Library:Enough is Enough

Enough is Enough: Dear Mr. Camdessus ... Open Letter of Resignation to the Managing Director of the International Monetary Fund
Author	Davison L. Budhoo
Publisher	New Horizons Press
First published	1990 New York
Type	Book
Source	archive.org

Foreword by Errol K. McLeod

The International Monetary Fund is one of the most powerful institutions in the world. Along with its 'sister' institution, the International Bank for Reconstruction and Development (the World Bank), the IMF is playing a crucial role in the reorganisation of global production. Through the rigid implementation of structural adjustment policies, the IMF and the World Bank are ensuring that the governments of countries that seek IMF and World Bank loans become faithful adherents to the philosophy of monetarism. And because the philosophy was never intended to create meaningful and sustained development, the result of the structural adjustment policies has been the deepening crisis of debt for Third World countries and rapidly growing poverty which leaves much of the peoples in these countries in a state of marginalisation at best, and abject misery at worst.

To confront an institution that has the power to implement this systematic process of recolonisation is not easy. It is also a task that requires a tremendous amount of personal courage. This publication is the result of one such act of courage. Davison Budhoo, former IMF and World Bank staffer, in a historic open letter of resignation from the IMF has not only challenged the philosophy and epistemology of the IMF and condemned its creation of mass poverty. He has gone further than anybody before by exposing massive statistical fraud carried out by the Fund in Trinidad and Tobago in the period 1985-1987.

Budhoo's resignation was an act of courage and conscience. All Third World peoples who have had to bear the economic and social weight of the Fund's "streamroller" policies are indebted to him. All those in the "developed" world of the North who are opposed to the injustice of the IMF and World Bank, are indebted to Budhoo.

The Oilfields Workers' Trade Union of Trinidad and Tobago invites others to express their indebtedness by utilising the facts and information provided in Budhoo's letter to the maximum. World public opinion must foa.as on the IMF's fraud. And at the same time we must collectively ensure that "Man of Conscience" Davison Budhoo is encouraged to continue his work. History is all too replete with the elites of this world using their to break people of conscience. We must not allow this to happen to Budhoo.

For the record it rust be said that Budhoo's position on fraud by the IMF in Trinidad and Tobago has been vindicated. The report by an investigating team appointed by the Cabinet of the Government of Trinidad and Tobago (which team was headed by Professor Compton Bourne of the Faculty of Economics, University of the West Indies) stated:

"(i) The Committee concludes that there have been serious statistical irregularities and technical deficiencies in the IMF's economic analysis and reporting on Trinidad and Tobago.

(ii) The likely consequences of these errors are:

(a) Unwarranted adverse judgement of the country's economic performance and national economic management;

(b) Inappropriate policy recommendations by the IMF and those agencies influenced by its economic analyses;

(c) International credit problems for Trinidad and Tobago

(iii) The IMF behaved irresponsibly in not disseminating the revised statistical series and in not revising its economic assessment when the earlier ones were known to be erroneous. Professional ethics, if nothing else, should have dictated that the corrected series be given the same prominence as was afforded the erroneous data."

In addition, the predictions by Budhoo of the effects of IMF and World Bank programmes in Trinidad and Tobago have all too sadly come to pass. Sine his warnings, the people of Trinidad and Tobago have suffered through a currency devaluation, increased unemployment and layoffs, a 15 percent Value Added Tax, cut in public sector employees' wages, cuts in social services, higher prices, loss of foreign exchange due t easing of controls on foreign exchange, impending removal of non-tariff barriers to imports, undermining constitutionally established bodies such as the Industrial Court and the Public Utilities Commission, and willy-nilly privatisation of State Enterprises.

We however are not defeated by the burden of this weight. We have rejected these policies of structural adjustment agreed to by our own weak, spineless and uncreative political directorate. And we have redoubled our efforts and intensified our struggle to bring about economic, social and political transformation. For it is only this that will enable us to end our persistent poverty. And as we struggle, we remember and thank Davison Budhoo for the unique and historic contribution he had made to this development. Davison has pointed a way but only the unity of the people will tame the IMF/World Bank "Goliath."

San Fernando, Trinidad

February 1990

Errol K. Mc Leod

President General

Oilfields Workers' Trade Union, Trinidad

Note by the publisher

The new decade now upon us — the last of this century and millennium — has been characterized by sweeping political and economic change. Starting in Poland, this extraordinary process of change spread rapidly across East Europe and the Soviet Union. Demonstrating the power of grassroots political mobilization, the forces behind this change quickly chal- lenged established centers of political and economic power. The cornmn denominator of the demands generated by these forces has beelö an insistence upon accountability to those whose lives are directly af- fected by those who wield power. It is unlikely that this contagious mass mobilization will be easily contained in one region of the world. Nor is it likely to be confined to producing change only in national governments. Established economic and plitical institutions everywhere are going to be, in the years ahead, subject to demands for greater account- ability for their actions. Accountability is, in the final analysis, what Davison Budhoo's Open Letter of Resignation from the ln- temational Monetary Fund is all about. By exposing the way in which the Fund works, both generally and in specific instances such as Trinidad and Tobago, he lays the groundwork for imposing on the Fund new stand- ards of accountability to the institutions and people affected by its actions.

Historically, the IMF has been primarily accountable to those who have provided the lion's share of its financial resources. This is no longer enough. We — the citizens of the world — are all stakeholders in the Fund. And those that have the greatest stake are the populations of countries that have had to endure the harsh economic and political adjustments imposed by the Fund as a condition of its providing assistance. By far the greatest stake of all is in the hands of the most vulnerable sections of these populations — typically, women, children, and the poor generally — because the burden of these adjustments has fallen most heavi- ly on their shoulders. Davison Budhoo's resignation from the Fund as an act of conscience was a courageous step into the unknown. When he took that step, he burned many bridges behind him, including a retum to the safe, conMortable, well-compensated world inhabited by international civil servants. For him the risks were very large, but he took those risks because, having participated in the work of the Fund and having seen for him- setf the terrible burdens the Fund's actions imposed on poor and innocent people, he could no longer live with his conscience.

The Fund's initial response in threatening Davison Budhoo with legal action ill behooves a powerful public institution. Such institutions must, if they are to be truly accountable to their stakeholders, function not in a closed Byzantine environment but as though they were in a goldfish bowl. By lifting the veil of secrecy that for far too long has protected the IMF and its actions from intense public scrutiny, Davison Budhoo has done all of us who believe in the principle of accountability for public institutions a great service. In publishing Davison Budhoo's Open Letter of Resignation, we seek to make it as widely accessible as possible as a tool for those who are striving to hold the International Monetary Fund to new standards of ac- countability. It will soon be followed by a new book by Davison L. Budhoo. With the working title, Global Jus- tice: The Struggle to Reform the International Monetary Fund, this new book will chronicle what happened as a result of his resignation, including investigation of the charges he made against the IMF and the IMF respnse. It will also set forth a program for reforming the IMF and a strategy for achieving those reforms.

We hope this new book, like the Open Letter, will be useful in the struggle to make the IMF more ac- countable to all of its stakeholders and not just its principal patrons. We are proud to be part of that struggle for global justice.

New York

February 1990

Ward Morehouse, Publisher

New Horizons Press

Author's preface

It is alrmst two years since my Open Letter of Resignation arrived at the desk of Mr. Camdessus, Manag- ing Director of the International Monetary Fund. My expectations of its impact on the Fund itself, its member governments and ordinary penple around the world who might hear or read about what I had done, were greatly underestimated and, simultaneously, naively inflated.

Let me explain what I mean.

When I began writing the Letter in 1987, I though that I had one buming, all-consuming mission - i.e.; to bring to the attention of the world what appeared to me to be the criminal actions by the Fund, perpetrated perhaps sometimes unknowingly against peoples of the Third World, and particularly the poorest and most economically vulnerable amng them.

I labored under the illusion then (as indeed I did for several months after the Letter appeared), that once I took the plunge and proved without question the accuracy of the serious charges that I was making, a process of internal dialogue and soul-searching, forced on the Fund by world public opinion, would inexorab- ly be set in motion. And I felt that in the ensuing climate of flux and accommodation, the regime of reform that I had proposed would necessarily be brought into the international spectrum, along with other proposals emanating from concemed sources.

In short, I believed that there was bound to be some way through which the Fund and its powerful sup- prters in the developed world Øuld be made to rmve away from the path of callous destructiveness and follow a humane course of fair play that makes civilization possible.

That was my thinking, but things did not turn out that way. Instead, the Fund dug in its heels, defiant and unrepentant. It turned all its anger and poison and frustrations on my person. In its own words "the Fund reserves its right to take such action against you as is necessary to protect is interests and those of its mem- ber countries." The Director of Administration who wrote these words did not, as I came to realize, have in mind legal, above-the-board action. For twenty one rmnths I have begged them to take such action and they have refused.

Before the Executive Board in early July, 1988, top management warned that the Fund was being "entrapped" by me. And at about the same time, the Director of External Relations told the British Broadcast- ing Corporation's Channel 4 Television crew that the Fund was determined to take all necessary action to ensure that Budhoo never becomes an "international star." And while my person was vilified, and plans laid to destroy me, no one on the Board thought it necessary to pay heed to the charges that I had made.

Now twenty-one rmnths later, I have eight questions for Mr. Camdessus, as follows:

(1) Does it mean nothing to the Fund that two independent commissions, appointed by the Government of Trinidad and Tobago, should have that all my charges of statistical and non-statistical fraud per- petrated against that country over 1985-88 were absolutely correct?

(2) Or that UNICEF in December, 1988 should have supported, after highly technical and painstaking research, my allegations of Fund-instigated genocide of Third World peoples under the on-going, creditor- oriented, international debt strategy?

(3) Or that the governments of the entire African continent south of the Sahara, in active collaboration with the UN E@nomic Commission for Africa, should have vehemently rejected in 1989 the Fund's concepts and implementation of Third World "structural adjustment" on the basis of technical analysis identical to that developed in the Open Letter? And that the self-same governments, and the self-same UN Commission, should have gone on to develop alternatives that would bypass, totally in the future, the present-day policies of the Fund?

(4) Or that the World Bank, smarting from the facts of the Letter, should have begun distancing itself, in a highly visible way, from Fund "rnonetarisrn" and "Reaganomics"?

(5) Or that several world quasi-legal tribunals, including some of the world's most outstanding jurists and humanitarians, should have seen fit, over the past eighteen months, to declare the Fund guilty of fun- damental violations of human rights and the perpetration of massive crimes against humanity?

(6) Or that First World and Third World voices, muted and uncertain before 1988, should now be raised in angry concert, from every corner of the globe, in condemnation of the Fund and its record of horror and ignominy?

(7) Or that so many thousands of people since 1988 should have been killed by their governments, or been maimed or arrested, fighting the Fund at street comers, and in slums and villages in countries as dif- ferent and as far apart as West Germany, Venezuela, Jordan, Nigeria, Tunisia, Egypt, Algeria and Sierre Leone?

(8) Or that tens of millions of people in the Third World should have suffered needlessly and many died since 1988 because the Fund and the interests it represents still continue to dominate the pages of human history?

In the aftermath of the Letter and its initial impact - and others in due course will judge the latter more objectively and more mmprehensively than I can - one important question arises: Where do we go from here? And on this matter, I will confine myself to two points, seemingly unrelated, but very much the logical outØme of the drama and the trauma of the last two years.

The first @ncerns the fact that the Fund remains a law unto itself, impervious to questions about its per- formance, its human rights record, and its accountability to its victims and others affected by its actions. In this situation, it appears that the effort from 'outside' forces for meaningful reform that will lead to civilized and responsible behavior can continue for some time to be thwarted.

