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IMF whistleblower: 'We make or break human life every day of every year'

Illustration: Alan Hughes

Dear Mr Camdessus
Today I resigned from the staff of the International Monetary Fund after over 12 years, and 1,000 days of official Fund work in the field, hawking your medicines and your bag of tricks to governments and to people 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 there is not enough soap in the whole world to cleanse me from the things that I did in your name ...

Budhoo: The charges I make strike at the soul of humankind and its conscience.
Photo: Anthony Swift

Thus begins the unprecedented, open, 150-page resignation letter of Davison L Budhoo, who this year relinquished his position as an economist on the staff of the IMF in order to raise public clamour for the Fund's reform. Blasting through the grey language that usually cloaks such matters he accuses the Fund of corruption, self-interest and deceit.

The IMF's programme in Trinidad and Tobago is a case in point and in his resignation letter Budhoo asserts: '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 (the) economic and financial performance of that country.'

According to Budhoo, IMF employees 'manipulated' a key indicator of Trinidad and Tobago's ability to compete and export (the labour cost index) to hammer home the point that massive devaluation was needed if the country was not to head for mounting economic chaos; the true figure he says, was far more encouraging. 'What we had done was to manufacture this and other statistical indices to allow us to prove our point and push a particular policy line, irrespective of the economic realities of the country,' says Budhoo who claims that such 'errors' were commonplace within the Fund.

Even when the inaccuracy was exposed by the Fund's own statisticians, the IMF neither owned up, nor apologized to the government, nor publicly corrected its misinformation despite the implications of its judgement for foreign investment.

'It was simply dropped as a hot potato and not referred to. Publication of a correction would have damaged the case for further devaluation, real wage cuts and other demand management measures wanted by the Fund.'

Budhoo puts the excesses of such 'joyrides in the IMF bulldozer when the moon is high' down to the zeal of what he calls the Fund's 'professionalized' political ideology, rather than to a political conspiracy. The generous financial rewards paid in salaries and extras to Fund staff, combined with a lack of accountability, have produced a 'honeypot' mentality; a preoccupation with material gratification and a lust for power which has stimulated personal greed and ambition, commitment to the status quo and an environment of 'yesmanship and stultifying conformity'.

Budhoo was allegedly on short rations from the honeypot because of his intransigence, but he nevertheless pulled $143,000 a year in salary and other subsidies, excluding those related to official travel and mission work. A staffer on the same rate of pay but on assignment in the Third World and with five children being educated in Geneva 'compliments of the honeypot', receives more than the basic pay of any head of state.

And the IMF's charms become virtually irresistible when supplemented by the 'intangibles': VIP treatment at airports, royalty-class and first-class travel, Dallas-style hotels, generous allowances for overnight stays in playground cities and for high-class nightclubbing in 'sin cities', personal secretaries on every mission, G-5 Visas allowing staff to bring maids into the United States, not to mention medical, insurance and pension perks.

'In a very meaningful way,' writes Budhoo, 'our staff perversion is the logical consequence of... the prevailing 1944 international ethos of superior man (sic) and inferior man, and the Western man and his system to be saved and nurtured, and the Southern man to be overlooked and cast aside ...'

Hopes of joining what Budhoo dubs the 'new nobility' in this 'ultimate paradise' are often enough to gain the compliance of Third World officials who might otherwise oppose the introduction of Fund programmes. The honeypot's charms make it easy for the Fund to poach skilled personnel from Third World administrations already desperately short of such skills.

Lured by the honeypot, staff sent on IMF missions to applicant countries develop an evangelical zeal. 'You go saying: "This is what we want. This is the programme. We must get it anyhow - whatever is necessary to get it". It's from this spirit that a lot of the manipulation comes.' What is wanted out of a mission is contained in a briefing paper, drawn up in advance by the mission chief and approved by the managing director of the IMF. 'You refer to the briefing paper in everything you do, because it details the official Fund stand for the country. It's the way the Fund operates.'

Less flamboyant and more measured in person than in print, Budhoo speaks with disillusionment about the Fund: 'The IMF was never designed to help the Third World or end poverty. It was established by the Bretton Woods conference of 1944 to restore economic and financial order to the Western world. There was no element of compassion for humanity in its formulation. The Fund's aim is first and foremost to secure the interests of developed countries.'

Budhoo asserts that the IMF and World Bank are key elements in an economic order that is deepening Third World poverty, the debt crisis, and a flight of capital from developing to developed countries which has soared in recent decades: in 1986 it amounted to well over $30-billion from the Caribbean and Latin America alone.

The IMF package for Trinidad and Tobago is an example of how Fund policies worsen Third World poverty. This programme required the removal of Government subsidies from basic food-stuffs, school books and drugs, The Fund also wished to cut the public wage bill (increase unemployment); lift import controls (allowing an influx of consumer goods, thereby undermining local production); privatize national industries at outrageously discounted prices; raise interest rates (also hitting the competitiveness of local producers); and remove exchange controls ('so that a privileged few could legitimately drain the country of the few remaining dregs of foreign reserves').

'Quite frankly, our "program" is nothing but a hotchpotch of irreconcilable and conflicting elements and objectives; it reduces economics to a farce,' writes Budhoo. '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.'

Such packages - which are repeated in scores of countries around the world - affect the poorest first, and amount to economic suicide for the governments concerned. In effect, Budhoo writes, 'we are asking the Government of Trinidad and Tobago to ... self-destruct itself and unleash unstoppable economic and social chaos'.

Budhoo also explains why the IMF never suggests cuts to defence, police or public control measures instead of to basic services and subsidies for the poor: 'It's one thing to push around countries and say, "OK you have to treat the poor that way". But with the arms industry you are talking about very powerful people - both inside and outside the country. They won't be pushed around. They are supposed to be among those who benefit. The US being a Fund shareholder and the staff taking its cue from the US, who is the Fund to tell a country to limit its arms expenditure? You can tell them to let people die, but not to limit their arms.'

Meanwhile, there is little evidence that IMF programs have set countries on any sort of breakthrough path. Claims have been made about Taiwan and South Korea, but tremendous amounts of US aid have been pumped into those countries for political purposes. 'I dare anyone in the Fund to point to a country and say it is much better off economically today because of a Fund programme,' says Budhoo. And this is not an empty challenge. For Budhoo deals in cold, stark facts. He is a man in the know, whose voice is now unfettered.

'As from today,' he writes in his resignation letter, 'I tear off the mask of studied ambiguity that your organization did give me twelve years ago. As from today conscience becomes my only guide.

'In guilt and self-realization of my own worthlessness as a human being... I would like to enlighten public opinion about our role and our operations in our member countries of the Third World. Do I hear you bristling with disapproval? "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 two-thirds of mankind (sic) from whose ranks I come, and for whose cause I must now fight.'

Anthony Swift is a freelance journalist who is currently working on a book about children in difficult and dangerous circumstances.

The impact of IMF policies

Hunger
In one third of recent cases countries were required by the IMF to reduce badly needed food subsidies. The result was a dramatic increase in malnutrition: in Peru it rocketed amongst under six year-olds from 41% to 68% between 1960 and 1983; Ghana saw pre-school malnutrition swell from 35% to 54% between 1980 and 1984; and in Botswana child malnutrition increased from 25% to 31% between 1982 and 1984.

Sickness
Government spending on health was cut in nearly half the African countries and in 60% of Latin American countries where the IMF was involved from 1980 to 1985: the money spent on an individual's health plummeted by 85% in Ghana between 1974 and 1982; by 78% in Bolivia from 1980 to 1982; and by 32% in El Salvador from 1980 to 1984. The grim harvest of these cuts was an increase in preventable diseases and hence deaths - especially in Ghana.

Poverty

Between 1980 and 1985 inflation soared, and wages crashed by 9 per cent in Latin America and 15 per cent in Sub-Saharan Africa from 1980 to 1985: in Mexico they tell by 30% between 1981 and 1984; in Ghana by 22% between 1979 and 1984; and in Sri Lanka by 18% between 1978 and 1983. The number of people below the poverty line increased by up to 75% in parts of Ghana between 1974 to 1984.

From Adjustment with a Human Face: a study by UNICEF 1987.

 

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The poor are stepping up to the trade war

Punta del Este is an enchanted enclave of fantastic wealth, much of it of doubtful origin. For two months after Christmas every year the doings of the rich and famous fill the media with events few local people will ever witness themselves. For though Punta del Este lies at the heart of Uruguay, it is foreign territory to the people of that country. They live in a land wrecked by the progressive collapse of its foreign trade in wool and meat over the past 30 years. A uniquely gentle, progressive society, where nothing much ever happened, fell to tyranny, torture and impoverishment as a result.

I visited relatives in Uruguay in 1987, as unaware as anyone else that, the year before, the functionaries of world trade had repaired to Punta del Este, there to launch the 'Uruguay Round' of the world's most important trade negotiating body, the General Agreement on Tariffs and Trade (GATT). No doubt the intention was commendable - the notorious 'Rich Man's Club' that is GATT had finally made it to the Third World. But by the time the Uruguay Round of negotiating is completed at the end of this year, all the signs are that it will have addressed itself no more closely to the real challenges facing world trade than those visiting functionaries had to the fate of the Uruguayan people in 1986.

How to get a handle on trade? How to rescue it from the doldrums of public interest in which it has languished for so long? Try this. Try thinking of the global economy as an organism. Its brain and nervous system, exercising the power of decision, are capital and finance. The muscle is our labour. Trade is its bloodstream, sustaining its life, supplying its limbs with energy - but carrying infection too if the organism becomes diseased.

