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ECONOMIC TRILOGY - The WORLD BANK & Overview of WTO & IMF - Friend Or Foe? - Part 1 of Trilogy -RI10 Repub
ECONOMIC
TRILOGY -
The WORLD BANK &
Overview of WTO &
IMF - Friend Or Foe? -
Part 1 of Trilogy -RI10
Originally published March 10, 2006
OVERVIEW
The World Bank Group is a group of five international organizations responsible for providing finance and advice to countries for the purposes of economic development and poverty reduction, and for encouraging and safeguarding international investment. The group and its affiliates have their headquarters in Washington, D.C., with local offices in 124 member countries.
The World Trade Organization (WTO) is an international, multilateral organization, which sets the rules for the global trading system and resolves disputes between its member states, all of whom are signatories to its about 30 agreements.
The International Monetary Fund (IMF) is the international organization entrusted with overseeing the global financial system by monitoring exchange rates and balance of payments, as well as offering technical and financial assistance when asked.
The Bretton Woods Conference of 1944 proposed the creation of an International Trade Organization (ITO) to establish rules and regulations for trade between countries. The ITO would have complemented the other two Bretton Woods Institutions: The International Monetary Fund (IMF) and the World Bank.
THE WORLD BANK
GROUP
World Bank Group Logo
World Bank Group
From Wikipedia, the free encyclopedia
http://en.wikipedia.org/wiki/World_Bank
The World Bank Group is a group of five international organizations responsible for providing finance and advice to countries for the purposes of economic development and poverty reduction, and for encouraging and safeguarding international investment. The group and its affiliates have their headquarters in Washington, D.C., with local offices in 124 member countries.
Together with the separate International Monetary Fund, the World Bank organizations are often called the "Bretton Woods" institutions, after Bretton Woods, New Hampshire, where the United Nations Monetary and Financial Conference that led to their establishment took place (1 July-22 July 1944).
The Bank came into formal existence on 27 December 1945 following international ratification of the Bretton Woods agreements. Commencing operations on 25 June 1946, it approved its first loan on 9 May 1947 ($250m to France for postwar reconstruction, in real terms the largest loan issued by the Bank to date). Its five agencies are the International Bank for Reconstruction and Development (IBRD), the International Finance Corporation (IFC), International Development Association (IDA), Multilateral Investment Guarantee Agency (MIGA), and the International Centre for Settlement of Investment Disputes (ICSID).
The World Bank's activities are focused on developing countries, in fields such as human development (e.g. education, health), agriculture and rural development (e.g. irrigation, rural services), environment (e.g. pollution reduction, establishing and enforcing regulations), infrastructure (e.g. roads, urban regeneration, electricity), and governance (e.g. anti-corruption, legal institutions development). It provides loans at preferential rates to member countries, as well as grants to the poorest countries. Loans or grants for specific projects are often linked to wider policy changes in the sector or the economy. For example, a loan to improve coastal environmental management may be linked to development of new environmental institutions at national and local levels and to implementation of new regulations to limit pollution.
The work of the Bank is subject to long-standing and strong criticism from a range of non-governmental organizations and from some academics. In some cases the Bank's own internal evaluations can produce negative conclusions. It has been accused of being a US or western tool for imposing economic policies that support western interests. Critics argue that the free market reform policies - which the Bank advocates in many cases - in practice are often harmful to economic development if implemented badly, too quickly, in the wrong sequence, or in very weak, uncompetitive economies. Nevertheless the World Bank is one of the most highly-regarded financial institutions in the world, especially in the field of development economics and related research. In addition, World Bank standards and methods have been adopted in many areas such as transparent procedures for competitive procurement and environmental standards for project evaluation.
In debates about the World Bank's role, the arguments and counter-arguments are complex, and often rely as much upon political judgment as economic proof. For example, in "Race Against Time" (the 2005 Massey Lectures), Stephen Lewis argues that the structural adjustment policies of the World Bank and the International Monetary Fund have aggravated and aided the spread of the AIDS pandemic through the limiting of allowed funding to health and education sectors. However, it should also be noted that the World Bank is a major source of funding for combating AIDS in poor countries, and in the past six years it has committed about US$ 2 billion through grants, loans and credits for programs to fight HIV/AIDS.
Organizational
Structure
Inside the main hall of the headquarters of
the World Bank Group in Washington D.C.
Together with four affiliated agencies created between 1956 and 1988, the IBRD is part of the World Bank Group. The Group's headquarters are in Washington, D.C.. It is a non-profit-making international organization owned by member governments.
Technically the World Bank is part of the United Nations system, but its governance structure is different: each institution in the World Bank Group is owned by its member governments, which subscribe to its basic share capital, with votes proportional to shareholding. Membership gives certain voting rights that are the same for all countries but there are also additional votes, which depend on financial contributions to the organization.
