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Bond, Patrick (2003) Bretton Woods reform or reparations?. Portland, Hart Publishing : -.

Does global apartheid emanate from the World Bank and IMF,
and if so, what is to be done?

Patrick Bond's review of Between Light and Shadow: The world Bank, International Monetary Fund and International Human Rights Law by Mac Darrow

South Africa is what she is today because, driven by
the spirit of human and international solidarity, you,
the peoples of the world took a stand and said that
apartheid in South Africa will not pass!' With these
words, Thabo Mbeki welcomed dignitaries to the World
Summit on Sustainable Development in August 2002.
Amongst his listeners were high-level staff of the
World Bank and International Monetary Fund (IMF). In
fact, South Africa is what she is today in part
because the Bank and Fund facilitated both apartheid
industrialisation and the post-apartheid neoliberal
policies which have shrunk black South Africans'
income by more than a fifth. Even if the 'Bretton
Woods twins' lack the power in South Africa that they
enjoy in most of the African continent, it is not for
lack of trying--and their influence as the most
prestigious financial and development institutions of
global capitalism remains unparalleled.

The question before us is whether the Bank and IMF
act in venues like South Africa in a manner consistent
with human rights values, or even the minimalist 'do
no harm' obligation embedded in Bretton Woods
operational directives. In Mac Darrow's new book,
Between Light and Shadow: The World Bank,
International Monetary Fund and International Human
Rights Law, South Africa's experience does not feature
as strongly as it could. The author is secretary of
the Committee on the Elimination of Racial
Discrimination in the Office of the High Commissioner
for Human Rights; his book is updated from a 2000 PhD
from the European University Institute in Florence. A
formidable work of scholarship, there are 1390
footnotes, 814 major reference works cited, and 130
interviews. However, compared to at least a
generation's worth of ferocious attacks on the Bank
and IMF from across South Africa, Africa and the Third
World, Darrow stretches long and far to offer
optimistic policy suggestions, but seems unable to
consider the most obvious evidence--including
contemporary social movement activism--that would
undermine his elite, insider mode of human-rights

Yet ambivalence to the institutions is justified by
Darrow's remarkably short 'positive side of the
ledger', which comprises just seven parse paragraphs,
highlighting 'abstract' (not actual) potentials for
the IMF and Bank to play a role in the progressive
realisation of human rights. The main
self-justification for institutional apathy is the
periodic insistence that human rights 'fall beyond the
mandate' given at the founding Bretton Woods
conference in 1944. Still, the two institutions have
been suffering delegitimisation thanks to decades of
developmental, environmental and macroeconomic
failures, and both have recently committed,
rhetorically, to use their influence against
corruption and political repression. The next obvious
question is whether, given their background and
ongoing controversies, the Bretton Woods Twins can
indeed be genuine allies of human rights
campaigners--except in the negative sense when they
are regularly requested by democratic mass movements
to rebuff loan requests from countries like Burma and
Zimbabwe whose leaders are blatantly opporessive, or
project loans such as mega-dams and energy projects
destructive of nature and indigenous people.

Given Darrow's own strong anti-racist orientation
and the ongoing controversy over reparations
lawsuits--i.e., distinguishing through the US and
Swiss courts those 'peoples of the world' who 'said
that apartheid in South Africa will not pass' from
those who made profits from apartheid--it is useful to
dwell on the Bank and IMF's role in South Africa as
the basis for considering a broad-based human rights
challenge to the institutions' very existence. This is
certainly not Darrow's agenda--he is a 'fixer' not a
'nixer.' The furthest he imagines the analytical
trajectory is towards 'more foundational critiques
seeking to contest the dominant neoliberal paradigm'
embodied in the Bank and IMF, and he admits that
'reform discussions in this area [human rights] must
be guided by at least some measure of modesty.'

Yet in the wake of the Seattle protests, and given
the urgency of the fight against global apartheid,
such modesty is unsatisfying and inappropriate. After
all, as this article went to press, the World Bank's
former senior vice president and chief economist,
Joseph Stiglitz, rebutted arguments against
apartheid-profits reparations by Mbeki and Justice
Minister Penuell Maduna; and a year earlier, Stiglitz
asked whether the IMF should not be closed down in the
wake of its failure to reform. To ask these two bigger
questions--did the Bank and IMF profit from propping
up apartheid?, and should they be decommissioned (in
2004, at age 60, an appropriate retirement age) once
reparations are paid for systemic human rights
violations?--is not unreasonable, as argued below.