Two of the features of this global organism stand out. The first is its astonishing growth. This growth has for the past 200 years nourished itself on a suitably mundane food - industrial manufacturing. The centre of this manufacturing has shifted constantly, from Britain to the United States to Japan and West Germany, but its tentacles have spread, since the last World War, to places like Hong Kong, South Korea, Taiwan and Singapore. Now Thailand, Malaysia, Morocco and tiny Mauritius are joining in. Giants like Brazil and Mexico have been trying for some time to get in on the act. By the end of this century, India, Pakistan and China may be with them too, hitching up one-third of the world's population. And, increasingly, what links these places together within a single, 'global' market, is world trade.

The second feature of the organism is an aspect of the first. For although industrial manufacturing and world trade generate enormous wealth, they also devastate large sections of the populations over whom they hold influence - from the urban slums of nineteenth century Britain to the pervasive poverty within and around the industrial cities of today. Here, as elsewhere, they prey upon those whom they exclude.

GLOSSARY
GATT - General Agreement on Tariffs and Trade.

GNP/GDP - Gross National Product/Gross Domestic Product. GNP measures the total income, whether at home or abroad, of residents of a particular country. GDP excludes income from abroad.

GSP - Generalized system of Preferences. Instituted by GATT in 1968, giving some Third World goods preferential treatment.

ICA - International Commodity Agreement. Agreements among producers to limit production and force up prices. Most have now collapsed.

LOME CONVENTION - Originally signed 1975, renewed 1979 and 1984, due for renewal 1989/90. This regulates the trade access to European Community of 60 African, Caribbean and Pacific (ACP) countries, mostly former colonies.

MFA - Multi-Fibre Arrangement. Established in 1974 to protect rich countries from Third World competition in textiles by limiting imports. Due for renewal in 1991.

MFN - 'Most Favoured Nation' Each member of GATT must treat other members as well as its most favoured trading partner.

NICs - Newly Industrializing Countries such as Taiwan and Singapore.

TRIPs - 'Trade-related aspects of Intellectual Property protection', e.g. computer and pharmaceutical technology, counterfeit goods. A current pre-occupation of GATT.

TRIMs - 'Trade-related Investment Measures', or how investment policies and aid are sometimes secretly used to promote national trading interests.

UNCTAD - United Nations Conference on Trade and Development.

According to the World Bank, 'some 60 low- and middle-income economies have suffered declining real GNP per capita in constant prices'.¹ Translated, this means that half the countries in the world are getting poorer. They are scarcely participating in the global economy. They have escaped the political, but as yet not the economic, bonds of the traumatic colonial era, when the sense of the world as one place first began to grow. What characterizes these colonial bonds is reliance upon the export of primary commodities (the things that go to make other things).

Everyone knows perfectly well that dependence on primary commodities is not good for your economic health. The natural resources of your country disappear with the minimum possible benefit to you. Once commodities reach world markets, they are subject to wild price fluctuations and speculation, making it impossible to plan. And, over time, the value of primary commodities just keeps on falling, relative to other prices. If you want to make a real profit you need to be in the business of manufacturing, of converting raw materials into marketable finished goods.

All this has been known for a very long time, and certainly since the Great Depression of the 1930s. When recession hit the world economy again in the early 1980s, commodity prices plummeted once more. Countries that still depended upon them for their economic life found the only, readily available alternative was to borrow to make up the difference. So, to a greater extent than is generally recognized, the commodity crisis led to the 'Third World Debt Crisis'.

The debt crisis may eventually be overcome. But, unless something radical happens soon, the problem with commodities will remain. So the commodity-dependent Third World countries struggle on, slowly dying, infected rather than nourished by the arteries of world trade.

But if the global economy is indeed a single organism, this decay of almost half its form threatens the life of the whole. It is a cancer. And it is driving people in despair to destroy the very planet on which they, like the rest of us, depend.

What is new, and truly alarming, about the current situation is that one half of the world is trying to cast off the other, like a reptile shedding its skin. The poor have come to seem dispensable to the rich. As one commentator put it, after the almost manically 'up-beat' annual gathering of the World Bank and International Monetary Fund in Washington last autumn: the big industrial nations have convinced themselves that they have done all that they can'.2

What, then, has GATT got to say on such topics? Pick up its latest Annual Report and you find expressions of regret but absolutely no practical proposals to meet the real challenges facing world trade. You get TRIPs and TRIMs (see the Glossary below), but no suggestions whatever, not even of the most reactionary kind as to why this glistening 'engine of growth' has so patently failed to couple itself up to the needs of more than half the globe. Even the ice-cream trade between Canada and the US can generate more heat at GATT than the prospect of another decade as disastrous for the Third World as the last one.

GATT was founded in January 1948. The original intention had been to set up an International Trading Organization as a specialist agency of the United Nations. But the dominant industrial nations, flushed with victory in the War, decided to keep the rich pickings of trade to themselves. Only 23 countries, those 'responsible for most of the world's trade', many of them with colonies still in tow, signed the original agreement.3

It was a very clever fix. The basic principle was that each 'contracting' country had to offer all the other contracting countries the same terms as the 'Most Favoured Nation' among its trading partners. This would prevent a return to the disastrous 'dog-eat-dog' protectionism of the 1930s that brought mutual ruination to the rich and led to war. By and large it has succeeded in this aim, and we should be grateful for that at least.

But it was a strictly business deal, a bargain that's been kept unchanged ever since. As Mr Arthur Sunkel, Director-General of GATT, recently told a gathering at the Wharton Business School in the US: 'GATT's future will depend mainly upon whether its activities benefit, as they have until now, the business community, who are the actual users of the trading system. This is the link between GATT and the "real world".'4 The real world of the peasant or the shanty town remains way out of sight, out of mind.

Nor must you go away thinking that GATT's stance against protectionism, its advocacy of free trade, is born of principle. On the contrary, its industrialized member countries operate tariff and quota systems that discriminate against imports of cheap manufactures from the Third World. So long as only countries outside the 'club' suffer, that's OK by GATT.

A clean-up for world trade is long overdue.
Photo: Claude Sauvageot

The net effect on the poor is to discourage them from trade in manufactured goods. They are encouraged instead to produce those primary commodities, like coffee or mineral ores, for which there is either no substitute or no competition in rich countries. In other words, this system seeks to maintain the old colonial order, in which the poor produced primary commodities and bought manufactured goods in return. It is precisely the reverse of what is really required.

So blatant was this fix that the United Nations decided to establish its own Conference on Trade and Development (UNCTAD) in 1962. By 1968 it had convinced GATT to introduce a Generalized System of Preferences giving better treatment to at least some of the Third World's manufactured goods. But even today this System covers just 11 per cent of total imports by the rich from the poor.5

UNCTAD spent the better part of the 1970s and 1980s trying to establish a Common Fund for Commodities. The idea was to create a fund to stabilize commodity prices. Because neither consumers nor producers like speculation and price instability, this seemed like the most obvious area of common interest between rich and poor. But no. The Common Fund only came into being in 1989: too small and poorly supported to stand much chance of influencing commodity markets at all; too late to avoid the catastrophic collapse of commodity prices in the early 1980s.

Marginalized by GATT, UNCTAD has been undermined and discredited. It spends $36 million on its offices and staff, and just $1 million on 'programmes to promote and expand world trade.6 I recall how in 1972 UNCTAD gathered in Santiago, Chile, where I was a student at the time. Natty little machines zipped up and down the streets of the city centre painting new white lines in honour of the visiting dignitaries. A protest demonstration outside the specially constructed, earthquake-proof conference centre resulted in tear gas being sucked into the air-conditioning system and the functionaries of world trade making a rare, unscheduled and inarticulate appearance on the streets of Santiago. Nothing much is remembered of what the conference was about. The conference centre itself became a landmark of a sort - as the government seat of the Pinochet dictatorship.

In the absence of any meaningful intervention by the UN, there is no-one working to promote a genuine, global approach to critical questions of world trade. What makes the situation so intolerable is that the way forward has been known and clear to everyone who has cared to look at it for decades.

A genuinely global approach to world trade would, first and foremost, seek to enhance the ability of poor countries to develop their manufacturing industry, selling on world markets. This would involve the kind of initial protection always required for 'infant industries'. Every single country that has ever launched itself successfully into industrial manufacturing has always had to do so, initially, behind some kind of protectionism - Japan preserves this approach to the present day. Yet GATT requires of the increasing number of poor countries seeking membership in desperation, that they disavow all forms of protectionism.

Once manufacturing had been made easier for the Third World, it would be possible to return to the issue of primary commodities. Not many people, and certainly not those of us who like coffee but could never grow it in our own back gardens, would seriously suggest that Central America, or Africa, must stop producing coffee altogether. Apart from anything else, that would be to revert to the sort of prescriptive arrogance that has so bedevilled development.

But the total dependence of many countries on primary commodity exports has to be reduced - and if the leap to manufacturing were made easier, this could at last happen. The cut-throat competition between commodity producers could be halted and perhaps even reversed. And an effective Common Fund for commodities might then become a practical possibility.

Sensible trade arrangements would feed into, rather than subvert, the more vigorous economic aid that is still essential for the poorest. Perhaps then the rich would finally get out of the habit, born in the nineteenth century, of giving with one hand and taking away with the other, transforming one half of the world into a gigantic object of charity in the eyes of the other.

But who would be launching this Trade-Related Action Programme (in a world obsessed with acronyms, why not a TRAP to join the TRIPs and TRIMs)? The truth is that both GATT and UNCTAD are a compromised part of the post-War settlement and have proved unequal to the task. They have failed to mobilize the internationalist potential of world trade and left it as a monument to inequality and inhumanity. They have to go.

Now that the end of the Cold War is in sight, and even the most 'cautious' of the protagonists on the world stage are talking of tearing up the script and starting again, the time may finally be right for a United Nations International Trading Organization. That in itself would take us a step closer to the United Nations we really deserve, one that would be a political match for the power of the global economic organism. The end of the East-West divide could also be a unique opportunity to bridge the North-South chasm.

