into two segments: "Mandatory Mechanisms" and "Voluntary Mechanisms." Among the mandatory mechanisms are their plans to create a global tax system--taxing such things as global financial transactions; arms sales; air travel; an amalgamation of ocean activities; use of the environment and any "common goods," such as radio frequencies or "scarce and non-renewable resources"; the use of outer space; etc.

The report indicates that the amount of money generated from such taxes could be immense: "Foreign exchange transactions totaled US$ 1,174 billion daily in 2001." The desired tax rate on financial transactions is .01 percent--over $117 million per day using this tax alone.

Subtle Siege

But maybe these monies will actually go to the poor; after all, the developed nations recently forgave much of the debt owed by developing African countries. Right? Perkins addresses this issue: "Debt-forgiveness is not what this is about. The G8 (the United States, the United Kingdom, Canada, France, Germany, Italy, Japan, and Russia), the World Bank, and the IMF are once again exploiting these nations and they are calling it 'debt forgiveness.' They are insisting on 'conditionalities' that are cloaked in phrases like 'good governance,' 'sound economics,' and 'trade liberalization.' ... These policies are 'good' and 'sound' only if you are looking at them through corporate windows." The "conditionalities" include, according to an article from Inter Press Service, "opening ... markets to corporate agri-business and cheap food imports, which threaten farmers' livelihoods, as well as mining and other environmentally destructive projects.... Such conditions subject the poor to deeper poverty."

In other words, the G8 countries forgave a small part of the developing countries' debts in order to gain more leverage within the countries. At the same time, the G8 continued to give more foreign aid to other countries.

Statements made by Chirac and other advocates of foreign aid shout warnings of hidden agendas and corruption in regard to foreign-aid monies. Repeatedly, they call for increased "transparency" in the developed countries so that donors feel comfortable giving aid, knowing it won't be siphoned off by corrupt officials. Of course, the money is being siphoned off, or eaten up in "administrative costs." Chirac acknowledged, "only one third of international disbursements currently go to fighting poverty." And the aid that does make it to the developing countries doesn't necessarily go to the poor. It goes into the regimes' annual budgets. The Christian Science Monitor claimed that "around Africa, governments rely on foreign donors to supply big chunks--sometimes two-thirds or more--of their annual budgets."

Corruption is rampant in the countries that get aid. In fact, without foreign aid and corruption, many of these countries would likely soon prosper. The Washington Times reported in June that the Congo's leader, President Sassou-Nguesso, "continues to fudge the facts of what happens to the considerable revenues derived from the Congo's oil industry.... The IMF, for instance, has stated the Congo's 'oil revenues continue to be diverted for other uses and do not reach the treasury.' This is bureaucrat code-language for the c-word: corruption."

And foreign aid abets the corruption. This is true even according to a paper prepared at the United Nations World Institute for Development Economics Research: "External borrowing ... led to further borrowing especially in countries led by corrupt and inept regimes that squandered borrowed funds through embezzlement and capital flight. There is substantial evidence in the literature that suggests a vicious cycle of borrowing leading to capital flight, which leads to further borrowing."

Capitalism Magazine explains why capital flight occurs: "The wealthy individuals of poor countries send their capital abroad to offshore accounts in order to avoid the financial volatility and political instability endemic in their homelands. Therefore, developing nations have had to rely on the looting and mooching of foreign taxpayers by the governments of developed nations and the international capital markets for their financing needs." The magazine further explains that because the wealthy send their capital offshore, the countries have never developed "the financial framework necessary to accommodate the massive infusions of investment capital," thereby debilitating economic progress and giving the countries' leaders the financial wherewithal to stave off the political repercussions which would otherwise likely soon accompany their corruption.

Cronyism and Coercion

Moreover, Chirac and friends admit that a host of new controlling organizations will be needed to manage the new desired tax systems, burning up much of the money to be raised. They admit, for instance, regarding their proposal to tax the arms trade: "It should be borne in mind that there will be a need to put in place a new, and perhaps costly, intergovernmental body to implement the mechanism.... Although it could still have positive moral and political impact, ... [it] might not be worth the effort, in terms of raising substantive resources for development goals--after deduction of administrative expenses." They admit, too, that new controlling entities would be required to implement any of their other proposed new global taxing schemes--with various costs.

All of the proposed new taxes have some inherent method to further enrich the politically connected rich through fiscal manipulation. Chirac forthrightly says that the financial tax could even be used to "stabilize exchange rates" between currencies--think control the value of a country's money. Even the most innocuous expenditures of money would have corporate cronyism involved. The UN plans to earmark for research about $2 billion a year of any new monies raised to find new cures for AIDS, tuberculosis, and malaria. The money would go to companies with the best political connections.

Chirac and friends plan to implement the global taxes through a combination of "lead by example" and political "penalties." France has already submitted to an air travel tax, and 83 nations--not the United States--already make a "tax-like international contribution" for the advertised purpose of remedying oil spills. Once enough countries get on board with the new taxes, the others will be "penalized for abstaining" through fines and trade penalties, likely put in place through the World Trade Organization.

We can aid the poor simply--through stopping this manipulation of countries' economies. We can start by exiting the United Nations, the World Trade Organization, and the so-called free-trade agreements that we have entered. This would put foreign aid back into the care of privately funded organizations. Unlike international aid, private organizations directly infuse aid into foreign countries. Even the foreign-aid proponents previously mentioned noted that the privately run Bill and Melinda Gates Foundation claims to have 97 percent of its disbursements go to the people who need them. Lest one think that such aid would barely scratch the surface of the world's needs, it must be remembered that private donations by U.S. citizens to charities are in the area of $220 billion a year.
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Title Annotation:GLOBAL TAXATION
Author:Williamsen, Kurt
Publication:The New American
Date:Dec 11, 2006
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