As a result, the World Bank is controlled primarily by developed countries, while clients have almost exclusively been developing countries. Some critics argue that a different governance structure would take greater account of developing countries' needs. As of November 1, 2004 the United States held 16.4% of total votes, Japan 7.9%, Germany 4.5% and UK and France each held 4.3%. As major decisions require an 85% super-majority, the US can block any change.
World Bank Group agencies
The World Bank Group consists of
* the International Bank for Reconstruction and Development (IBRD), established in 1945,
* the International Finance Corporation (IFC), established in 1956,
* the International Development Association (IDA), established in 1960,
* the Multilateral Investment Guarantee Agency (MIGA), established in 1988 and
* the International Centre for Settlement of Investment Disputes (ICSID), established in 1966.
Governments can choose which of these agencies they sign up to individually. The IBRD has 184 member governments, and the other institutions have between 140 and 176 members. The institutions of the World Bank Group are all run by a Board of 24 Executive Directors, with each Director representing either one country (for the largest countries), or a group of countries. Directors are appointed by their respective governments or the constituencies.
The agencies of the World Bank are each governed by their Articles of Agreement that serve as the legal and institutional foundation for all of their work.
The Bank also serves as one of several Implementing Agencies for the UN Global Environment Facility (GEF).
Presidency
The World Bank Group is headed by Paul Wolfowitz, appointed on June 1, 2005. Wolfowitz, a former United States Deputy Secretary of Defense and well-known neo-conservative, was nominated by George W. Bush to replace James D. Wolfensohn. By convention, the Bank President has always been a US citizen, while the Managing Director of the IMF has been a European. Although nominated by the US Government, the World Bank President is subject to confirmation by the Board of Directors. The President serves a term of five years, which may be renewed.
Paul Wolfowitz is the
thread that ties the
World Bank
to the Bush
Administration to
The Project For
The New
American Century.
There is not a nickel's
worth of difference
among these three
groups. All three are
devoted to profit for
the rich, profit for
themselves, and
control of the world’s
resources with little
or no regard for the
Goals
The World Bank Group’s mission is to fight poverty and improve the living standards of people in the developing world. It provides long-term loans, grants, and technical assistance to help developing countries implement their poverty reduction strategies. As such, World Bank financing is used in many different areas, from reforms in health and education to environmental and infrastructure projects, including dams, roads, and national parks. In addition to financing, the World Bank Group provides advice and assistance to developing countries on almost every aspect of economic development.
Since 1996, with the appointment of James Wolfensohn as Bank President, the World Bank Group has been focused on combating corruption in the countries that it works in. This is outlined in the World Bank report 'Helping countries combat corruption: progress at the World Bank since 1997'. This has been seen by some observers as a potential conflict with Article 10 Section 10 of the World Bank's Articles of Agreement, which outlines the 'non-political' mandate of the Bank1. The World Bank's view is that reduced corruption and improved governance are not so much political as economic goals and are crucial for sustainable development and poverty reduction ("Governance Matters IV: Governance Indicators for 1996–2004", D. Kaufmann, A. Kraay, M. Mastruzzi (World Bank 2005))
In recent years the World Bank Group has been moving from targeting economic growth in aggregate, to aiming specifically at poverty reduction. It has also become more focused on support for small-scale local enterprises. It has embraced the idea that clean water, education, and sustainable development are essential to economic growth and has begun investing heavily in such projects. In response to external critics, the World Bank Group's institutions have adopted a wide range of environmental and social safeguard policies, designed to ensure that their projects do not harm individuals or groups in client countries. Despite these policies, World Bank Group projects are frequently criticized by non-governmental organizations (NGOs) for alleged environmental and social damage and for not achieving their intended goal of poverty reduction.
Criticism
Although relied upon by poor countries as a contributor of development finance, the World Bank is often criticized, primarily by opponents of corporate "neo-colonial" globalization. These advocates of alter-globalization fault the bank for undermining the national sovereignty of recipient countries through various structural adjustment programs that pursue economic liberalization and de-emphasize the role of the state.
A related critique is that the Bank operates under essentially "neo-liberal" principles. In this perspective, reforms born of "neo-liberal" inspiration are not always suitable for nations experiencing conflicts (ethnic wars, border conflicts, etc.), or that are long-oppressed (dictatorship or colonialism) and do not have stable, democratic political systems.
One general critique is that the Bank is under the marked political influence of certain countries (notably, the United States) that would profit from advancing their interests. In this point of view, the World Bank would favor the installation of foreign enterprises, to the detriment of the development of the local economy and the people living in this country.
Furthermore, it is frequently suggested that the Bank intervenes in order to salvage irresponsible loans from private institutions to third world governments (and which are also often corrupt and non-representative), and thus shifts the risk from the original risk-takers to the public of the rich countries, who ultimately must back the Bank.
