Working hand in hand with these transnational investments are the foreign aid programs. US aid to other countries subsidizes construction of the infrastructure needed by corporations: ports, highways, and refineries. Aid given to Third World governments comes with strings attached. It often must be spent on US products. The recipient nation is required to give first preference to US companies, relying less on home-produced commodities in favor of imported ones, thereby creating more dependency and debt and leaving these countries less able to feed themselves.10
A good chunk of US aid money never sees the light of day, going directly into the personal coffers of sticky-fingered officials in the recipient countries. The very ease by which these officials are bought off makes them the favored choices of the powerful investor interests. Better to have readily cooperative and corrupt leaders who help themselves rather than dedicated incorruptible leaders who mobilize popular sentiment to resist foreign takeovers.
Aid (of a sort) also comes from other sources. In 1944 the United Nations created the World Bank and the International Monetary Fund. Voting power in both organizations is determined by a country’s financial contribution. As the largest “donor,” the United States has a dominant voice, followed by Germany, Japan, France, and Great Britain. Though it has 186 countries as members, the IMF operates in secrecy with a select group of bankers and finance-ministry staffs drawn mostly from the rich nations.
The World Bank and IMF are supposed to assist nations in their development. What actually happens is another story. The World Bank will lend money to this or that country to finance a huge dam project that displaces thousands of families while providing cheap irrigation for export agriculture and cheap power for a private company.11 Or a poor country may borrow from the World Bank to build up some aspect of its economy. Should it be unable to pay back the heavy interest because of declining export sales or some other reason, it must borrow again, this time from the IMF. But the IMF imposes a “structural adjustment program” (SAP), requiring debtor countries to grant tax breaks to the transnational corporations, reduce local wages, and make no attempt to protect native enterprises from foreign imports and foreign takeovers.
In accordance with SAP rulings, the debtor nations are pressured to privatize their economies, selling at scandalously low prices their state-owned mines, railroads, and utilities to transnational corporations. They are forced to open their forests to clear-cutting and their lands to strip mining, without regard to the ecological damage done. The debtor nations also must reduce or eliminate subsidies for health, education, transportation, and food, spending less on public needs in order to have more money to meet debt payments. So it is that throughout the Third World, real wages have declined, and national debts have soared to the point at which debt payments absorb almost all of the poorer countries’ export earnings—leaving the debtor country even less able to provide for the minimal needs of its population.12
Here then we have explained a “mystery.” (It is, of course, no mystery at all if you don’t adhere to trickle-down mystification.) Why has poverty deepened while foreign aid, loans, and investments have grown? Answer: loans, investments, and most forms of aid are not designed to fight poverty but to augment the wealth of transnational investors at the expense of local populations. There is no trickle down, only a siphoning up from those who labor to those who accumulate.