The World Bank, the IMF, and the 21st Century

‘Structural Adjustment’. ‘Washington Consensus’. ‘Privatisation’. ‘Budget Cuts’. ‘Austerity’. On and on…

The World Bank and International Monetary Fund (IMF) hold their Annual Meeting this weekend.

As we know these two organisations are yet to have a non-Western director – the World Bank, always US, even though now the President is of South Korean extract; and the IMF, always a European, even if the President is now a French woman. Such an exceptional state of affairs has led to initiatives by major countries that see themselves treated as no more than second-class countries. The likelihood of the US ceding any control, its veto seems very low, to nil.

No surprise then that China, with fierce opposition from the US, has started its Asian Investment in Infrastructure Bank (AIIB), the BRICS, with their New Development Bank (NDB), both of which are to start operating within the year. Other factors have also led to disenchantment with these Western entities. Principal among these are perceptions that they more represent the interests of Western capital and finance, than those of the putative beneficiary countries. Sudden, severe economic and financial crises, especially from the eighties, had led many regional countries to rely on, even submit to multilateral development institutions, in particular the WB and the IMF, for assistance with development and debt challenges, with what seems to have been imperceptible benefits.

Fortunately economic fortunes of some countries would change, drastically and for the better, and for an extended period. Such benefits would enable Hugo Chavez of Venezuela, Lula da Silva of Brazil, and Nestor Kirchner of Argentina to become key in weaning most Latin countries off those institutions that had inflicted such social and economic damage on their countries.

Indeed, The Guardian has recently posted a series of articles on the World Bank, one of which would surprise few familiar with the organisation. World Bank lending: how the organisation rode roughshod over its own rules – interactive. There the Guardian provides an interactive breakdown of the countries and the people, millions, and mainly poor, adversely affected by the bank’s loan programmes.

With that report we sample those reports that reflect Latin and Caribbean disappointment, even repudiation of the benefits offered by the World Bank and IMF.

A brief video clip at teleSUR with the sharp title, Blood Money: The World Bank and IMF in Latin America, offers a summary view.

With regard to Argentina, IMF Medicine for Latin American Debt Killed the Patient.  Snippets from the teleSUR post,

In 2005, former Argentine president Nestor Kirchner, after paying off his country’s debt to the International Monetary Fund said, the IMF has “acted towards our country as a promoter and a vehicle of policies that caused poverty and pain.” He was right.

In contrast to the great depression, during the 1980s, Latin America faced strong pressures to avoid prolonged defaults and was forced to adopt contractionary macroeconomic policies, much of it by the IMF.
As a result, as economist Mark Weisbrot has pointed out, “Since the IMF and the World Bank began their structural adjustment programs there in the early 1980s, the whole continent has actually had a per capita growth rate of about zero,” whereas in previous decades was consistently above at least 4 percent.

The analysis does merit at least a glance.

Coincidentally, as promotion of the TTIP (and TPP) takes centre stage in potential ‘partner’ countries, we have a case study from Argentina, as reported on the blog, common dreams, So TTIP Won’t Stop Public Services Being Run in the Interests of Ordinary People? Tell That to Argentina,

Another week, another victory for big business over a government in a secret pseudo-court. This time it’s the turn of private water giant Suez, who successfully sued Argentina for reversing the privatisation of Buenos Aires’s water supply.


Yet it is exactly this system of so-called Investor State Dispute Settlement (ISDS) that we will be signing up to if the US-EU trade deal known as TTIP goes ahead. Again and again government ministers tell us there’s nothing to fear. Nothing in TTIP will prevent us running public services in the way we choose.

Try telling that to Argentina, which now ‘owes’ $405 million, according to one such corporate court, this one based in the World Bank, which just happened to also be a shareholder in the Suez-run private water scheme.

Yes, the Latin America and the Caribbean has been a region, where privatisation ‘experiments’ were implemented, ventures that would benefit more the corporation, usually foreign, than the society, the citizens of the afflicted country. Argentina had been the much vaunted ‘poster boy’, the ‘model’ for privatisation for other countries to follow – until the IMF/WB model collapsed, and the people of Argentina would have to pay and continue to pay. For Argentina and its people, a lesson, a bitter lesson, learned.

With regard to Bolivia, teleSUR gives us, Bolivian Independence from the World Bank and IMF. Snippets,

Over the last 60 years, some of Bolivia’s largest resistance struggles have targeted the devastating economic policies carried out by the International Monetary Fund and the World Bank.

The bulk of these protests focused on opposition to privatization policies and austerity measures, such as cuts to public services, privatization decrees, wage reductions, as well the weakening labor rights.
Bolivia’s economic dependence on the IMF and the World Bank escalated in the 1970s when the country contracted massive loans to finance the modernization of their mining and agriculture export industries, thereby meeting the needs of Northern countries and enriching a handful of transnational companies in the relevant sectors.
In recent years, the Bolivian government has successfully managed to lessen its dependency on the IMF and the World Bank through increasing government royalties from the country’s hydrocarbon reserves (a policy that the IMF and World Bank opposed), which provided the government with sufficient financial independence in order to promote its own economic model. Today the state is the main wealth generator in the country.

Moving on to the not-so-fortunate, Honduras, we have from the same TeleSUR, Aguan, Honduras: World Bank Backs Death Squads and Displacement, from which couple paragraphs,

In November 2009, just months after the military coup ousting President Manuel Zelaya shook Honduras, the World Bank delivered a US$15 million loan to the Honduran corporation Grupo Dinant, despite obvious human rights concerns.
The US$15 million, paid through the World Bank’s private sector lending arm the International Financial Corporation (IFC), was the first installment of a US$30 million loan to be paid to to the palm oil processing and snack food company owned by Honduras’ largest landowner Miguel Facusse.

And to have another perspective on Aguan, we turn to CEPR. which, a little over two years ago, would post, and bluntly so, Will the World Bank Stop Investing in Campesino Assassinations? So grave was the matter considered to be that we had,

A diverse group of international organizations, including Oxfam, Vía Campesina and the Latin American Working Group, welcomed CAO’s decision. In a co-signed letter, though, the groups expressed their firm demand that the IFC halt its financial cooperation with the palm oil company
A demand that IFC halt its financial cooperation? Such was, such is the lot of the poor of the countries without governments that address their needs or in the thrall of powerful interest groups. For most of the Latin and Caribbean countries, that dependency on the World Bank and the IMF would be reduced, and even severed – thanks to three astute and society-minded leaders of powerful countries of Argentina, Brazil and Venezuela.
The result of their decision-making would see UNASUR and other entities, independent of the presence of countries of the North. A perspective on that move to economic and financial independence from the two institutions comes from teleSUR, Hugo Chavez Helped Overturn Neoliberalism in Latin America. The policy of neoliberalism as promoted by the World Bank and the IMF had pushed many economies backward, with privatisation rampant and effective social programmes mainly absent.
One is left to wonder if the two institutions now resemble NATO, that other Western anachronism, now fumbling about for some role, some relevance. The financial crisis that has afflicted many countries of Europe has afforded these two, a brief respite – the imminent AIIB, SCO, NDB, and Bank of the South should offer another view of, and approach to social and economic development that does not presuppose costly sacrifices to the citizens and society of the applicant country.
The outcome of the Annual Meeting of the World Bank and IMF should be revealing.

Tags: , , , ,