Defenders of the World Bank point out that no country is forced to borrow its money. The Bank provides both loans and grants. Even the loans are concessional since they are given to countries that have no access to international capital markets. Furthermore, the loans, both to poor and middle-income countries, are at below market-value interest rates. The World Bank argues that it can help development more through loans than grants, because money repaid on the loans can then be lent for other projects. Finally, it has made a major effort in recent years to address criticism, particularly regarding the environment and corruption.
Evaluation at the
World Bank
Social and environmental concerns
Throughout the period from 1972 to 1989, the Bank did not conduct its own environmental assessments and did not require assessments for every project that was proposed. Assessments were required only for a varying, small percentage of projects, with the environmental staff, in the early 1970s, sending check-off forms to the borrowers and, in the latter part of the period, sending more detailed documentation and suggestions for analysis.
During this same period, the Bank’s failure to adequately consider social environmental factors was most evident in the 1974 Indonesian Transmigration program (Transmigration V). This project was funded after the establishment of the Bank’s OESA (environmental) office in 1971. According to the Bank critic Le Prestre, Transmigration V was the “largest resettlement program ever attempted... designed ultimately to transfer, over a period of twenty years, 65 million of the nation’s 165 million inhabitants from the overcrowded islands of Java, Bali, Madura, and Lombok...” (175). The objectives were: relief of the economic and social problems of the inner islands, reduction of unemployment on Java, relocation of manpower to the outer islands, the “strengthen[ing of] national unity through ethnic integration, and improve[ment of] the living standard of the poor” (ibid, 175).
Putting aside the possibly Machiavellian politics of such a project, it otherwise failed as the new settlements went out of control; local populations fought with the migrators and the tropical forest was devastated (destroying the lives of indigenous peoples). Also, “some settlements were established in inhospitable sites, and failures were common;” these concerns were noted by the Bank's environmental unit whose recommendations (to Bank management) and analyses were ignored (Le Prestre, 176). Funding continued through 1987, despite the problems noted and despite the Bank’s published stipulations (1982) concerning the treatment of groups to be resettled.
More recent authors have pointed out that the World Bank learned from the mistakes of projects such as Transmigration V and greatly improved its social and environmental controls, especially during the 1990s. It has established a set of "Safeguard Policies" that set out wide ranging basic criteria that projects must meet to be acceptable. The policies are demanding, and as Mallaby (reference below) observes: "Because of the combined pressures from Northern NGOs and shareholders, the Bank's project managers labor under "safeguard" rules covering ten sensitive issues...no other development lender is hamstrung in this way" (page 389). The ten policies cover: Environmental Assessment, Natural Habitats, Forests, Pest Management, Cultural Property, Involuntary Resettlement, Indigenous Peoples, Safety of Dams, Disputed Areas, and International Waterways.
The Independent Evaluation Group
The Independent Evaluation Group (IEG) (formerly known as the Operations Evaluation Department (OED)) plays an important check and balance role in the World Bank. Similar in its role to the US Government's Government Accountability Office (GAO), it is an independent unit of the World Bank that reports evaluation findings directly to the Bank's Board of Executive Directors. IEG evaluations provide an objective basis for assessing the results of the Bank's work, and accountability of World Bank management to the member countries (through the World Bank Board) in the achievement of its objectives.
Extractive Industries Review
After longstanding criticisms from civil society of the Bank's involvement in the oil, gas, and mining sectors, the World Bank in July 2001 launched an independent review called the Extractive Industries Review (EIR - not to be confused with Environmental Impact Report). The review was headed by an "Eminent Person", Dr. Emil Salim (former Environment Minister of Indonesia). Dr. Salim held consultations with a wide range of stakeholders in 2002 and 2003. The EIR recommendations were published in January 2004 in a final report entitled "Striking a Better Balance". The report concluded that fossil fuel and mining projects do not alleviate poverty, and recommended that World Bank involvement with these sectors be phased out by 2008 to be replaced by investment in renewable energy and clean energy. The World Bank published its Management Response to the EIR in September 2004 following extensive discussions with the Board of Directors. The Management Response did not accept many of the EIR report's conclusions. However, the EIR served to alter the World Bank's policies on oil, gas and mining in important ways, as has been documented by the World Bank in a recent follow-up report. One area of particular controversy concerned the rights of indigenous peoples. Critics point out that the Management Response weakened a key recommendation that indigenous peoples and affected communities should have to provide 'consent' for projects to proceed - instead, there would be 'consultation'. Following the EIR process, the World Bank issued a revised Policy on Indigenous Peoples.