This is not a fail-safe route out of the disgusting poverty that wrecks the lives of so many of us. But nor is it an invention of idealism - it is to some extent already working. Let us not forget that immediately after the last World War, the two most successful economies of today, Japan and West Germany, were among the most devastated places on earth. Both have become prosperous by manufacturing for world markets. So too have the Newly Industrializing Countries - and one of those, South Korea, was also destroyed by a terrible war no more than 30 years ago.

South Korea and Taiwan were probably helped along the way by strategic US aid in the 1950s. Hong Kong, Singapore and Taiwan again perhaps had a kick start from rich people fleeing revolutionary China with their capital. This shows aid and investment can change things. But the real lesson of the Four Little Tigers is that there are chinks and openings in the Great Wall of world trade waiting to be exploited. Poverty can be overcome.

The poor are stepping up. The means for them to do so are available, but the functionaries of world trade and rulers of rich nations do their best to hold them out of reach. When you become aware of this, the present state of affairs seems all the more intolerable. That is why it is in the interests of the powerful that you ignore world trade, that your eyes continue to glaze over at the mere mention of the words. Trade wars are for real but, invisible as it may be, knowledge could be the weapon that decides their outcome.

1 World Development Report 1989, World Bank.
2
Financial Times. UK, 27.10.89.
3
What it is. What it does, GATT, 1989.
4 GATT Press communiqué. 19.10.89.
5
History of UNCTAD 1964-84, UNCTAD, Geneva, 1956.
6
Lords of Poverty. Graham Hancock, 1989.

 

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Squeezing the South: 50 Years Is Enough

Montserrat’s not going to get a toxic waste dump. At least not yet. You might well ask why this tiny Caribbean island, the Emerald Isle of the Leewards, would even consider letting a US toxic waste dumping company set up shop in the first place. Montserrat, one of the last British colonies, is just 21 kilometres long by a couple of kilometres wide. Except where the goats have played havoc with the vegetation it is a lustrous green most of the year. Tourism of a quiet and mostly unobtrusive sort is the main foreign-exchange earner. Not a good mix with toxic waste, one would have thought.

That’s exactly what most Montserratians felt when they heard that local politicians had been in intense negotiations for over a year with a US multinational named, with typical euphemistic panache, Energy Processing and Supply. Opposition quickly mounted. A local doctor wrote a scathing critique in the island paper where he drew a vivid picture of cruise ships emptying passengers among the toxic-waste drums on the docks of the island’s capital, Plymouth.1

This is a small story about a small place but it illustrates the inexorable pull and push that draws the countries of the Third World into the global economy – no matter what the costs to their people and eco-systems. The pull is obvious enough: the American Dream bounced off TV satellites into the most modest of homes in surprisingly remote corners of the Third World. The push is more complicated: a subtle combination of budget and trade deficits, and debt obligations. But together this lends a seemingly unstoppable momentum to the race to get as big a slice as possible of the illusive global economic pie.

This momentum is exactly what the Bretton Woods Conference held 50 years ago this month was all about. When the world leaders gathered in that fashionable old resort hotel deep in the hill country of New Hampshire their agenda was clear: they aimed to bury forever the nationalistic protectionism they saw as the main culprit in creating the Great Depression of the 1930s. To do this they put in place the pillars of a global economy where borders were to be as porous as possible to goods and capital from anywhere in the world. As part of the design they set up two key institutions, the International Monetary Fund (IMF) and the World Bank, to deal with problems that might lead governments to inward-looking economic policies. This was followed shortly by another organization, the General Agreementon on Tariffs and Trade (GATT), which set the rules and pressures for open economies and free trade. Together with the regional development banks these are collectively known as the IFIs, an acronym for international financial institutions.

These were not neutral economic mechanisms set up to co-ordinate the world economy: they contained a powerful bias in favour of global competition and corporate enterprise. There were warnings of problems ahead from a few discordant voices, the most prominent of which was the eminent British economist John Maynard Keynes. He advocated a balanced world trade system in which surpluses and deficits would not be allowed to accumulate and there would be strict controls on the movement of capital across borders. He held that the free movement of all goods and capital, advocated most powerfully by the US delegation, would inevitably lead to inequalities and instabilities.

Costs of globalism
From the standpoint of 1994 these warnings seem all too prescient. Today budget and trade deficits plague most countries in the world. The debt load on all governments, but particularly those of the Third World, has crippled their fiscal capacity to look after their citizens. Capital moves so freely that it is often impossible for governments to find, let alone tax. Corporations treat the world like a global chessboard bidding down wages and taxes, avoiding environmental regulation and pillaging natural resources. Their right to do this is no longer even considered controversial. They are courted by politicians of all political stripes. The stability of communities from rural Zambia to Bangladesh and even the decaying rust-belts of the US heartland or the British Midlands are casually undermined by processes that appear ‘natural’ but were in fact carefully constructed at Bretton Woods.

Abandoned factories and children who make a living on the street seem light years away from that magnificent temple to money, the IMF building on 19th Street in downtown Washington. At the IMF it isn’t easy to get past security. It seems like 5 per cent of black Washingtonians are employed to keep the other 95 per cent out of such white inner sanctums. If you are curious about the IMF you will be directed to the well-appointed Vistors’ Centre complete with art gallery just next door. There, if you are interested enough (few were the rainy December afternoon I showed up) you will be shown a video tellingly entitled One World, One Economy. It’s a choice piece of propaganda for a globalist worldview that doesn’t really seem to need propagandizing any more, becoming as it has the common sense of our age for most economists and politicians. In the video a parade of besuited, mostly white men lecture on the merits of IMF medicine for ailing economies. It has some real classics of understatement such as ‘While the Fund cannot force its members, the Fund’s suggestions are taken seriously.’ A parade of faces of colour speak gratefully about the wisdom of IMF policies in their countries.

The debt crisis of the 1980s which really gave the IMF and the World Bank (the huge hulk on the other side of 19th street) leverage over desperate Third World economies is referred to mildly: ‘A workable solution was required to avoid defaults that would severely damage debtor countries, as well as financial institutions’. The solution, structural-adjustment programs or SAPs, proved a lot more ‘workable’ for the big international banks who got their interest payments than it did for the laid-off public-sector workers of Latin America or for the African families who can no longer send their kids to school because of SAP-related ‘user-fees’. These ordinary people were the ones who had to do the ‘adjusting’. This issue contains two articles – by Ayesha Imam on Africa and Mark Fried on Latin America – who provide chapter and verse on the human and environmental costs of structural adjustment.

When the dust had settled, the ‘short-term pain’ of the SAPs had not got rid of the debt: total Third World debt actually shot up from $751 billion in 1981 to $1,355 billion in 1990. What it had done was to pry open Southern economies to the world market. The formula was deceptively simple: international competition would result in growth that would be good for everyone. And this glittering promise of the global economy remains for most policy-makers, North and South, the only game in town.

But growth has proved elusive. There has been significant economic growth in some adjusting Latin American and Asian countries and new élites have profited handsomely from the privatizing of public industries. But for every South Korean success story there are dozens of unmitigated failures such as the Ivory Coast and Venezuela where absolute destitution has sky-rocketed. A recent World Bank study, Adjustment in Africa, which makes great claims about the success of SAPs on the continent, is so full of holes that the usually restrained British agency OXFAM-UK was forced to characterize it as ‘a blend of half-truths, over-simplifications and institutional propaganda’.

But if the grand architects of Bretton Woods have through their design managed to defeat 1930s-style protectionism they have been less successful with that other scourge of the Depression, unemployment. While total world output has doubled since 1975, employment has actually declined.2 The global economy with its emphasis on reducing labour costs and on currency or property speculation does not put a high priority on providing sustainable livelihoods. An underlying assumption of the growth economy is that Northern-style overconsumption can be achieved by every society on the globe. Only recently has attention started to be paid to the ecological impact of such a design.

Those who speak for the IFIs are genuinely puzzled when the Bretton Woods institutions are blamed for such problems. They are simply messengers pointing out the obvious: dispensing the advice necessary to survive the rigours of the global economy. They point to their limited budgets, a few billion dollars and a few thousand personnel, when an estimated trillion dollars crosses borders every day in response to the slightest change in currency and interest rates. They point to their minimal influence over the industrial North and even the larger Third World governments like those of China and India.

Poor pay the piper
But the role of these institutions cannot be reduced to their budgets. They help create and maintain the rules for the global economy. They sustain its momentum and make sure that any alternative vision proves impractical and unworkable. The lack of their ‘stamp of approval’ makes it virtually certain that freethinkers like Sandinista Nicaragua will be starved of capital and subjected to rigorous external pressure. If problems occur such as the 1980s debt crisis, the IFIs guarantee that any resolution will respect the interests of Northern fund managers and banks first. The price will be paid in the shantytowns of Lima and on the family farms of Uganda. In Africa the IFIs have taken over the bulk of public debt and now directly wring payments out of enfeebled African economies. As a result both the World Bank and the IMF now take more out of the Third World in repayments (even from the poorest countries) than they provide in new finance.

Nobody talks about a debt crisis any more, but while it no longer endangers world financial institutions it is still very much a crisis for those who have to pay. Along with the opening up of Third World economies, this transfer of the debt burden from the rich to the poor has been the IFIs’ greatest triumph. Their greatest failure has been in delivering the orderly world financial system that Bretton Woods promised. Narrow technocratic thinking and cynical power politics have put short-term gain ahead of stability. Public finance the world over is in a mess. Private wealth and public squalor are the order of the day. It is written right into the World Bank’s constitution that it cannot fund projects that compete with private enterprise. The IFIs have exerted consistent pressure to minimize state involvement in economic life from Bogota to Bangkok. This despite the clear evidence that the development success stories of Asia (Taiwan, South Korea, Malaysia and Thailand) have all involved strong government intervention to order society, protect the domestic economy and promote growth.

