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November 2001
A CIVIL SOCIETY REBUTTAL TO THE
WORLD BANK'S "RESPONSE TO FOUR DEMANDS FROM THE MOBILIZATION FOR
GLOBAL JUSTICE"
In late September, with little fanfare, the World Bank released
a response
[http://www.worldbank.org/html/extdr/pb/pbfourdemands.htm]
to the four demands circulated by the Mobilization for Global Justice
(MGJ), the Washington-based coalition organizing protests and alternative
educational events at the joint annual meetings of the World Bank
and its sister institution, the International Monetary Fund (IMF),
scheduled for September 2001 in Washington, DC. SEEN was a
participant in the MGJ. Those four demands, endorsed by hundreds
of organizations around the world, are:
1. Open all World Bank and IMF meetings to the media
and the public.
2. End all World Bank and IMF policies that hinder
people's access to food, clean water, shelter, health care, education,
and right to organize. (Such "structural adjustment" policies
include user fees, privatization, and economic austerity programs.)
3. Stop all World Bank support for socially and environmentally
destructive projects such as oil, gas, and mining activities,
and all support for projects such as dams that include forced
relocation of people.
4. Cancel all impoverished country debt to the World
Bank and IMF, using the institutions' own resources.
With the recent announcement that the institutions have rescheduled
two of the postponed committee meetings for November 18 in Ottawa,
organizations in Canada and the U.S. which participated in formulating
or supported the MGJ’s demands offer the following rejoinder,
pointing to flaws, distortions, and misleading statements in the
Bank’s response. This document, together with the more detailed
resources it refers readers to, bolsters the MGJ’s original
demands with added evidence, raises questions about the logic
employed by the Bank’s policy-makers, and reasserts the
urgency -- moral, economic, and environmental -- of marshalling
the international political will to see that these fundamental
steps toward economic justice are implemented at once. (The organizations
that participated in drafting this document are listed at the
end.)
The four demands that form the basis for this exchange have been
promoted by a wide range of organizations and social movements
in the Global South. These four demands are also partially drawn
from a longer list of eight demands generated by the 50 Years
is Enough Network (http://www.50years.org/s28/demands.html), in
consultation with its South Council, which includes members in
Haiti, Nicaragua, Panama, Brazil, Cameroon, Senegal, South Africa,
Tanzania, Kenya, Zimbabwe, Mauritius, the Philippines, Thailand,
and India.
This rejoinder addresses the World Bank’s points in the
order they were presented in its response, i.e. the four MGJ demands
in order (transparency, structural adjustment, environment, debt),
followed by the Bank’s "demands" of its opponents. It is
important to note that the IMF has not responded. To a great extent,
the policies and practices of the IMF and the World Bank overlap,
and thus, although the IMF did not respond, most of what is discussed
in this document applies to the IMF also.
INTRODUCTION
For decades, individuals and broad-based movements in the Global
South (Africa, Asia-Pacific, Latin America, and the Caribbean) have
protested against World Bank and International Monetary Fund (IMF)
policies. They have denounced the expensive energy-generation
projects, designed and built by the Bank together with multinational
corporations, which have forced the re-location of thousands, devastated
the environment, and mired countries in debt. They have taken
to the streets to demonstrate against the "structural adjustment
programs" which indebted governments must agree to in order to get
loans from the IMF and World Bank, and which preach a blind reliance
on market forces and a progressively diminished role for government
in regulating the economy and advancing social goals. People
in the Global South have also rallied against the debt treadmill,
administered in significant part by the World Bank and IMF, which
requires their countries to devote more and more resources to international
debt repayments, even at the expense of provision of education,
healthcare, and other basic services. Finally, many Southern citizens
have identified the mission of the World Bank and the IMF as a neo-colonial
one, in which the institutions act as agents of the G-7 countries
(and in particular the United States), coercing support for the
G-7’s political and economic aims and establishing rules that
favor corporate interests in G-7 countries.
The protests in the South have in recent years been matched
by protests in Northern countries, including in the institutions’
host country, the U.S., in the Czech Republic, and now in Canada.