Impact Evaluations
In recent years there has been an increased focus on measuring results of World Bank development assistance through impact evaluations. An impact evaluation assesses the changes in the well-being of individuals that can be attributed to a particular project, program or policy. Impact evaluations demand a substantial amount of information, time and resources. Therefore, it is important to select carefully the public actions that will be evaluated. One of the important considerations that could govern the selection of interventions (whether they be projects, programs or policies) for impact evaluation is the potential of evaluation results for learning. In general, it is best to evaluate interventions that maximize the learning from current poverty reduction efforts and provide insights for midcourse correction, as necessary.
List of Presidents
An unwritten rule establishes that the IMF's managing director must be European and that the president of the World Bank must be from the United States.
* Eugene Meyer (June 1946–December 1946)
* John J. McCloy (March 1947–June 1949)
* Eugene R. Black (1949–1963)
* George D. Woods (January 1963–March 1968)
* Robert S. McNamara (April 1968–June 1981)
* Alden W. Clausen (July 1981–June 1986)
* Barber B. Conable (July 1986–August 1991)
* Lewis T. Preston (September 1991–May 1995)
* James D. Wolfensohn (May 1995–June 2005)
* Paul Wolfowitz (June 2005-Present)
The World Bank Bonds Boycott is an international grassroots campaign that is building moral, political, and financial pressure on the World Bank. The World Bank raises most of its funds by issuing bonds. Ordinary people, through their pension funds, labor unions, churches, municipalities, and universities are exerting pressure for change on the World Bank by refusing to buy its bonds.
The campaign links social movements in the global South, which are challenging harmful World Bank policies with activists and networks in the North, which are using the boycott to reclaim democracy at home.
The campaign demands an end to the World Bank's harmful "structural adjustment" policies; 100% debt cancellation; and an end to environmentally destructive projects, especially for oil, gas, mining, and dams.
http://www.econjustice.net/wbbb/us/
http://www.worldbank.org/
Go to the above website to view World Bank’s own propaganda.
RESIST THE IMF &
WORLD BANK! STOP
CORPORATE GLOBALIZATION!
(Go to Short Version)
WE CALL ON those who rallied in Seattle against the World Trade Organization, and those who supported them, to come to Washington in April. In Seattle we contributed to the collapse of a dangerous attempt to control the world’s economy and resources for the benefit of corporations and the wealthy. That was an exhilarating, landmark victory. But of course it was just a beginning. The International Monetary Fund (IMF) and the World Bank are the architects of the world economy, and spawned the WTO. In Seattle, the heads of the three institutions issued a joint statement saying, "The IMF, the World Bank and the WTO … will continue to work together closely, under our Cooperation Agreements to help increase the coherence of economic policy-making."
We must make our demands for economic justice heard. We are bringing thousands of activists to Washington for the IMF/World Bank Spring Meetings (April 16-17, 2000). Finance ministers from around the world will be in Washington to ratify their plans for the expansion of elite, corporate power. We need to share the spirit of Seattle with them.
What are the IMF and World Bank?
The IMF and World Bank have been empowered by the governments, which control it (led by the U.S., the U.K., Japan, Germany, France, Canada, and Italy -- the "Group of 7," which holds over 40% of the votes on their boards) with imposing economic austerity policies in the countries of the so-called "Third World" or "global South." Once Southern countries build up large external debts, as most have, they cannot get credit or cash anywhere else and are forced to go to these international institutions and accept whatever conditions are demanded of them. None of the countries has emerged from their debt problems; indeed most countries now have much higher levels of debt than when they first accepted IMF/World Bank "assistance."
Structural Adjustment Programs (SAPs)
The IMF/World Bank conditions – "structural adjustment programs" – force Southern countries to promote sweatshops, exports to rich countries, and high-return cash investment. The resulting increase in international commerce – corporate globalization – led to demands by corporations and investors for ways to lock in their privileges and protection against the perceived danger of governments seizing assets or imposing new regulations. The WTO was the answer to those demands, an institution whose secret tribunals can overrule national laws if they are found to violate the rights of corporations.
The World Bank is best known for financing big projects like dams, roads, and power plants, supposedly designed to assist in economic development, but which have often been associated with monumental environmental devastation and social dislocation. In recent years, about half of its lending has gone to programs indistinguishable from the IMF’s: austerity plans that "reform" economic policies by suffocating the poor and inviting corporate exploitation.
Although the IMF finally got some of the criticism due it with the East Asian financial crisis (where it imposed austerity programs on South Korea, Indonesia, and Thailand), the two institutions continue to be the chosen tools of the political and business elites for ruling the global economy, and run, to one degree or another, about 90 Southern countries’ economies. These countries are forced to adopt policies even more committed to deregulation and withdrawal of government from insuring public welfare than those in the U.S. Considering how impoverished many of these countries were to start with, the effects of these policies have been predictably devastating. The "emerging market success stories" we sometimes read about generate wealth which goes to very small segments of the populations, and much of it ends up in the North. The great majority of the people of the South is enduring increased poverty, decreased access to basic services, and decreased control over their own economies.