The irony is that in many ways the IFIs show the same weaknesses they criticize in government bureaucracies. Their bloated and privileged staffs resemble more the command economies of old-style Communism than the lean mean private sector they celebrate. While they lionize risk-takers there are no risks attached to an IFI loan: a government (or rather its benighted citizens) has to pay it back no matter how wasteful or ill-considered it was in the first place. The distance between an IFI head of mission who lives in a comfortable Virginia suburb and a hard-pressed Argentinian pensioner or a mother in Benin struggling to keep her family alive is just too great. Staffers are too well insulated from the effects of their own advice.

The IFIs’ single-minded insistence on an export-driven growth formula also shows the weakness of centralized economic decision-making. Whether we are talking about huge transnational corporations, over-ambitious state planning or the global economic management ambitions of the IFIs, wasteful diseconomies of scale are inevitable. The IFIs’ loan portfolio is a prime example. It leans towards big loans for big projects such as dams or port facilities that will ‘aid international competitiveness’. It is a lot easier to manage one big loan than a lot of little ones. Unfortunately experiences like those of the Grameen Bank in Bangladesh and its support for micro-enterprises shows that it is many small loans that work best in spreading economic benefits.

The research and on-the-ground experience which shows this is conveniently ignored. Small loans usually don’t build up a country’s capacity to earn foreign exchange and therefore don’t help pay off debt. But more exports don’t necessarily help either. Producing more of a cash crop tends simultaneously to lower its price on the world market. This has cancelled out any significant gains for five of Africa’s main exports.3

Killing the alternatives
The message echoing down the decades from those heady days in New Hampshire is always the same: ‘there is no choice’. GATT has set the rules for the global economy and the IFIs must enforce them. The slash-and-burn economic policies adopted both South and North are the only way forward. Economies have to compete on the world market no matter what the human costs. There is simply no alternative.

This is of course the big lie. State socialism has collapsed, but that was never the only and certainly not the best alternative to global capitalism. There is a rich vein of alternative economic initiatives and ideas: co-operatives, self-managed enterprises, various mixes of private and public sector, eco-development, ideas for a diversified regional and community-based economics, innovations in planning the economies of cities, fresh approaches to taxation, and blueprints for converting military production to basic needs. In each of these alternatives the people affected would have more power over decisions and the health of the environment would weigh heavier in economic calculations.

Small may be both beautiful and possible but the decisions taken at Bretton Woods make it unlikely. After all why waste time and resources trying to do things differently when you can earn good foreign exchange from toxic waste dumps, exporting weapons, depleting your natural resources and letting transnationals exploit your workers?

There is another less discussed cost of a global economy directed by those who control international capital. Gradually democracy itself is slipping through our fingers. Today it hardly matters if a finance minister comes from the Left or the Right if their main concern when preparing a budget is how the IMF and the money markets are going to react. Voters may support anti-SAP politicians as they have in Venezuela, Argentina and Brazil, but those who buy and sell government bonds and hold the national debt will see to it that SAPs get implemented anyway. But people and politics have proved a lot less malleable than economics to the IFIs’ designs for global management. In Eastern Europe structural adjustment has produced results inconceivable a couple of years ago: the political rehabilitation of the Left. In Hungary, Lithuania and Poland the Socialists have become the most popular political party.

A much more disturbing by-product of adjustment has been the stoking of anti-immigrant feeling and lifeboat ethics across the industrial world. The economic dislocations accompanying the IMF-encouraged market reforms in Russia and eastern Germany have helped set in motion a vicious nationalism based on race and violence; the fascist Right have been revived in both Rome and Berlin. These are just the kind of political developments Bretton Woods was intended to forestall.

It is in the Third World, however, that the breaking of glass and the explosion of tear-gas canisters have formed a recurrent soundtrack of protest. Enraged citizens from Cairo to Caracas are taking their insecurities about the global economy to the streets. At its worst this has led to authoritarian politics (the dictatorship of Alberto Fujimori in Peru) or political pathologies such as Islamic fundamentalism that reject not only the superficialities of Western materialism but most recognizable forms of democracy as well.

More promising is the emergence of ‘internationalism from below’ as networks of activists from North and South come together to expose the impact on livelihoods and environment behind the globalist cant. Organizations have sprung up on every continent and in any country that allows them the political space to operate. So far the main activity of these networks has been to challenge the priorities of the export-driven growth model of development. They have been in the forefront of opposing the structural-adjustment policies of the IFIs. It is this ‘internationalism from below’ which has put the reconsideration of the decisions and institutions of Bretton Woods on the agenda. For them 50 years is enough!

To have real effect, however, this citizens’ movement needs to move beyond opposition to proposition. Grassroots organizations the world over are seeking an economics driven by community need rather than export opportunities. Strategies will vary, but the emerging common thread is the rejection of the grand designs and globalist illusions of Bretton Woods as undemocratic and anti-ecological. Bretton Woods stands as a cement block in the path of rethinking what a peaceful and sustainable world might look like. The words of singer Jackson Browne could be directly addressed to the eminent group pictured below: ‘Boys, boys, this world is not your toy. This world is long on hunger. This world is short on joy.’

1. The Montserrat Reporter, 14/1/94
2. Mahbub Ul Haq, Bretton Woods Institutions: The Vision and the Reality, North – South Roundtable, Bretton Woods, New Hampshire.
3. Salim Lone, Troubled Adjustment Efforts, African Recovery, UN , Vol. 7 no.3/4.


 

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Currents

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Land Rights
Rumbling volcano
Brazilian rural workers rise
up to oppose impunity

The massacre hit headlines in Brazil. In April 1996, on a road 500 kilometres from the city of Belém at the mouth of the Amazon, 19 people were murdered and 69 seriously injured when local police attacked a march of landless people demanding land reform. Two died later from their injuries and many suffer from the trauma. ‘There are still people who cannot sleep very well, they hear crying, bullets and gunfire at night,’ says Jorge Neri, a leader of the Brazilian Landless Movement (MST). ‘There are children who rarely leave their homes, who are afraid of the sound of fireworks. Any loud noise scares them.’

Jorge Neri has been touring nine European countries to gather support for bringing the perpetrators of the massacre at Eldorado dos Carajás to justice. Last year three police commandants were found innocent in court but the ensuing outrage meant that the trial was suspended. Since then, 16 local judges have reportedly turned the case down. The judge who eventually put himself forward, José Maria Teixeira do Rosairo, has a record of hostility towards the landless. The MST wants international observers to attend the retrial to ensure its impartiality.

Meanwhile, the violence against rural workers and activists in Brazil continues. Over the past 12 years at least 1,167 have been murdered, while only 86 suspects have been brought to trial, of whom just 7 have been convicted. The Brazilian Government is proposing legislative changes that will make it harder to secure land through the kind of ‘invasions’ the MST has been organizing to great effect for many years.

A monument to the people killed at Eldorado DOS Carajás now stands at the centre of what has become a thriving rural community, occupied by some 600 families. ‘There is a school for all the children and agricultural production has flourished,’ says Jorge Neri. ‘This shows that these people were not “bandits” or “marginal”. They died because they fought for dignity, work and freedom.’

The fact that more than 20 million people have yet to find land does not daunt him. ‘Latin America is a huge volcano,’ he says. ‘It may have been dormant for a few years, but that’s because we’ve been reorganizing from the bottom up.’

David Ransom

To offer support contact:
MST Support Group,
94 Hurst St, Oxford OX4 1HF, England,
and/or visit the MST website: www.mstbrazil.org

Good kids in two minutes
Malaysian parents should spend at least two minutes a day talking to their children, advises the Deputy Education Minister Abdul Aziz Shamsuddin: ‘I am asking for only two minutes, not even one hour. It is not too much to ask.’ Violence and arson are increasing in Malaysian schools and the Government is searching for solutions. If the parental two-minute plan is not enough, authorities are considering advocating use of the cane by teachers.

Sydney Morning Herald: www.smh.com.au

World Bank shunned
Activists are calling on corporations and individuals to boycott World Bank bonds — the source of 80 per cent of the Bank’s funds. Neil Tangri of Essential Action says the boycott could discourage capital-market punters: ‘When investors realize that their money is being used to damage the environment, destroy indigenous communities and trample human rights, they will move their investments to less controversial projects.’ Several socially responsible investment firms and the city of Berkeley, US, have pledged not to buy World Bank Bonds. One of the organizers of the boycott in India, Dr Vineeta Gupta, says: ‘It’s time that we shut the Bank down, and this boycott is a great start.’

Corporate Watch: www.corpwatch.org

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Pakistan’s nuclear-test region suffers drought

Word corner

Coconut
If you have ever looked closely at a coconut, you will have noticed the three small marks in its base. Portuguese and Spanish travellers thought these marks looked like a monkey’s face, and called the coconut coco. Coco means grinning face, grin and grimace in Spanish and Portuguese.

The Cocos Islands in the Indian Ocean (also known as the Keeling Islands after William Keeling who discovered them in 1609) get their name from the coconut trees growing there.

Susan Watkin

In southernmost Pakistan, site of the Government’s nuclear tests, drought has left a trail of deaths and destruction. International aid organizations estimate it will take at least three years before life can limp back to normality.

In Baluchistan, Pakistan’s largest province, at least 200 people perished due to the drought — although the Government puts the death toll at 15. Baluchistan’s Arenji area is where Pakistan tested its nuclear device. ‘The drought started immediately after the nuclear blasts. It is for the scientists to ascertain the link between the two. We have reasons to believe it was because of the detonations,’ says Akhtar Mengal, former chief executive of Baluchistan province.

