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Monkey-Wrenching the Globalisation Gang

APRN Trade Conference – Hong Kong, July 11-13, 2005

BWIs , IFIs , FTAs and MDGs : WMDs for the TNCs : Monkey-Wrenching the Globalization Gang

Aziz Choudry, GATT Watchdog

Click here for Aziz Choudry's full report: Neoliberal Globalization: Cancún and Beyond

I went to Bretton Woods, but all I got was this lousy t-shirt. Amazingly, it’s not a ‘one size fits all’ and it’s not full of holes.

Walking through the Mount Washington Hotel in Bretton Woods two years ago, in the New Hampshire mountain resort and official birthplace, in July 1944, of the International Monetary Fund (IMF), the World Bank, and of plans for an international trade organization – eventually embodied by the General Agreement on Tariffs and Trade (GATT)/World Trade Organization (WTO), I thought about the genocide of Indigenous Peoples in that part of the USA, now called “New England”, perpetrated by Puritans and other settlers who viewed them, as historian Douglas Leach put it, as a “graceless and savage people, dirty and slothful in their personal habits, treacherous in their relations with the superior race…fit only to be pushed aside and subordinated” .

Neoliberalism and Colonialism Fast forward a few centuries, and this colonizing mindset and racist contempt still underpins contemporary forms of subjugation, exploitation and dispossession against peoples of the Third World as well as Indigenous Peoples and racialized communities in the global North. It lives on at the G8, in the neoliberal policies of the Bretton Woods institutions, and powerful Northern governments like the US and the European Union, in aid arrangements and debt, in free trade and investment agreements, multilateral, regional and bilateral, and the activities of transnational corporations. 21st century imperialism is frequently masked in the language of development, ‘good governance’, ‘working for a world free of poverty’ , ‘fighting poverty in Asia and the Pacific’ ‘countering terror with trade’ and ‘building freedom through trade’ .

They might call it market capitalism, economic reforms and free trade instead of Manifest Destiny (though this may be news to the Bush Administration as it wages its wars and occupations), but the song remains the same.

''Colonialism is a big event that economists have not talked about, " MIT professor of economics and current winner of the John Bates Clark Medal, awarded by the American Economic Association to the US's top economist under 40, Daron Acemoglu told the Boston Globe last month. ''Historians talk about it. Political scientists talk about it. But economists just focus on the last 50 years."

When we discuss ‘policy coherence’ in the era of global neoliberal economics we should acknowledge the colonial roots of neoliberalism. In this supposedly ‘post-colonial’ world, colonial relations and geohistorical location continue to shape the reality of who eats, and who doesn’t, who has freedom, and who doesn’t, who has access to land and water, and who doesn’t, who can work in dignity and justice, and who doesn’t, who carries the burden of crippling debt, and who doesn’t, who has the right to determine their own futures, and who doesn’t.

When we hear ‘policy coherence’ talk, we should ask: coherent for whom and with what? The programmes of the IMF, World Bank and WTO fundamentally fail to cohere with development options which carve a different path than market capitalism. Indeed, they work to crush them, to shrink policy space and to prevent future governments from even thinking about alternatives. They are incoherent with peoples’ struggles for justice, dignity and self-determination. Behind sustainable development and pro-poor rhetoric, these institutions’ policies are utterly incoherent with socially and ecologically just development. ‘Policy coherence’ is a euphemism for imperialist globalization and expanded opportunities for domination by Northern governments and corporations.

There is definitely ‘policy coherence’ between colonization and neoliberalism. As activists, social movements and NGOs, we must name and confront the systems of capitalism and colonialism in our analyses and actions, if we are to put forward coherent agendas of resistance, and effectively struggle for justice, locally and globally.

Policy coherence: Singing from the same neoliberal songbook Almost every few weeks, another high-level statement calls for greater coherence between the Bretton Woods institutions, the WTO, the UN, the baby banks, bilateral donors and so on. This coherence agenda means support for the Doha work programme of the WTO – liberalization in goods, services, investment, trade-related capacity-building, improving global financial stability through capital account liberalization (didn’t that work well in Thailand and Korea in the 1990s! ) and channelling increased investment to developing countries and assisting borrower countries to improve coherence in their national policies.

In 2001, L. Alan Winters, (Director of the World Bank’s Development Research Group, Economic Professor at University of Sussex, and advisor to numerous international organizations on trade and development including the WTO, Organization for Economic Cooperation and Development (OECD), the InterAmerican Development Bank (IADB), the European Commission and UN Conference on Trade and Development (UNCTAD) wrote : “The WTO and the BWOs are already rather highly coherent. All subscribe to basically the same model of society and the economy, favouring markets over direction, advocating transparency and predictability, seeing international trade and investment as routes to prosperity and peace, accepting the importance of development and poverty alleviation, and recognizing the possibility that adjustment is painful. Hence much of what the three bodies do is mutually supportive, and incoherence is mostly just a matter of detail. This is not the impression one would get from some of the rhetoric behind calls for coherence.” This does not mean that there are not differences among these organizations in areas where they have jurisdictional overlap, especially in relation to financial liberalization.