SAPS Work for Corporations and Elites; Impoverish the Rest
How -- and why -- do the structural adjustment programs that the IMF & World Bank impose create conditions that multinational corporations desire and that devastate most people in the Southern countries? A look at the most common SAP conditions show how economic "advice" is used to maintain the interests of the wealthy at the expense of continued suffering for the bulk of the people.
So Why Do Countries Agree to SAPs?
SAPs are anti-democratic in more than one way. The institutions are correct in saying that the plans are formulated in part, and agreed to, by the governments. But the government officials involved are usually limited to the Finance Ministry and the Central Bank, usually among the most conservative, Northern-educated, and wealthy members of the government -- in other words, those most likely to agree with IMF economics and benefit from the policies. In many cases even they feel coerced into going along with IMF/World Bank demands. If they don’t cooperate, the consequence can be a complete cut-off of credit because other lenders follow the lead of these institutions.
With such unpopular policies, it is the rare government that can "sell" structural adjustment to its people, especially after 20 years of similar failed policies. The slogan "short-term pain for long-term gain" sounds hollow when people have heard it for a whole generation. SAPs encourage instability in democratic countries by forcing elected governments to institute measures, which make them illegitimate among their people. It has been argued that the IMF prefers dictatorships to democratic governments, because dictators can more successfully impose SAPs. And once the rules are in place the WTO extends the attack on democracy by overruling any regulations that corporations claim interfere with their right to profits.
The fact that institutions based in Washington and largely controlled by the U.S. Treasury Department have been starving peoples around the world for two decades is a scandal. That people in the U.S. are barely aware of the fact is a disgrace.
In April we have the opportunity, building on the momentum of Seattle, to alert the people of the U.S. and deliver a strong message to the Finance Ministers who plan to meet at the IMF’s headquarters to tighten their grip on the global economy. We will be doing so in solidarity with the peoples of the countries controlled by the IMF and World Bank, to claim for all people, including those in the North who know the dangers of the powers given the WTO, the power to make the economic decisions affecting their lives.
50 Years Is Enough: U.S. Network for Global Economic Justice
1247 E Street, S.E. • Washington, DC 20003 USA
202/IMF-BANK • e-mail: <wb50years@igc.org>
web: <www.50years.org>
http://www.50years.org/action/april16/april16b.html
The World Bank's
Financial
Components
The World Bank Group has four financial arms: the International Bank for Reconstruction and Development (IBRD, also known as the "World Bank"), the International Development Association (IDA), the International Finance Corporation (IFC), and the Multilateral Insurance Guarantee Agency (MIGA). After the debt crisis, the World Bank Group became the primary source of governmental loans to the developing world. However, in the past few years, the amount of private investment has dramatically increased in the World Bank Group.
The International Bank for Reconstruction and Development was founded in 1946 as a way to finance reconstruction projects in war-ravaged countries despite their poor creditworthiness. The IBRD gets its money from regular subscriptions paid by member governments and by borrowing money on international markets (through selling World Bank bonds). The Bank then lends that money to borrowing governments at a lower rate than commercial banks would. Although the IBRD still concentrates on development it operates primarily in mid-middle-income developing countries; in FY 1994, the IBRD was funded at about $17 billion.
The IBRD offers loans to developing country governments for a variety undertakings: Sectoral loans support reform or infrastructure improvement in a specific economic sector, i.e., mining, transport, energy, banking, etc.; project loans support the completion of a specific project, such as a dam, highway or power plant; and macroeconomic loans assist governments in achieving the economic objectives detailed in a structural adjustment program (more on structural adjustment programs, below). IBRD loans can cover the entire cost of a project, but Bank clout attracts many other sources of financing, especially from the private sector. Recently, the Bank has also started offering support for private investors themselves, in an effort to attract development money to Southern countries. Finally, IBRD also offers a host of technical assistance programs to its developing country members for "capacity building" and "technology transfer."
Technical assistance can be given in areas such as privatization of state owned entities, developing banking systems and domestic capital markets, as well as creating a regulatory framework for foreign direct investment.
To be eligible for IBRD loans, governments must be a member the World Bank, and comply with Bank-imposed Structural Adjustment Programs (SAPs), which have been severely criticized by NGOs worldwide as an unnecessarily harsh set of macroeconomic policies. SAPs are aimed at reducing government budget deficits by decreasing government expenditure (particularly on social programs), increasing export production, privatization, and liberalizing trade and investment policies. The purpose of these reforms is to help countries become more economically robust, creditworthy and able to pay off its debts. These policies are prerequisites for loan eligibility and often include provisions for reduced government spending on social services. The Bank offers advice and loans to help implement SAPs.