Government officials emphasize there was no report of radiation in the area after the nuclear blasts in Chagai. But Mengal has doubts about their capacity to limit the effects of the detonations to the test site: ‘Even in the most advanced nations of the world, nuclear blasts are not entirely safe.’

Field workers in Baluchistan said tens of thousands of people had migrated to the neighbouring province, abandoning their dying flocks. The drought has claimed at least 75 per cent of local livestock, including goats, sheep, cattle and camels, in a region where two out of every three families depend upon the herds for their survival.

In the southeastern province of Sindh, Tharparkar district was the worst hit — at least half a million people were badly affected. The official death count stood at 127 but one international aid worker estimated the figure was 560. Oxfam says that in Tharparkar ‘around 70 per cent of the population face a 75-85-per-cent food deficit; livestock left in the desert area face acute fodder shortages; and debt for poor households has doubled.’

Ahmar Mustikhan

Shameful name
Like his famous President-uncle Robert, Zimbabwe’s football boss Leo Mugabe is under fire. Soccer fans often carry banners against Leo, chair of the Zimbabwe Football Association (ZIFA). One banner depicts a spear and drops of blood, with the accompanying words: ‘Leo, you are killing soccer.’ Since Leo’s ascendancy, fans have had to live through a string of humiliating defeats. The Confederation of African Football (CAF) stripped the nation of the right to host the African Cup of Nations in 2000, arguing the Zimbabwean Government had failed to guarantee financial backing for the tournament. And the national soccer team’s recent performance has gone from bad to worse — it recently failed to qualify as one of Africa’s representatives to September’s Sydney Olympics. The Sports Commission has hit out at the ZIFA executive — accusing it of bad organization and poor external relations with bodies like CAF. This echoes an inquiry three years ago into the state of football that accused Leo of having little knowledge of soccer and behaving like a dictator.

Tendai Madinah/Gemini News Service

Military armed terrorists
The rebels responsible for kidnapping foreign tourists in the southern Philippines in April were armed and financed from within the nation’s armed forces, according to Marites Dangilan Vitug and Glenda Gloria, authors of The Crescent Moon: Rebellion in Mindanao. They allege that military officers first armed rebel group Abu Sayyaf to divide the Muslim insurgency and to protect their economic interests. ‘Illegal logging was a partnership between Abu Sayyaf and the marines from 1992 to 1996,’ says Father Cirilo Nacorda, a Catholic priest who was abducted by Abu Sayyaf. But the operation got out of control as Abu Sayyaf evolved into a fundamentalist terror squad, launching a wave of bombings, shootings and kidnappings aimed chiefly at Christians. Afghanistan, rather than the Filipino military, is now believed to be Abu Sayyaf’s main source of weapons. The Philippine Government now has to spend up to $25 million a day fighting terrorism that its own military helped to spawn.

Michael Bengwayan / Gemini News Service

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Rise of ethnic sect creates anxiety

Tension between ethnic groups in Kenya now has an added religious element as more youths from the Kikuyu people become members of the Mungiki religious sect. According to Maina Njenga, a founding member of Mungiki, the organization was born ‘when a number of people saw visions where we were commanded by a divine power to call upon the Kikuyu people and all Africans to go back to their roots. We in Africa had our own prophets and we should seek them instead of believing everything we are told by those who believe in Christianity.’

Members of the sect don dreadlocks, sniff tobacco, advocate female genital mutilation and are opposed to the consumption of alcohol. They are also dissatisfied with President Moi who, they claim, has discriminated against the Kikuyu when allocating funds and employment ever since he came to power in 1979; Moi is from the Kalenjin minority. Ironically, it is arguable that Moi would not be President today if Kenya’s founding father Jomo Kenyatta and his coterie of loyalists — dominated by the Kikuyu — had opted to dump him from the Vice Presidency perch that he held for almost a decade. According to Dr Shem Okoth of the Sociology Department of the University of Nairobi, Mungiki is ‘a reflection of the sordid scenario in Kenya where a certain community believes that it needs to get cohesive to protect its own from being marginalized. The religious element in the sect is only an excuse for bonding.’ The Kikuyu form Kenya’s largest ethnic community, comprising 20 per cent of the 30 million population. Now the Mungiki’s rise to prominence has fuelled an undercurrent of resentment amongst Kenya’s 41 other ethnic groups. Christian leaders are also alarmed. ‘Mungiki is primitive and retrogressive and the Presbyterian Church of East Africa has vowed to fight it,’ says Reverend Linus Kimani Mwangi in Nyeri. ‘The sect leaders are recruiting jobless youths to use them in heinous crimes, including forcibly circumcising women.’

Charles Wachira

Chile's call for justice
Military officers providing information about people who disappeared during Pinochet’s dictatorship will be protected and guaranteed anonymity under a controversial law passed by the Chilean Congress. Families of those detained or ‘disappeared’ have denounced the move, saying it extends impunity to human-rights violators. ‘We prefer justice to a measure of truth,’ says Viviana Díaz, President of the Group of Families of the Detained-Disappeared.

Latin America Press Vol 32 No 25

Diamonds buy many friends
Jonas Savimbi, the Angolan rebel leader who was once armed and supported by the CIA, fights on with the support of several African leaders, a Lebanese arms broker, a Belgian diamond merchant and many Eastern European dealers, according to a UN report. Savimbi has bought such allies through the sale of Angolan diamonds in violation of a UN embargo, says a panel established by the UN Security Council Sanctions Committee. The report is particularly critical of the Belgian authorities in Antwerp, the world’s diamond-trading centre, stating that ‘extremely lax controls and regulations’ encourage illicit activities. It recommends imposing sanctions against countries, individuals and companies that violate the embargo and calls for a ‘very substantial bounty’ for those who track or identify assets controlled by members of Savimbi’s rebel group, UNITA.

Guardian Weekly Vol 162 No 13

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Big Bad World by Polyp
Big Bad World cartoon.

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Chronicle 2000

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Health hazard / CHRONICLE

Chronicle 2000

.WITH A SPECIAL FOCUS ON THE MAJORITY WORLD
Our media feed us news dominated by rich-world events and preoccupations.
Here the NI redresses the balance with an alternative view of the year's key events.

JAN | FEB | MAR | APR | MAY | JUN | JUL | AUG | SEP | OCT | NOV | DEC

Click a month above to read an alternative view of the key events of that month.


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Prohibited items

On the night of the Day of the Dead in November 2005, Helena Villagra and I had to pass through Miami airport on our way back to Uruguay. We had just been in Honduras, El Salvador and Mexico. Before we flew out of Mexico our four bags were carefully checked, before our eyes, by gloved hands that rummaged through every millimetre and sent them off to Montevideo.

So far so good. Only that was not the end of it. We had to change planes in Miami where we spent about 40 minutes, the time it took to complete the Calvary of lines, forms, questioning, digital impressions, photos and the striptease before boarding. Hours later, when we reached Uruguay, we found that two of our bags had been violated. The lock of one had disappeared. On the other the security seal had been broken. Inside, we found an explanation: ‘prohibited items’.

In each bag there was a notice from the Transportation Security Administration. ‘Your bag was among those selected for physical inspection. During the inspection, your bag and its contents may have been searched for prohibited items. We appreciate your understanding and co-operation.’

Helena has the fortunate or unlucky habit of seeing reality before it happens. She sees it while she sleeps. She saw it shortly before our baggage suffered this attack from official curiosity. She saw us in line in an airport where we were required to pass our pillows through a machine. In the pillows the machine was able to read the dreams that we had dreamt upon them. It was a detector of dreams dangerous to public order.

I’m afraid the security agents that opened our bags grew suspicious not because of what they found but because of what they didn’t find. The bags did not contain weapons of mass destruction. Perhaps this is why they deserved to be invaded.

• There were many books. But there was not among them a complete collection of the speeches of the president of the planet, who from his first oratorical forays in Texas stood out for his sublime prose, his mystic fervour, his limpid honesty and his involuntary sense of humour.
• The agents did not find among our papers a single job contract like those used by Wal-Mart, the universal model of success, which prohibits unions and other nuisances that are the enemy of worker productivity.
• They did not find a single document by the international wisemen capable of proving that water, right up to rain itself, should be privatized, as happened in Bolivia until it was deprivatized by the people.
• We were not carrying a single free-trade tract of the sort regularly decreed by the all-powerful country that has never practised and never will practise anything like free trade.
• We also failed to pack electrodes or other instruments of torture necessary for the interrogations that this country has conducted, and still conducts, to promote freedom of expression.
• In our suitcases there were no wrappers from McDonald’s, Burger King or any other enterprise sanctified by its noble mission to fight hunger by propagating obesity.
• Also revealing was the absence of genetically modified seeds like those converting the farmers of the world into happy functionaries of the Monsanto company.
• Equally revealing was the absence of the genetically modified press, whose journalists call the daily terrorist acts of consumer society ‘natural catastrophes’.

We had been run down by hurricanes and visited some of the countries hardest hit by the madness of cyclones, droughts and floods which are becoming ever more frequent and more ferocious.

What is natural about these pooricidal natural disasters? Is it nature that is poisoning the air, polluting the water, razing the forests and driving the climate into the madhouse?

In Honduras we visited the ruins of Copan, one of the Mayan kingdoms mysteriously toppled six centuries before the Spanish conquest – or not so mysteriously. Researchers tend to believe, with growing reason, that the cause was an ecological disaster. In the case of Copan, the forests had been reduced to deserts that produced stones instead of corn. But isn’t that what is happening now? In Honduras the extermination advances at a clip of 75,000 trees per day, according to priest Andres Tamayo, who lives in the service of the heavens and the earth. In the Americas, and in many other parts of the earth, the natural forests, green feasts of diversity, are being brutally reduced to nothing or converted into pastures of profits or false industrial forests that are drying out the earth.