The sheer numbers of protesters and the reception the protests have
met in the media have apparently caused the World Bank concern that
its reputation, and perhaps even its funding, are endangered.
The Mobilization for Global Justice cancelled its call for street
protests in Washington in late September, in part out of respect
for the victims of the September 11 tragedy and their families.
But as the IMF and World Bank once again take up their business,
the movement for global justice must too. The economic, social,
and environmental realities of the Global South have not changed,
after all; and the challenges that people in the North confront
have only become more complex. The international movement for global
justice will continue to work in every way to oppose the policies
of the IMF and World Bank until their power to do harm has been
eliminated. Whenever and wherever these institutions hold their
closed-door meetings, our movement will continue to be there to
expose them and demand justice.
MGJ Demand #1. Open
all World Bank and IMF meetings to the media and the public
The senior decision-making bodies of the IMF and the World Bank,
their respective Boards of Executive Directors, continue to operate
in almost total secrecy. The Boards of these two institutions make
final decisions on all IMF and World Bank loans and institution-wide
policies. Yet the meetings of the Executive Boards of the IMF and
the World Bank are closed to citizens around the world who will
be affected by these loans and policies, closed to their parliamentary
representatives, and closed to the media. The written proceedings
from these meetings are also secret. The World Bank publishes a
highly edited and summarized report called the "Chairman's Concluding
Remarks" which does not cover any loan discussions. The IMF publishes
"Chairman's Statements" which are very brief and edited notes regarding
debt policy, and loan decisions. Neither of these documents is adequate
to provide civil society or the media with comprehensive information
about decisions that will have tremendous impact on the lives and
livelihoods of citizens in developing countries.
While continuing to use the rhetoric of empowerment, country ownership
and participatory development, the World Bank has rejected citizen
demands in three key areas:
- The Bank has rejected calls for release of draft documents.
Many important loan-related documents are only disclosed after
Executive Board and government approval, after they have already
become binding contracts. People in borrower countries need information
before important decisions have been made, not afterwards.
- The Bank has rejected calls for public release of structural
adjustment conditions. In a small move toward greater disclosure,
some adjustment documents may be disclosed after Executive Board
and government approval. However, borrowing governments will identify
"sensitive or confidential" information that will remain secret.
- The Bank has rejected calls to open its Executive Board to public
scrutiny. This means the public will continue to be denied access
to the substance of Board deliberations pertaining to specific
lending operations and institution-wide policies.
For further information:
MGJ Demand #2. End all
World Bank and IMF policies that hinder people's access to food,
clean water, shelter, health care, education, and right to organize
(such "structural adjustment" policies include user fees, privatization,
and economic austerity programs)
Policies formulated and supported by the World Bank and IMF have
consistently reduced access to health care, education, clean water,
and food, and have undermined workers’ right to organize (a
human right highlighted in demands from around the world, but ignored
by the World Bank). The economic and administrative systems established
under these policies have devastated the productive capacity of
national economies and proven hostile to the provision of basic
services and protection of labor rights. The specific actions mandated
by the World Bank, such as user fees, have directly caused undeniable
suffering.
The World Bank aggressively pushed countries to charge user fees
for primary health and education services for much of the last 15
years, often including them as conditions of loans. The user fees
were meant to compensate for budget shortfalls that were in part
related to strict IMF budget austerity demands. After years of independent
research showed the harmful effects the fees had on preventing the
poorest citizens from accessing these key services, the World Bank
began to backtrack on its long-standing support for user fees. In
September 2001, the Bank released a new policy statement opposing
user fees for primary education and, in a highly qualified manner,
for primary healthcare. However, despite new claims by the Bank
that it now discourages user fees, several recent policy documents
endorsed or approved by the Bank, including ones for Ghana, Mauritania
and Burkina Faso, contain user fees. It must also be recognized
that the recourse to user fees is not always a Bank condition, but
often one which grows indirectly but logically from the destructive
rules established by Bank programs. And while the Bank claims that
it mitigates the harmful effect of user fees with targeted subsidies,
research by UNICEF, the Bank's own Operations Evaluation Department
(OED), and its annual World Development Report (WDR) show that such
exemption schemes have largely failed.