Consequently, there must e an Intensificationo the effort to reac the undredso millionso und vic- tims all around the world. We need to educate them about the institution that dominates their lives and to elicit a worldwide reaction sufficiently strong and broad-based and vocal to convince the High Priests in Washington and elsewhere that the day of reckoning is finally at hand. Branding the Fund's critics as "do- gooders" or "spoilers" or "madmen" or "communists," is no longer enough to get the institution off the hook or to save the over-protected skins of its staff.

Finally, I have to mention, albeit reluctantly, a systematic pattern of violation of my human rights, and the human rights of others associated with my work. On this matter, I respectfully ask to be left in peace. Let those who oppose what I am doing take formal, legal action against me, if they so wish. But Øvert harass- ment and underhanded intimidation at the personal level are, by consensus of civilized people everywhere, among the rmst reprehensible forms of criminal behavior, and I will never accept them as factors miniaturis- ing my life, and conditioning my freedom. Therefore, to all concerned I say, let good sense and propriety prevail. Let us build new foundations for human understanding, not undermine further the existing fragile base inherited from centuries of broadening our tolerance, and deepen our compassion.

Washington, D.C.

February 1990

Davison L. Budhoo

Memorandum of Transmittal of Open Letter of Resignation

May 18, 1988

To: Mr. Camdessus, Managing Director

From: Davison L. Budhoo

OPEN LETTER OF RESIGNATION IN SIX PARTS (PARTS I - VI)

I am enclosing Part I of a Six Part Open Letter of Resignation addressed to you. The remaining Parts of my Open Letter (Parts II through VI) are summarized briefly on pages 5 to 15 of Part l.

For various reasons, it is impractical to issue, simultaneously, all Six Parts of this Letter. Accordingly, Parts II, Ill, IV, V, and VI will be issued in that order, at fairly regular intervals over the next three months. A second "follow up" Letter to you, in one Part only, is also being prepared for release later.

All Parts of this Letter will be distributed, on the appointed dates, to the Fund's Board of Governors and Board of Executive Directors. Worldwide distribution will include political and economic organizations in the United States and throughout the world, religious leaders, human rights groups and the news media.

On the question of why I write this Letter and see fit to release it beyond the Fund, I must refer you to Part l, Section 1 for the quick answer. The more detailed answer is not hard to find either; I think that it is written into virtually every paragraph of what, unfortunately, can be seen as nothing if not a withering Indictment of Us, as an international institution, and as an over-privileged, rampaging group of men and women defying every day the world's conscience, and defacing grossly our own heritage of fair play and decency and humanity.

For God's sake, let us stop dead in our tracks and take stock of ourselves, for stocktaking is overdue. Serious, clinical stocktaking, before a knowledgeable public that, conceivably, can force us to save oursel- ves from what we have become is a long, long overdue act of redemption - for us, and for the mass of humankind that we have defiled and diminished for nearly two score years.

Attachment

Part I of Open Letter; Reason for This Letter and a Summary of Its Contents

May 18, 1988

Mr. Camdessus

Managing Director

International Monetary Fund

Washington, D.C.

Dear Mr. Camdessus,

Davison L. Budhoo: Part I of Open Letter of Resignation From the Staff of the International Monetary Fund: Reason for this Letter and a Summary of its Contents

1. The milieu

(a) Why I have to Forego the Code of "Proper Fund Staff Behavior" and Write this Letter

Today I resigned from the staff of the Intemational Monetary Fund after over twelve years, and after 1000 days of official Fund work in the field, hawking your medicine and your bag of tricks to governments and to peoples in Latin America and the Caribbean and Africa. To me resignation is a priceless liberation, for with it I have taken the first big step to that place where I may hope to wash my hands of what in my mind's eye is the blood of millions of poor and starving peoples. Mr. Camdessus, the blood is so much, you know, it runs in rivers. It dries up too; it cakes all over me; sometimes I feel that there is not enough soap in the whole world to cleanse me from the things that I did do in your name and in the names of your predecessors, and under your official seal.

But I can hope, can't l? Certainly I can hope. I can hope that there is compassion and indignation in the heart of my world, and that people can stand up and take notice of what I have to say, and listen to your reply. For you will have to reply, because the charges that I make are not light charges - they are charges that touch at the very heart of western society and westem rnorality and post-war inter-governmental institutionalism that have degenerated into fake and sham under the pretext of establishing and maintaining international economic order and global efficiency.

You think that's all there are to my charges? No, there is rnore; much more. The charges that I make strike at the very soul of man and at his conscience. You know, when all the evidence is in, there are two types of questions that you and me and others like us will have to answer. The first is this : - will the world be content merely to brand our institution as arnong the most insidious enemies of humankind? Will our fel- lowmen condemn us thus and let the matter rest? Or will the heirs of those whom we have dismembered in our own peculiar Holocaust clamor for another Nuremberg?

I dont mind telling you that this matter has haunted me; it has haunted me particularly over the past five years. It has haunted me because I know that if I am tried I will be found guilty, very guilty, without extenuat- ing circumstance.

But beyond the question of guilt, there is a far more operational matter that bothers me; it is this: what devil is there in us that will allow us to go this far into a shame and an ignominy without screaming out a protest as human beings and as men of conscience? How could we have allowed ourselves for so long to defend the indefensible?

When I ask myself that question I become disoriented. I become disoriented because I cannot cope with the consequences of the answer that I know will surface one day. Put simply, that answer will doubtlessly focus on the total preoccupation of Fund people, and Fund inspired people, with personal material gratifica- tion and with the lust for, and abuse of power placed so inadvertently, yet so completely, in their hands. It is the timeless story of human beings, faced with an exceptional opportunity to further the cause of mankind, tuming around and destroying eveMhing worth preserving because of some indefinable quirk in our Nature. It is the timeless story of the descent of another century of history into hell.

Doubtlessly you feel outraged that I speak thus, and that I ask questions that raise the spectre of per- sonal culpability of those who labor within our institution, and that I make what you may see as meaningless, but dramatic and eye-catching generalizations about our work and history's verdict on it. Perhaps you wish to say to me "You are mad to suggest that the Fund, or anyone associated with it, has Ørnmitted such awful crimes." Well, maybe I am mad, Mr. Can%essus, to look at our operations with eyes of candor and to feel terror, rather than satisfaction, at the sight of us doing things of Dracula that we so blithely do. But I cannot help being mad thus; I cannot help feeling what I feel; I cannot help being squeamish. I guess you can say that there was always a Mr. Hyde within me, and even as I did your Dr. Jekyl work I kept looking over my shoulder at his kind face. And one day he said to me: "Take stock of yourself; the image of the Beast is blot- ting out all else. Your soul is becoming shrivelled up; you are becoming dispossessed of all traces of your humanity." And I replied: "It cannot be; I will never accept to be thus; I will fight tooth and nail to return to the Human Fold."

This Letter is the start of my fight back to that Fold, and in writing it, and in doing other things that I must henceforth do, I have to forego the conventional stereotype of Fund Staff "proper" behavior. Put bluntly, as from today I refuse to accept the Fund-imposed censorship on our activities in the Third World. I have also stopped obeying your directive that reports and memoranda and other printed matter that document these activities be regarded as unexceptionally confidential and "hush-hush". Equally, I reject the Fund's tradition- al stance that the world has no right to know details of our methodology, or be made privy to the secrets of our success in doing what we do. More comprehensively and catalytically, as from today I tear off the mask of studied ambiguity that your organization did give me twelve years ago. As from today, Conscience be- comes my only guide.

(b) The Purpose of this Letter

In guilt and self-realization of my own worthlessness as a human being, what I would like to do most of all is to so propel myself that I can get the man-in-the- street of North and South and East and West and First and Second and Third and Fourth and All Other Worlds to take an interest in what is happening to his single planet, his single habitat, because our institution was allowed to evolve in a particular way in late twentieth- century intemational society, and allowed to become the supra- national authority that controls the day-to- day lives of hundreds of millions of people everywhere. More specifically, I would like to enlighten public opinion about our role and our operations in our member countries of the Third World. I would like...

Do I hear you bristling with disapproval? Yes, I do. "Enlightening public opinion" are nasty words in the vocabulary of the Fund; I know it; I know it. Well, not so for me. In my new dictionary, "enlightening public opinion" spells the only means to salvation. For if I can do that - if I can get people to begin to comprehend the universality and the depth of our perversion - I would have achieved something rare and precious for the starving and dispossessed of mankind from whose ranks I come, and for whose cause I must now fight.

If only I can light a little spark of concern for the Third World from the First World, Mr. Carndessus! If only I can make others to see that the poor and the destitute are not the expendable garbage heap that our in- stitution thinks they are! (what a garbage heap, Mr. Camdessus! What a large expendable garbage heap of three billion souls!). If only I can...

(c) What this Letter is, and isn't

Wait, Mr. wait! Dont breathe a sigh of relief. Dont say : "Oh, another do-gooder filled with delusion and a pitiable sense of self-importance! Another geezer striving vainly for melodramatics! Another geezer wasting my time. Now that I know who he is and what he is after, let me call in the High Priests of the Fund. They will take care of him; they will clean up the little mess that he did make. What a life! It's all in a day's work." Mr. Carrdessus, don't say these things; dont devalue my substance thus, as we devalue the currency of every Third World Øuntry that we latch on to. You know, contrary to what may be your impression af reading the first few pages of this Letter, I do not deal in wild accusations and uninformed guesses; I do r deal in diatribe. I deal in cold, stark facts - facts and specifics of time and place and Fund policies and Fu conditionalities and Fund missions and Fund meetings and Fund negotiations and Fund-related fraud, ant And Fund-related fraud? Yes, Sir, Fund-related fraud. You know, the term "fraud" is not mine; it was first used by your predea sor, Mr. de Larosiere; I merely pick-up from where he left off. And in so doing, I shall put under the mic scope each element of the type of fraud to which he did refer; I shall dissect every element separately show where the cancer lies.

Want an example of the technique? Want me to illustrate the method of approach that I will use to dis- sect our dealings in member Øuntries? Well, I'll respond immediately by delving into our activities in the member country of Trinidad and Tobago, a small, twin-island state in the Eastern Caribbean. I will summarize here, briefly, what we did do there from 1985 to the present time. (In Parts II and Ill of this Letter I describe these activities, blow by blow, in great detail.) And I'll guarantee you one thing - viz: that when I've had my say, no one in the Fund will want to laugh again today, or tomorrow, or the day after tormrrow for that matter.