Can we not see ourselves in the mirror of the past? Is memory a prohibited item?

The disaster of cyclone Stan in Chiapas would have been only half as severe, experts assert, if the region had still been protected by its forests. In Cancun, where Wilma left nothing standing and beaches stripped of sand, the immense megahotels of the tourist business had annihilated the dunes and mangroves that had protected the coast.

And those other ‘hurricanes’? The unstoppable storms that force desperate people from the South to the North – are they natural disasters as well? In Tegucigalpa, in San Salvador, in Oaxaca, we saw long lines of barefoot women from distant villages, carrying children, standing in front of currency exchange offices. They were waiting for money wired from the US – from husbands, brothers or children.

Misfortunes are disguised as acts of fate and presented as natural. But is it natural for a country to condemn its poorest to gamble their lives chasing hope at the cost of humiliation and rootlessness?

Throughout Latin America, it must be acknowledged that the philanthropists of the International Monetary Fund and the World Bank have succeeded in increasing exports – exports of human flesh.

Are these emigrants or were they expelled? Many of these people, the so-called ‘wetbacks’, die on their way North, whether from thirst or bullets, or return mutilated to their villages. Those that survive and reach the Promised Land work themselves to the bone at any job in any condition, day and night, so that far away their despoiled families can survive, with neither land nor food, in the land that banished them. It is a hard road. They too are prohibited items.

Eduardo Galeano, Uruguayan writer and journalist, is author of _The Open Veins of Latin America_ and _Memories of Fire_.

 

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Radio New Internationalist - The Arrogance

The Arrogance

This week we’re linking up Asia, Latin America and the Middle East to explore why that bundle of international economic policies favoured by the neo-cons can fail so badly… and uncover a common link. It’s ‘The Arrogance’… the arrogance of the World Bank in Indonesia, of the International Monetary Fund in Latin America, and US policy-preachers now working in Iraq. Today’s guests – all of whom are working closely with international policy makers – open the doors to a range of very personal experiences:

  • Jim Shultz, Executive Director of The Democracy Center in Bolivia remembers the 34 people killed in protests over the International Monetary Fund’s fatally flawed tax policies;
  • Farah Sofa, from WALHI (Friends of the Earth, Indonesia), tells us about their negotiations with the World Bank, which is now supporting Indonesian industrial timber plantation projects the size of whole countries; and
  • Pratap Chatterjee, Managing Editor, CorpWatch takes us to Iraq and shows us around both the healthcare system being imposed on the Iraqi people, and the colourful crooks and incompetents that are mismanaging it.

Last week and this week, we’ve been featuring the CD… Rhythm of the River… which showcases a range of artists from the World Music Network’s Riverboat Records series. From rhapsody to rap, it offers music with which to relax, then rage.

Listen now (click the play button) or download the program (click this link)

Subscribe to the Podcast Subscribe to the podcast

 

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The suitable Mr Wolfowitz?

It was just sitting there, waiting to happen – the Paul Wolfowitz corruption scandal.

But over so small a thing! I don’t want to belittle the World Bank chief’s actions, but using his position to ensure a plum job (salary $200,000) for his lover Shaha Riza is chicken feed by World Bank standards.

Okay, so 430 Haitians could live on Ms Riza’s annual salary, but do let’s get this into proportion.

During its 60-year history the Bank has managed to ‘lose’ $100 billion to corruption; it has backed and funded projects that have made fortunes for corrupt officials and corporations at the expense of the world’s poorest people. (see NI 396, Corruption, 'Killer sting' )

It has imposed polices that have enforced privatization of state assets and has made loans on condition that governments hack public health, education and food subsidy provision. This has torpedoed development, benefited élites, fuelled corruption and had a devastating effect on the most vulnerable people, even driving down life expectancy in some places.

But, alas, none of this seems to register on the radars of Mr Wolfowitz’s sensitive colleagues who bemoan the fact that their boss’s misdemeanour has undermined credibility and brought their anti-corruption drive into disrepute.

Disrepute? Surely there has to be some ‘repute’ there in the first place for it to be dissed?

While genuine attempts to encourage good governance and tackle corruption must be lauded, there are several things about the World Bank’s campaign that arouse suspicion. Buried on page 20 of the Bank’s latest strategy, revised is March of this year, is an encouragement for governments fighting corruption to ‘transparently and competitively privatize state-owned businesses’.  So, like everything else it does, the Bank’s anti-corruption agenda is to be used as a Trojan horse for its neoliberal prescriptions.

Meanwhile, Wolfowitz is also accused of watering down reports on global warming in order to continue the Bank’s policy support for fossil fuels.
But to return to Paul Wolfowitz’s ‘outraged’ and ‘dismayed’ colleagues at the Bank: what on earth did they imagine life would be like with him at the helm? We are talking about the man who, as Bush’s former Defence Secretary, was architect of the most deadly and surreal campaign of corruption in modern history – the invasion of Iraq. ( see NI 396 Corruption, 'Can the rot be stopped?' )

The discovery that the World Bank chief now appears to be using public office for private gain – a usual definition of corruption – should surely come as no surprise. Is it a surprise that Al Capone evaded tax – the misdemeanour that finally landed him in the soup?

Naturally, questions are being asked as to whether Wolfowitz was a suitable candidate for the big job in the first place. Well, it depends on whether you think a World Bank chief should genuinely reflect the ethos of the institution she or he heads. If you think they should, then you could argue that this particular appointee was most suitable.

And if that seems too perverse a twist, how about this: the right-wing press in the US is saying that Wolfowitz has been unfairly targeted precisely because he was tackling corrupt governments (not his own, notably) and that is why some donor countries, European ones especially, have been holding back funds from the Bank and want to see the back of Wolfie.

Nothing is too complex in the bluff and counter-bluff world of anti-corruption. Only one voice rings clear and true – that of Kenyan anti-corruption tsar John Githongo who says, ‘if you are going to try and tackle corruption you must start with your own people’.

If – and it’s a huge ‘if’ – that is what Mr Wolfowitz’s colleagues are trying to do, they are going to have to rid themselves of a lot more than one bad apple.

There’s an entire institution, held together by neoliberal dogma, to get started on.

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Garden furniture for Europeans

=teaser

_‘Our life will never again be as before. We are losing for good our means of subsistence. Our survival depended on the forest, which gave us everything we needed to live. Now everything is disappearing: the forest, the wild game, the caterpillars, the mushrooms, even the honey… These things will not return. What will become of us, of us and our children?’_
Pygmy villager from Yaimbo, L’Equateur Province, DR Congo.

_‘They [the loggers] don’t respect our forests: the sacred trees, the sacred places, the burial places of our ancestors in the forest.’ _
Pygmy villager of Makumo, Orientale Province.

This is contrary to the mercantile vision of the forest, which is simply as an object of commerce, and which leads to its devastation

_‘The companies don’t recognize that we are the proprietors of the forest which they are exploiting. Our oak trees are destroyed, the mushrooms become scarce, animals have fled because of the noise of the machines, or have been massacred by shotguns. We are dying of hunger! If we dare to speak… they have us arrested by soldiers… We have always suffered, but since the arrival of the timber companies, it’s worse.’_
Boko Tatakoyi, a 45-year old Pygmy woman from Yaimbo.

These sad words sum up the drama that Pygmies are experiencing as a result of logging, and the deforestation that follows, in the Democratic Republic of Congo.

The forest is vital for millions of lives. It covers two-thirds of the Congo Basin, the second largest forest area in the world, after the Amazon. But quite apart from its planetary role in the current context of climate change, the forest assures the survival of 40 million out of the country’s 60 million people.

It harbours endemic species of wildlife such as the Congolese peacock, the chimpanzee- like Bonobo, the okapi giraffe and many sought-after wood species such as Wenge, Sapelli or Afromosia. There are also Pygmies.

The first people to inhabit the territory, Pygmies† are the aboriginal people of the DR Congo – where we are estimated to number between 300,000 and 600,000. People of the forest, we have lived here for millennia in harmony with nature. Our holistic vision of the forest – including its spiritual dimensions – means we see it as our nurturing mother, venerated and protected. This is contrary to the mercantile vision of the forest, which is simply as an object of commerce, and which leads to its devastation.

The destruction of the forest is as a real tragedy for Pygmies. The forest is our supermarket, our pharmacy, our school, our temple and our cemetery.

Deforestation deprives us of the resources vital for our survival, and the environment in which to express our culture, our traditional wisdom and our spirituality. Briefly, deforestation sets in motion the total uprooting of Pygmies; it brings poverty, malnutrition, illness and death.

World Bank double-speak

Since 2001 the World Bank has financed and supported forestry reforms in the DR Congo, to ‘create an environment and a development driven by the private sector, including expansion of industrial exploitation of timber’. This policy is largely responsible for deforestation.

However, according to its own rules, the World Bank should not be doing this. In May 2002 the Bank inspired and supported a moratorium on the granting of new forestry concessions. In August that year it also adopted a new forestry code.

For its part the DR Congo Government restricted the renewal of logging titles in October 2005 and extended a moratorium on granting new forestry concessions. An independent observer, from the World Resources Institute, was recruited to monitor the process of renewing titles. But this is what happened:

The moratorium was systematically violated by the Government, under the nose of the World Bank whose silence translates into complicity.

The Bank participated in violating the moratorium by financing – through the Société Financière Internationale – the Singapore-based multinational Olam, which acquired 300,000 hectares of forest three years after the moratorium was established.

The Congolese forestry sector is gangrenous with corruption; the forestry administration is very weak, badly equipped and incapable of controlling the sector.