The Bank's claim that its structural adjustment lending does not
promote user fees, austerity or privatization is thus simply inaccurate.
As far as privatization is concerned, for example, the Bank's own
Adjustment Lending Retrospective (February 20, 2001, page 47) states
that privatization became an important feature in Bank adjustment
lending in the mid-1980s and remains one today. Also contrary to
Bank assertions, its adjustment programs have not been designed
for the primary purpose of protecting key social sectors, much less
to reduce poverty. These programs are no more development-oriented
now than they were 20 years ago, as their core measures - economic
deregulation and liberalization, privatization and austerity --
have remained unchanged. (According to the World Bank, between 1995
and 1999, 65 percent of all adjustment operations included trade
policy and exchange rate reforms and more than 32 percent of adjustment
lending supported privatization reforms. Almost 100 percent of IMF
loans have budget deficit conditions.)
The World Bank frequently cites the large sums it loans countries
and its programs which include funds for social programs as proof
of its generosity and value. The value of those programs is mitigated
by the conditions governments must agree to. And although the loans
given are often at very low interest rates, they are loans, not
grants, and add to the country’s debt burden. Indeed, a large
portion of the debt that impoverished countries must deal with (see
Demand #4) comes from low-interest Bank loans.
Adjustment programs vary little from country to country because
governments "adopt" adjustment programs designed by the Bank and
the IMF. They take this step because these institutions have the
power to cut off all international financing to a country, and do
so whenever a country hesitates to implement the economic policies
it considers "sound." Leading economists and insiders like the Bank’s
former Chief Economist, Joseph Stiglitz, and a former adviser to
the Bangladeshi president, Rehman Sobham, have recently publicly
belittled the Bank’s claims that governments feel "ownership"
of adjustment policies. Rather than a sense of having led or had
equitable participation in formulating the policies, government
officials frequently feel trapped into accepted policies they have
little confidence in.
Structural adjustment has failed on its own terms, with countries
displaying lower growth rates while undergoing structural adjustment
than when they were not; and with the economically successful Southern
countries of recent decades ignoring and contradicting central tenets
of the structural adjustment policy package. In restructuring national
economies so that international corporations and financial institutions
can maximize returns on investments, production and trade, structural
adjustment policies have destroyed the productive core of domestic
economies. The World Bank, with the IMF, has successfully demanded
"labor flexibility" measures which have undermined workers' legal
protections and wages and facilitated mass layoffs. The Bank and
Fund also routinely press countries to rapidly remove trade barriers
(such as tariffs on imports) and government subsidies for basic
needs (e.g. bread) and to raise interest rates. In dramatically
reducing consumer purchasing power, increasing the cost of borrowing
and forcing competition with heavily subsidized and powerful foreign
multinational corporations, these policies have devastated small
and medium-sized enterprises and farms, which produce for the local
market and employ the vast majority of workers in most countries.
This widespread phenomenon and many other debilitating effects of
imposed adjustment policies have been documented on four continents
by the Structural Adjustment Participatory Review Initiative (SAPRI),
an initiative in which the Bank itself was involved with civil society
and governments.
For further information:
MGJ Demand #3. Stop
all World Bank support for socially and environmentally destructive
projects such as oil, gas, and mining activities, and all support
for projects such as dams that include forced relocation of people
Communities that have lived with oil, mining, gas, and large dam
projects, and NGOs which have analyzed them, find that such projects
consistently have negative social, environmental, and developmental
impacts. World Bank lending for these projects runs directly
counter to its stated mission of helping the poor. A recent internal
paper commissioned by the Bank’s private-sector lending division
noted that: "The notion that governments invest incremental rents/returns
from extractive industries profitably and for the benefit of poor
people is all too often more of an aspiration than a reality."