2. Six indictments against our operations in Trinidad and Tobago

I hereby file accusation against the Fund in its dealings with Trinidad and Tobago on six counts, viz:

(i) We manipulated, blatantly and systematically, certain key statistical indices so as to put ourselves in a position where we could make very false pronouncements about economic and financial performance of that country. In doing so, we created a situation whereby the country was repeatedly denied access to international commercial and official sources of financing that otherwise would have been readily available. Our deliberate blocking of an economic lifeline to the country through subterfuge served to accentuate tremendously the internal and external financial imbalances within the economy springing from the dramatic downtum in the price of oil;

(ii) The nature of our ill-will, and the depth of our determination to continue on a course of gross ir- regularities, irrespective of economic consequences for the country and its peoples, are clearly shown by the fact that your senior staff bluntly refused in 1987 to correct even one iota of the wrong that we had done over 1985/86;

(iii) Congruent with action outlined in (i) and (ii), the staff has waged within the Fund an aggressive cam- paign of misinformation and derision about economic performance in Trinidad and Tobago. The insidious- ness of that campaign is dramatically highlighted in the deliberately wild allegations made in the Briefing Paper to the last consultation mission - a paper that was cleared and approved by your good self in late June, 1987;

(iv) Asthe country continues to resist our ea lest e lane t at wou put It In a position to enter into a formal stand-by arrangement with us, we continue to resort to statistical malpractices and unabashed misin- formation so as to bring it to heel. Among several misdeeds, we have influenced the World Bank, apparent- ly against the better judgement of its own mission staff, to come out in support of our trumped-up policies and stances for the country;

(v) In our seemingly inexplicable drive to see Trinidad and Tobago destroyed economically first, and con- verted thereafter into a bastion of Fund orthodoxy, we have applied, and are applying, intolerable pressures on the government to take action to negate certain vital aspects of the arrangements, as enshrined in the constitution of the country, through which the government functions, and within whose framework fundamen- 01 rights of the people are recognized and protected, and norms of social justice and economic equity main- tained;

(vi) Our policy package for Trinidad and Tobago - i.e. the conditionality that we are demanding for any Fund program, and the measures that we are asking the authorities to implement as a necessary precondi- tion for a loosening of the iron grip that we now hold on the fortunes of the country in so far as its recourse to international capital markets and official bilateral donors are concerned - can be shown, even in a half-ob- jective analysis, to be self-defeating and unworkable. That policy package can never serve, under any set of circumstances, the cause of financial balance and economic growth. Rather, what, in effect, we are as- king the Government of Trinidad and Tobago to do is to self-destruct itself and unleash unstoppable economic and social chaos. In this respect, this Letter invites you to appoint urgently an independent expert group to look into all aspects of the charges made in Parts II and Ill of the Letter;

Self-defeating and unethical as it may seem, what we have done and are doing in Trinidad and Tobago is being repeated in sØres of countries around the world, particularly in Latin America and the Caribbean and Africa. Sometimes we operate with greater restraint, sometimes with less, but the process and the result are always the same: a standard, pompous recital of doctrinaire Fund "advice" given uncompromisingly and often contemptuously and in utter disregard to local conditions and concerns and susceptibilities. It is the norm now rather than the exception, that when our "one-for-all and all-for-one" Fund cap doesn't fit the head for which it is intended, we cut and shave and mangle the head so as to give the semblance of a fit. Maybe we bust up the head too much in Trinidad and Tobago, but have no illusions that the way We operate through- out the world - the narrow and irrelevant epistermlogy underlying our work, the airs and affectations and biases and illusions of superiority of our staff vis-Å-vis government officials and politicians in the developing world, our outrageous salaries and perks and diplomatic immunities and multiple "entitlements", the ill-got- ten, inadvertent power that we revel in wielding over prostrate governments and peoples - can only serve to accentuate world tensions, expand even further the already bulging ranks of the poverty-striken and des- titute of the South, and stunt, worldwide, the human soul, and the human capacity for caring and upholding norms of justice and fairplay.

3. A Bird's Eye View of Subsequent Parts of This Letter

Each of the remaining five Parts of this Letter has been placed in appropriate safekeeping, pending release to you. In this section, a brief summary is given of each of these five Parts.

(a) Summary of Parts II and Ill

Parts II and Ill document, in considerable detail, the range of Fund wrongdoing in Trinidad and Tobago from 1985 to the present time, as summarized in Section 2 above. Part II deals with statistical malpractices and improprieties that we did perpetrate (items (i) through (iv) on page 4), whereas Part Ill provides evidence to support charges relating to non-statistical issues (items (v) and (vi) on pages 4 and 5). From the backdrop of our very shameful but wholly unrepentant behavior in Trinidad and Tobago over the period identified, two operational and highly relevant issues are brought into focus in later sections of Part Ill. The first of these reminds you that on-going Fund policy pays a lot of lip service to "evenhandedness" (or equality of treat- ment) in our relationships with member countries, but suggests that in actual practice this goal remains a dead letter. Firsthand evidence to support this latter position is brought to bear on a comparison that is made of our treatment of Trinidad and Tobago and Jamaica in 1987. The second matter aired is the question of what constitutes statistical fraud in the dealings of the Fund with member countries, and what are the penal- ties involved for entities caught redhanded in perpetrating such fraud, or otherwise indulging in statistical malpractices meant to mislead others or to misrepresent a true position. On this issue, you are urged to es- tablish immediately an independent investigative authority to look into all charges made in Parts II and Ill, and in the light of the findings of such authority, to take whatever remedial action is called for in relation to established Fund procedures, notwithstanding the fact that the culprit may prove to be the Fund itself, rather than miscreant member countries for which the penalties were intended in the first instance.

(b) Summary of Part IV

Part IV is divided into three sections. The first reviews the conceptual content and the theoretical under- pinning of our "program" for Trinidad and Tobago, irrespective of the statistical and other malpractices that we did commit in the process of trying to get the authorities to bite the bullet and accept that "program." The conclusion is that our "program" for Trinidad and Tobago is nothing but a hotchpotch of irreconcilable and conflicting elements and objectives. The accusation is made that the internal logic of our "program" spells comprehensive economic disorder in Trinidad and Tobago and all enfolding disintegration of the fabric of na- tional life - economic, political, and social. Evidence is brought to show that our action in Trinidad and does not relate to any clear set of economic principles, however misguided or inappropriate such principles may be, and that we are just striking out wildly at everything and anything in our path, without reason or ra- tionale or sensitivity to an aftermath.

The seØnd section of Part IV asks the question: why should this be the case? How, in fact did we get into the game of giving farcical advice to member countries? In seeking an answer, another question is brought to the fore; it is this: Is the Fund staff running amok with the wholly unexpected and unexceptional authority that they wield? Are we churning out despair after despair, hunger after hunger, death after death, in the name of Bretton Woods merely to satisfy a lust for power and punish those who run against the grain of our personal or "professionalized" political ideology, while rewarding those who think as we do?

This question takes us back to the very origin of the Fund; an attempt is made to unravel the various ele- ments of Fund history and epistemology to see how and if, to what extent and at what stage, our quest for a better functioning world became ensnarled into our personal ambitions and our burgeoning group psychosis.

On the above matters a set of inter-related conclusions are drawn. The first is that the Fund, which was established primarily to serve developed countries by overseeing the return of the industrialized world to or- derly multilateral trade and payments arrangements, has never been able to come to terms with the problems of the developing world, which are fundamentally different - ie; a economic growth and diversification, and broad social change along the whole spectrum of income distribution, quality of life, social security and politi- cal instability and economic waste, and poverty and hunger and disease and desperation. Always, and under all conditions that may be encountered, the conceptual backdrop that we brought to bear on our work, and the body of economic principles that guided our action, sprang overwhelmingly from the nineteenth century vision of Pax Britanica, now writ large as Pax Atlantica - ie; "perfect competition" and "world allocation of resources" and "international division of labor" and "general equilibrium in the (western) world economy" to be achieved through the instrumentality of unbridled and "free" pricing systems domestically and Gold-Stan- dard determined exchange rates internationally. As far as we were concerned, all the difficult dynamics and unforeseen phenomena of the developing world in the fifties and sixties and seventies and eighties of this century had no meaning whatsoever; they could be ignored or dismissed or shrugged off without the batting of an eye or the furling of a brow. Unwilling and unable to meet emerging Third World needs, we became the Neanderthaler of the twentieth century.

Why was this the case?

The third section provides the following answer, viz; sometime in the course of Fund history, our original episternology became transformed from a system of verifiable concepts, theoretically open to chßnge and adaptation, to a totally closed and vainglorious doctrine that has nothing to do with economic theory, but everything to do with the Nature of Man. More specifically, at some stage the Fund staff - the seeming "non- descript technocrat" who was hardly ever mentioned in our Articles of Agreement - managed to "steal" the Fund and began using it as his own personal tool to propel and shape the emergence of what I choose to call a New Nobility on Earth, wielding power and influence and control over the lives of hundreds of millions of hapless people in a New Late-Twentieth Century Dark Age, epitomized by a Continual and Never-Ending State of Tyranny and Dictatorship and Oppressiveness. Even more specifically, at some stage in Fund his- tory, Pax Atlantica gave way to Pax Honeypot when the latter is defined to mean the easily identifiable and Gndless stock of almost unbelievable goodies and material Things of Life provided by the captive Fund to its triumphant and rampaging and insatiable staff. Pax Honeypot has become the be-all and end-all of every- thing done by the Fund in the Third World; it is the basis of all our motivation and all our objectives in countries such as Trinidad and Tobago that we would rape, and where we would commit statistical fraud, and mash up the constitution and bring poor people to further and further grief and destitution.

The following general conclusions are drawn, after close perusal of evidence.

(i) We get away with our works of Dracula hiding behind the mask of Superior Technocracy and a Greater Wisdom striving for "financial balance" and "structural adjustment" in the Third World. But the mask is be- coming more and rmre tattered, outside observers and victims of our scorched earth policy themselves are beginning to see us as we really are. But our response to criticism is greater self- righteousness and greater indignation and sense of effrontery that anyone can dare to question our works and our methods. Can't they see that we are the only wise ones and that they are the fools?

(ii) The Fund is soulless, not because there is no scope for humanized behavior and compassion in an institution dedicated to optimum world efficiency and a more effective use of foreign financial resources in developing countries, but because its founders, in chasing their improbable dream of Pax Atlantica, over- looked all scope for exercising compassion and alleviating social injustice in certain parts of the intemation- al system that they were creating. Compassion and social justice were crying needs; they are the very roots on which we should have nurtured an evolving and pragmatic Fund philosophy for the Third World. But our Founding Fathers denied us access to them, and shrivelled our soul. So later on, when we "stole" the Fund, All Things Just and Humane became our Absolute Antithesis; we were as clinically and completely materialis- tic and single-minded in pursuit of Our Own Gratification (Pax Honeypot) as they were in pursuit of Pax At- lantica.

(iii) In a very meaningful way, our staff perversion is the logical consequence of our Founding Fathers' credo, just as the latter is the logical consequence of the prevailing 1944 international ethos of Superior Man and Inferior Man, and the westem man and his system to be saved and nurtured, and the southern man to be overlooked and cast aside, in so far as his needs and aspirations as individuals and groups and nations are concerned.

And it is this theme - the theme of the southern man remaining in oppression under post-war multi- lateralism, spearheaded by the Fund, as he had been under seventeenth and eighteenth and nineteenth century colonialism - that occupies the fourth section of Part More specifically, representative examples are given of the rnodus operandi of Fund staff as the New Nobility of Earth, out to protect and expand Pax Honeypot, and to srnother all opposition to their hegemony, from whatever quarter such opposition may come. Initially, the spotlight tums to "internal" power distribution among the staff, with "core" staff from the West call- ing the shots and laying down, virtually on their own, Fund law at 700 19th Street, N.W., Washington D.C. Subsequently, the field of enquiry widens from "internal" matters to "external" authority wielded by sectors of our staff. In particular, the nature of power that we hold in countries of the Third World, and the methods that we use to make our power effective and self-sustaining, are brought to the fore.

On "internal" matters you are asked to take a close look at the implications of the rampant and multi- faceted racism that is now an extremely operative factor in Fund staff calculations; as you are fully aware, this "internal" worm eating at our soul has created its own system of internal injustices and double standards and rank arbitrariness within the Fund, particularly in relation to staff promotion and job assignments. But, unfortunately, that is only the tip of the iceberg; the matter runs far deeper than staff issues. Indeed, racism makes itself felt in a wide range of organizational practice, some of which are eminently inexcusable, given our international nature. Among these is the classification of South Africa as a "European country" ad- ministered by our highly segregated, virtually "white staff only can work here" European Departmqnt. But however outrageous our internal practice and organizational arrangements, they fade iffto insig- nificance when compared with the sheer temerity and dare-devil grossness of the methods and procedures that we use to keep Third World governments and peoples under our heel. And in this respect the most ob- vious point to be made is that we are Judge and Jury and Maker of All Relevant Laws Pertaining to the Crime Committed and Administrator of the Penal Code and Executor of the Sentence.