After all, activists and large institutional
investors across the world are posing the problem in
these familiar terms: if it was immoral to invest in
apartheid, is it not also immoral to invest in global
apartheid? Should profits drawn from the World Bank's
bonds--responsible for 80% of its funding--swell the
portfolios of churches, university endowments, pension
funds and municipal treasuries? Multinational
corporations which invested in apartheid-era South
Africa inevitably called forth the answer: 'we are
reforming the system from the inside.' Darrow believes
in the same project, and the resulting lack of vision
is the book's fatal flaw.

As Darrow notes, the Bretton Woods twins drew
criticism from the United Nations during the 1960s for
lending to the Verwoerd regime. In 1966, the General
Assembly passed a resolution against such activity.
The Bank's lawyer replied that 'the Bank's articles
provide that the Bank and its officers shall not
interfere in the political affairs of any member and
that they shall not be influenced in their decisions
by the political character of the member or members
concerned.' The following 'apolitical' activity was
observed during apartheid:

o the Bank's US$100 million in loans to Eskom from
1951-67 that gave only white people electric power,
but for which all South Africans paid the bill, as
well as US$100 million more for railways;
o IMF apartheid-supporting loans of more than $2
billion between the Soweto uprising in 1976 and 1983,
when the US Congress finally prohibited lending to
o a Bank loan for Lesotho dams which were widely
acknowledged to 'sanctions-bust' apartheid South
Africa in 1986, via a London trust; and
o IMF advice to Pretoria in 1991 to impose the
regressive Value Added Tax, in opposition to which 3,5
million people went on a two-day stayaway.

Because it covers a wide variety of rights violations
and remedies, Darrow's book draws upon the two major
local socio-economic cases judged by the
Constitutional Court--Government of RSA and others v
Grottboom and others and Minister for Health and
others v Treatment Action Campaign and others--in his
argument that socio-economic rights will increasingly
be considered justiciable, and should be taken more
seriously. However, staying within the realm of
incrementalism and lacking a sufficient sense of
historical justice, he fails to contribute to a South
African debate that is now making explicit the extent
to which the post-apartheid government protects the
economic forces it formally opposed.

Not only does Mbeki explicitly aim to 'fix' not 'nix'
the varied institutions of global apartheid through a
variety of high-profile interventions, the debate has
underscored extreme political pschizophrenia when it
comes to obvious linkages between human rights and
financial power. Mbeki addressed the question of
divestment many times, as a leading ANC diplomat
during the exile era, firmly in the affirmative. But
since the World Conference Against Racism (WCAR) in
September 2001, he has been forced to make an
embarrassing U-Turn worth a brief review. At the WCAR,
neither Mbeki nor Kofi Annan deigned to meet the main
delegation of 20,000 demonstrators who marched up
within a few metres of the Durban International
Convention Centre entrance. Indeed, even the official
conference risked being torn apart over the demand by
NGOs and some African governments that payment be made
to compensate for centuries of plunder. Ironically,
even though Nigerian president Olusegun Obasanjo
endorsed reparations along with other African official
delegates, Mbeki and his foreign minister, Nkosazana
Dlamini-Zuma, very publicly refused support, saying
merely that more donor aid was needed.

A wedge issue, reparations subsequently led to a huge
division between the ANC government and civil society
activists. Frustrated by the failure of the WCAR--the
single most appropriate international forum--to
advance their agenda, leaders of Jubilee South Africa
and other church groups subsequently turned to the US
and Swiss courts. Following the model set against
Swiss and German bankers and corporations which
violated human (and property) rights during the Nazi
era, civil cases for billions of dollars in damages
were filed on behalf of apartheid victims against
large multinational corporations which profited from
South African investments and loans (by 2003, Anglo
American, Gold Fields and Sasol were added to the
corporate defendants' list). The fear engendered was
so great that the Bush regime and corporate lobbies
pleaded with US courts, initially unsuccessfully, to
nullify an interpretation of the Alien Tort Claims Act
that made the apartheid-reparations suits possible.