Illegal exploitation and devastation of the forests is intensifying, to the detriment of forest communities and the Congolese state.

Twenty-two million hectares of forest – almost the entire land surface of Britain – have been conceded to timber interests through 156 titles of which two thirds – covering 15,416,252 hectares – are illegal and granted in violation of the moratorium.

The titles are mainly held by multinationals with foreign capital – US, French, Italian German, Portuguese, Belgian, Libyan, Singaporean, Chinese and Indian. Many concessions encompass areas vital for forest-dwelling communities, leading to conflicts between these indigenous communities and the timber concession holders.

Indigenous resistance

Our survival, our vital space, our cultural identity, our traditional wisdom are threatened. We have only one option: to resist. Ours is a peaceful resistance – but not a passive one.

As to the protection we might expect from the Congolese state: it is absent. Rather, the state is the protector and accomplice of the companies and against indigenous communities.

From 2003, we repeatedly appealed to the Government and the World Bank, through formal and informal meetings, through written correspondence, to try and draw attention to their failings and to propose alternatives. We did not have much success.

In February 2005, indigenous organizations addressed a memo to the World Bank, pointing out its ‘failings concerning the forests and the indigenous peoples of the DR Congo’. The Bank’s response, dated 5 July 2005, was received by us on 5 October 2005. It did nothing to address our concerns.

In October 2005 indigenous delegates visited Washington, informing the Executive Directors of our grievances and supplying irrefutable evidence. There was not an echo in response. The indigenous Pygmy groups therefore decided to submit a request to the World Bank Inspection Panel, on 30 October 2005. Our complaint: that the Bank was not respecting its own policies in relation to forestry sector reform.

With help from allies such as the Rainforest Foundation, Greenpeace and Friends of the Earth, indigenous delegates made several visits to Washington and other capitals.

The Inspection Panel made two missions to DR Congo, after which it upheld the complaints against the Bank. In October 2007, a delegation of Pygmies arrived in Washington for the World Bank’s annual meeting. We had the chance to talk with the Bank’s President, Robert Zoellick, and other members of the staff. The Bank management was defensive, ill at ease, as though trying to ignore the Inspection Panel’s conclusions.

In November 2007 the Bank’s management published its rather disjointed response – but did not deny the facts. In January 2008, the Board of Directors got together again to discuss the response of the management in light of the Inspection Panel’s report.

The Board limited itself to general considerations. For us, a clear position on specific issues, such as maintaining the moratorium on issuing new logging concessions, would have been preferable. The management is embarrassed, abashed by the gap between its actions and its declarations of good intentions. Its Plan of Action promises improvement. As far as we are concerned, the management must put into place a Development Plan for Indigenous Peoples that protects our community rights. It would be better if they developed it with our participation.

Meanwhile, our struggle continues.

So the next time you see an item made out of tropical wood that comes from the DR Congo – or are perhaps considering buying it – remember the words of the Pygmies quoted at the beginning of this article. Say to yourself: ‘The survival – physical, cultural or spiritual – of thousands of Pygmies, extremely dependant on the forests, is every day sacrificed for the comfort of rich consumers of tropical timber from the DR Congo!’

_† Although the word ‘Pygmy’ has derogatory connotations it is the term currently used by many different groups – including Batwa, Twa, Bantu – to describe themselves._

*Adrien Sinafasi Makelo* is a campaigner with Dignité Pygmée in the DR Congo.
For more info see www.rainforestfoundation.org or www.greenpeace.org

 

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Day seven - finding funds

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If all economists were laid end to end
they would not reach a conclusion.

GEORGE BERNARD SHAW

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BEFORE the week finishes we really ought to talk some more about the international banking institutions - more about the IME of course, but also about the commercial banks and the World Bank.

I’m beginning to feel sleepy already.

That’s not always the kind of reaction that the IMF provokes. In countries like Jamaica and Brazil there have even been ‘IMF riots’. The organisation has cut so deeply’ into peoples’ daily lives that they have taken to the streets in protest.

They obviously understand more about banking than I do.

Maybe so. But all they really understood was that the price of their foodstuffs was shooting up, or that they were losing their jobs, or that the government was putting up bus fares yet again. The IMF takes the blame for such things because these are often the remedies it demands before it will give the country’ a loan.

You will remember that the IMF is the place that countries can go to when they’ get into balance of payments difficulties. It was set up for this purpose following the Bretton Woods Conference of t 944 which met to reorganise the world’s monetary system. This same meeting also suggested founding the World Bank to offer longer term finance - we will come to that later.

But the IMF was never intended to be a kind of financial welfare agency to which needy’ governments could go for help. Its purpose was to support a particular economic philosophy - that of ‘free trade’.

After World War II there was a great fear that governments which got into financial difficulties might put up tariff barriers to defend their industries against cheap imports from healthier economies. This, it was argued, would damage world trade as a whole - though, as we have seen, those who would have the most to lose from this would be the most powerful economies. The IMF offered a temporary but reassuring source of money on which countries could draw to help them weather any crisis.

You haven’t said who puts money into the Fund.

All the member governments - 147 of them. Their contribution varies according to their wealth. Those with the highest GNPs and the highest shares of world trade have to supply’ the most.

That seems fair.

Yes, but this has political implications because voting power in the governing body is weighted according to contributions to the Fund. The United States, which supplies the most, finishes up with 20 per cent of the votes. And, given that any major change of policy requires an 85 per cent majority, you can see that the US has something of a stranglehold. Developing countries, which represent over three-quarters of the total population of IME countries, are only entitled to 35 per cent of the votes. The organisation is supposed to be a neutral financial institution. But, not unnaturally, it follows the economic philosophy of its dominant member. S/be who pays the piper calls the tune.

What tune is that?

Mostly variations on the theme of free enterprise. The IMF belief is that if international trade is unrestricted then balance of payments problems will sort themselves out ‘naturally’ as exchange rates move to reflect changes in international competitiveness.

And don’t they?

Well they might do if they were allowed to’ In fact the exchange rates of most Third World countries are fixed by their governments rather than ‘floating’ as ours do - so they only change every so often. Fixing the rate gives the government more control. But fixed or floating the likelihood is that all the natural adjustments in their case would be downwards.

This is because the industrialised countries have taken the more profitable part of international business - and have grown steadily wealthier as a result. And once countries get such a lead they stand a very good change of retaining it.

Watching this inexorable process, many Third World countries have tried to keep a grip on their international trade by controlling the exchange of their currencies. They make it difficult for their own people to buy foreign currencies so they cannot so easily buy goods from abroad. And they often ‘overvalue’ their own currency by quoting a high official rate so that when foreigners buy their goods they are effectively charged more in dollars or pounds.

This kind of thing is very much frowned upon by the IMF which dislikes any kind of obstacle in the way of natural market forces.

What does it matter what the IMF thinks? Surely sovereign governments can do more or less what they like.

Within their own shores they can. But there are too many things over which they have very little control and which can put them into the hands of the IMF. The first is a drop in the price of their exports. A violent downward lurch in the price of cocoa or sugar can be disastrous for a country’ which relies upon one or two such commodities for the bulk of its export income.

Then there are the goods they have to import. The same oil price rises we are familiar with have dealt a real body blow’ to many poorer countries. There has been a steady rise too in the price of all manufactured goods. So back in 1959 when a small truck could have been bought with six tons of jute fibre from Bangladesh, today that same truck costs the equivalent of 26 tons.

So it’s not too surprising that a country’ s balance of payments can suddenly swing into the red. At this point they could always stop imports altogether. But that really’ would bring them grinding to a halt. There would be no oil to fuel the trucks, supplies of spare parts would dry up and all kinds of machinery and vehicles would become useless. And, for those countries which have to import much of their food, starvation would loom up on the horizon. Eventually most governments find themselves turning at some point to the IMF.

I suppose the wicked IMF slams the door in their face.

Far from it. This is the kind of opportunity which allows the IME to demonstrate the superiority of its financial morality.

Generally speaking it advocates the same remedy regardless of what might have caused the problems in the first place. The IMF always assumes that the crisis is internal rather than external and due to profligate overspending.

Balance of payments problems arise, they say, because demand for goods in the country is higher than can be met by local supply - so exports are sucked in to meet the gap. The excess demand, they say is caused by high government spending and probably because general wage levels are too high. This in turn raises the price of the country’s exports and makes them less competitive overseas.

The list of actions to be taken always involves cutting government expenditure and cutting wages all round. It usually insists on devaluing the currency as well to bring the price of their exports down.

I gather that you don’t agree with this.

Well in some cases governments do spend more than they really have - on grandiose armies, for instance, or on food subsidies for the poor. But to place the whole weight of the solution on cutting spending, given the number of factors outside the government’s control, is hardly fair.

But you can see how this approach fits into the kind of monetarist philosophy that we have seen within rich countries. This philosophy disapproves of the government’s taking too much responsibility for the economy and would like to see that responsibility shift to the shoulders of the private sector.

The argument the IMF puts forward in poor countries has the old, familiar ‘supply side’ character. If wages are cut, they say, production costs will fall, there will be a greater chance of increasing exports, and local entrepreneurs will make more profits to re-invest in the economy. Everyone will live happily ever after. The IMF’s role as international financial policeman gives it the opportunity to impose such policies on ‘erring’ governments whether they like it or not. And when agreements are signed regular six monthly visits are made to see if the government continues to toe the IMF line before more funds are handed over.

It still sounds very sensible to me. Anyway they wouldn’t suggest such things if they didn’t really work.