Besides shared commitment to neoliberalism, the WTO, IMF and World Bank have formal relationships to achieve ‘policy coherence’. The Ministerial Declaration on the Contribution of the [World] Trade Organization to Achieving Greater Coherence in Global Economic Policymaking, in the Uruguay Round Act 1994, Part III.2 urged the IMF, the World Bank and the WTO to follow “consistent and mutually supportive policies…with a view to achieving greater coherence in global economic policymaking.” This is expressed in various agreements, ministerial declarations and decisions between the institutions. In May 2003, senior officials of the three institutions, including IMF Managing Director Horst Koehler, WTO Director General Supachai Panitchpakdi and World Bank President James Wolfensohn met in Geneva under the umbrella of the WTO General Council to develop a common approach to global economic policies – the “coherence agenda.”


The IMF and World Bank offer “technical assistance” and loans for adjusting debtor countries’ economies to full trade and investment liberalization. “Technical assistance” sounds benign enough. In reality it means coercing countries of the South to swallow more neoliberal medicine, sometimes in sectors over which they have been disputing further liberalization at the WTO. World Bank and IMF loan conditionalities generally insist that governments lower or eliminate tariffs, remove restrictions on foreign investment, modify customs procedures, fiscal and labour regulations and procurement policies, and promote private sector ownership. Privatization, deregulation and trade and investment liberalization have been core to Structural Adjustment Programmes (SAPs) and the so-called Poverty Reduction Strategy Papers (PRSPs) which the World Bank and IMF now insist countries adopt in order to receive continued loans. Former World Bank chief economist and US Treasury Secretary Larry Summers claimed in 1998: “IMF and…World Bank programs not just in East Asia but in India, Latin America, Central Europe and Africa, have led to more systematic trade liberalization than…bilateral or multilateral negotiations have ever achieved.”

Amid much official rhetoric about trade replacing aid to move people out of poverty comes more explicit aid-for-trade liberalization, (and, as we have seen with the recent G8 finance ministers’ debt reduction package, ‘debt relief’ for enforced liberalization and privatization) deals. The World Bank is increasingly concentrating its resources on trade-related operations, particularly towards least-developed countries (LDCs), transition economies and those in the process of WTO accession. The Bank is allocating more funds to trade-related activities in 2004-2006 than it did during the eight years from 1996-2003. Total trade lending over the next three years is nearly US $4 billion compared with just over $2 billion in the past 8 years . Lending for trade facilitation is increasing from $300 million over the past 8 years to a projected $1 billion over the next 3 years . Meanwhile the Bank leads the joint agency Integrated Framework for Trade-related Technical Assistance for Least Developed Countries (IF). The other agencies involved are the IMF, WTO, the UN Development Programme (UNDP), UNCTAD, and the ITC (International Trade Centre - the technical cooperation agency of UNCTAD and the WTO for operational, enterprise-oriented aspects of trade development). According to its website , the IF’s objectives are to ”"mainstream" (integrated) trade into the national development plans such as the Poverty Reduction Strategy Papers (PRSPs) of least-developed countries; and to assist in the co-ordinated delivery of trade-related technical assistance in response to needs identified by the LDC”.

The spread of World Bank-led diagnostic trade studies is forcing rapid unilateral trade liberalisation into national development plans through the back door.

The IMF, meanwhile, remains the global gatekeeper for aid, the most important single agency in signalling the quality of a country’s macro-economic environment and creditworthiness to other donors. The IMF’s Poverty Reduction and Growth Facility (PRGF) complements and interlocks with the World Bank’s PRSP and the work of the WTO. Its platform is trade liberalisation, privatisation and a reduced role for the state. In April 2004, the IMF launched its Trade Integrated Mechanism (TIM) to assist member countries meet balance of payment shortfalls resulting from multilateral trade liberalization (like reduction in export revenues, and increased import bills). Its first recipients were Bangladesh and the Dominican Republic. The IMF has also boosted technical assistance and research on trade.

A 10 December 1999 World Bank-IMF operational document on PRGF-PRSP argues: "The impediments to faster sustainable growth should be identified and policies agreed to promote more rapid growth: such as structural reforms to create free and more open markets, including trade liberalisation, privatisation and tax reform and policies that create a stable and predictable environment for private sector activity."