In addition, according to a recent Oxfam report, countries whose
economies are dependent on oil and mineral exports also show: exceptionally
low living standards, higher poverty rates, exceptionally high rates
of child mortality, malnutrition, income inequality, low rates of
literacy and life expectancy.
The Bank's own staff have examined the relationship between extractive
industries and corruption, authoritarian governments, governance,
and conflict, and found strong evidence for a "repression effect,"
which holds that resource wealth retards democratization by enabling
the government to better fund the apparatus of repression.
In addition, large dams and fossil fuels have well-documented negative
local and global environmental impacts. According to recent research
by the Institute for Policy Studies, the $20 billion in World Bank
fossil fuel projects financed from 1992 to September 2001 will ultimately
release 40.6 billion tons of carbon dioxide, an amount greater than
all current annual global fossil fuel emissions.
The Bank states that "energy is critical in enabling developing
countries to grow, to reduce poverty and to improve the quality
of life for their citizens." The question, then, is how best
to meet the energy needs of the most impoverished. The Bank
currently devotes less than 5 percent of its energy lending and
investment to meet the needs of the poorest 2 billion people, who,
according the Bank’s own studies, would best be served with
clean and renewable sources of energy. Despite this, the overwhelming
majority of Bank energy lending continues to be for fossil fuel
projects. As the Sustainable Energy & Economy Network has shown,
the ratio of fossil fuel funding to funding for clean, renewable
sources of energy is approximately 20 to 1.
The World Commission on Dams was established not just to "define
standards" for dams (as the Bank maintains), but also to review
the past record of large dams and assess alternatives for water
resources and energy development. The World Bank has been silent
on the WCD's findings on the destructive impacts of dams and its
criticisms of the World Bank's role in promoting them over more
appropriate alternatives. While it is a positive signal that the
Bank says it will "promote the seven strategic priorities for future
decision-making on dams," this is not a sufficient response to the
report. The WCD guidelines cover not just decision-making on dams,
but the whole process of energy and water planning. Given the Bank's
poor record on compliance with its own safeguard policies, if the
WCD guidelines are not given the force of policy, there will be
no enforcement mechanisms, no accountability to the Bank’s
Inspection Panel, and few incentives for compliance. The Bank's
back-tracking on the WCD is one reason NGOs are currently viewing
the Bank’s Extractive Industries Review with great skepticism.
For further information:
MGJ Demand #4. Cancel
all impoverished country debt to the World Bank and IMF, using the
institutions' own resources
The international Jubilee 2000 movement succeeded in drawing attention
to the "debt treadmill" which forced most developing countries to
borrow year after year to pay off old loans, with no end in sight.
Since private lenders are unwilling to make loans to governments
that do not receive the World Bank/IMF stamp of approval, indebted
countries had little choice but to submit to the structural adjustment
policies that were a condition of loans from the World Bank and
IMF. Unfortunately, structural adjustment policies invariably led
to an increased debt burden, as exports failed to keep pace with
surging imports.
Since the appearance of Jubilee 2000, the World Bank has tried
to reverse the damage done to its public image by claiming that
it "strongly supports debt relief." The Heavily Indebted Poor Countries
(HIPC) Initiative, however, is more a tool for inducing governments
into accepting new IMF/World Bank programs than a way of helping
countries get out of debt. Governments wishing to benefit from HIPC
must demonstrate prior compliance with IMF/World Bank structural
adjustment conditions and commit to three, six, nine, or even twenty
more years of structural adjustment to receive the maximum benefit
(some portions of the promised debt relief are not wholly enacted
for 20 years, thus giving the institutions prolonged leverage).
HIPC relieves too little debt for too few countries, at little
or no cost to the World Bank and IMF. Under HIPC, the World Bank
and IMF relieve less than 50% of the most impoverished countries'
debts, leaving them to pay more than $700 million each year in debt
service to these institutions. Zambia and Niger both face increased
debt service payments after qualifying for HIPC. Five years after
the introduction of HIPC, only three countries (Uganda, Bolivia,
and Mozambique) have jumped through all its hoops and gotten all
the relief promised. Under intense pressure from Jubilee campaigners,
the Bank and IMF quickly approved 20 countries for entrance into
the program by the end of 2000, but new hurdles are now being erected
for them. Meanwhile, indebted and impoverished countries like Bangladesh,
Haiti, and Nigeria do not even meet the Bank’s criteria for
consideration under HIPC.