In a very limited sense much measures do work to right a balance of payments problem. But you will remember that monetarist policies only reduce inflation by causing unemployment. So the IMF’s similar solutions act on poor economies by causing a similar kind of recession. As government spending and wages fall the multiplier goes into operation and demand and income certainly’ do fall and imports drop as a result. But local industry usually goes into decline as well, since consumption of local goods drops too. So the balance of payments tends to be righted at the cost of recession and permanent damage to the economy.

In addition the human cost can be enormous. Governments might have been spending some of their money on subsidising food and transport for the poor: real basic needs. But these and other government services will be casualties of the general cutback.

Put that way, it does seem harsh. But some changes are needed - surely?

True. If international market forces continue to make them poorer they will have to do something. But there are several questions, which this raises. The first is to do with timing. The IMF usually sets impossibly fierce targets: governments find it very difficult to comply with those kinds of changes overnight. And the IMF has been criticised for demanding too much too quickly.

Then you might ask what sort of adjustment should be made. A better solution to excessive imports might be to produce more locally - this goes by the name of ‘import substitution’. Yet what the IME usually suggests has the effect of damaging local industry. This is what happened in countries like Jamaica and Chile. But building up local industry in this way would probably involve protecting it for a time from outside competition - not something the IMF would approve of at all.

Then again you might ask why it is that the poor countries are the ones who should be making the adjustments at all. After all, for one group of countries to be in deficit requires others to be in surplus. Should they not be reducing their surpluses? This would be a good deal less painful than what is happening in the poor world.

But, as we have seen, very productive countries like Japan - and West Germany too - are reluctant to take such steps. Rather than taking advantage of mechanisation to reorganise their working styles and to distribute leisure, they prefer to export their leisure time to other countries in the form of unemployment. Poor countries have forced onto them the ‘disadvantages’ of technological progress.

I don’t see much chance of people volunteering for the dole queue so that the poor countries can have a bigger share of industry.

You’re right. Unemployment is already a problem in the rich world and we don’t want to make it worse. Most Western nations are not even adjusting to the microchip revolution in their own countries let alone worrying about the international implications. For the time being it is the poor countries who must take the strain. And while they are doing this, they have to deal with the IMF.

Surely there are other places they can go. What about the commercial banks? Isn’t that what the ‘debt crisis’ is supposed to be about?

Yes the commercial banks can and so lend money. But many of them wait to see what the IMF does before they will lend their support. Their problem is that, unlike the IMF, they cannot impose conditions on the borrowing government. So they watch what the IMF does and then go in after it.

There has been a massive quantity of money lent to developing countries in this way’ in the recent years by the private banks. This is because the oil producers have placed their funds in overseas accounts. The banks concerned have then needed to lend the money out to earn interest and the faster-growing developing countries like Brazil and Mexico had plenty of appetite for such funds.

The banks also like lending to such places because the risks are higher there so they can justify charging higher rates of interest. Citicorp, for example, is one of the largest US banking companies and finds that lending to Brazil is five times more profitable than any of its other lending operations.

But if the risks are higher presumably they should also count of losing some of their money.

You would think so. But this has become the great conundrum of the debt crisis. The scale of debts is now’ so great it w’ould not just be a case of one or two bad debts offsetting the good ones, butane or two huge crashes. Brazil, for example, owes $90 billions, and if she were to default this would cause a whole series of collapses. The banking system is based on depositors believing that they’ could always take their money out - if they wanted to. Once this confidence is shaken there could be a disastrous ‘run’ on the banks. Western governments cannot afford to let this happen - and in the end will have to support the debtor countries in some way. So the banks have charged more money for taking risks yet are effectively blackmailing their own governments into removing those risks.

Very clever. Did they know they were doing that when they made the loans loans?

That’s difficult to say. They were probably so excited about the potential profits that they simply lent too enthusiastically.

I should add that there would not be a ‘debt crisis’ even now if the debtor countries were capable of paying back their loans or even the interest on them. But since the loan series was started the whole world has gone into recession. This has had two important results. The first is that the exports of the countries concerned have fallen as the rich countries are buying less. The second is that interest rates have shot up as monetarist approaches have been adopted in Western nations.

As you can see all of these financial issues rebound very’ quickly back on each other. The character of the international financial scene has changed dramatically in recent years. Rather than having national economies that have links with each other, we now have a global economy which has regional or national aspects to it.

It all sounds a bit out of control to me. And frankly a bit unreal. Can’t we talking more practical terms? What were these countries actually doing with the money that they were borrowing?

In the case of Brazil this money was for ambitious projects in things like mining, shipbuilding and nuclear power. Brazil has always fancied itself to be well on the way toward developed country status. This new money seemed to offer a shortcut towards this. The recession means that many of these projects have had to slow down or stop altogether, resulting in high unemployment.

It could be argued, however, that the poor in Brazil were never going to benefit much even if those projects had succeeded. The new projects would just have concentrated Brazil’s wealth into fewer and fewer hands. But this is generally the way things have gone with massively funded outside projects. They have rarely been of the scale that would cause money to flow around productively inside the country. Usually the benefits have been confined to a small elite in the large cities.

So it’s the projects that are wrong. Not the IMF or the international economy.

There have unfortunately always been development schemes like this regardless of who is financing them. Before the commercial banks entered the scene in this direct way they had usually channelled their funds through a particular international agency - the World Bank.

Another baddie, I’ll be bound.

I can’t, unfortunately, say much that is complementary. The World Bank was set up at the same time as the IMF. There was a recognition thaUwbile the IMF could cope with short-term problems, the World Bank should loan the funds over much longer periods to finance long-term development projects. The money today for this part of the organisation, which is more properly called the International Bank for Reconstruction and Development, comes about a third from governments or central banks of those countries which have surpluses and the rest from the commercial banking system.

This seems unnecessarily complicated. Why couldn’t people borrow directly?

The most important reason is that the Bank guarantees the loans. It might raise the money from banks in West Germany and lend it out in Nigeria. But if the borrowers in Nigeria were to default then the governments who make up the Bank’s founder members would have to cough up to repay the West Germans. So basically taxpayers round the world would foot the bill. This means that there is much risk for the West Germans in lending so there is no justification for high interest rates. Countries who borrow from the World Bank would usually pay close to the general commercial rate.

That still doesn’t seem very generous.

No, and it might be very difficult for many countries to borrow even at the standard commercial rate. That was why part of the Bank called the International Development Association (IDA) was started in 1960. This gets almost all its funds in the form of grants from donor countries and lends them out at close to zero interest over long periods to those countries too poor to make use of normal Bank money.

Sounds like the kind of bank I need.

It’s certainly more like aid than banking. The IDA is only supposed to help countries that would not be credit-worthy on normal Bank terms. This means that a large part of IDA funds have been taken up by low income countries like India, Pakistan and Bangladesh - so much so that the IDA has sometimes been called the India Development Association. Most of the Bank’s money is tied to specific projects like dam construction or building a new steel works. So the money is actually paid over to the corporations who win the contract to do the job. Advance notice of the forthcoming contracts to be tendered for can be seen in a UN publication which advertises itself as ‘a unique source of advance notices for more than $16,000,000,000 worth of world-wide projects’.

That all sounds like very healthy competition.

Well it’s certainly healthy for the corporations But whether the poor people who live in the countries concerned are going to benefit is quite another matter. Most of the projects which the Bank funds favour high-technology solutions.

A good way of increasing agricultural efficiency, for example, might be to redistribute land to landless labourers, instead of having it used inefficiently by large landowners. This, however, will be politically difficult. So a more typical World Bank solution would be to assist those who already own land to use it more efficiently by increasing irrigation and mechanisation. Indeed large numbers of peasant farmers are actually being evicted in Bank-financed projects to make way for larger and larger farms, or roads. They see little of the benefits of increased efficiency.

Surely you are being a little unfair - the Bank must be helping poor people somewhere.

Maybe they are. But such examples have proved very difficult to find. This is not so much a criticism of what the Bank does with its money though it often does use it very badly. The problem lies with the very idea that massive capital-intensive projects, however well-conceived, will help the poor. The very poor are totally unhelpable by the Bank. If you have no land you will not take part in agricultural development at all. And if you rent a little land the chances are that when the new Bank-financed technology moves into an area you will be thrown off and replaced by a tractor.

The central problem with the activities of the World Bank - as with the IMF - is that those who control large amounts of funds are in a position to determine the style of development that poor countries take. It is not that their economic-theories of how progress should be made are superior. It is just that they have the power to put those theories into practice.

The fact that such approaches do not seem to work at all does not seem to dissuade them. Rising unemployment in rich countries and steep industrial decline do not seem to have noticeably disturbed the economists who proposed monetarist strategies. They just argue that their policies have not been properly put into practice.

The permanent stagnation and sometimes total collapse of poor countries who have taken the IME medicine does not seem to unduly affect that organisation’s approach to similar difficulties elsewhere. And that World Bank projects have thrown people out of work and steeply’ increased inequality in the places they operate does not seem to dissuade them from doing the same thing over and over again.

Surely they are not that stupid?

Nobody says they are stupid. They’ have a particular philosophy and this will be reflected in what they put forward as sound economic policy’. It’s up to the rest of us to point out just how unsound such approaches are, no matter how much jargon and theory they come cloaked in.

This is not easy to do given the weight of statistics or academic authority they can usually muster. That’s why I’d like to suggest a few more books you might like to read.

Wait a minute. I thought you said this was going to be ‘Economics in seven days’. I’m supposed to be a modest expert by now.

Well, there are degrees of expertise. You’ve had one kind of shortcut through the more daunting books, but there are a few easier volumes that I could suggest which are only slightly longer cuts. In any case you didn’t really think it was going to be that easy did you?

I had hoped...

Besides, this is a subject so broad that the New Internationalist will always be coming back to it in one way or another. Next month, for example, we’ll look in more detail at multinational corporations - throwing up some interesting aspects of the food industry.

I can’t wait.

 

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