[corp-focus] IMF and World Bank: Out of Control

[Robert Weissman]

IMF and World Bank: Out of Control
By Russell Mokhiber and Robert Weissman

The International Monetary Fund and World Bank are institutions out of
control.

For evidence, consider the institutions' feeble and fatally flawed debt
relief program. Under their Highly Indebted Poor Country (HIPC)
initiative, the world's poorest countries can receive reduction of
approximately one third of their current payments to overseas creditors
-- if they endure six years of closely monitored, extremely intrusive
"structural adjustment."

Structural adjustment is the policy package that includes such measures
as indiscriminate privatization, labor market deregulation, government
spending cuts, trade and financial liberalization, economic
deregulation, an emphasis on exports and charges ("user fees") for
people to attend clinics for basic healthcare.

HIPC is the institutions' most important fig-leaf, a program designed to
obscure the view of the harm they are doing to poor countries. The World
Bank and IMF regularly tout HIPC as a sign of their responsiveness to
the poor.

But now the HIPC initiative is beginning to collapse, even on its own
terms. In April, during their spring meetings, the IMF and Bank
announced that several of the countries that have qualified for debt
relief by suffering through the first three years of mandated structural
adjustment are about to lose their debt relief eligibility. The charge:
they have failed to implement structural adjustment conditions with
sufficient vigor.

Apparently, the Bank and Fund cannot control themselves. They want to
exact more blood from the world's poorest countries, even when they must
know it will sabotage their public relations campaign.

There is, however, now an opportunity to rein in the Bank and Fund.

This year, the World Bank is seeking new monies for its International
Development Association (IDA), the arm of the Bank that lends to the
poorest countries.

Getting the U.S. contribution to IDA will require a vote by the U.S.
Congress.

A broad coalition of U.S. environmental, development, religious, labor
and global justice organizations has formed to demand that if the United
States decides to contribute to IDA -- a near certainty  -- that it also
work for policies that will reduce the IMF and Bank's power. (Essential
Action is part of this coalition.)

The coalition is drawing on a successful initiative of the year 2000,
when the Congress enacted a law requiring the U.S. representatives to
the World Bank and IMF to vote against projects or loans that included
user fees for primary education or healthcare.

The Treasury Department, which manages U.S. policy at the Bank and Fund,
invented a duplicitous reading of the legislative language to avoid
carrying out Congressional intent, especially on healthcare user fees.

But the passage of the law helped force a reconsideration of education
user fees. Now the World Bank, which for 15 years has encouraged school
fees, is actively working to help countries remove such charges. In
Tanzania, the recent elimination of school fees enabled 1.5 million
children, who otherwise would have been locked out, to go to school.

The coalition is now urging the United States to oppose loans or
projects that include a range of harmful provisions, including
restrictions on labor rights, increased water charges for the poor,
environmentally hazardous practices such as aggressive pesticide use,
privatization without safeguards for workers and protections against
corruption, and privatization of tobacco enterprises. (For details on
the proposals, see
<http://www.essentialaction.org/imf/worldbank_report/IDA_FINAL_REPORT.pdf>.)

The coalition is also proposing the IDA appropriation be accompanied by
new U.S. support for debt cancellation for the poorest countries. social
and environmental assessments of structural adjustment -- conducted
before such policies are put into place -- and requirements that the
World Bank measure the effectiveness of its project loans.

Some set of these proposals will appear in an IDA authorization bill,
which will be considered by the House financial services committee and
the Senate foreign relations committee over the summer, as well as in
the foreign operations appropriations bill, which is sure to pass by the
end of the Congressional term.

It is sad and pathetic that these reforms, limiting the ability of the
World Bank and IMF to do harm, must come from the U.S. Congress. Sad,
because institutions that claim to be devoted to eradicating poverty
should not need such external discipline. Pathetic, because it is not
people in affected countries who have the ability to influence the
institutions' policies, but uniquely the citizens of the United States.

With that power and influence comes obligation. The Treasury Department
will oppose the coalition's proposals, if for no other reason than it
does not like Congress trying to direct policy toward the Bank and IMF.
It will take an expression of citizen concern to overcome the Treasury
Department's obstruction.



Russell Mokhiber is editor of the Washington, D.C.-based Corporate Crime
Reporter. Robert Weissman is editor of the Washington, D.C.-based
Multinational Monitor, http://www.multinationalmonitor.org and
co-director of Essential Action. They are co-authors of Corporate
Predators: The Hunt for MegaProfits and the Attack on Democracy (Monroe,
Maine: Common Courage Press, 1999; http://www.corporatepredators.org).

(c) Russell Mokhiber and Robert Weissman

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