Yes, yes, Mr. Camdessus, in scores of developing countries that are unfortunate enough to fall within our grasp, we hold simultaneously and completely in our hand Legislative and Executive and Judicial powers over wide- ranging matters relating to national economic and financial policies. We do our own "tainted" evaluation of economic and financial performance (an evaluation that is subsequently accepted as Bible Truth by our Executive Board and by the intemational community); we write our own Letter of Intent under the name of the Minister of Finance and present it to him for signature; we administer the "program" specified in the Letter of Intent (this includes determining whether or not the country has met the "performance criteria" that we have established, and whether, therefore, it is eligible, on "target" dates, to draw down the financial resources that we had committed, and that other supporting institutions had promised). The whole process of determining what is "right" for the country, to formulating that "rightness" into a legal document that specifies "conditionality" and "performance criteria", to administering and monitoring the "program", to determining whether or not the country is eligible to draw, to alerting the international com- munity as to whether or not we did see fit to create yet another "outcast country" or "leprosy case", is per- formed not only solely by the Fund, or by the relevant Division of the appropriate Department of the Fund, but in rmst instances by a single staff member acting on your behalf and with your authority. Such a staff member would hold, for all intents and purposes, the economic fate of the country concerned, and of its peoples, in his hand; as such he becomes transformed from a human being to the Unstoppable Supra- Na- tional Authority; all his own personal prejudices and arbitrariness and hang-ups and self-interest and [ust for power and mad desire to control the destiny of peoples and of nations become essential elements of that Unstoppable Authority.

It is a telling commentary on the nature of our operations in the developing world to be able to say, without any fear of contradiction - I wish you would contradict, Sir, so I can reply - that for forty years we took a par- ticular stance and acted in a particular way that showed a total disregard and absolute contempt for the doctrine of the separation of powers - a doctrine that constitutes the true basis of everything fair and just and decent in western political and economic and social systems. Amazingly, our contemptuous disregard for, and easy dismissal of the rnost treasured tenets of western society, have somehow been accepted by the Third World as "normal" and "right" practice by the Fund. You know, it is Lord Acton who observed that "all power corrupts, and absolute power corrupts absolutely." That maxim could never have been truer than when applied to us. The Third World, in accepting our absolute power and our absolute corruption, is also instrumen- tal in writing its own obituary.

(c) Summary of Part V

Part V of the Letter is devoted to a definition of the actual size and depth of our Treasured Honeypot that is the Be All and End-All of Everything for Fund staff, and to an investigation of how we use the Honeypot as a means for neutralizing and defusing "outside" elements that potentially could threaten or frustrate the ex- ercise of our Absolute Authority in the developing world. On size and depth of the Honeypot, details are given of salary and other emoluments, including our mul- tifarious allowances and subsidies. On this matter, it is concluded that the salary/allowances package of a median "missionary" staff member would be in the region of from five to ten times the budgeted salary of al- most every Third World head of state, and some one thousand times the per capita income of that two thirds of mankind that he is paid so handsomely to crush down into further destitution. The salaries/allowances package, of course, tells only part of the story; beyond it, there is an amazing set of perquisites and "intangibles" that come with the job. These include diplomatic immunities and our United Nations Laissez Passer, Royalty and First Class travel everywhere we go, generous allowances for overnight stays in Europe and elsewhere on our way to perform our "missionary" work in Africa and Asia and Latin America, high class night-clubbing in Sin Cities of the world, personal secretaries on each and every of our missions, G5 Visas for maids that we bring in from Paraguay and Mexico and Jamaica and Greece and everywhere else, the very generous Group Life Insurance and Medical Benefits Plans, and the even more generous Pensions Scheme. And most satisfying of all, the realization dawning on us that we have finally made it to Ultimate Paradise.

Honeypot, of course, transcends the staff; we make others to partake of the Good Things of Life, depend- ing on the extent to which we perceive them either as a threat to our own Unmolested Gratification, or as an aid to help us win even greater personal material benefits. Specifically, we share our Honeypot with our Ex- ecutive Board and its staff, who sit at our headquarters in Washington, and whose "typical" salary/allowances package is even heftier than ours. Drawn hopelessly into our malestrom, and obviously Very Pleased with Everything Pertaining to Honeypot's Form and Style and Substance, the Board of Executive Directors- appointed by member governments as a political entity to "direct" the Fund - has become a quiescent, al- most anesthetized body; it operates mostly as a rubber stamp to endorse our action and initiatives that are designed, invariably, to maintain our political and economic hegemony in Third World countries. In addition to having their teeth drawn by the faceless bureaucrat whose original purpose was to implement autonomous decisions of the Executive Board (what a reversal of function!), your attention is drawn to the consequences of a set of anomalies and conflicts of interest involving the government appointed staff of Executive Direc- tors in their relations with "regular" Fund staff.

That we, faceless bureaucrats, protect our flanks by going far beyond the Executive Board and its staff is illustrated and documented carefully in the final section of Part V. In this respect, a representative set of action on our part involving "extemal" entities is highlighted viz: (a) the "carrot" (involving, of @urse, use of our ubiquitous Honeypot) that we offer to senior government officials, and middle-level govemment officials to be soft on us, and/or to actively collaborate as we construct our bogus programs based on "fixed" statis- tics so as to sell such "right" programs to national political directorates; (b) the cosmetic measures taken to defuse international criticism and give the illusion that the Fund is responding meaningfully to the needs of developing countries. Specifically, recent institutional innovations within the management structure of the Fund - ie; the establishment of the Group of Twenty Four and the Development and Interim Committees - are discussed from the perspective of the realistic role and function of such entities within the context of a burgeoning staff supremacy at all levels in Fund decision making processes. Equally, the true purpose of the periodic appointment of "Wise Men" (compliments of Honeypot) to do "new thinking" and undertake "inde- pendant analysis" and "objective evaluation" of our successes and failures is brought to your attention. "Wise Men" rise and fall with equally indecent haste, they say the lines that we did want them to say and then they go away. And in the aftermath, the only thing that ever becomes strengthened is the already impregnable psition of the faceless Fund technocrat, and his accountability to no one but himself.

In general, the conclusion of this Part of the Letter is as follows: any outside shock wave that conceivab- ly may serve to alter, even by one iota, the Established Order of Things, orthe Equanimity of Our High Priests (senior staff) or the Irresistible Logic of the Fund in Reducing Everything to a Common Denominator of Greed and Personal Ambition, or Maintenance of the Status Quo and Further Enhancement of the Power of the New Nobility, must be expunged, necessarily and unexceptionally, from the system. However, we don't do our expunging with high visibility action or with fanfare. A willingness to ride out the criticism, or the protest, or the concern expressed by others is what is called for. Seeming reasonableness and pronriety and "sweet talk" become the order of the day; we seem to feed the hog even as we stab him in the back. There is no in- tellectual effort, no honest search for solutions, no new thinking whatsoever Mediocrity and an absolute slavish imitation of High Priests who have "made it" in the Fund; stultifying conformity and an amazing per- fection of the art of "yesmanship" - these are the essential elements of a true Fund Person. Hypocrisy un- derlies everything that we do; certainly core elements of our staff have had centuries of experience in practicing it on subject peoples. And the world is no closer today to an amelioration of the ills of Imperial Em- pire than it was at the time of Queen Victoria. Therein lies the bequeathment of the West and the tragedy of the South. Therein, too, lies the entire history and insidiousness of the Fund.

(d) Summary of Part VI

This Part has eight sections. The first section comes back to a fundamental question raised in Part IV, viz: can the Fund reform itself so that it serves the true interests of developing countries without negating critically its role as the major plank of an intemational management system for economic stability and growth and for the financing of such stability and growth? In searching for an answer, a comprehensive listing is made of "reform proposals" made by your good self and by your predecessors over the past several years to change the nature and the modules of Fund operations and facilities, presumably with a view to sensitiz- ing the institution to the needs and characteristics of developing countries. All aspects of the agenda for change and reform that you have articulated recently are classified under four headings viz: (a) resource mobilization by the Fund (eg; establishment of the Enhanced Structural Adjustment Facility financed by developed countries); (b) resource transfer by the Fund (eg; establishment of an External Contingency Mechanism to be combined with the existing Compensatory Financing Facility for assisting countries to over- come unforeseen extemal shocks); (c) terms and conditions for resource transfer by the Fund (eg; estab- lishment of an interest subsidy facility and proposals for "relaxing" Fund conditionality); (d) the effect on developing countries of resource transfer under stated terms and conditions (eg; impact on the poor and economically underprivileged). Having listed thus your Agenda for Reform, an examination is made of items on the Agenda to see just how they tie in with the wide spectrum of issues raised in earlier parts of the Letter, and how they address the rank abuses of Fund staff in the Third World - abuses that have been carefully and systematically docu- mented throughout the Letter at a level of detail and specificality that can be checked and verified, and that can leave no scope for guesswork or equivocation. And in this respect, the conclusion is drawn that past and present "reform proposals" put forward by Fund Management are not really proposals for reform at all - cer- tainly they do not address matters highlighted in this Letter. Instead, they are shown to be the minimum jaw- that the Fund staff feels compelled to indulge in at any particular time, to take the heat out of criticisms our operations in the Third World made by the Board of Governors and other "important" entities. In any event, your Reform Agenda is not new; the items identified - with one exception - have been depress- ingly recycled, with minor modification, at almost every Fund/World Bank Board of Governors gathering over the past twenty years.

We go through motions, Sir; we have our annual charade that we call the Fund/World Bank Board of Governors Meetings; we hand out the same "reform package" to the Ministers of Finance of the Third World, and they go home satisfied, having connived in all our trickery and participated in our game. Yes, yes, we move them around the chessboard like robots. We tell them "come back for the next bodacious meeting of the Development and Interim Committees in Sin City in the Spring; Fun and Games will start anew again." And so it goes on and on and on. And nothing changes in the developing world except more death and destitution for the people in the slums, and more power for the Fund. And with the passing of every meeting our staff becomes even more reinvigorated; they wield a sharper and more bloodied tool; an even more ter- rifying Executor's Axe stand poised for service everywhere in the South. And the children scream, Sir; my God, how they scream! The only relatively new "reform proposal" on your agenda relates to the impact of Fund supported programs on poverty groups. This issue received some degree of formal recognition by the Fund in 1984 with discussion by the Executive Board of a staff paper purporting to show the impact of Fund programs on poverty levels and related matters. With slight modification the paper was published and circulated worldwide. This was unfortunate, for the paper was extremely defective technically and analytically, and its arguments highly dubious. The aim appeared to be to invent excuses from thin air, and to give the appearance of a Fund concern for this burning Third World issue - an issue that previously we had either ignored or brushed aside brusquely. In any event, the paper was seen for what it was; internationally, it was greeted with overwhelm- ing skepticism. This forced the authors to go back to the drawing board so as to try to come up with a more credible apology. The result was another paper issued to the Board in January, 1988, and another publica- tion circulated worldwide in May 1988.