IFIs, the Basel Committee on Banking Supervision, comprised of the world’s thirteen most powerful Central Bankers , the WTO and the baby banks essentially form much of the framework for global economic policymaking. The IFIs set parameters for all donors of the accepted creed of policy discourse with developing countries and ‘effective’ aid delivery strategies. Calls for greater coherence of donor countries to harmonize their aid, investment, export credit insurance and trade policies are cold comfort when coherence means conformity to a neoliberal model of development. Trade-related conditionalities of the IMF-WB (and regional banks like the ADB) weaken negotiating positions and possibilities for formation of alliances of countries to stand against US-EU bullying in multilateral or regional trade negotiations or aggressive bilateral deal-making.

The ‘Baby Banks’ Trade–related technical assistance has also become an increased focus of ADB and IADB lending policy. The IADB has a close formal relationship with the WTO. In February 2002 it signed a memorandum of understanding to deepen cooperation on providing technical assistance like training courses and workshops on trade negotiations and capacity-building to Latin American and Caribbean countries “to participate fully in the multilateral trading system.” The IDB’s central policy goal is economic integration of Latin American countries with the global market. Since 1994 the IADB has contributed over US $10 million to support the Free Trade Area of the Americas (FTAA) process . In May 2002 WTO and ADB officials signed a memorandum of understanding under which their institutions agreed to cooperate on joint technical assistance programmes for participants from the ADB's developing member governments in Asia and the Pacific .

WTO As the WTO broadens its scope it opens up a greater interface with the IMF and World Bank, which have also broadened their roles beyond their original core activities in recent years. A key area for jurisdictional overlap between the institutions concerns capital liberalization, especially in relation to the General Agreement on Trade in Services (GATS), Trade-Related Investment Measures (TRIMs), and the plurilateral Financial Services Agreement. Continuing pressure from Northern governments and corporations in the GATS negotiations aims to achieve, by the backdoor, the liberalization and convertibility of capital accounts of developing countries. Meanwhile any future Multilateral Agreement on Investment (MAI)-style deal on investments at the WTO would inevitably create other areas of overlap with the IMF-World Bank.

Potential for inter-institutional tensions certainly exists, and there already are examples. As Korean academic Dukgeun Ahn has noted , measures adopted under South Korea’s December 1997 agreement with the IMF during the financial crisis became the focal point for WTO trade disputes with the USA and the EU. Here, IMF-prescribed and temporary increased roles of the government in the financial restructuring of the Korean corporate sector were challenged under the WTO Agreement on Subsidies and Countervailing Measures. Ahn observes: “There is no exception to WTO obligations for policy measures regardless of whether they are employed as parts of adjustment measures or IMF conditionality.” Perhaps the moral of this story is that when there is apparently full coherence and congruence between IMF, World Bank and WTO measures, you stand to get screwed for not being neoliberal enough, and if there is inconsistency, you also get screwed for not being neoliberal enough!
The UN, Neoliberal Globalization and the Millennium Development Goals The Monterrey Consensus declaration from the UN Conference on Financing for Development (FfD), attended by representatives of the IMF, World Bank, WTO and many corporations was aptly dubbed the “Washington Consensus wearing a sombrero” by John Foster of the Ottawa-based North-South Institute. With its advocacy of trade and investment liberalization, privatization and the marketization of land and resources, it highlights again the neoliberal capture of the United Nations. It comes on top of increasingly entrenched corporate involvement at UN agencies, its 1993 dissolution of the UN Centre on Transnational Corporations, and the UN Global Compact with 50 of the world’s largest corporations, an initiative which Kofi Annan promised would “safeguard open markets while at the same time creating a human face for the global economy" among other things . Arguments for more policy space must be seen in the context of an overall push to get UN members to ultimately move towards the same goal – free market economies.

On April 15 2005, a special high-level meeting of the UN ECOSOC with the Bretton Woods institutions, the WTO and UNCTAD (WTO Director-General Supachai Panitchpakdi’s new employer) discussed ‘Coherence, coordination and cooperation in the context of the implementation of the Monterrey Consensus: achieving the internationally agreed development goals, including those contained in the Millennium Declaration.” The President of ECOSOC’s summary noted that “the increasing interdependence of national economies in a globalizing world and the emergence of rule-based regimes for international economic relations meant that the space for national economic policy was now framed by international discipline, commitments and global market considerations”. Most sought “decisive progress” in the Hong Kong WTO Ministerial Conference towards “a successful conclusion of WTO negotiations in 2006 on the basis of a truly development-oriented Doha agenda”. Indeed, this is the UN Secretary-General’s request. A June 1 2005 Secretary-General’s report to the UN General Assembly reiterated support for “addressing systemic issues: enhancing the coherence and consistency of the international monetary, financial and trading systems in support of development.”

The MDGs ignore structural issues at the root of poverty such as debt, unfair trade and economic policies. Perhaps that is unsurprising. They were essentially drawn up by ministers from OECD countries, with no participation by governments from the South let alone those most directly affected. How exactly will governments finance primary health care and education while they are being forced to cut public expenditure and privatize services under neoliberal conditionalities of IFIs? How can the poor afford commercialized healthcare, water, education? How can even the rather modest goals of the MDGs be achieved by any country in the grip of neoliberalism, privatisation, and debt slavery? The social development goals are little more than a whitewash of the continuing policies of structural adjustment and liberalization – policies which worsen poverty and stunt genuine development.

