Post by POA on Apr 25, 2004 3:26:59 GMT -5
Unhappy Birthday, World Bank!
Mark Engler, a writer based in New York City, is a commentator for Foreign Policy in Focus and for the Global Beat Syndicate.
In 1994, when the IMF and World Bank were celebrating the 50th anniversary of their creation, very few people in this country could tell you anything about the twin fixtures of corporate globalization. "Globalization" itself was only beginning its life as a buzzword, almost always used to celebrate an uncontroversial march of progress into the 21st century.
Ten years, several regional financial crises and hundreds of worldwide protests later, the cheerful anonymity that shielded these institutions from criticism has long since disappeared. This weekend, protesters will rally outside the spring meetings of the IMF and World Bank to wish the financial bodies an unhappy 60th birthday. They will highlight the dramatic manner in which the development debate has changed in just a few years. And they will denounce the nefarious IMF/World Bank policies that remain important elements of the Bush administration's imperious foreign policy.
Perhaps the most remarkable change since protesters began aggressively challenging these institutions is how the mainstream has adopted their criticisms. Today the legitimacy of protestors' demands for IMF/World Bank reform—or at least moderate versions of them—is acknowledged by virtually all fair-minded observers of development policy, including a growing number who have defected from the World Bank itself. Joseph Stiglitz, a Nobel laureate and former chief economist at the Bank, states that "even those in the Washington establishment, now [agree] that rapid capital market liberalization without accompanying regulations"—a core element of neoliberal globalization that contributed mightily to financial collapse in East Asia—"is dangerous." Stiglitz further argues that demands "such as the need for better ways of restructuring debt might have seemed controversial a short while ago. Today they are either in the mainstream or are gradually being accepted."
Building A Protest Movement
Much of the credit for the IMF/World Bank's deepening image crisis of past years belongs to the organizations of the 50 Years Is Enough Network. Since it formed 10 years ago, the aim of 50 Years Is Enough has been to publicize grassroots criticisms of the harms inflicted by the IMF and the World Bank on the developing world, and to advance a series of sweeping reforms. By April 2000, in the wake of the Seattle protests, the numbers of people joining protests grew to 25,000. U.S. mobilizations have been mirrored by raucous demonstrations overseas, many in the countries most affected by IMF/World Bank policy.
The demands of this weekend's protest mirror the original platform promoted by the network 10 years ago:
* Democratic reforms to force greater openness and accountability upon bodies accustomed to directing foreign economies based on closed-door sessions in Washington, DC.
* An end to "structural adjustment" mandates—such as deregulation and required cuts in public spending—which increase poverty and inequality in the developing world.
* Discontinuation of the many IMF/World Bank projects that failed to meet even rudimentary environmental standards.
* Debt cancellation for poor countries whose foreign debts prevent them from making basic investments in health and education.
The Decline Of Neoliberalism
By 1997, Bank President James Wolfensohn was compelled to admit to critics that "Adjustment has been a much slower, more difficult and more painful process than the Bank recognized at the outset." A few years later, "structural adjustment" had become a taboo phrase, eliminated altogether from IMF/World Bank rhetoric.
Other changes go beyond rhetoric. In 2000, the Congress passed a measure requiring U.S. opposition to any IMF/World Bank loan mandating "user fees or service charges on poor people for primary education or primary healthcare." The institutions have since abandoned such fees. In past months, Argentina—a star pupil of the IMF that saw its economy implode in late 2001—has bucked the Fund's demands to cut public spending to benefit private creditors. Bank officers and activists alike recognize that this successful act of defiance could make Argentina an influential role model for other countries seeking ways to break the neoliberal stranglehold on their economies.
Pressure from the protest movement, along with its own failure to deliver on promises of economic growth, is spelling out a slow but steady decline for the neoliberal paradigm that reigned over mainstream development thinking for more than two decades. Nevertheless, many U.S. officials are doggedly trying to hold on to the "Washington Consensus." The Bush administration's "America First" nationalism has created rifts between the United States and many long-standing allies, and (by fostering stalemates in such venues as the WTO talks in Cancún) has even scuttled much of the multilateral "free trade" agenda that proponents of corporate globalization would like to see enacted. Yet in spite of this unilateralist turn, the United States still uses IMF/World Bank actions as key mechanisms for regulating foreign economies—probably because the White House is effectively able to dictate policy to these institutions.
Ample Room For Improvement
Recent IMF/World Bank reforms have real limits, deftly illustrated by the cause of debt cancellation. Ministers from wealthy nations have almost universally conceded that debt is a crisis, but assistance has been slow in coming. The creditor-based system of debt relief administered by the IMF/World Bank doles out aid at levels based more on poor countries' ability to cough up future payments than on what they actually need to reach humanitarian targets like the Millennium Development Goals. As economist Jeffrey Sachs writes, "It is perfectly possible, and indeed is currently the case, for a country or region to have a 'sustainable' debt" under IMF/World Bank definitions "while millions of its people are dying of hunger or disease."
Throughout the developing world, huge debts persist despite the fact that many countries have paid back their original loans several times over. As the American Friends Service Committee reports, Nigeria has paid over $16 billion on its original $5 billion loan, yet finds itself owing $32 billion on that same debt.
A second problem is that the IMF and World Bank still make relief contingent on conditions like market liberalization and privatization of public services—many of the same mandates that were the core of previously discredited policies.
The IMF and the World Bank now prefer to describe their structural adjustment as "Poverty Reduction and Growth Facility Programs." However, advocates in the developing world report that ostensibly "participatory" processes leave much to be desired. While the financial institutions may now offer NGOs and governments a seat at the table in drafting their national economic programs, they don't allow local participants the opportunity to challenge the market fundamentalism or faulty macroeconomic assumptions that continue to guide IMF/World Bank decisions.
How does all this fit in with the White House's wider foreign policy? A pro-corporate vision of "free enterprise" has always held a central place in President Bush's militaristic quest to spread "freedom" throughout the world. In its short time in Iraq, the occupying authority has already succeeded in conducting a radical economic restructuring, privatizing the bulk of the economy and working to chain the country into a multi-billion loan package from—guess who?—the IMF.
Asked whether they intend to change the name of their network, the leading critics of IMF/World Bank policy say they will not. Fifty years was enough. And 10 years later, an end to neoliberal economic policy is long overdue.
Research assistance for this article provided by Jason Rowe.