Many of the debts claimed by creditors, including the World Bank
and the IMF, were accrued by dictators, corrupt officials, and non-democratic
governments -- often with the complicity of the lenders, who were
guided by political, rather than economic, motivations (hence the
approval of billions for U.S. Cold War ally Zaďre, long after an
IMF audit demonstrated that virtually all its loans went into President
Mobutu’s own accounts, though now the people of the Democratic
Republic of Congo are expected to repay it). Many of the debts claimed
have in fact been paid back, even several times over; they persist
only because of high interest charges.
The World Bank also glosses over the reality of how the debts of
countries benefiting from HIPC are cancelled. When the World Bank
and the IMF agree that a country should receive debt relief, this
does not mean that they write off debts they claim. Instead, it
means that they agree to accept full payment on those debts from
a different source — namely, from funds made up of contributions
of taxpayer money from wealthy countries (and some, including the
initial $500 million, from the World Bank itself). The Bank and
the IMF have policies against writing off loans (even in part).
They use their unique status as "preferred creditors," meaning they
take priority over all other creditors, and as "gatekeepers," meaning
other creditors wait for them to certify (through lending) that
a country is creditworthy, to get 100% repayment on all their loans,
regardless of the country’s condition. Under the HIPC program,
neither the IMF nor the World Bank sacrifices anything; indeed they
gain more rapid and secure repayment of monies claimed of their
most impoverished client governments, including debts long ignored
by creditor and debtor alike.
The World Bank and IMF are deeply reluctant to take any responsibility
for the failed loans and bad "advice" they have given over the years
by themselves taking a loss in the cycle of debt. They routinely
protest that to take money from them is to deny the benefits of
their lending to other needy countries. In fact, the World Bank
makes an annual profit of over $1.5 billion, and the IMF is sitting
on gold reserves valued at over $30 billion. Independent research
by accountants Chantrey Vellacott DFK demonstrates that even under
well-established conservative accounting procedures, the World Bank
and IMF could find more than $30 billion to compensate for debt
cancellation, without jeopardizing the ability of the World Bank
to carry out its overall functions, and without a negative impact
on the Bank’s credit rating or its status as a lender.
For further information:
- Jubilee South: www.jubileesouth.net
- Jubilee USA Network: www.jubileeusa.org
- Jubilee Plus Network: www.j2000uk.org
THE WORLD BANK'S DEMANDS
OF ITS OPPONENTS
1. We demand that groups renounce and denounce
violence. This is a prerequisite for constructive discussion and
debate
The Mobilization for Global Justice is, and has been since its
inception, a non-violent organization, as are all the organizations
whose staff have contributed to this response.
The demonstrations at the April 2000 meetings of the IMF and World
Bank, organized by the Mobilization for Global Justice, were free
of "violence" and property destruction by protesters, despite many
abuses by those protecting the meetings and the delegates. Despite
over 1,200 arrests, there were no convictions for either felonies
or misdemeanors. We believe that the Bank’s demand requiring
specific rejection of violence is a tactic designed to distract
readers from its economic agenda. Its failure to recognize
the systemic violence of policies that kill 19,000 children a day
(according to the United Nations Development Program) reflects either
a frightened or willful blindness to its impacts, or an inexplicably
strong belief, after over 20 years of evidence to the contrary,
that policies designed to promote corporate profit will ultimately
end poverty. Our task in the movement for global justice is to make
sure the public understands the violence perpetrated by these institutions’
power, and to see that they are held accountable.
2. We also challenge those groups who claim
to be concerned about poor people in developing countries, yet have
focused primarily on organizing protests, to shift their energies
away from conflict and toward constructive dialogue and partnerships
with the Bank and its member governments
The range of constituencies affected by IMF and World Bank policies
is tremendous. In its response, the Bank suggests -- indeed,
demands -- that those who wish to criticize the institution refrain
from demonstrating, but instead engage in "constructive dialogue
and partnerships with the Bank and its member governments."