In his “In Larger Freedom” report, Kofi Annan says that “development, security and human rights go hand in hand”. But what little the MDGs appear to give with one hand is taken away with the other. Goal 8 of the MDGs is: ‘Develop a global partnership for development …. Develop further an open, rule-based, predictable, non-discriminatory trading and financial system (includes a commitment to good governance, development and poverty reduction – both nationally and internationally)”
IBON’s Joseph Yu points out: “The pessimism towards meeting the MDGs is not meant to spur rich donor countries to increase development assistance to underdeveloped countries, but to set the stage for the prescription of further neoliberal reforms as the means to achieve rapid economic growth and consequently, poverty reduction…Promoting an “open, rule-based trading and financial system”, cooperation with the private sector and competition in the global economy risks poverty alleviation goals being overwhelmed by corporate and donor interests.”

Finance Liberalization and FTAs The 1998 UNCTAD Trade and Development Report noted: “the ascendancy of finance over industry together with the globalization of finance have become underlying sources of instability and unpredictability in the world economy. (…) In particular, financial deregulation and capital account liberalization appear to be the best predictor of crises in developing countries.” Capital account liberalization, the removal of controls, taxes, subsidies and quantitative restrictions that affect capital account transactions - whether promoted through IMF loan conditionalities, the WTO Agreement on Financial Services, or now, in bilateral free trade and investment agreements – has already devastated domestic economies, particularly in South East Asia and Mexico in the 1990s.

The Chile and Singapore FTAs with the USA have “NAFTA -plus” broad definitions of investment, which throw the door wide open for disgruntled investors to take a case to a dispute tribunal. Both agreements impose alarming new limits on the use of capital controls. Indian policy analyst and researcher Kavaljit Singh argues that Chile’s controls on capital inflows have helped insulate it against financial crises. He writes that it “stands to reason that the probability of occurrence of a financial crisis in Chile and Singapore would increase manifold with the removal of capital controls as envisaged in the bilateral trade agreements with the U.S.”

Even free traders have slammed this aspect of these FTAs. In a March 2003 Financial Times article, Jagdish Bhagwati and Daniel Tarullo wrote, “The intention of the Bush administration to use these two agreements as ‘templates‘ for other trade agreements, possibly including the Doha round, means that acceptance of the capital control provisions could engender a trade policy that causes far-reaching damage. The prohibition on capital controls has the makings of a U.S. foreign policy debacle. Imagine that a government imposes short-term capital controls in order to manage financial problems.

Compensation will ensue, but only for American investors. The citizens of the developing country will then see a rich U.S. corporation or individual being indemnified while everyone else in the country suffers from the crisis. One would be hard-pressed to think of a better prescription for anti-American outrage.”

Fighting Back While some people say “make poverty history”, some of us say “make capitalism history”. Capitalism and colonialism are all too often the elephants in the room in NGO activities on debt, trade economic, social and political justice – and war.

If our analysis of neoliberalism takes an explicitly anti-colonial and anti-capitalist standpoint, we may question strategies which aim to move these predatory, carnivorous institutions and companies towards a vegetarian diet by polite petitioning and ‘civil society dialogue’, and instead work together to delegitimize them. We must go beyond a compartmentalized campaign approach to individual institutions and their policies and name and confront the values and ideology that lie behind and link them.

Both critics and supporters of policy coherence argue that coherence at an international level between institutions has to be based on coherence within national governments and their different ministries, agencies and departments. Strategically and practically, I think that it is primarily the domestic pressure points of intervention - conflicts, contradictions, tensions between officials, government ministries and departments - which are important to identify and campaign around, rather than the potential or apparent tensions between the IFIs and the WTO.

As labour researcher Gerard Greenfield warns, calls for transparency, openness and more democracy within institutions like the WTO ignore “the fact that we need to have the ability to do something about what we see, otherwise we’ll just be spectators in a transparent process… Aggressively cutting back our ability to impose democratic priorities on capital is not an afterthought - it lies at the very heart of the globalization project.

For those in power, an opposition that prioritizes dialogue and a contest of ideas with elites is far less dangerous and more controllable than one that understands power and builds counter-power through community organizing and movement-building.

“Many of the biggest and strongest civil society organizations orient upwards, justifying and elaborating the actions and ideologies of the dominant power. Others orient to the grassroots, and within this there are two different types: those that organize and mobilize to fit into programmes constructed by dominant power, and those that organize and mobilize to confront the dominant power” write South African activists and researchers Stephen Greenberg and Nhlanhla Ndlovu.