The International Development Agency (IDA) was established in 1960 to provide concessional (no interest or "soft") loans to the world's poorest governments. IDA's funding priorities are poverty alleviation, environmental protection, and sustainable development. Its loans, however "soft" they might be, are conditioned by harsh structural adjustment requirements. IDA and IBRD are often lumped in the same category, because they lend for the same purposes and focus primarily on government borrowers. However, IDA funding is considerably lower than that of the World Bank, amounting to $5.6 billion (about 34% that of IBRD's) in FY 1994.
IDA is considering the establishment of two new financing services to enhance the private sector. The rationale is that through foreign investment, IDA countries could gain much-needed infrastructure. The first is a guarantee program that would encourage the penetration of foreign capital and multinational corporations. The second program is the IDA Private Investment Fund, which would be IDA money managed by the International Finance Corporation (see below).
The International Finance Corporation (IFC) is the Bank's lending facility to the private sector. Established in 1956, it offers a wide range of financing, including equity investments (having an ownership stakes in companies), loans, and guarantees. It also offers numerous technical assistance and advisory programs in areas such as privatization, environmental assessment, risk management and accessing international capital markets. IFC is funded through investment contributions from member countries and from the income those investments generate. IFC is the largest source of direct investment for private-sector projects in developing countries. In 1994, IFC helped finance 213 projects, totaling $5.4 billion. The IFC prides itself on its history of mobilizing private money -- for every one dollar IFC invests; it recruits six more dollars from private investors. In theory, IFC should invest only in those projects that have trouble attracting private-sector funding, but 85% of its investments have been concentrated on large projects in 15 emerging market economies that are often able to attract sufficient private investment. The IFC is supposed to "go where no one else will go," but instead they seem to follow other private investors to the safe markets to minimize risks.
This concentration of investments in a handful of countries is a direct result of the IFCs requirement that all of its investments must make a profitable rate of return. By linking its activities to profitability criteria, critical development projects, which are not lucrative (such as health, education, services to rural or poor populations, etc.), are passed up.
One of the most pressing NGO concerns regarding the IFC is how IBRD policies regarding environment, gender, resettlement, indigenous peoples, information disclosure, etc. will apply to the IFC's private sector clients -- primarily corporations. While activists are fighting to keep these hard-won policies in place, the IFC claims that Bank policies must be adapted to respect business confidentiality, an important consideration for private companies who face competition from corporate rivals. Exactly how these policies will be adapted is still under debate.
MIGA -- the Multilateral Insurance Guarantee Agency, is the World Bank's newest arm. Its stated purpose is "to help developing countries attract productive foreign investment." MIGA itself has no explicit aim of reducing poverty, but it is a member of the World Bank Group, which claims goals of reduced poverty and improved standards of living. Established in 1988 as a "direct response to the debt crises of the 1980s," MIGA provides long-term non-commercial risk insurance to foreign investors doing business in MIGA-member countries. Originally, the World Bank was created with the intention of granting guarantees or insurance to private parties wishing to invest in war-torn countries. But only in the last ten years has the Bank been actively involved in issuing guarantees. MIGA gets its money from member-country subscriptions and insurance premiums.
As of November 1995, MIGA had guaranteed over 155 contracts valued at more than US$8.5 billion, but actually had never made any payments on claims. MIGA insurance covers private investors from "political risks" associated with doing business in a developing country. Such political risks include: expropriation (government take-over of a private company or assets), civil disturbance, the risk that local currency cannot be converted to "hard" currency (like dollars) and government breaches of contract.
In addition, MIGA sponsors investment missions to help businesses and governments network with each other. They also provide technical assistance to governments, such as helping to develop information technologies, train policy makers, and establish investment promotion agencies.
http://www.50years.org/factsheets/structure.html
How the International Monetary Fund and the World Bank Undermine Democracy and Erode Human Rights:
Five Case Studies
http://www.globalexchange.org/campaigns/wbimf/imfwbReport2001.html
Why the World Bank Must Be
Reformed and How We Can Do It
1. The globalization of market forces, vigorously promoted by the World Bank, creates greater inequality. Over the past 30 years the globalization of the economy-led by the World Bank, the International Monetary Fund and transnational corporations-has proceeded at a quickening pace. These institutions have pressured governments to remove barriers to the cross-border flows of money and products. Advances in telecommunications and computer technology have made it possible for trillions of dollars in finance capital to zoom around the world, 24 hours a day, searching for the highest rate of interest.
This globalization of market forces has greatly increased inequality. Just 150 years ago there was not great inequality between the standards of living of people in the global north and those in Africa, Asia and Latin America. Now the richest 20 percent of the world's population receives 83% of the world's income, while the poorest 60% of the world's people receive just 5.6% of the world's income. The richest 20% of the world's population in northern industrial countries uses 70% of the world's energy, 75% of the world's metals, 85% of the world's wood, 60% of the world's food, and produces about 75% of the world's environmental pollution.