The latter part of the second section analyses this "second attempt" paper at some depth. The conclusion is drawn that the paper can have no merit as an objective evaluation of the role of the Fund in deepening the level and extent of poverty in Third World countries and in redistributing national income in favor of highly privileged and elitist groups. In this respect, it is as equally laughable as its predecessor More pointedly, the authors admit that they themselves had been instrumental in formulating the Fund programs evaluated for a "poverty impact". Amazingly, those who had themselves participated in pushing our medicine down the throats of screaming victims were mandated by the Fund to judge the social damage of their work. But I should know better than to find this irregular or unfortunate in any way, given the level of ethics and rnorality characteristic of our institution.

Inadvertently, the paper did serve a very useful purpose. For at last Fund people have made some sort of pronouncement on the poverty issue, never mind how biased and self-serving such pronouncement may be. Now others can move on from a re@gnized Fund conceptual base and from a Fund related viewpoint to open up a worldwide dialogue on the true impact of Fund "adjustment programs" on poverty and income dis- tribution in the Third World. There is no way in which we can retreat back into our shell; there is no way in which we can conveniently put the poverty dimension of our work under wraps again. Pandora's box is wide open and we had better begin to recognize that immediately The section ends by examining a plethora of technical possibilities through which the poverty and in- come redistribution variable could be made to an integral part of Fund programming and perfor- mance guidelines in Fund supported arrangements. One by-product of this exercise is the identification of a seemingly unbridgeable chasm between Pax Honeypot and all that it stands for, and the human values that we had ignored and had lost. Starkly brought into focus is the mind-boggling extent of our violation of basic human rights throughout the developing world for over the past five years in particular. (And don't raise your hand in protest, Sir, as I say this. The evidence is there, wait to read it).

The third section of Part VI asserts that however catalytic and causative are Fund programs as tools for deepening poverty and unleasing further destitution on the South, such programs represent only the periphery of an iniquitous and surprisingly comprehensive system within whose structure the Fund operates, and whose objectives it strives to achieve. That system is responsible for massive people-oriented economic crimes, and acts of almost unbelievable horror against the poorest sectors of society in countries of the South. A plea is made to you to start a process whereby we can be made to retrace our steps back to the Bret- ton Woods Conference of 1944, holding to our chest the soiled and tattered rag of multilateralism that did represent dreams and aspirations of almost buo generations of southern people - dreams and aspirations that did become a graveyard and an imposed monstrosity defiling our times and our world. We have to hold that tattered rag with a contrite heart; we must be made to realize that it is an intolerable burden on our soul. Somehow we must know that we have to make amends. The remaining five sections of this Part deal with just how we can start the process of 'making amends'. Looking at evidence of Fund involvement in economic crimes other than through the intermediacy of our programs, the fourth section zeros in on the Fund's role in arms expenditures in Third World countries. With concurrence of the Fund, arms expenditures in developing countries rose from 7 billion in 1975 to over 14 billion in 1980 and above 21 billion in 1986. Between 1955-85, Third World military expenditures as a propor- tion of total world military expenditures rose from 3 percent to 20 percent. Yet in 1985 over 1 billion Third World people lived in what the United Nations has designated as absolute poverty, and over 500 million were in the throes of famine and incurable malnutrition. Throughout the entire post-war period, the Fund was con- tent to shut its eyes entirely to the Third World military expenditure binge, in deference to the arms exporters - its major shareholders. We have no qualms in forcing governments to crush millions upon millions of their own people to death - look at the extremely serious allegations made recently by UNICEF against us in this respect - but when it comes to arms merchandising we are hypocritical enough to throw our hands up in the air and talk of "national sovereignty". That just is not good enough.

What the Fund could have done to curb military expenditures, but didn't do, is discussed at length; on this matter the issue of fungibility of Fund resources is brought to the forefront. Our cowardly refusal to un- dertake any sort of analysis of the arms issue, and its direct and predictable relationship to destitution and pverty in the South are also highlighted. The Letter pleads with you to try to shed for us the role of Whitewasher and Apologist on the military expenditure issue. While you cannot influence directly the arms export policies of our major shareholders, it is very much within your power to force the High Priests to un- dertake necessary research that could provide a base for a new and enlightened Fund position on military expenditures of Third World client states. And we should use our clout on Third World states in getting them to control the arms race, rather than forcing them to kill their own peoples for our sake. Section five would be of particular interest to you; it deals with a theme that seems to be your own hob- byhorse; the theme of "financing versus adjustment". There is no phrase more abused and more misunderstood in the Fund than this one. We utter it loosely; to us it has really no technical connotation; it is just our blanket excuse for enslaving the South; it is Fund conditionality expressed more graphically. So as to help provide you with a clearer perception of "financing versus adjustment" from the perspec- tive of both the Fund and its developing member countries, a rigorous analysis is undertaken of the mean- ing of the term, and a conceptual base built up to show how economic efficiency can be maximised, for all the patties concerned, through use of 'Yinancing" to achieve "adjustment." This really is the heart of the aid relationship; this is the raison d'etre of multilateralism. It is concluded that intemationally acceptable and verifiable criteria can be used to determine the relevance and fairness of Fund conditionality in every instance of use of Fund resources by Third World countries, with three critical elements meshed into a matrix solution, viz.; Fund concem about the revolving nature of its resources, some criterion of international economic efficiency in resource use by the Fund, and the social welfare function of the country seeking use of Fund resources. To date, the latter criterion has been ignored by the Fund as an operative factor in its financing relationship with developing member countries. By refusing Third World countries recourse to any objective and verifiable analytical system to determine the economic worthiness of financial assistance that it is providing, the Fund has turned all post-war develop- ment ecnnomics, and all precepts underlying such economics, on their head. In section six, the theme of the Fund turning post- war development economics on its head is tackled in a more comprehensive and systematic way. The issue hinges around the Fund's attempt to replace all development theory, from Arthur Lewis to A.Sen, with "Reaganomics" and Chicago School "rnonetarism". All current development theory recognizes that provision for, and administration of peoples' economic "entitle- ments" is an important purpose of economic management, even in the poorest countries of the South, and the ultimate rationale of government. But this is absolute anathema to Fund programs, and Fund theology. The analysis looks at the development experience of six southern countries and asks you to get your High Priests to make their choice of which of these countries have developed, and which have stagnated and regressed. I think we both know their answers in advance.

Sir, this Letter is optimistic enough, and imbued with sufficient faith to believe that there is scope for human beings, including those who run the Fund and who make decisions of life and death for the over- whelming masses of mankind, to move away from an edge - when that edge is pinpointed and its enorrnous dangers seen - and to seek safer ground that will allow exercise of an inherent humanity and a reaffirmation and rededication to norms of justice and fairplay. Even so, I am not so simplistic and so starry- eyed to think that the task of bringing the Fund back unto that safe ground is an easy, or an immediately attainable one. In this respect, there really are three interrelated, but conceptually different goals to be pursued in the wake of a new era of understanding on our part, and an acknowledgement by us of why and how we went astray. The first goal relates to wing clipping of our staff, or if one wants to be more blunt, to dismantlement of the modern day phenomenon of a New Nobility straddling the earth. The second involves a grappling and a com- ing to terms with the dynamics of the Third World; it also envisages establishmenttöf a new and relevant epistermlogy that bursts, once and for all, the bubble of Pax Atlantica and ensures that Pax Honeypot will never be able to raise its head again as Fund credo. Finally, action must be taken to bring centerstage the politically-charged question of power distribution between Part I and Part II member countries within a reor- ganized international management system for world financial stabilization and economic and social develop- ment; or, alternatively stated, action must be taken to provide appropriate ways and means through which the Fund's changed philosophy and operational modules can become self- sustaining and its new mandate fulfilled. Sections seven and eight of Part VI deal exclusively with the first of these tasks; all else is left hang- ing in air for the time being.

The question of Fund staff wing clipping is discussed at various levels and from various angles, but two basic issues stand out, viz: (a) what can be done through direct means that impinge immediately on our over- •eavy salaries and allowances and perquisites and "privileges", to reestablish some sort of balance and sanity in our remuneration and terms and conditions of employment? (This Letter screams out that rees- tablishment of such balance and sanity is an absolute requirement for the restoration of professionalism and perspective and fairplay and humanity in our institution); (b) irrespective of the Honeypot that provides its stream of endless material benefits to Fund people, what checks and balances mechanisms may be created within the organizational structure of the Fund, and in the structure of relationships between the Fund and developing member countries, so as to curb the "absolute" power presently wielded by Fund bureaucracy in the Third World, and ameliorate the growing tendency for wanton abuse of that power? On the first of these issues not much is said; the hope is that you can fill in some gaps over the next few months, as you respond, one way or the other, to my charges. I suggest, however, that there is need for some new thinking, from major shareholders, on how to halt escalating salary/allowances for Fund staff and beyond that, how to make Fund staff minimally accountable to member countries for action and stances in the developing world - action and stances that appear so totally unreasonable on any meaningful criterion of economic reasonableness. Efforts in the past to curb staff excesses have been very weak and half-hearted, and singularly unsuccessful. Proposals are made on how they may be strengthened and made more effec- tive in the immediate future.

On the second matter, there is a distinction between (a) "internal" checks and balances mechanisms to curb staff power and restore a semblance of sanity and order arnong different decision-making elements of Fund management, such as senior staff, Board of Executive Directors and Board of Governors, and (b) "ex- temal" checks and balances mechanisms to halt excesses and power abuse in developing member countries - abuses that have been meticulously documented in Parts II through V of this Letter. On "internal" mechanisms, proposals are made for the immediate establishment of those safeguards that had been built into the Fund's Articles of Agreement in 1944, but which had never been activated, main- ly because of the unforeseen "hijacking" of the Fund by its burgeoning bureaucracy, and the outstanding suc- cess achieved by the latter in stifling all other potential power points within the decision making structure of the Fund. In this respect, relatively meaningless "posturing" of the past and present, including creation of the basically toothless and captive Interim Committee and Development Committee and Group of Twenty Four, as discussed extensively in Part V, must give way to a fully independent Fund Council of broad decision making powers and wide geographic representation along lines laid down in our Articles of Agreement. The Council should not be made to operate on "advice" from Fund staff; it must spawn its own small but highly proficient body of technical expertise as a counterweight to the methods and approaches of what initially may prove to be the still all-pervading power of our Retreating Nobility. In any event, it must be expected that in the short term, establishment of an effective regime of "internal" checks and balances that reflects the reality of a previously "captive" institution, will involve, inevitably, some degree of experimentation and perhaps of seeming functional duplication over a "phasing in" period of from, say, three to five years.

On "external" checks and balances the following are proposed for implementation, concurrent with the effectuation of "internal" reform: (a) establishment of an Advisory and Review Commission to be shared with the World Bank. This organ will assume the functions of the now defunct Advisory Council that was enshrined in the Articles of Agreement of the Bank. More specifically, it will act as a final court of appeal in instances where disputes of a technical nature have arisen (e.g; statistical discrepancies, relevance of performance criteria, eligibility criteria for particular facilities) between Fund (or Bank) staff and the member country con- cerned; (b) establishment of a series of Regional Coordinating Committees - independent of Fund staff and appointed by the Board of Governors - to review on an annual basis economic progress in each member country, and to lay down general guidelines to Fund (or Bank) staff for future operations in individual countries and regions. Regional Coordinating Committees should review all Fund staff documents (including REDs and Staff Reports to the Board) with a view to determining the accuracy and objectivity of such documents, and pronouncing on the "evenhandedness" in Fund staff stances from one country to Detailed com- ments from the Regional Coordinating Committee concerned should always accompany each and every Staff Report that goes to the Board, whether such Staff Report seeks approval for use of Fund resources or not.

