What was the chain of events that helped facilitate the process of developing countries becoming beholden to institutions like the IMF and the
World Bank which dictated neoliberal policies—starting with the OPEC oil crisis of the early 1970s and the petrodollars that were produced by those countries in the Middle East that had oil?

DH: There’s a very interesting story to be told about that and I’m not sure it has been fully elaborated upon yet. With the OPEC oil price hike in 1973, a vast amount of money was being accumulated by the Saudis and other Gulf states. And then the big question was: well, what’s going to happen to that money? Now, we do know that the U.S. government was very anxious that that money be brought back to New York, to be circulated back into the global economy via the New York investment banks, and persuaded the Saudis to do that. Why the Saudis were persuaded to do it remains a bit of a mystery. We know from British intelligence sources that the U.S. was actually prepared to invade Saudi Arabia in 1973, but whether the Saudis were told: recycle the money through New York or you get invaded … who knows?

Now, the New York investment banks then had vast amounts of money. Where were they going to invest it? The economy wasn’t doing very well at all in 1974–75, as, all over, it was in depression. Citibank head Walter Wriston came up with the comment that the safest place to invest the money is in countries, because countries can’t disappear—you always know where they are. And so they started to make the money available to many countries like Argentina, Mexico—Latin America was very popular—but also places like Poland even. They lent a lot of money to those countries.

That worked out quite well for a while, but then in 1982 there was this general fiscal crisis, particularly after Volcker had raised the interest rate. What this meant was that the Mexicans who had borrowed money at 5 percent were now having to pay it back at 16 percent or 17 percent, and they found they couldn’t do it. Mexico was about to go bankrupt in 1982. That was the point at which neoliberalism kicked in. The U.S. via the International Monetary Fund and the U.S. Treasury said: we’ll bail you out, but we’ll bail you out on condition that you start to privatize and open up the country to foreign investment and start to adopt a neoliberal stance. Initially the Mexicans really didn’t do that very much, but by the time you get to 1988 they start to do it sort of big time.

But here’s the interesting thing: it’s unreasonable to think that actually the U.S. imposed neoliberalization on Mexico. What happened was that the U.S. was putting neoliberalizing pressures on Mexico and an elite inside of Mexico seized the opportunity to say: yes, that’s what we want. So it was a coalition between the elite in Mexico and the U.S. Treasury/IMF that put together the kind of neoliberalization package that came to Mexico in the late 1980s. And actually, if you look at the pattern, it’s very rare for there to be a straight imposition of neoliberalizing policies through the IMF or the U.S. It’s nearly alwaysan alliance between an internal elite, as it had been in Chile, and U.S. forces that put this thing together. And it’s the internal elite who are as much to blame for neoliberalization as the international institutions.