||The 60th birthday of the Bretton Woods Institutions - the World Bank and
International Monetary Fund (IMF) - will be formally celebrated early next
month, amidst the distraction of the US presidential campaign. Finance
ministers and bankers will gather in Washington for the terrible twins'
annual meeting, and the DC-based Mobilization for Global Justice and 50
Years is Enough! Network will host some small-scale events.
The two major International Financial Institutions (IFIs) continue to show
their disdain for societies and environments. Around the world, civil
society groups, especially those associated with the IFI's -OUT! movement
have declared 1-12 October an international protest period.
The institutions are simply impervious to reform, as illustrated by last
week's sneaky $103 million Bank loan aimed at privatising Ghana's urban
water supplies (see www.wateractivist.org and Bond's ZNet Commentary
of 25 May 2001) was actively opposed by the mass Campaign Against
Let us first dwell a bit more on a problem briefly raised in Bond's July 22
ZNet commentary: NGO collaborationism.
To illustrate, a few weeks ago, World Vision disturbingly requested a
greater IMF role in country financial surveillance, in spite of the IMF's
record of incompetence during the emerging markets crises worldvision.org.nz/reports/onestepforward.pdf
Further, one reason for the World Bank's awful August 3 decision to reject a recommendation to halt oil/gas financing made by its own multi- takeholder Extractive Industries Review (EIR), was the NGO position adopted in preceding days. Weakening resolve, after a short burst of Seattle/Washington/Prague militancy in 2000, has become debilitating in many established NGOs, and in turn empowers the worst elements in the Bank and IMF.
Four years ago, more than 200 groups from more than 50 countries urged the Bank to stop financing fossil fuel extraction and mining projects. In December 2001, ten senior Bank managers met a dozen civil society leaders to explore a new framework for dialogue and engagement: the Joint Facilitation Committee (JFC).
New NGO alliances were seen as crucial in the recent wake of a World
Commission on Dams harshly critical of Bank projects, and the damning
Structural Adjustment Participatory Review Initiative, both of which the
Bank tried to sabotage (by encouraging Third World state non-compliance and by walking out, respectively).
The JFC emerged just in time. The Bank established or expanded lucrative
financial and institutional relationships with several key NGOs, including
the US-registered, Johannesburg-based Civicus.
Alongside colleagues in the Association for Women's Rights in Development,
Europe-Central Asia NGO Working Group, the International Confederation of
Free Trade Unions, the World Confederation of Labour, the Worldwide
Initiatives for Grantmaker Support, and the World YWCA, Civicus purged the
EIR recommendation to end oil and coal lending, in a letter to Bank
president James Wolfensohn two months ago, by proposing much weaker reforms.
The July 19 JFC letter contained only a transparently hollow threat: The
World Bank's future relationship and interactions with civil society are at
stake. But Civicus had provided Wolfensohn an internal poll twelve days
earlier, in which 52% of its NGO members reported good relations with the
Bank and 80% desired further JFC engagement - in sharp contrast to the
growing global grassroots/labour mobilisation to disempower and defund the
Consider the cozy personal interconnections involved. During 2002, after
Civicus took the lead JFC role, it paid Oxford-based Tim Cullen $51,981 for
consultancy services. Until 1999, Cullen was World Bank senior advisor for
external affairs and chief spokesman, after a career at Ford Motor Company
and the subsequently-bankrupted Continental Illinois Bank. Perhaps the
Cullen connection was a wise investment: the Civicus secretary general was
subsequently invited to give the World Bank Presidential Lecture in February
Certainly, the JFC NGOs were not the only conflict-avoiders when it came to the main EIR recommendation. A July 7 NGO sign-on statement to Wolfensohn (arranged by Catholic Relief Services) also failed to mention the EIR's main recommendation, halting oil and coal financing. Many of the NGO signatories possibly put their name on the counterproductive letter out of ignorance, while some might argue that the main struggle was already lost.
But the letter to Wolfensohn included this brown-nosing Q&A: Would the Bank continue to lend even if a government declined to be transparent about its own revenues? To do so would be to seriously undermine the Bank's own credibility, and worse, its own aims of promoting development and reducing poverty. Once you worry about Bank credibility and accept the myth of poverty-reduction, it's time to look in the mirror and check whose side you're on.
Likewise, at the beginning of last month, Civicus' widely-distributed email
newsletter ran the EIR debate as the main headline, yet only provided
readers with the World Bank's side of the story. Two days later, probably
knowing that at least a critical mass of establishment NGOs would meekly
accept the decision, Wolfensohn and his board rejected the recommendation to quit financing oil and coal.
A few NGOs, including Friends of the Earth International and the Institute
for Policy Studies' Sustainable Energy and Economy Network, were
appropriately furious, but the damage by their colleagues had been done.
Global warming, resource wars, corruption, destruction and death in
indigenous communities and ecological degradation will intensify, in part
thanks to the collusion and failure of spineless NGOs.
Such elite-pacting tendencies are also a serious problem in South Africa -
dating to the early 1990s when Pretoria's outgoing racial-apartheid regime
and Johannesburg big business together nurtured friendly African National
Congress neoliberals to codify class apartheid. One marker was an $850
million IMF loan in December 1993, with formulaic neoliberal strings
The problem is sometimes counteracted by activist pressure. In late 1996, IMF managing director Michel Camdessus visited Johannesburg, catalysing the launch of the Campaign Against Neoliberalism in SA (the main precedent to the Social Movements Indaba, which hosts South Africa's anti-imperialist demonstrations). Camdessus attracted several vigorous protests, and trade unionists angered finance minister Trevor Manuel by refusing an invitation to chat with the IMF boss. When Camdessus' successor, Horst Kohler, arrived four years later, Jubilee SA and their community allies welcomed him with a spontaneous, disruptive demo.
