George Bush (satire - http://goo.gl/cpPBK ) had promised that Morarjee Desai would be on Mount Rushmore.
In his 1983 book, ”The Price of Power: Kissinger in the Nixon White House,” Mr. Hersh wrote that Mr. Desai, India’s Prime Minister from 1977 to 1979, received $20,000 a year from the C.I.A. during the Johnson and Nixon administrations in exchange for information on Indian foreign policy and domestic politics. Mr. Hersh based his claim on information supplied by six confidential sources. (via U.S. Journalist Cleared of Libel Charge by Indian – New York Times).
CIA ‘bought’ Indian politicians
For years together, Morarji Desai was charged with being in CIA pay – even before Seymour Hersh’s book. Indian newspapers, Parliament, everyone discussed this. Seymour Hersh, an American investigator claimed that Morarjee Desai was in CIA pay.
When Seymour Hersh ‘revealed’ this in his book, Morarji Desai sued – filed a case in US courts and subsequently died. Henry Kissinger, appearing at Morarji Desai’s request, made a bald defence of Morarjee Desai.
But, importantly, why would the US recruit Morarji Desai – and then leak that information? This information could not have become public knowledge without information leak by the US.
Chains of Gold
Morarji was a threat to the US-administered global financial system, based on Bretton Woods Agreement.
The promise of the Bretton Woods system was stability. The dollar would be backed by gold. Under Bretton Woods system, anyone could (except Indians and Americans) buy an ounce of gold from the USA for US$35 – managed by the the London Pool system. USA promised the world that they will redeem the US dollar for gold – at a rate of US$35. Only US had enough gold to make that promise. More than 20,000 tons.
Soon, the USA was bleeding gold.
The Indian Factor
In the 1960s, most of the world was buying gold at an artificially low price of US$35. If Indians joined the gold-buying spree, the dollar would have collapsed decades ago. The success of Bretton Woods-I depended on blockading Indians from buying gold – which was effectively done by Morarji Desai. World’s largest buyers of gold, Indian buying would have emptied US Treasury in a few years.
Without Indian ‘help’ within 20 years, the Bretton Woods promise was broken. Redemptions of dollar for gold to individuals was stopped in 1968 (March15th). The Bretton Woods system worked for 20 years because Indians were not allowed to buy gold.
Hand In Glove
India’s finance minster during that crucial period, Morarji Desai, (on CIA payroll during Lyndon Johnson’s Presidency 1963-1968), presented a record 10 budgets, between February 1958, up to 1967. His adamant attitude on gold cost the government popularity and electoral losses – and the Indian economy and Indians much more. His break with Indira Gandhi began when the Finance portfolio was taken away from him.
True or untrue Hersh’s claim maybe, but Morarji Desai’s ban on gold imports allowed the sham of Bretton Woods to continue for 20 years. Was it a co-incidence that many of the RBI functionaries later got (and even now) plum postings at LSE (IG Patel) and BN Aadarkar (IMF)?
More was to follow …
On August 15th, 1971, the world got the Nixon Chop - where even Governments could not redeem dollar holdings. The dollar was put on float. In little time, dollar value depreciated from US$35 per ounce of gold to US$800 in 1980.
Over the next 20 years, through various clandestine methods (check out the Edmond Safra and the Yamashita stories links), gold prices were managed and brought down from US$800 (1980) to US$225 per ounce – but still 80% reduction in value of dollar value. Foreign reserves of poor countries got eroded. It was a gigantic fraud on the world – especially the poor, developing countries.
This was also done as a part of economic war against the Soviet Union – which was bankrupted due to low-gold prices during the 1990-2000 period.
Indians Not Allowed
From practically, 1939, (the start of WW2) gold imports into India were controlled or banned. This British legacy was continued by Indian Government and RBI. Many Gold control laws were enacted which stopped all legal gold imports into India.
With this, gold imports went underground.
Gold (illegal) imports (called smuggling) gave rise to biggest criminals that India has seen. Karim Lala, Haji Mastan, Varadarajan Mudaliar, Yusuf Patel, Tiger Memmon, Chota Rajan, and of course, Dawood Ibrahim – a biological son of a police constable Sheikh Ibrahim Kaskar, was spawned by Morarjee Desai’s laws.
These laws corrupted four generations of Indians Government and politicians. It made gold in India very expensive – and the Indian buyer remained in poverty longer.
Since the amount was so small, just US$20,000, it may well be that Morarji was never bought. But by spreading this rumour, the US kept Morarji on leash. Important, considering the US stakes involved.
And Morarji Desai was a obstinate and recalcitrant man.