Perhaps we need to reclaim the roots of the word monkey-wrenching – it is a term from Ed Abbey’s book about a fictional band of militant environmental activists, The Monkey Wrench Gang referring to direct action against the powerful. The biggest and strongest kinds of monkey-wrench are strong and sustained communities of resistance and social movements. For those of us that do research and policy analysis, our challenge is to redouble our efforts to orient our work in ways that strengthen and support those popular struggles against neoliberalism, in our communities, and internationally.

*******

Douglas Edward Leach. 1958. Flintlock and Tomahawk: New England in King Philip’s War. New York: Macmillan, p.22 World Bank website: http://www.worldbank.org
Asian Development Bank website: http://www.adb.org
Robert B. Zoellick, US Trade Representative. Countering Terror With Trade. Washington Post editorial, 20 September 2001. http://www.ustr.gov/Document_Library/Op-eds/2001/Countering_Terror_with_Trade.html
US Trade Representative website: http://www.ustr.gov
Robert Gavin. MIT professor named top economist under 40: Key study minimizes geography in formation of rich vs. poor nations. Boston Globe. 15 June 2005.
http://www.boston.com/business/articles/2005/06/15/mit_professor_named_top_economist_under_40
L. Alan Winters. Coherence with no “here”: WTO co-operation with the World Bank and the IMF. Paper presented at CEPR/ECARES/World Bank Conference on ‘The World Trading System Post Seattle: Institutional Design, Governance and Ownership’, 14/15 July 2000, Université Libre de Bruxelles, Brussels.
WTO website, http://www.wto.org/english/docs_e/legal_e/32-dchor_e.htm
Emad Mekay, IMF, World Bank Join Forces With WTO, Inter Press Service. 13 May 2003
Lawrence Summers, Why America Needs the IMF, Wall Street Journal, 27 March 1998, p. A.22
Bank Information Center USA website. The World Bank and Trade Liberalization. http://www.bicusa.org/bicusa/issues/trade/index.php
Bretton Woods Project. IFIs on trade: “enormous investment” but to what end? Bretton Woods Update, Number 45 – March April 2005
Integrated Framework website. http://www.integratedframework.org/
International Monetary Fund and International Development Association. Poverty Reduction Strategy Papers – Operational Issues. Prepared by the Staffs of the IMF and the World Bank. December 10, 1999. http://www.imf.org/external/np/pdr/prsp/poverty1.htm#I
IMF Factsheet. The IMF’s Trade Integrated Mechanism (TIM). March 2005 http://www.imf.org/external/np/exr/facts/tim.htm
Basel Committee on Banking Supervision website. http://www.bis.org/bcbs
IDB website. IDB Support for Integration in Latin America and the Caribbean. www.iadb.org/EXR/AM/2003/eng/issuebriefs/am_integ.cfm
ADB News Release. ADB, WTO Agree to Join Efforts to Promote Trade in Asia. 9 May 2002. http://www.adb.org/Documents/News/2002/nr2002076.asp
Dukgeun Ahn. WTO Disciplines Under the IMF Program: Congruence or Conflict. In Mitsuo Matsushita and Dukgeun Ahn (eds) 2004. WTO and East Asia, New Perspectives. London: Cameron May. Pp.25-38. http://www.worldtradelaw.net/articles/ahnimf.pdf
BBC website. Analysis: Mixed Feelings at Monterey. 23 March 2002 http://news.bbc.co.uk/1/hi/world/americas/1889536.stm
George Monbiot. Getting Into Bed With Big Business: The UN is no longer just a joke. It is becoming the villain of the piece. The Guardian, 31 August 2000. http://www.guardian.co.uk/Columnists/Column/0,5673,361716,00.html
UN Website: http://www.un.org/docs/ecosoc/meetings/2005/bwi2005/
UN General Assembly/Economic and Social Council. Summary by the President of the Economic and Social Council of the special high-level meeting of the Council with the Bretton Woods institutions, the World Trade Organization and the United Nations Conference on Trade and Development (New York, 16 April 2005). 2 June 2005. http://www.un.org/docs/ecosoc/meetings/2005/bwi2005/President%27sSummary.pdf
UN General Assembly. The Monterrey Consensus: status of implementation and tasks ahead. Report of the Secretary-General. I June 2005. http://daccessdds.un.org/doc/UNDOC/GEN/N05/370/07/PDF/N0537007.pdf?OpenElement
UN General Assembly. In larger freedom: towards development, security and human rights for all. Report of the Secretary-General. p.5 http://www.un.org/largerfreedom
UN Millennium Development Goals website. http://www.un.org/millenniumgoals/
Joseph Yu. Kofi Annan’s ‘In Larger Freedom’: Still not free from the neoliberal strategy. IBON Features. Vol XI No 11. April 2005 http://www.ibon.org
UNCTAD Trade and Development Report 1998: Financial Instability, Growth in Africa. pp. V. and 55. http://www.unctad.org/en/docs/tdr1998_en.pdf
see Aziz Choudry. Bilateral Trade and Investment Deals: BITs a serious challenge for global justice movements. Z Magazine, December 2003 http://zmagsite.zmag.org/Dec2003/choudry1203.html
Kavaljit Singh. Trading Away Capital Controls. 12 April 2003. http://www.ased.org/artman/publish/printer_72.shtml
Jagdish Bhagwati and Daniel Tarullo. A ban on capital controls is a bad trade-off.
Financial Times, 17 March 2003
Gerard Greenfield. The Success of Being Dangerous: Resisting Free Trade & Investment Regimes. Studies in Political Economy, Spring 2001. http://www.global-labour.org/greenfield1.htm
Stephen Greenberg and Nhlanhla Ndlovu. Civil Society Relationships.  www.interfund.org.za/pdffiles/vol5_two/greenberg.pdf
Edward Abbey. 1976. The Monkey Wrench Gang. New York: Avon Books.