2. The World Bank is wrong in arguing that economic growth will solve the problems we face. World Bank officials keep reassuring us that if we can just get economic growth rates high enough, these problems will be solved. We regularly hear the refrain, "a rising tide floats all boats." But for those who don't own boats or have leaky boats, a rising tide means greater inequality between them and the more fortunate. The data shows that during a period of significant growth in world trade (1960 to 1989), global inequality got significantly worse: the ratio between the richest 20% and poorest 20% of the world population went from 30 to 1 to 59 to 1. We should also remember that unrestrained growth is the ideology of the cancer cell.
3. The real function of institutions such as the World Bank is not to promote "development" but rather to integrate the ruling elites of third world countries into the global system of rewards and punishments. Because direct colonial control of the third world is no longer tolerated, northern elites need an indirect way to control policies implemented by third world governments. By getting the elites onto a debt treadmill and promising them new cash if they implement policies written in Washington, the World Bank can effectively control third world policies. You can see the effects right next door in Mexico. For more than a decade, Mexican elites have followed the "Washington consensus" of policy reforms designed by the World Bank. This has created some billionaires, yet for most of the 85 million Mexican people life is more difficult now than it was ten or twenty years ago. If the ruling PRI party did not control the police and military, its blatant corruption and disastrous economic policies would not be tolerated for long.
4. Evidence from many countries shows that the policies promoted by the World Bank are disastrous. Whether you look at poor countries such as Somalia, Rwanda and Mozambique or well- endowed countries such as Ghana, Brazil and the Philippines, the policies pushed by the World Bank have worsened conditions for the majority. Evidence from dozens of countries under World Bank tutelage shows a similar pattern: structural adjustment policies may help countries pay off their foreign debts and may create some millionaires but the majority of the population suffers lower wages, reduced social services and less democratic access to the policy-making process.
5. The World Bank's emphasis on expanding exports has been disastrous for the environment. As part of the standard structural adjustment package, the World Bank encourages countries to expand their exports so they will have more hard currency (dollars, yen) to make payments on their foreign debts. But this leads countries to overexploit their natural resources. They cut down their forests, which contributes to the greenhouse effect. They pump chemicals onto their land to produce export crops such as coffee, tea and tobacco, thus poisoning their land and water. They rip minerals out of the ground at a frantic pace, endangering human lives and the environment in the process. They over-fish coastal and international waters, depleting a resource of the global commons.
6. The "free market" economic model being pushed on third world governments is not one the industrial countries used to develop themselves. All the wealthy countries-the USA, Japan, Germany, England, France and the recent success stories such as Taiwan and South Korea-used a heavily state-interventionist model that had government play a strong role in directing investment, managing trade and subsidizing chosen sectors of the economy. The United States was in many ways the "mother country" of protectionism, showing other wealthy countries how to do it. Would we have a big electronics industry or nuclear power industry were it not for the massive government subsidy program called the Pentagon?
7. Globalization-from-above is being rejected and millions of people all over the world are struggling to build globalization-from-below. Globalization-from-above is controlled by wealthy elites and driven by a hunger for more wealth and power. But there is another form of globalization made up of grassroots alliances of human rights activists, trade unions, women's organizations, environmental coalitions and farmers’ organizations. This people-centered form of globalization does not have the amount of money or guns possessed by the elites but it does have moral authority. Just think about the contrast between the dominant system's focus on greed and our focus on meeting human needs. This alternative vision calls for more openness and accountability by institutions such as the World Bank and transnational corporations. It calls for raising wages, health and safety standards in the third world to bring them up to first world levels, rather than driving first world standards downward. It calls for stewardship of natural resources that will preserve something of the environment for our grandchildren to enjoy. It seeks to redefine self- interest so that it is more in line with the common interest of humanity. The problem confronting us is how to get the leaders of the World Bank to listen to our demands for reform.
An Easy Way to Pressure the World Bank for Change
The World Bank gets most of its capital by selling bonds to wealthy investors. If we could pressure large institutional funds (e.g., university endowments and state worker pension funds) to stop buying World Bank bonds as a way to protest the Bank's destructive policies, we could exert serious pressure on the Bank.
Just think about the huge impact the divestment campaign had on South Africa's white minority rulers during the closing days of apartheid. The divestment struggle also raised a key question: who controls how capital is invested and why isn't it a more democratic process?
