Last week, the International Monetary Fund gave the tiny Mediterranean island nation of Cyprus, a member of the European Union, an ultimatum.

The Cypriot government had to come up with $7.5 billion to bail out the nation’s failing banks, or else be cut off by the IMF from borrowing money internationally – an economic death sentence.

To come up with the money, the IMF, along with the European Union and Europe’s Central Bank, wanted money to be skimmed from the personal bank accounts of all Cypriots. That didn’t go over too well.

It settled for a deal that will strip as much as 80 percent from bank accounts containing 100,000 euros or more.

If it is only confiscating funds from accounts with six figures, it’s only the money of the super wealthy, right? Not exactly.

Filelftheros, a respected Cypriot newspaper, reported last week that the president of Cyprus warned his friends days before the crisis hit to move their money out of the country. It was widely reported in Italian and German media that in the week prior to the crisis, 4.5 billion euros were transferred out of Cyprus’ banks.

On Monday, Greek news outlet SigmaLive released a list of 132 companies and wealthy individuals who had all of their money transferred out of the country between March 1-15, well before the crisis hit.

Clearly, the rich and powerful knew what was coming and were able to evade losses. This is not unique to Cyprus – these “insiders” do so frequently, all over the world.

To meet the IMF’s demands and bail out the nation’s banks and financial system, it is small businesses and the life savings of middle-class families that are being wiped out.

Cyprus follows the United States and Greece, along with a host of other nations, in continuing the trend in which the ordinary citizen loses and major banks and corporations benefit.

How can the policies of so many governments and international organizations so lopsidedly and consistently favor these banking and corporate elite?

Look no further than the IMF and its close relative, the World Bank.

The IMF was founded shortly after World War II to help countries rebuild. Today, the IMF justifies its existence by saying its purpose is “helping a country benefit from globalization while avoiding potential downsides.”

In reality, the IMF’s actions show that its main purpose is to bail out powerful, politically connected banks, as well as nations with serious spending problems. It does so with the money of taxpayers from a variety of nations, with the United States as its largest contributor.

The nations the IMF lends to typically have weak economies and unstable governments, and have little chance of paying the loans back. Thus, most recipient nations face enormous debt they can’t pay back, only adding to their poverty and instability.

In Gregory Palast’s 2001 article from The Observer, former Chief Economist of the World Bank Joseph Stiglitz showed just how the IMF goes about its business with these recipient nations.

In the article, titled “IMF’s four steps to damnation,” Stiglitz explains that the IMF privatizes all of the nation’s assets, opening its markets up to foreign businesses and eventually draining its wealth.

“In theory this allows investment capital to flow in and out,” Palast says, “Unfortunately … the money often simply flows out.”

It ends with national treasuries drained, property values demolished and ultimately, civil unrest. It happened in Indonesia, Brazil, Ecuador, Bolivia and most of Africa. The list goes on.

In this system, almost everyone involved loses.

That is, except for the Western mega-corporations and international banks, which benefit from the recipient countries’ wealth and bailouts they receive on the taxpayer’s dime whenever they risk losing.

So for the Western elite, what’s not to like?

It’s imperialism at its finest.

Nick Smith is a junior broadcast and digital journalism major. His column appears weekly. He can been reached at nxsmith@syr.edu and followed on Twitter at @Nick_X_Smith.

Published on April 3, 2013 at 1:35 am