ENDS

Corporations and IGOs

This is from Anhi's excellent intercontinentalcry, which gives a global look & analysis of Indigenous peoples and our struggle/s.

The purpose of this section is to give people a primer on economic globalization, NAFTA, FTAA, the WTO, World Bank, and Corporations.

http://intercontinentalcry.org/library/corporations-and-igos/

THE WORLD BANK AND IMF - ENFORCING A SYSTEM OF GLOBAL APARTHEID

·Global Apartheid refers to a system by which mostly white wealthy elites exploit and maintain control over poor people, predominately people of color, throughout the world. Similar to the former apartheid government in South Africa, it follows the legacies of colonialism, slavery, and genocide of indigenous peoples.


·The IMF and World Bank are controlled by wealthy, mainly Northern countries. The decision-making process at the IMF and World Bank is dominated by wealthy countries - many of the very same countries which formerly colonized large parts of Africa, Asia, and Latin America. This is because voting power is assigned through a one-dollar one-vote system, in which the voting power of a country is proportional to the size of its financial contribution to the Bank and IMF. The Group of 7 (G-7) countries of U.S., Canada, Britain, France, Germany, Japan, and Italy alone control about 50% of the decision-making power in the IMF and World Bank, and the U.S., with more than 17% of the vote, has effective veto power over some key decisions that require a supermajority of 85%. The vast majority of the world's people are people of color, living in the Global South; yet, they have a very limited voice in these supposedly global multilateral institutions which affect their lives so profoundly.



·The World Bank and IMF push policies on the Global South without any accountability. The IMF and World Bank use the debt of impoverished countries to impose all sorts of conditions, effectively micromanaging their economies. These conditions corrupt political systems and corrode self-determination, making governments accountable to foreign creditors rather than their own people. For example, when the parliament of Ghana decided to protect small farmers by imposing import duties on chickens and rice, the IMF retaliated by threatening Ghana's credit rating. They bullied the government to change its policy without regard to popular will in Ghana. When it comes to key economic policy issues, the countries of the South remain colonized!



·IMF and World Bank policies impoverish - and kill - people in the Global South. The IMF and World Bank consistently impose policies such as "labor market flexibility," trade liberalization, privatization, user fees, and budget caps on social services. These policies impoverish people in the global South by taking away their livelihoods while at the same time pricing essential services such as water and health care out of their reach, and crippling the ability of governments to provide those services. These policies cost lives, particularly in the context of serious public health crises, including the HIV/AIDS pandemic in Africa, which is threatening the future of an entire continent. By imposing user fees for health care on communities with widespread poverty and unemployment, these policies make the deaths of poor people from treatable diseases inevitable. The people who are being made poor, and who are dying, are people of color from the global South. And the people who get to make decisions that cost other people's lives in the name of economic efficiency (which usually means more profits for people like themselves), are wealthy, mainly white, people from Northern countries.



·World Bank projects disproportionately hurt indigenous peoples. The World Bank pours billions into environmentally destructive projects such as large dams, oil and gas, mining, and logging, which in a large number of cases affect indigenous communities. Indigenous peoples are displaced from their homes, farmlands, and traditional fisheries - which they have used for centuries - to make room for these projects. They almost never receive adequate compensation, and end up significantly poorer than before. Sometimes, as happened to the Maya people displaced by the Chixoy dam in Guatemala, they are subject to massacre or other violent repression if they try to resist.



