http://www.fpif.org/fpiftxt/4931

Noam Chomsky is a noted linguist, author, and foreign policy expert. On January 15, Michael Shank interviewed him on the latest developments in U.S. policy toward regional challenges to U.S. power. In the second part of this two-part interview, Chomsky also discussed the Bank of the South, nationalization of resources, and the Shanghai Cooperation Organization.

Michael Shank: In December 2007, seven South American countries officially launched the Bank of the South in response to growing opposition to the World Bank, the International Monetary Fund and other International Financial Institutions. How important is this shift and will it spur other responses in the developing world? Will it at some point completely undermine the reach of the World Bank and the IMF?

Noam Chomsky: I think it’s very important, especially because, contrary to the impression often held here, the biggest country Brazil is supporting it. The U.S. propaganda, western propaganda, is trying to establish a divide between the good left and the bad left. The good left, like Lula in Brazil, are governments they would’ve overthrown by force 40 years ago. But now that’s their hope, one of their saviors. But the divide is pretty artificial. Sure, they’re different. Lula isn’t Chavez. But they get along very well, they cooperate. And they are cooperating on the Bank of the South.

The Bank of the South could turn out to be a viable institution. There are plenty of problems in the region. But one of the striking things that’s been happening in South America for quite a few years now is that they are beginning to overcome for the first time, since the Spanish invasion, the conflicts among the countries and the separation of the countries. It was a very disintegrated continent. If you look at transportation systems they don’t have much to do with each other. They’re mostly oriented toward the imperial power that was dominant. So you send out resources, you send out capital, the rich tiny elite have their chateaus on the Riviera, and that sort of thing. But they have not much to do with each other.

There was also a huge internal divide between a rich, mostly white, Europeanized elite and a massive population. For the first time, both of those kinds of disintegration, internal to the countries and among the countries, are being confronted at least. You can’t say they’re overcome but they’re being confronted. The Bank of the South is one example.

Actually what’s happening in Bolivia is a striking example. The mostly white, Europeanized elite, which is a minority, happens to be sitting on most of the hydrocarbon reserves. And for the first time Bolivia is becoming democratic. So it’s therefore bitterly hated by the West, which despises democracy, because it’s much too dangerous. But when the indigenous majority actually took political power for the first time, in a very democratic election of the kind we can’t imagine here, the reaction in the West was quite hostile. I recall, for example, an article - I think it was the Financial Times - condemning Morales as moving towards dictatorship because he was calling for nationalization of oil. They omitted to mention, with the support of about 90% of the population. But that’s tyranny. Tyranny means you don’t do what the United States says. Just like moderation means that you’re like Saudi Arabia and you do do what we say.

There are now moves toward autonomy in the elite-dominated sectors in Bolivia, maybe secession, which will probably be backed by the United States to try and undercut the development of a democratic system in which the majority, which happens to be indigenous, will play their proper role, namely, cultural rights, control over resources, political and economic policy, and so on. That’s happening elsewhere but strikingly in Bolivia.

The Bank of the South is a step towards integration of the countries. Could it weaken the IFIs, yes it can, in fact they’re being weakened already. The IMF has been mostly thrown out of South America. Argentina quite explicitly said, “Okay, we’re ridding ourselves of the IMF.” And for pretty good reasons. They had been the poster child of the IMF. They had followed its policies rigorously and it led to terrible economic collapse. They did pull out of the collapse, namely by flatly rejecting the advice of the IMF. And it succeeded. They were able to pay off their debts, restructure their debts and pay them off with the help of Venezuela which picked up a substantial part of the debt. Brazil in its own way paid off its debt and rid itself of the IMF. Bolivia is moving in the same direction.

The IMF is in trouble now because it is losing its reserves. It was functioning on debt collection and if countries either restructured their debt or refused to pay it, they’re in trouble. Incidentally the countries could legitimately refuse to pay much of the debt, because, in my opinion at least, it was illegal in the first place. For example, if I lend you money, and I know you’re a bad risk, so I get high interest payments, and then you tell me at one point, sorry I can’t pay anymore, I can’t call on my neighbors to force you to pay me. Or I can’t call on your neighbors to pay it off. But that’s the way the IMF works. You lend money to a dictatorship and an elite, the population has nothing to do with it, you get very high interest because it’s obviously risky, they say they can’t pay it off, you say okay your neighbors will pay for it. It’s called structural adjustment. And my neighbors will pay me off. That’s the IMF as a creditors’ cartel. You get higher taxes from the north.

The World Bank is not the same institution, but there’s the same kind of conflicts and confrontations going on. In Bolivia, one of the major background events that led to the uprising of the majority indigenous population to finally take political power was an effort by the World Bank to privatize water. Take an economics course, they’ll tell you that you ought to pay the market price and so on. True value, yes, very nice, except that means poor people, which is most of the population, can’t drink. Well that’s called an externality; don’t worry about things like that.

What the population did - and it was a big conflict, mostly in Cochabamba - peasants just forced the international water companies, Bechtel and others, just to pull out. It was supported by a solidarity movement here, it was quite interesting. But the World Bank had to pull out of that project and there are others like it. On the other hand, some of the things they do are constructive. It’s not a totally destructive institution. But that’s weakening too.