In addition to action that rust be endorsed formally by appropriate elements of Fund management, proposals are made for the formation, by developing countries themselves, of a Watchdog Committee to oversee their interests in negotiations with the Fund (and World Bank). It is proposed that the Committee be selected from a panel of eminently qualified persons including political figures, religious leaders, economists, sociologists, jurists and trade unionists from both developed and developing countries. The rationale for the Committee is the existing overwhelming power of the Fund (and World Bank) in the Third World, vis-a-vis in- dividual governments and Ministries of Finance, and therefore the extremely weak position of such govern- ments and such Ministries in processes of multilateral economic negotiations on matters that determine thRir future, and the well-being or ill-being of their peoples at a particular point of time, and for several years theÆ- after. The Committee, which may take up the cause of any particular country only at the specific request of the govemment concerned, will serve to redress a long outstanding imbalance that never ever should have been made to exist. While it will have no authority to adjudicate on Fund horrors and excesses of the past, its work, conceivably, could lead to a less tortured existence for the Third World in the future.

A general recommendation of Part VI is as follows: until the above regulatory an control mechanisms, or appropriate variants of them, are established and become operative, developing countries - especially those who at the present time deem themselves to be receiving particularly raw deals from the Fund and the World Bank - may consider a strategy of freezing all relations until further notice. This will release their energies to pursue single-mindedly the very urgent, prior task of creating the type of institutional adaptations, as described above, to protect their interests in the face of current gross excesses rampant within the system. In this connection, it is pointed out that while organizational innovation within the formal structure of the in- stitutions (e.g; establishment of an Advisory and Review Commission and of Regional Coordinating Com- mittees) could be unduly delayed by non- Third World elements who may be opposed to the type of change contemplated, there is no reason why developing countries, perhaps through instrumentality of the G-77 or Non-Aligned Movement, or both, could not take immediate action on their own to bring into being the Watchdog Committee. Indeed, such a critical instrument for protecting the Third World could well be made to function within a six-month period, assuming that there is a reasonable degree of consensus, in the South, for its establishment.

4. A Final Observation Before I Proceed to Release Parts II-VI of This Letter

Over and over again I've been told by people whose judgement I respect, that the Fund will do everything in its power to decimate me as an individual, and to destroy me as a professional economist, in the wake of this Letter. The overwhelming advice of those with my interests at heart is that I had better resist all dictates of conscience and keep my mouth shut. I refuse to do that; I will not be muzzled one iota; I will speak up; I have taken meticulous care in writing what I write; I am prepared to prove everything that I say - send me before the harshest judge and see what you will see. In any event, in the broad sweep, individuals are not important; Davison Budhoo is of no consequence. I'm a vessel and the message that I carry will get through; that's the only thing that matters; irrespective of what may happen to Davison Budhoo, the message, the whole message, will get through. And this Letter does not define anything close to the whole message; it is only the tip of an iceberg. And as to what lies beneath - well, time will tell. Soon enough, time will tell.

Follow your instincts, Sir, and let the High Priests go empty-handed for a change - at least, think very carefully before taking their advice on what to do about this Letter. For we are not speaking anymore about technical problems in international finance, amenable to technical and "convenient" solutions ("convenient" to who?) We're speaking about our role in shaping the destiny of humankind; about the horrendous part that we have played on the twentieth century world stage; about the legacy that we will leave to generation upon generation yet unborn; about man's inherent right to follow the callings of his conscience and man's efforts to try to save his soul; about the occasional sight of one individual throwing himself blindly at the feet of his fellowmen and begging for mercy and amelioration.

So think carefully Sir; think beyond the heat of an impassioned moment. Think as the man of compassion and vision that I believe you are.

Yours sincerely,

Davison L. Budhoo

Part II of Open Letter; Our Statistical Misdeeds and Our Statistical Fraud in Trinidad and Tobago, 1985-1988

May 18, 1988

Mr. Camdessus

Managing Director

International Monetary Fund

Washington, D.C. 20431

Dear Mr. Camdessus,

Davison L. Budhoo: Part II of Open Letter of Resignation from the Staff of the International Monetary Fund; Our Statistical Misdeeds and Our Statistical Fraud in Trinidad and Tobago, 1985-1988

This part of my Open Letter deals with the array of statistical irregularities that we did perpetrate in Trinidad and Tobago, in very recent times, and are still practicing today. Obviously, the provision of proof for indictments that I am making calls for extensive reference to, and quotations from documents and reports previously circulated internally, and/or to member countries and other international agencies. Even so, evidence provided here is selective, not comprehensive, and I shall be pleased to expand on the chosen themes to properly constituted investigative authority.

1. The Index of Relative Unit Labor Cost (the RULC Index) and how we abused it in Trinidad and Tobago

As you are fully aware, an Index of Relative Unit Labour Cost (RULC) that measures unit labour costs in manufacturing in the developing country concerned in relation to such costs in its major trading partners (industrialised countries) is a Key Economic Indicator that is used extensively in the Fund, subject to the availability of statistics. Once the series becomes available in a developing country, chances are it will feature prominently in our periodic consultation reports to the Executive Board - ie. the Report on Recent Economic Developments (RED) and the Staff Report. The prominence given to RIJLC reflects the perception that such an index mirrors international competitiveness of the economy concerned and indicates, there- fore, the country's ability to continue to produce for export markets. In an economy such as Trinidad and Tobago, where one sector which had previously accounted for the bulk of export earnings (the oil sector) enters a phase of uncertainty and rapid price decline, the index is particularly important as a general determinant of the potential of the country to diversify successfully its export base and service its foreign debt. At a meeting in mid-June to prepare for the 1987 consultation mission, a Senior Staff member viewed the recent, dismal performance of the country's RULC as revealed in our 1986 RED and Staff Report and commented that "this statistic is the most important one that we will ever collect in Trinidad and Tobago". In his own way he was right; no one steeped in Fund methodology would doubt those words. Certainly, we did not carry the RULC series in both the text and in the Statistical Appendix of the RED, and in highly visible graphs in both the RED and the Staff Reports of 1985 and 1986, for the mere fun of doing so. We knew fully well that the international financial community would peruse our conclusions on the RULC carefully and religiously, and that international money markets would make a decision to reschedule loans or grant new credit almost exclusively on the basis of what we were saying. In this respect, it must be remembered that the external debt profile of Trinidad and Tobago is relatively new, and that the country has not as yet had time to develop a track record of debt servicing that international banks and other financial institutions could use substantively as a guide for operations there.

Apart from providing a cue to commercial banks and other lenders, the RULC index serves a critical role in the establishment of Fund conditionality for developing countries. In fact, it is the most lethal weapon that we have in our entire bag of tricks - quite definitely, it is the one that we use most often, and rnost effective- ly, to cut short the arguments of protesting governments and peoples against the need for currency devalua- tion and/or other measures to cut the real wage rate, initiate mass layoff of workers in the public sector, and resort to crippling measures of "demand management". Thus, when we find a sagging index in a developing country we know, instantaneously, that the time has come to get another blighter to swallow our deadliest medicine.

And so it was for Trinidad and Tobago over the period 1985-1986. In each year we drilled home the point that the RULC was way out of line and that massive devaluation was needed; without such devaluation the country would slither progressively into mounting economic chaos. In 1985, for instance, and within the context of intense Fund pressure for devaluation, our RED (Report No. SM/85/105 of April 15, 1985) states as follows:

"The substantial rise in wages, coupled with a fixed exchange rate and very small gains in productivity in most industries, have resulted in erosion of international competitiveness. Thus, unit labour costs in manufacturing compared with costs in major trading partners, rose by 150 per cent from 1979 to 1984."

In similar vein, the 1986 RED (Report No. SM 86/172 of July 15, 1986) comments as follows:

"Unit labour costs in manufacturing increased by 160 per cent over the period 1981-85 due to the rapid increase in wages at a time when hours worked were declining ... unit labour costs in manufacturing compared to costs in Trinidad and Tobago's major trading partners, rose by 170 per cent during 1980-85 ... resulting in a substantial erosion of international competitiveness."

As I said before, in 1985 and 1986 the RULC index for Trinidad and Tobago was highlighted in text tables of the RED and in the Statistical Appendix, and was plotted in graphs in both the RED and in Staff Reports to the Executive Board. These graphs demonstrated starkly an alleged position of a runaway and still rising RULC, and on the basis of such "evidence" we chastised the government severely for not taking appropriate, or sufficient corrective action to put its house in order. Even after a withering round of devaluation in late 1985 we continued to call, shrilly and insistently, for more devaluation, and more public sector unemploy- ment and real wage cuts, and more "demand management" policies, and more price deregulation of essen- tial goods used by the poor, and more regression in the tax system, et al.

This explicit and confrontational Fund posture is illustrated in the following excerpt from the Briefing Paper for the 1987 consultation mission, as cleared and approved by you in late June, 1987. (You may recall that that Paper became the essential reference point, and the formal basis for our discussions with the government of Trinidad and Tobago, during the course of the mission and subsequently).

The Paper reads as follows:

"Over the ... period (1982-85), real GDP contracted sharply, and real wages continued to rise under heavy union pressure; unit labour costs in manufacturing relative to Trinidad and Tobago's main trading partners increased at an average rate of 20 per cent (per year)..."

"A further devaluation of the Trinidad and Tobago dollar is needed ... The mission will propose a significant initial devaluation (e.g. from TT $3.6 to TT$ 5.0 per US dollar) perhaps to be followed by further small step adjustments..."

"The degree to which exchange rate adjustment is successful will depend to a great extent on the incomes and demand management policies pursued by the authorities. The recent fall in export in- come makes a significant decline in real wages unavoidable ... To give full effect to the exchange rate adjustment being sought, the mission will stress the need to have exchange rate changes pass through fully to domestic prices of tradeable goods. This consideration may require a revision of the Government's price control policy which limited the increase in domestic prices of essential imported goods following the reunification of the exchange system in January 1987".

I resort to the above quotations to establish the fact that we placed extraordinary importance on the RULC; our entire case for massive and continuing devaluation, and equally massive and continuing real wage cuts, depended on what we said was happening to that index. And this is not surprising, for there can be very few instances in Fund history where such a drastic increase in domestic labour costs over such a short period as we claimed for Trinidad and Tobago, was not followed by traumatic adjustment of exchange rates and real wages alike. As responsible international financial/economic inspectors, we were well within our right to carry a particularly poignant message to the Trinidad and Tobago authorities, and to warn them, in no uncertain terms, that we and the international community that follows us so blindly and so unexceptionally, would have no option but to turn away from the country and label it "a leprosy case" in the event that they could not see fit to drink our deadliest medicine.

But there is a catch in all this - viz: the RULC Index for Trinidad and Tobago was never close to what we were proclaiming it to be so loudly and so insistently and so definitively. What we had done over these years was to "manufacture" statistical indices - the RULC and several others - that would allow us to prove our point, and push a particular policy line, irrespective of economic realities and circumstances of the country.

Obviously, more details on just how we managed to misrepresent the RULC are needed - details of sources and statistical material and facts and figures and calculations and recalculations and Fund technical notes and Fund working sheets. And on this matter, I wish to state immediately that while I did participate in the work of all three Fund missions that visited Trinidad and Tobago between 1985-87, I did not become aware of the RULC scandal until last year, when I worked on the national income, prices and employment sectors of the economy. Not surprisingly, it has not been very easy to decipher any exact methodology underlying the 1985/86 calculations; most of the records for these years appear to have been destroyed prematurely. Even so, I have managed to put together some key elements of the jigsaw puzzle; this gives a fairly clear picture (from the technical stand point) of what we did in 1985-86. As for 1987, I have kept records of the various facets of our work on the RULC during the mission and subsequently.

