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The World Bank and the IMF—Poverty Reduction or Just More Debt?
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Polly Mann, W A M M
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The Web permits these miscreants to identify themselves. The “World Bank” refers to two of five closely associated institutions of the “World Bank Group,” which is owned by member countries. The World Bank consists of 1) the International Bank for Reconstruction and Development and 2) the International Development Association. The stated mission of the Group is “to fight poverty and improve living standards for people in the developing world, and to provide loans, policy advice, technical assistance and knowledge sharing services to low and middle income countries to reduce poverty.” The Bank claims it “promotes growth to create jobs and to empower poor people to take advantage of these opportunities.”
The International Monetary Fund (IMF) is defined as “an international organization of 184 member countries. It was established to promote international monetary cooperation, exchange stability, and orderly exchange arrangements; to foster economic growth and high levels of employment; and to provide temporary financial assistance to countries to help ease balance of payments adjustment.”
Because their policies and practices are so often considered together, it’s important to examine their relationship. While the IMF’s focus is chiefly on macroeconomic performance and financial sector policies, the World Bank is concerned with longer-term development and poverty reduction issues. Its activities include lending to developing countries and countries in transition to finance infrastructure projects, the reform of particular sectors of the economy, and broader structural reforms. The IMF, in contrast, “provides financing not for particular sectors or projects but for general support of a country’s balance of payments and international reserves while the country takes policy action to address its difficulties.” (Note: The Bank decides what those difficulties are.)
According to reams of Web information, magazine articles, and books, World Bank accomplishments have been great. But in my role of naysayer (Don’t look it up. It’s not there.) I look to their critics. Out of each organization opposing organizations have been spawned. Some not only demand change, but propose the total elimination of these so-called poverty-reducing life-improving institutions.
“50 Years Is Enough” is a coalition of over 200 U.S. grassroots organizations dedicated to the profound transformation of the World Bank and the IMF. This network, working in solidarity with over 185 international organizations in more than 65 countries, is committed to transforming World Bank policies and practices and to making the development process democratic and accountable. Its latest publication is a 24-page booklet entitled “Ten Things You Really Should Know about the World Bank,” which shows as false 10 claims made by the Bank about its accomplishments.
According to “50 Years Is Enough,” the nations of Asia-Pacific, Africa, Latin America, and the Caribbean continue to pay the costs—financial, social, and environmental—of thousands of ill-conceived World Bank projects dating as far back as the 1950s. Power plants that never opened. Dams that have displaced thousands, such as the Kariba Dam on the Zambia/Zimbabwee border, completed in 1959, whose victims still have not received adequate compensation, and which is still contributing to Zambia’s massive debt burden. Fossil fuel projects like pipelines and mines despoil fragile environments and contribute to corruption.
“50 Years” charges vehemently that the Bank continues to take more money out of the global south than it puts in and that it could easily cancel 100 percent of the debt owed it by the developing nations. It has increased the debt in Africa 400 percent since 1980 alone. Corporate influence at the Bank, under the guise of “partnerships,” is rampant. The Bank’s policy on private sector partnerships requires that its corporate partners undergo close scrutiny to ensure their compliance with the Bank’s mission. The list of 85 partners is dominated by multinationals who benefit from contracts or are clients of the Bank’s insurance arm. Among them are: Citibank, Exxon-Mobil, Shell, and pesticide producers Aventis, Syngenta, and Dow, who have a history of placing their interests above that of the public. In addition, the Bank has maintained relationships with many corrupt authoritarian regimes.
In addition to “50 Years Is Enough,” other anti-World Bank/IMF organizations exist. “World Bank Bonds Boycott” is an international grassroots campaign that demands an end to the World Bank’s harmful “structural adjustment” policies; 100 percent debt cancellation; and an end to environmentally destructive projects, especially for oil, gas, mining, and dams. Explanation for the name is that the World Bank raises most of its funds by issuing bonds. The “World Bank Bonds Boycott” claims “ordinary people, through their pension funds, labor unions, churches, municipalities, and universities are exerting pressure for change on the World Bank by refusing to buy its bonds.” In the U.S. there is a network of groups working on the campaign providing a way in which local peace activists can exert influence over World Bank policies. For example, in the past four years, ten U.S. cities have passed resolutions or adopted formal policies committing themselves not to invest in World Bank bonds. Twelve investments firms, nine international labor unions, twenty-one locals and central labor councils, the University of New Mexico and 37 churches and religious communities (including, locally, Walker Lutheran Church and Macalester Plymouth Methodist Church) are participating in the boycott.
The boycott organization presents forceful arguments against World Bank policies by citing criticisms of people once associated with the Bank. In 1992, after reviewing about 1800 Bank projects in 113 countries for which the Bank had lent US $138 billion, Willi Wapenhans, a former vice president, reported that 37.5 percent of projects completed in 1991 were deemed failures. An especially damning statement in his report was from a staff member who said the Bank staff “know what they want from the outset and aren’t open to hearing what the country has to say.” The Bank staff often insisted on international consultants to prepare projects, resulting in poor quality suggestions because the consultants “from New York or London” had no experience in the country nor were they willing to solicit local advice.
Joseph E. Stiglitz, chief economist at the Bank from 1996 until 1999, resigned in protest under pressure to keep quiet about his criticisms. Says Stiglitz, “Convincing people at the World Bank of my analysis proved easy; changing minds at the IMF was virtually impossible . . . In theory, the fund supports democratic institutions in the nations it assists. In practice, it undermines the democratic process by imposing policies. The IMF pressed ahead, demanding reductions in government spending. And so subsidies for basic necessities like food and fuel were eliminated at the very time when contractionary policies made these subsidies more desperately needed than ever. When the IMF decides to assist a country, it dispatches a mission of economists. These economists frequently lack extensive experience in the country. . .”
The brilliant Indian writer and polemicist, Arundhati Roy, has written with passion and indignation against World Bank/IMF policies in her slim paperback The Cost of Living. She cites the example of the huge dams erected in India, which have neither increased the amount of safe drinking water for the population nor increased the amount of arable land available to farmers. According to Roy, 33 million people have been displaced by big dams alone in the last 50 years, left landless, penniless and homeless. Roy says that India is in a situation today where it pays back more money to the Bank in interest and repayment installments than it receives. According to the World Bank annual report, in 1998, after the arithmetic, India paid the Bank $478 million more than it borrowed. Over five years (1993 to 1998) India paid the Bank $1.475 billion more than it received. China, however, is the World Bank’s favored client. Roy comments, “It’s the great irony of our times—American citizens protest the massacre in Tiananmen Square, but the Bank has used their money to fund studies for the Three Gorges dam in China, which is going to displace 1.3 million people.”
WAMM members who believe that the World Bank/IMF policies are antithetical to world peace need to support the efforts of groups around the world who have begun to take a hard, critical look at these institutions and their footprints. Can we increase locally the number of people who are knowledgeable about the World Bank/IMF? Yes - because one does not have to be an expert to write a letter to the editor, review a book, show a film, or arrange for an adult education program. The situation today is grim. We in WAMM recognize the overwhelming need for change. If the World Bank/IMF looks like a force for harm instead of good, we need to point out that reality unremittingly. |
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World Bank and IMF Resources
50 Years is Enough online.
Word UP!
I’m a universal patriot . . .
My country is the world.
—Charlotte Brontë (1816–1855)
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© 2005 Women Against Military Madness. All rights reserved.
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