·IMF and World Bank policies displace people and force them to migrate. People whose livelihoods are destroyed by the policies of the World Bank and IMF often have no choice but to migrate to wealthy Northern countries in search of work. The racist immigration systems of Northern countries are highly unlikely to give them travel documents, so they make the journey without documents, sometimes at great risk to their lives. Once in the North, undocumented immigrants usually work the lowest paying jobs, with long hours, hazardous working conditions, and no legal protections. Employers take advantage of their undocumented status to exploit them, and they remain in perpetual fear of discovery and deportation - a feeling reinforced by periodic immigration raids, which also serve to ensure that the workers are afraid to organize. Whether Latino immigrants in the US, or African immigrants in Europe, or Filipino immigrants in Japan, undocumented immigrants face the same kinds of oppression everywhere.

http://www.globalizethis.org/content/view/68/68/

The IMF at Sixty-Three — An Early Retirement?

by Mark Weisbrot

April 07, 2007
McClatchy-Tribune Information Services


It's a rite of Spring in Washington: as winter fades and the cherry blossoms burst into their pale pink splendor, the International Monetary Fund (IMF) and World Bank hold their annual Spring Meetings. It was not so long ago, in the pre-9/11 world, that the event attracted protestors, police crackdowns, and pre-emptive strikes against them. "Better the finance meeting had been held offshore, like other nefarious cartels do, than to reinforce the image of our nation's capital as a two-bit capitalist dictatorship," wrote Washington Post columnist Courtland Milloy in 2000, after the police rounded up scores of bystanders, including tourists, and threw them in jail.



Today the IMF attracts relatively little attention, mostly because it has become a shadow of its former self. The protests - among many others throughout the developing world - helped bring about this historic change by shining some light on an organization that has spent most of its 63 years operating under the radar.

The Fund's portfolio of loans has been sharply reduced: from $96 billion as recently as 2004 to just $20 billion today. About half of that $20 billion is owed by Turkey. But much more importantly, the Fund has lost its enormous power to pressure middle-income developing countries to adopt a whole set of economic policies that were often not in their interests.

The IMF's power was based on an informal arrangement that put the Fund at the head of a powerful creditors' cartel. A government that didn't meet the Fund's conditions wouldn't be eligible for most loans from the World Bank, other multilateral lenders such as the Inter-American Development Bank, rich country governments, and sometimes even the private sector. This gave the IMF enormous leverage: often it could present governments with an "offer they couldn't refuse."

Since the US Treasury Department holds a veto over IMF decisions, this power was even more concentrated, and was in fact the major avenue of US influence over the economic policies of developing countries. This power began to erode after the East Asian Financial crisis in the late 1990s, where the IMF's intervention was widely seen as having increased the regional economic damage and imposing unwanted conditions on the affected countries, such as South Korea, Indonesia, and Thailand. These countries and others have since accumulated large international reserves and will never have to go back to the Fund.

The Fund's contribution to Argentina's economic collapse (1998-2002) and its unwillingness to help with the country's recovery further damaged the IMF's reputation. Argentina also showed that the IMF and associates' "help" was unnecessary, disregarding their advice to become the fastest-growing economy in the Western Hemisphere over the last five years.

Then Venezuela began to make billions of dollars of its international reserves available to neighboring countries such as Argentina, Bolivia, Ecuador, and others. This broke the back of the creditors' cartel by offering an alternative source of credit with no strings attached.

The Fund sees itself as a victim of its own success - the world hasn't had any major financial crises in recent years and developing countries can borrow from private sources at relatively low interest rates. Some economists think the Fund will regain its power when the next crisis hits.

But it won't. The IMF has lost power because its policy prescriptions didn't work. The areas where it had the most influence, such as Latin America and Africa, have experienced profound economic growth failures. The fastest growing countries in the world over the last 25 years - e.g. China, Vietnam, and India - were free from the Fund's influence. The next important step will be for the poorest countries in the world, which are still in the grip of the IMF's cartel, to become independent.



Mark Weisbrot is co-director of the Center for Economic and Policy Research, in Washington, D.C. (www.cepr.net), and co-author of Political Forecasting: The IMF's Flawed Growth Projections for Argentina and Venezuela."

http://www.zmag.org/content/showarticle.cfm?SectionID=13&ItemID=12519

IMF plutocracy condemns developing world to misery

the paternalists who run the IMF — who are fixated on creating safe havens for foreign capital — cannot help micro-managing the economies of the poor nations, without reference to the needs of the people who live there

Published: Sunday, 22 April, 2007, 09:13 AM Doha Time

By George Monbiot
LONDON: The disease that afflicts all British governments is an inability to let go. Unable to accept the end of empire, they cling to past glories. However much they speak of modernity and democracy, they cannot help managing other people’s lives, preserving foreigners — often at gunpoint — from the mistakes they would make if they were allowed to govern themselves.

I was going to call this an imperial delusion, but Britain has been remarkably successful at defending its powers. The UK government has retained a permanent seat on the UN Security Council.

Its membership of the G8 is unchallenged. Most important, it has preserved its unwarranted share of the vote on the boards of the International Monetary Fund (IMF) and the World Bank. And it has no intention of giving this up.
In advance of the IMF’s spring meeting (just concluded in Washington), France and Britain rejected any political reform to the organisation, which is charged with maintaining global financial stability.