On the basis of calculations made by our divisional statistician last year after the Fund mission returned from the field, the Relative Unit Labour Cost in Trinidad and Tobago increased by 69 percent only, instead of the 145.8 percent as stated in our 1985 reports, and the 142.9 percent as claimed in the 1986 Fund documents. Between 1980-85 the RULC actually rose by a mere 66.1 percent instead of our assertion of 164.7 percent made in the 1986 reports. Over 1983-85 relative unit labour costs moved up by only 14.9 percent, not by the 36.9 percent that was mooted to the world community in 1986. In 1985, instead of rising by the 9 percent that we had stated in the RED and Staff Report, the RULC Index fell by 1.7 per cent. And in 1986 relative unit labour costs slid downward spectacularly by 46.5 percent although there is no record of this in the 1987 report or anywhere else in official Fund documentation.

2. Refusing to "own up" to the Trinidad and Tobago authorities or to the international community after our "mistakes" were exposed

Let me come back now to what happened in 1987 after there was "internal acknowledgement" that "mis- takes" were made in 1985-1986. And let me say immediately that nothing happened - nothing at all. When, in the course of the mission last July, past misdeeds were pointed out, and a pledge won that we would "come good" once and for all, it was my understanding that we would make full amends during the consultation dis- cussions with the Government, and that the mission's subsequent reports prepared for our Executive Board and for the intemational community would substitute revised figures for those of 1982-1986. But our previous "mistakes" were never mentioned to the authorities. Privately, it was conceded that in light of the corrected RULC figures, the instruction in our Briefing Paper to try to force the government to undertake more mas- Sive devaluation now and "step" increases thereafter was really beside the point. However, in statements to the authorities, and in the Aide Memoire presented to them, issues relating to the RULC in 1985, and the latter's performance in 1986 were side-stepped, and we went on glibly to ask for more devaluation, greater public sector lay-offs, further major real wage cuts and the whole gamut of demand management measures, as if the Briefing Paper's evaluation of the RULC was still absolutely valid, and eminently relevant for July 1987.

Back in Washington, the revised RULC index was prepared for publication in the RED and Staff Report. But it was not to be; all reference to RULC was deleted from all text, and from all tables, and from all charts. The reason for this action was obvious enough: public acknowledgement and publication of the corrected series, and demonstration of the dramatic downturn of the index in 1986, would have devastated the case for further devaluation now, and for the comprehensive and blistering demand management and wage/employment contraction measures that were being pushed down the throat of the Government, and for which we were seeking, ex post, formal endorsement from our Executive Board and, beyond our Board, from the entire international community. So, suddenly, what just a few weeks before had been branded 'the most important statistic" that we would encounter in Trinidad and Tobago, became transformed into a nauseat- ing irritant to be dropped as a hot potato, because it could no longer fit into the economic scenario that the Fund, with increasing insistence over several years, had tried to have enacted in the country.

Part III of open letter; non-statistical areas of wrongdoing in Trinidad and Tobago, 1985-88

May 18, 1988

Mr. Camdessus

Managing Director

International Monetary Fund

Washington, D.C.

Dear Mr. Carndessus,

Davison L. Budhoo: Part Ill of Letter of Resignation from the Staff of the International Fund

In this Part of the Letter, I turn to nonstatistical areas of wrong-doing on our part in Trinidad and Tobago. This is followed by a comparison of Fund "evenhandedness" in member countries, and Fund Executive Board definition of "statistical fraud" and remedies established for victims of such fraud or other proven malpractices.

1. Getting World Bank staff to join in the charade

On December 14, 1987 the World Bank produced its first economic report on Trinidad and Tobago after an interval of over five years. That report, in white cover draft, and entitled: "Towards a Program of Policy Reform and Renewed Growth in Trinidad and Tobago- was prepared by the World Bank mission that visited Port of Spain in 1987 - well over three months after our own team had returned to Washington. Far more objective than us, but equally outspoken, the World Bank team did not tow our line in pushing devaluation as the solution to the country's ills. In fact, they rejected it outright on the grounds that overvaluation of the TT dollar, based on their own calculations, was relatively insignificant, and that international competitiveness, in areas where the latter had been eroded, could be restored by far less traumatic and measures designed to "fine-tune" specific sectors, and protect the integrity of the government's own medium term program for economic reconstruction.

I quote from page 7 of Part 1: Main Report:

"...the devaluation of December 1985 has restored competitiveness of the manufacturing sector to 1980 levels and manufactured exports (excluding petroleum and related products) have been growing by over 15% in each of the last two years, Nevertheless, the evidence suggests that the TT dollar be overvalued to a small extent (less than 10%). The extent of the overvaluation has been minimized by the continued fall in the value of the US dollar to which the TT dollar is pegged, The priority now should be further reforms of industrial incentives and measures to preserve the 1985 devaluation edge through fiscal and income aimed at containing and reducing costs. A supplementary that could be considered is an export bonus for selected lines of manufactured exports, to be funded from an import surcharges on a limited range of imports. The scheme could be extended to cover certain agricultural exports and the tourism sector."

Of course the World Bank report was passed on to us before being put in final form for delivery to the Trinidad and Tobago authorities, and to the international community And as our own High Priests and Not so High Priests read it they saw red; we contacted the World Bank; we brought "Fund/World Bank collaboration" fully to bear on this matter. And just four months after the first report was issued, a "revised" version came out that, in certain pans, was as virulently subjective, and fanatically devaluation- oriented, and statistically manipulated as any of the various Fund reports of last year that are quoted in Part II of the Letter.

But, judge for yourself, Sir, about what role we may have played in getting the World Bank to change its mind so fundamentally from one report (initial) to the next (final). And let me have the honor of setting the stage for such a judgement by quoting as follows from the revised World Bank report (Report No. 7139-TR) issued on April 18, 1988 (Main Report, page IV, of Summary and Main Issues):

"...The evidence indicates that the Trinidad and Tobago dollar (TT$) is still overvalued. In cornparison with its 1976 level - 1976 is the earliest year for which data are available for this series - the real ef- fective exchange rate, based on a basket of currencies of major trading partners, has appreciated by 16% by the third quarter of 1987, and this in spite of the continued fall in the value of the US dol- lar since 1985, to which the TT dollar is pegged ... A flexible exchange rate policy would further boost export competitiveness ... If foreign exchange reserves were to continue to fall, further action on the exchange rate will be required to establish equilibrium in the balance of payments. And since ex- change rate adjustments play a key role in the generation of expectations, the Government will need to supplement these efforts with fiscal and monetary measures."

You know, I suspect that "Fund/World Bank collaboration" in Trinidad and Tobago over the next several months will become increasingly important. At any rate, in wake of the above report, and of Trinidad and Tobago's request that its "graduation" from use of World Bank resources (on per capita GDP criteria) be res- cinded, I would not at all be surprised if the World Bank were to say something like this to the Trinidad and Tobago authorities:

"We are agreeable to the proposal that you be allowed to use World Bank resources in the future. However, use of such resources will be severely restricted, and the delivery mechanism will have to be a "plicy" or "program" loan that will allow us, in collaboration with the Fund, to ensure that Steamroller (Heaviest) mow you down, rather than through loans for specific projects of reconstruction and development that will not give us any such macro-economic policy leverage. In this context, we will ask you to accept a Trade Reform Structural Adjustment Loan or some such macro-economic facility that will enable us to coordinate our structural adjustment efforts with those of the Fund. Of course, our first requirement is Massive Devaluation, and more expenditure cuts and more taxation on the poor through VAT or other such like in- direct taxation measures. Drink your medicine now, Trinidad and Tobago. Drink it now, because tomorrow things may be much more difficult for you. Certainly, we will make sure that you cannot continue to defy the Fund. In this respect, please do not continue to pretend to know what are the solutions for your country's problems."

Sir, such a message may well be under preparation at this time by the World Bank - in far less graphic form, of course, but implying everything said above. Whether this Letter can prevent its delivery remains to be seen.

Part IV of open letter; a history of the fund, or how we moved from Pax Atlantica to Pax Honeypot

May 18, 1988

Mr. Camdessus

Managing Director

International Monetary Fund

Washington, D.C.

Dear Mr. Camdessus,

Davison L. Budhoo: Part IV of Open Letter of Resignation from the Staff of the International Monetary Fund. A History of the Fund, or How We Moved From Pax Atlantica to Pax Honeypot

In this Part of the Letter I will tum to the role that we play in developing countries outside of our lust for dabbling in seeming fraud and misrepresentation of facts and figures. For, really, we should not get caught in the trap of thinking that once we mend our ways on the figure work and begin to focus more on the technical norms (vis a vis our alarming penchant for politicisation and victimization and bias), our problems with the developing world would be ameliorated, and our relations stabilized. Far from it. Indeed, I would go as far as to say that the epidemic of irregularities in our work, as undertaken from the backdrop of the particular epistemology that we bring to bear on our outlook and operations in the Third World economies, is in a sense a red herring. I don't want to put a floodlight on the herring merely to have the whale slink away unobserved. No, no, we cannot afford to do that; we must latch on to the fins of that whale; we must tackle the problem at source. And to do that, we must go back to our preconceptions, and our doctrine, and our theoretical un- derpinning that strike fear and trembling in the hearts of hundreds of millions of people in the South everyday of every year.

1. The trinidad and tobago program restated; everything is ad absurdum

You know, let me tell you something, Sir. As I read through our July 1987 Aide Memoire to the Trinidad and Tobago authorities, and indeed our latest Staff Report on that country I get goose bumps; there is an acute despair within me because of the growing irrelevance of what we say to Third World countries and what we try to force tlem to do in the name of financial adjustment. Yet that irrelevance and that forcing is not neutral or benign; our policies in the Third World are becoming more and mre synonymous with economic and social bedlam. In Trinidad and Tobago, for instance, if we had our way - and in certain Departments of the Fund there is a feeling of great optimism that we are finally about to get our way - we would have the authorities taking the following measures:

- significant devaluation immediately with more to come, a la Jamaica;

- removal of domestic price controls even on the most basic essentials used by the poorest of the poor (and creation of a brand of desperation and destitution unknown to the country before);

- further accelerated reduction in the real wage in each and every sector of the economy (a further precipitous drop in the living standards of the unskilled and semi- skilled and a drastic redistribution of income in favour of those most able to cope);

- total removal of import duty exemptions to all producers and investors, save exporters (virtual dismantling of import substituting and processing industries and those catering for the domestic market);

- subversion of the Industrial Court and the Public Utilities Commission, leading immediately and automatically to a serious erosion of constitutional and democratic rights of the Trinidad and Tobago people;

- removal of exchange controls on external capital and current transactions, so that a privileged few could legitimately drain the country of the remaining dregs of foreign reserves that it still possesses;

- spectacularly large cuts in the (annual) public sector wage bill through massive firing of people and drastic reduction in the nominal wages of those fortunate enough to remain employed;

- deep and incisive reductions in transfers to persons, inclusive of benefits and subsidies to the aged and the sick and the handicapped;

- deep and incisive reductions in social services, including health and education;

- removal of import controls so that the domestic market become flooded with a plethora of consumption-related imports from non-regional sources (thus putting another nail in the coffin of the local manufacturing and agricultural sectors and creating a new wave of unemployment and social unrest);

- systematic increases in interest rates, without rhythm or reason that relates to domestic economic conditions, so that domestic producers who constitute one of the major catalysts for enhancing income and employment throughout the economy become squeezed out of the market, and find it impossible to borrow domestic funds generated from domestic savings (leading to even more generalized business failures and bankruptcy in all sectors of the economy);

- structural change in the taxation system to increase significantly its regressiveness, with indirect taxation as a proportion of total revenue escalating significantly through the imposition of a withering VAT and introduction of other elements of indirect taxation that fall disproportionately on those least able to bear it;

- massive and indiscriminate divestment of public enterprises, a la Jamaica, that reduces significantly the stake of nationals in the capital stock of the country, liquidifies, at outrageously discounted prices, public capital assets for current consumption, eliminates overnight the social rationale for government action - all for the pleasure of momentarily satisfying the Fund, and "window dressing", unsustainably and fleetingly, the fiscal accounts and balance of payments;

Need I go on? No, I won't; it is too painfully embarrassing. Even for your High Priests who cooked up the above defined "adjustment program" it must be too embarrassing. For the bits and pieces of our "program" just don't jive together in relation to any type of objective, whether it be domestic retrenchment for correcting financial and economic imbalances, or resource reallocation to create greater overall economic efficiency, or balance of payments viability, or "structural adjustment", whatever that may mean, or economic diversification to broaden the economic base and generate new growth points, or restructuring of the Trinidad and Tobago economy to further the cause of general equilibrium in the world economy, or any such like aesthetic Fund dogma. Quite frankly, our "program" is nothing but a hotchpotch of irreconcilable and conflicting elements and objectives; it reduces economics to a farce. It is the recipe for comprehensive disorder and all enfolding disintegration of the fabric of national life - economic, political, social - without reason or rationale or sensitivity to the aftermath. More pointedly, our action in Trinidad and Tobago does not relate to any clear set of economic principles - however misguided and inappropriate such principles may be. We're just striking out wildly in every direction and at everything in our path; we strike out thus and we create maximum grief and confusion. It's like a terrorist attack, you know, splashing around rifle fire and bazookas and even nerve gas indiscriminately so as to get the highest death toll in the shortest possible time.