This attitude reflects a regrettable impulse to restrict the legitimate
avenues for dissent. We believe that the problems with World
Bank/IMF policies are not simply economic, but also very much political
problems. We feel that the urgency of fundamental change in
the global economy is great enough to warrant hard work on many
different levels by many different kinds of civil society organizations.
There are compelling reasons for some organizations to meet with
the IMF and World Bank, but there are equally compelling reasons
to build opposition to the institutions’ policies by lobbying
their governments, engaging in grassroots public education, and
organizing vivid demonstrations of the passion and numbers of people
who oppose IMF and Bank policies. It is important to note that there
are no rigid divisions among IMF/World Bank opponents; indeed those
who compile studies frequently participate in mass marches. Working
to improve the economic and political position of the Global South
means seeking immediate policy changes and building public support
for a fundamental shift in global power relations.
Many groups that have tested the Bank's expressed desire for dialogue
in recent years have found the Bank’s response disingenuous.
They have met with the Bank to address issues such as large-dam
development (World Commission on Dams), structural adjustment (SAPRI),
fossil fuels and other extractive industries, forestry, and poverty
(PRSPs), as well as a number of safeguard policies and the Bank's
information-disclosure policy. These groups have found the Bank
fundamentally unresponsive to citizen input -- even when the Bank
has requested it -- and to the initiatives' findings and recommendations.
Civil-society participants in those initiatives have been frustrated,
finding that the Bank seeks to manipulate its joint endeavors with
civil society, use its consultations to validate and advance its
own positions, and turn the initiatives into public-relations exercises.
When it has been unable to control initiatives, the Bank has sought
to distance itself from them and from the outcomes they produce
and to avoid implementation of recommendations.
In this context, critics of the Bank have found that a mobilized
citizenry is essential for holding the Bank accountable. Protests
shed light on the actions of the Bank and put pressure on governments,
in the South and North, to be responsive, and to make the Bank responsive,
to local and global concerns. Especially in light of its aggressive
defense of policies that have inflicted so much hardship around
the world, the World Bank should expect more protests in the future.
Finally, we are deeply conscious of the fact that the Mobilization
for Global Justice and the other organizations in the North that
have participated in creating this document are just one part of
the global movement for economic justice. Our role is to use our
position nearer the seats of power to amplify the experiences and
demands of people in the Global South, the people who actually live
under the policies of the World Bank and IMF. (The extensive history
of resistance in the South is documented, in part, in a report by
the World Development Movement: http://www.wdm.org.uk/ cambriefs/Debt/unrest.pdf)
We believe that no effort to address poverty, inequality, and environmental
destruction can be satisfied by discussions among people in Washington,
but must instead be led by the people closest to the problems, and
the possibilities, on the ground.
The following organizations participated
in the composition of this rebuttal:
- Mobilization for Global Justice — Washington, DC USA
- Halifax Initiative — Ottawa, ON Canada
- 50 Years Is Enough Network - Washington, DC USA
- The Development GAP - Washington, DC USA
- Social Justice Committee — Montreal, QC Canada
- Jubilee USA Network - Washington, DC USA
- Sustainable Energy & Economy Network/Inst. for Policy Studies
- Washington, DC USA
- Essential Action - Washington, DC USA
- International Rivers Network — Berkeley, CA USA
- INSAAF International — Bhatinda, Punjab, India
- RESULTS Education Fund - Washington, DC USA
- Africa Action — New York, NY & Washington, DC USA
- Religious Working Group on the World Bank & IMF - Washington,
DC USA
- Center for Economic Justice — Albuquerque, NM & Washington,
DC USA
- Global Exchange — San Francisco, CA USA
- Civil Society Initiative for the Environment — Panamá
City, Panamá
- Sisters of the Holy Cross — Notre Dame, IN USA
- Campaign for Labor Rights — Washington, DC
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