Mbeki had first responded to the reparations campaign
with 'neither support nor condemnation.' However, in
April 2003, in the wake of the Truth and
Reconciliation Commission's final report, recommending
a reparations payment by businesses which benefitted
from apartheid, Mbeki changed tack. It was suddenly
'completely unacceptable that matters that are central
to the future of our country should be adjudicated in
foreign courts which bear no responsibility for the
well-being of our country and the observance of the
perspective contained in our constitution of the
promotion of national reconciliation.' The president
expressed 'the desire to involve all South Africans,
including corporate citizens, in a cooperative and
voluntary partnership'--not reflecting on the numerous
attempts by the Jubilee SA, the Apartheid Reparations
Task Force and Cape Town's Anglican archbishop
Njongonkulu Ndungane for several years prior to filing
the lawsuits.

Trade minister Alec Erwin added during the April
parliamentary discussion that Pretoria was 'opposed to
and contemptuous of the litigation' and that any
findings against companies 'would not be honoured' in
South Africa. Moreover, he said, the wealth tax
promoted by the Truth and Reconciliation Commission
would be 'counterproductive.' In July 2003, Maduna
then explicitly defended international lenders and
corporations against two major reparations proceedings
in the US courts, arguing that by 'permitting the
litigation', the New York judge would discourage
'much-needed foreign investment and delay the
achievement of the government's goals. Indeed, the
litigation could have a destabilising effect on the
South African economy as investment is not only a
driver of growth, but also of unemployment.' As noted
above, Stiglitz replied that Mbeki and Maduna's
concern had 'no basis' because 'Those who helped
support that system, and who contributed to human
rights abuses, should be held accountable. Holding
them accountable would contribute to confidence in the
market system, creating a more favourable business
climate. If anything, it would thereby contribute to
South Africa's growth and development.'

The matter of 'accountability' is occasionally
addressed by Darrow, in discussions of the futility of
both governance modernisation (the US still enjoys
veto power over Bretton Woods decisions and is
unwilling to let go) and NGO reform campaigns in many
areas (the most important have generally
unsuccessfully tackled transparency, participation,
environment, gender equity and post-Washington
Consensus economics). One savvy technocrat who
repeatedly tried to reform the Bank from the inside,
David Ellerman, had a vantagepoint in the chief
economist's office during the late 1990s and early
2000s. Finally in 2003, Ellerman threw up his hands:

Agencies such as the World Bank and the IMF are now
almost entirely motivated now by big power politics
and their own internal organisational imperatives. All
their energies are consumed in doing whatever is
necessary to perpetuate their global status.
Intellectual and political energies spent trying to
'reform' these agencies are largely a waste of time
and a misdirection of energies. Dominant global
institutions, like monopolies or dominant oligopolies
in the private sector, can be counted on to use the
power to maintain their dominance-and yet that
dominance or monopolistic power is the root of the

Abuse of power and dogmatic ideology were
long-standing complaints of Stiglitz, and justified
his August 2002 call to consider abolition of the IMF:

I used to say that since we are going to need these
institutions it is better to reform them than to start
from scratch. I'm beginning to have second thoughts.
I'm beginning to ask, has the credibility of the IMF
been so eroded that maybe it's better to start from
scratch? Is the institution so resistant to learning
to change, to becoming a more democratic institution,
that maybe it is time to think about creating some new
institutions that really reflect today's reality,
today's greater sense of democracy. It is really time
to re-ask the question: should we reform or should we
build from start?

Simultaneously, George Soros complained about
inadequate debt cancellation on offer from the Bretton
Woods Institutions, whose 'failure to bring the
required relief indicates that there is something
fundamentally wrong with the international financial
system as currently constituted... In recent years,
the so-called Washington Consensus has put its faith
in the self-correcting nature of financial markets.
That faith has been misplaced.'