2. How did we get into the game of giving farcical advice to member countries?

In the aftermath of our recent dealing with Trinidad and Tobago - and I must emphasize again that such dealings is but one example of scores of senseless and disastrous Fund/country relationships that define nothing but frontal attacks on peoples minding their business in their own homes and in their own countries all around the world - it behooves us to take a deep breath and sit down calmly, reflectively and ask oursel- ves a simple question; viz:

How on earth could we ever have got ourselves in a position where, with a straight face and without the batting of an eye, we could ever offer this brand of professional "advice" to the myriad of developing mem- ber countries in our midst? My God, my God, what have we wrought unto ourselves and unto the world?

Frankly, Mr. Camdessus, I dont have a clean and clearcut answer; I dont know exactly how our dogma did crystallize into such monstrosity. But I do have some ideas of why we are what we are, and how we did become that way, and I want to pass on these ideas to you. Probably you will find them worthwhile, probab- ly not; I dont know. What I do know is that we cannot continue to dodge the issue anymore; we cannot keep sweeping it underneath the carpet, pretending that it doesn't exist. We cannot continue to ignore the howls of pain of those in the developing world who drink our senseless medicine of death and destruction every hour of everyda% We cannot continue to mete out our own brand of punishment and justice to leaders who have the guts to stand up to us and say "no". We cannot continue to hold the whole world and its peoples to ransom to satisfy some undefined, and catalytically destructive quirk in our nature.

You know, Sir, since you came to us just over a year ago, I have been following with great interest the initiatives that you have taken relating to the role of the Fund in Third World countries. I know that you are worried, and I hope that you are big enough, and open enough to listen to what other people (High Priests aside) have to say. Who knows, maybe there can even be a meeting of minds, at some (low) level, between you yourself and those who see the Fund and the world in perspectives different from those of your High Priests, and who are therefore branded by the latter as natural Fund "enemies"? You think that's too ambitious? I'm not so sure.

(a) A Link between Fund Staff Material Aspirations and Fund Epistemology

The first question I want to ask is perhaps a shocking question; at least you will think so, so let me ask it quickly, and get it over with. It is this:

Is the Fund staff running amok with the wholly unexpected and unexceptional authority that they wield? Are they churning out despair after despair, hunger after hunger, death after death in the name of Bretton Woods epistemology merely to satisfy their lust for power and punish those who run against their personal plitical ideology, and reward those who think as they do? Or maybe the creation of that despair and that hunger and that death is the way to prormtion and personal aggrandizement within the Fund? Maybe it is the passport to an office as big as a church, and stuffed sofas to sit on there, and high heeled secretat\es constantly in attendance; and Young Economists listening gratefully to advice on how 'to make it" in the Fund? Or maybe it's a combination of all these things?

Be that as it may, I am firmly convinced that there is a close, and indeed watertight, link between our perverse role in developing countries and the epistemology that guides our action and the personal aspirations of our staff. More specifically, there is a widespread perception among Fund staff that personal progress and career advancement can best be served - indeed, can only be served - by an attitude that would deny, as being legitimate or valid, the aspiration of "the teeming masses" of the South for a better life. Thus in our day-to-day work we must trump up a missionary zeal to put the skids, carte blanche, on any effort of any government to alleviate destitution or to redistribute the gains of economic advances or to lighten, for the poor, the burden of economic adjustment. Put differently, the staff through time has twisted and changed whatever may have been the original epistemology of the Fund into a dogma that says that irrespective of reason, or conscience, or necessity, or professional etiquette, Fund staff has an inherent right, springing from the Bretton Woods philosophy of 1944, to emasculate the Third World, and particularly the economically underprivileged of the Third World, and to wield unholy power there, and to line their pockets with the good things of life for doing so, and to solidify the myth that they are above the law and that they are The New Nobility of Earth, and to say that they are...

Halt! No more! I don't expect you to agree with what I've already said, much less to what I was about to say. But really it doesn't matter. The important thing is that, whatever your own thinking on who we are, and why we are what we are, you are prepared to concede that we must try to get to the bottom of the whole question of staff motivation in doing the things that we do. So let us proceed, hopefully in a systematic way, to unravel the various elements of Fund history and epistemology to see how and if, and to what extent and at what stage, our quest for a better functioning world became ensnarled into staff personal ambitions and lust for power and more material comforts. And to do this we must go back to the very origins of the Fund in 1944; nothing less would suffice.

(b) The Origins and Theoretical Underpinning of the Fund

The Fund was created in 1944 to oversee the return of the developed world to orderly multilateral trade and payments arrangements, mainly through currency convertibility and exchange rate realignment in the United States and Western Europe after the debilitating disruptions of the inter-war period and World War II. We never did do as much pioneering work in the developed world as our founders intended; from about the mid-fifties our attention turned increasingly to the developing world.

Of course the problem there was not the creation of workable arrangements for more world trade and freer capital movements, but one of economic growth and diversification, and the need for urgent change along the whole spectrum of income distribution and quality of life and social security and political instability and economic waste and poverty and hunger and disease and desperation. Yet this whole gamut of problems was never conceived when the Fund was founded in 1944; people then never realized that the institution would come to play the catalytic role in the developing world that it plays today. This being the case, no mechanisms were built into the Fund's organisational/management system or policy structure so as to allow it to deal specifically with Third World concerns and priorities; recognition was not even given to their existence.

6. A personal plea

Forgive me, Sir, but I smile wryly as I write these words, and I shut my eyes, and I shake my head over and over again and I swallow and nonchalantly I thrust my pen into the cotton sheet of my bed and the ink spreads there slowly, and as the blue blob grows and grows I think of how idealistic and hopeful I was twenty two years ago when I first joined the staff of the World Bank, and how disillusioned I am today as I leave the Fund. And I remove the pen from the sheet, and I throw it away from me. And I say to myself: "let it be; let it be. Close this Part of the Letter now; dont write another word. Go outside instead; take a brisk walk in the cold; try to calm yourself tonight.

But I cannot do that. I cannot bring myself to conclude this Part without at least begging you to affirm that we share something in common as members of the human race. For only if we can admit existence of that minimal commonalty that I have tried to define in the opening paragraphs of Part l, can there be any hope, however fragile it may seem to be, of seeing eye to eye on issues raised in this Letter, and of being able to use the period immediately ahead to reevaluate the state of our institution from the backdrop of some acceptable code of civilized behavior, and from an agreed benchmark of human conduct that can serve, at some future date, to validate our relationship with others.

You know, Sir, we are not the cold and dispassionate technical inter-governmental agency doing cold and dispassionate and technical things unrelated to the warp and woof of the broad stream of human life that flows through our planet. Your High Priests, in blissful illusion and with the Honey of our Pot dripping from their lips, would claim that we are the Innocuous Eunuch of twentieth century intemational society, keeping Due Order in the Harem on behalf of Master Sheik, untouched by the pathos and tragedies and triurnphs of Haremdom that swirl around us. Sir, they are wrong in that evaluation, for we are part and parcel of the tide; we make or break human life every day of every year as probably no other force on earth has ever done in the past or will ever do again in the future. And we've botched it all up; there's dust and ashes everywhere. The only things that grow in Size and Stature are our Honeypot, and those who suck at it. That's unsustainable; that's eminently unsustainable; there will come a day when we will have to go down unto our knees to pick up the pieces of our Horror and our Infamy. Pick them up carefully merely to thrust them away from us again to show the world that we are contrite. And on that day, and at that stage the world will tell us where we must go from there, or - more realistically - whether there is any place at all for us to go from there.

As we stand waiting for the world to speak thus - and it will speak, Ir; It WI spea sooner than you may think; much sooner - I want to ask some questions about our common humanity. If I'm insistent, its only be- cause I'm worried; very worried. Sometimes I have nightmares, and I wake up in a cold sweat, and I say to myself: "Maybe Mr Carndessus will not understand; maybe we are on entirely different wavelengths. I fear that he will never see my point of view." So let me find out now, Sir; let me find out once and for all, and let your answer pitch me into a further dismay, or provide a new hope.

I don't know, Sir, if you ever did wonder why the history of the Fund should have been written by our High Priests with such effervescent satisfaction and self- congratulation. I don't know if you ever noticed that it is only those who worship unreservedly at our altar of Inhumanity and Savage Thirst for Blood when the Moon is Full who can be made to belong to and find his or her ultimate Potential within our Fold. I dont know if you ever became nonplused as you wish your staff Godspeed, and send them to roam the Third World everyday, and create new chaos there. I don't know if your heart did ever bleed to see all around you in the Fund such a complete lack of human worthiness, and such an easy divestment by human beings of their birthright of humanity, and such nonchalant denial of their capacity for compassion and fair play toward others. I dont know if you ever felt uneasy in an environment where there is such evident joy and self-satisfaction of the Over- Privileged in tormenting further the innocent and the hapless and the diseased and the malnutritioned and the little children of the South. I don't know if you ever sensed the dark and dank cloud of shame that hangs around us all the time, stifling us, blotting out all vision beyond our physical and material gratification, mirroring faithfully what we are and what we do to others. I don't know if you ever saw terror in the eyes of at least one of your staff members and thought to yourself: "My God, my God, maybe there's some devil that he sees that I cannot see as yet; I wonder if it is more than a hallucination that I see in his eyes?" I don't know ...

I dont know; I dont know. I wish I did; I wish I could be reassured. For I want to stop addressing you as an economist, or as a central banker, or as an appointee with a mandate for Pax Atlantica, or even as a Man with Even Hands. I want to stop addressing you thus, and to subsume all your variegated roles as Fund Boss into the much bigger context of one human being seeking to establish dialogue with another on mat- ters of overwhelming mutual concern that test our soul, and prove or disprove our common humanity.

Yours sincerely,

Davison L. Budhoo

Part V of Open Letter; Details of the Honeypot

Part VI of Open Letter; Reform of the Fund - Psychology, Epistemology, Organisation, Operations

Part VII of Open Letter; The Fund and the Debt Crisis