This week, Kohler's replacement, former conservative Spanish finance
minister Rodrigo de Rato, maintained the legacy, by asking on very short
notice to meet the Community Constituency of the National Economic
Development and Labour Council (a deal-making stakeholder forum). The
convenor, Selby Shezi, organised a boycott: We are aware that he has spent
days talking to business and government but did not even have the courtesy
to notify the community and labour constituencies that he would be visiting
until the eleventh hour.
Even if there's a new managing director, it is business as usual at the IMF. The Fund is not serious about addressing the problems of economic development in South Africa and is not interested in the views of the workers and poor of our country.
Aside from invitation etiquette, why is civil society so hostile to Rato? Johns Hopkins University professor Vicente Navarro provided the IMF leader's unauthorized biography (on 19 June at http://www.counterpunch.org Rato is of the ultra-right. While in Aznar's cabinet, he supported such policies as
making religion a compulsory subject in secondary schools, requiring more
hours of schooling in religion than in mathematics, undoing the
progressivity in the internal revenue code, funding the Foundation
dedican'ted to the promotion of francoism (i.e., Spanish fascism), never
condemning the fascist dictatorship, and so on.
In the economic arena, he dramatically reduced public social expenditures
as a way of eliminating the public deficit of the Spanish government, and
was the person responsible for developing the most austere social budget of
all the governments of the European Community. The elimination of the
deficit in the Spanish government's budget has had an enormous social cost.
The World Bank's September 8 Press Review service summed up the marching orders: During his two-day visit, de Rato praised President Thabo Mbeki and his economic team for the progress South Africa had made in rebuilding its economy. The IMF particularly supported the government's policy of privatising state assets, he said.
Asked about the job losses associated with privatization, he answered that
the loss of jobs should be compensated for by increased growth and
efficiency in the country as a whole. The IMF recommended a more flexible
labor market to increase employment in South Africa. 'It is not good for
government to intervene,' de Rato said. The IMF saw room to strengthen
privatisation of the country's electricity sector.
In reality, South Africa has lost at least 100,000 jobs due to
privatisation, as unemployment has doubled since liberation in 1994.
Periodic labour/community campaigning has at least slowed down electricity
privatisation, so de Rato was making quite a brutal political intervention.
Surely then, Rato was a good choice to run a pathologically undemocratic institution. Recall that Sub-Saharan Africa has only two executive director seats on the 24-member IMF/Bank board, while eight rich countries have one seat each. In response, the policy-making Development Committee, chaired by South Africa's Manuel, offered merely a narrow, technocratic governance strategy - as the Financial Times interpreted - which would add just one additional representative from the Third World to the board.
At the 2003 IMF/Bank annual meeting in Dubai, when asked why no progress was made on Bank/IMF democratisation, Manuel answered, I don't think that you can ripen this tomato by squeezing it.
The reluctance to squeeze was again evident in March this year, when Manuel sent a sparing two-page letter to fellow Committee members, arguing that reforms on IMF/Bank voting rights were likely to be postponed for some time. At the following month's Bank/IMF spring meetings in Washington, Manuel made no progress, even on his milquetoast idea that an eminent persons group produce a neutral report on board governance within a year. Nor did Manuel's letter refer to the highly controversial question of who would run the IMF.
There was, at that very moment, a minor palace revolt underway - involving
even some leading IMF/Bank directors - against the selection method.
Ironically, notwithstanding four years of lobbying by Manuel and other Third
World politicians for Bretton Woods reform, the succession of IMF leadership
was less amenable to Africa in 2004 than in 2000.
In the earlier struggle over the job of managing director, Africa's finance
ministers adopted what Time magazine described as a clever strategy:
nominating Stanley Fischer, the Zambian-born, South African-raised acting
managing director of the IMF.
Fischer's fatal flaw, according to Time, was his US citizenship. Kohler
got the job instead, thanks to the unwritten rule that divides such spoils
between the US and Europe. In 2004, the African finance ministers made no
such clever attempt, and instead meekly expressed hope for a few more
advisors to Rato and a few more resources for the two African directors.
Meanwhile, the continent's popular movements continue to speak out against the Bretton Woods Institutions. Three months ago, a Cape Town meeting of Jubilee South Africa members and allies from ten African countries, Latin America and Asia called for full unconditional cancellation of Africa's total debt; reparations for damage caused by debt devastation; an immediate halt to Bank/IMF debt relief and poverty-reduction scam programmes; and a comprehensive audit to determine the full extent and real nature of Africa's illegitimate debt, the total payments made to date, and the amount owed to the continent's people.
Last week, IFIs-OUT! issued a call for robust protest against the Bank and
IMF in early October. Their statement can be found and endorsed at http://www.ifi-out - if you can't be in Washington to demand the
institutions' early retirement - at 60, what any civilised society should
offer as an option - then please help the IFI-OUT! demonstrators get more
publicity and resources for their worthy cause.
(Dorsey is assistant professor at Dartmouth University. Bond -
firstname.lastname@example.org - is author of *Talk Left, Walk Right: South Africa's
Frustrated Global Reforms*, http://www.unpress.co.za