Many institutions such as universities and retirement funds purchase bonds issued by the World Bank. The name appearing on the bonds will be the World Bank's formal name: International Bank for Reconstruction and Development. These are fixed rate securities, which are sold by underwriters such as Goldman Sachs, Fidelity, First Boston, Credit Suisse and many Japanese banks. The bonds pay a good rate of return and are considered safe investments because they usually carry a triple-A rating. They are not officially insured by the U.S. government but, as one bond trader told us, the U.S. government would not stand by and let the World Bank default on its bonds. In other words, the U.S. taxpayer is the ultimate insurer of these bonds-just as we were forced to bail out the Wall Street speculators and Mexican financiers during Mexico's crash in early 1995.
See also: World Bank Bond Boycott Campaign
http://www.globalexchange.org/campaigns/wbimf/reformWorldBank.html
SATIRE
http://www.whirledbank.org/
Topsy turvy logic. "If it is right for non-Americans to influence the choice of whom Bush appoints to be World Bank president or as his country's ambassador to the UN, then it was right for Bush to send the US army into Iraq." This is the intriguing, but absurd, argument of Charles Onyango-Obbo writing in the East African.
more...
Alex Wilks ~ April 27, 2005 ~ Link
"Sophisticated colonialism". A punchy piece in The Nation from Naomi Klein argues that post-conflict reconstruction in Iraq, Afghanistan, as well as post-tsunami rebuilding is all about drastically reshaping countries' policies and practices. more...
Alex Wilks ~ April 27, 2005 ~ Link
Wolfowitz oil danger. A detailed article on Salon considers the likelihood that Wolfowitz will use his new position as World Bank head to get hold of more oil for the United States. The piece, by Daphne Eviatar, reminds readers that Wolfowitz "would be in a position to pressure the world's largest public financial institution to help pay for the exploration, drilling and transport of America's most coveted natural resource". more...
Alex Wilks ~ April 26, 2005 ~ Link
Wolfowitz power memo. Mohamed El Beih has dug out a fascinating early Wolfowitz memo, which made me shudder. The memo extracts, which appear in Stern Opportunity (free subs) reveals a mind filled with naked power politics. more...
Alex Wilks ~ April 14, 2005 ~ Link
Protests likely larger because of Wolfowitz. Expectations are growing about protests against the Bank and Fund on Friday and Saturday. Reuters explains: "President George W. Bush's recent choice of Pentagon No. 2 Wolfowitz to lead the World Bank is proving a lightning rod for resistance groups, who view him as the chief architect of the U.S. invasion of Iraq and fear he will pursue Bush's agenda with a similar zeal in his new job.
more...
Alex Wilks ~ April 13, 2005 ~ Link
Rewarding allies, pocket change. "More reconstruction money for Afghanistan and Iraq? Sure! New loans for Pakistan? Yes sir!" Christian Science Monitor reviews the controversy over Wolfowitz. It concludes, however, that the Bank is becoming increasingly irrelevant, still useful for rewarding allies, but being dwarfed by other financial flows.
In aggregate for Southern countries this may be true, but not for the most aid-dependent ones, notably in Africa.
Alex Wilks ~ April 08, 2005 ~ Link
Smelling hypocrisy. Tony Sisule, writing in The Nation (Nairobi) is not convinced by Mr. Wolfowitz's "politically correct" statements about wanting to do something about African poverty. Sisule says, "It is obvious that the cause of poverty in Africa is poor access to international markets and the heavy debt burden. Good governance will only work if it is matched by a fair deal in international trade and the cancellation of debts". more...
Alex Wilks ~ April 06, 2005 ~ Link
Burkinabes not impressed. A strong article carried on a Burkina Faso portal condemns the Wolfowitz appointment to the World Bank in no uncertain terms. It says (French) Washington is clearly giving itself all the means possible to "encircle and suffocate the rest of the world in order to bring it to adopt the U.S. worldview". more...
Alex Wilks ~ April 06, 2005 ~ Link
http://www.worldbankpresident.org/
It’s a simple concept: setup organizations, which appear to be helping the world’s poor and underdeveloped 3rd world countries, while stealing their natural resources, privatizing their essentials for further profits at their expense, control and manipulation of their political & financial decisions by maintaining a permanent debt they can never repay. Accusing politicians within those countries or UN dignitaries of corruption is the final insult: “the pot calling the kettle black”. And they get away with it by pretending to be benefactors. Machiavelli would be proud!
Tabacco: I consider myself both a funnel and a filter. I funnel information, not readily available on the Mass Media, which is ignored and/or suppressed. I filter out the irrelevancies and trivialities to save both the time and effort of my Readers and bring consternation to the enemies of Truth & Fairness! When you read Tabacco, if you don’t learn something NEW, I’ve wasted your time.
In 1981's 'Body Heat', Kathleen Turner said, "Knowledge is power".
T.A.B.A.C.C.O. (Truth About Business And Congressional Crimes Organization) - Think Tank For Other 95% Of World