Closer to home, Archbishop Njongonkulu Ndungane has
recently laid out the threat in no uncertain terms:

[If] we must release ourselves from debt peonage--by
demanding the repudiation and cancellation of debt--we
will campaign to that end. And if the World Bank and
IMF continue to stand in the way of social progress,
movements like Jubilee South Africa will have no
regrets about calling for their abolition. To that
end, the World Bank Bonds Boycott movement is gaining
even great momentum. Even a money centre city like San
Francisco decided to redict funds away from Bank bonds
into other investments, on the moral grounds that
taking profits from World Bank operations contributes
to poverty, misery and ecological degradation. More
and more investors are realising that profiting from
poverty through World Bank bonds is not only immoral,
but will not make good financial sense as the market

Statements from such powerful voices would be
disputed, of course, by several South Africans at the
helm of the Bank and Fund. In 2003 these included
Trevor Manuel as chair of the IMF/WB Development
Commmittee (which sets policy); the Bank managing
director responsible for human development, Mamphela
Ramphele; Bank vice president for public relations Ian
Goldin; and other high-profile technical and
administrative experts such as Lesley Lipshitz,
Geoffrey Lamb, Caroline Moser, John Briscoe, Jeff
Racki, Alan Gelb, Roland White and John Roome.
Nevertheless, as a result of many experiences with
failed reform, it has become clear that weakening the
Bretton Woods component of global apartheid is an
extremely important strategy for South African,
Southern African and African human rights movements.
Many Africans especially in the Jubilee
debt-cancellation campaign have long argued against
the Washington lenders, because they are:

o global neoliberalism's 'brain' and policeman;
o active across the African continent, in nearly every
o reliant upon unreformed neoliberal logic, ranging
from macroeconomics to micro development policy;
o responsible for even project-level conditionality;
o capable of commodifying even the most vital public
services; and
o already subject to periodic IMF Riots and other
activism, and suffering a severe legitimacy crisis.

Already, Africna campaigning against the IMF and World
Bank is quite sophisticated:

o several international and local lobbies aim to force
the WB/IMF and WTO to stop commodifying water, health,
education and other services;
o economic justice movements such as
Anti-Privatisation Forums and environmental justice
groups exist in many African cities;
o the African Social Forum and Southern African
People's Solidarity Network links progressive
activists, churches, etc in an explicit ideological
challenge to the Washington Consensus;
o Jubilee movements continue fighting for debt
o most Southern African progressive movements demand
that IMF and Bank quit their countries; and
o reparations protests and lawsuits are underway
against financiers--including, potentially, the Bank
and IMF--which supported apartheid and African

Surprisingly, these kinds of movements receive no
attention from Darrow, nor does the most intriguing
tactic against global apartheid, so reminiscent of the
anti-apartheid divestment movement: the World Bank
Bonds Boycott. US groups like Center for Economic
Justice and Global Exchange continued to work with
Jubilee South Africa and Brazil's Movement of the
Landless, amongst others, to demand of the Northern
investment community: is it ethical for
socially-conscious people to invest in the World Bank
by buying its bonds (responsible for 80% of the
institution's resources), hence drawing out dividends
which represent the fruits of enormous suffering? The
boycott impressed a London Evening Standard financial
markets commentator during the IMF/Bank spring 2002
meetings: 'The growing sophistication of radical
activists increases the likelihood that once-accepted
fixed-income investment practices can no longer be
taken as off limits from the threat of moral suasion.'
A massive wave of Bond Boycott endorsements have come
from municipality funds (like San Francisco's), large
trade union pensions, church and university
endowments, and socially-responsible investors (e.g.
the Calvert Group). In turn, some of the organisers
hope, this lays the basis for a 'run on the Bank', to
defund the institution entirely, initially through a
collapsed bond market and then through taxpayer

Better than Darrow, the human rights campaigners
understand that the Bank and IMF may have changed
their rhetorics but not their structural adjustment
programmes, no matter their renaming as Poverty
Reduction Strategy Papers and Highly Indebted Poor
Country initiatives, and no matter the attempt by
Mbeki to give the Bretton Woods twins more legitimacy,
power and resources via the New Partnership for
Africa's Development. Perhaps most crucially, the
rhetorics of 'pro-poor' development do not quite cover
up the fact that virtually everywhere, the Bretton
Woods Institutions maintain their commitment to
accumulation via the commodification of everything. In
contrast, a common strategic thread is emerging, that
will allow the human rights, democracy,
environmentalists and socio-economic justice movements
to continue growing: the decommodification of crucial
goods and services, and in the process the
decommissioning of the Bretton Woods institutions that
respected international intellectuals such as Walden
Bello and Iris Young have begun to spell out. It is
in recognising many of the problems caused by the
Bank, but not recognising the logical conclusion, that
Darrow himself falls between light and shadow.

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