It is true that the fund’s proposals are feeble. It is true that even after far more ambitious reforms the IMF would remain the wrong body, constitutionally destined to fail. But this is not why the British government is holding out. It is resisting change because it wants to preserve its imperial rank.

Britain, with 1% of the world’s population, has 5% of the IMF’s votes. Sub-Saharan Africa, with 12% of the population, has 4.6%. Britain’s share equals that of China and India put together. It is five times as big as Argentina’s, 19 times Bangladesh’s, 35 times Kenya’s, 124 times bigger than Malawi’s.

The G7 nations — Britain, the US, Japan, Germany, France, Canada and Italy — together possess 45% of the vote. The other 177 members are left to squabble over the remainder.

Even these numbers tell only half the story. The five countries with the biggest quotas — the US, Britain, Japan, Germany and France — are each allowed to appoint their own executive director to the IMF’s board. The rest must submit their candidates for election. Because poor nations don’t know what’s good for them, they are assigned to the tutelage of richer ones.

The votes of the English- speaking Caribbean countries are given to Canada. Mongolia is represented by Australia, Kazakhstan by Belgium. The reason that Britain and France are resisting even the most timid reforms is that these would tip them below the threshold for automatic election: like the other countries, they would be represented on the board as part of a bloc.

Power is distributed like this because the IMF is a plutocracy. A country’s vote represents its ‘quota’, which is allocated according to its gross domestic product. In theory, the quota reflects countries’ financial contributions to the fund. But this is no longer the case, as the IMF receives much of its income from loan repayments from poorer nations.

But the old formula has resisted 60 years of complaints. The result is that governments that are never made subject to the IMF’s strictures control it, while those whose countries have been reduced to an IMF franchise have no say in the way it is run. The allocation of votes is a perfect inversion of democracy.
A new report by ActionAid gives us a glimpse of how this unfair distribution of power affects the poor. After years of protest by poor countries and their supporters in the rich world, the IMF and the World Bank at last permitted the provision of healthcare and education without charge.

The rich nations also promised, in 2000, to ensure that by 2015 every child in the world would have primary education. It looked like a great victory for the global justice movement. But the IMF is ensuring that the promise won’t be met. It has, in effect, forbidden the poorest nations to hire sufficient teachers.
No one disputes that public-sector wage rises can contribute to inflation. No one denies that governments have to exercise some degree of restraint. But the paternalists who run the IMF — who are fixated on creating safe havens for foreign capital — cannot help micro-managing the economies of the poor nations, without reference to the needs of the people who live there. The limits they have imposed on the bill for public-sector pay ensure that schooling can’t be improved.

ActionAid studied three very poor countries with major education problems: Malawi, Mozambique and Sierra Leone. After fees were abolished (and when the civil war ended in Sierra Leone), vast numbers of pupils enrolled. But a combination of the rich nations’ failure to provide the foreign aid they had promised and the restrictions imposed by the IMF has prevented these countries meeting the new demand.

As a result, the pupil to teacher ratio in Sierra Leone is 57:1; in Malawi 72:1 and in Mozambique 74:1. That’s the average; in rural areas it can be much higher. Many of the teachers are untrained, and many give up because they cannot survive on their wages. In Malawi, the goods required for the most basic level of subsistence cost $107 a month. A trained teacher receives $55.

So crowds of pupils strain to hear a scarcely literate teacher somewhere in the middle distance seeking to instruct them without books, chalk, paper or pens. We should not be surprised to discover that 40% of children fail to complete primary school in Sierra Leone and Mozambique, and 70% in Malawi. Most of the drop-outs are girls.

As a result, these countries are stuck in a vicious circle of misery. Until education improves, GDP remains low. Until GDP rises, there is little money for education. As one of the agencies charged with rescuing countries from poverty, the IMF should be seeking to break this circle.

But the conditions it attaches to its loans keep these countries in their place. In Malawi the IMF sets the ceiling for public-sector wages directly; in Sierra Leone and Mozambique the broader macro-economic rules it imposes have the same effect.
ActionAid argues that these fiscal targets are outdated and unnecessary: all these countries have now achieved sufficient stability to start raising teachers’ pay. But in no case did the IMF consult either the public or the state’s own ministry of education before laying down the law.

The amount of money a teacher in rural Malawi is paid is decided by the men in London and Washington. Except for the district commissioners in pith helmets, little has changed since the country was called Nyasaland.

Last year Tony Blair acknowledged that the IMF “must become more representative of emerging economic powers and give greater voice to developing countries.”
But he just can’t let go. The proposed reforms do nothing to democratise the IMF: by linking the quota to purchasing power parity rather than raw GDP, they simply turn it into a more sophisticated plutocracy. But they could have the effect of very slightly empowering some middle-income countries while taking a few votes away from some of the rich ones. And even that is too much for the Emperor of Africa.

If the British government wants to help the poor, it must first give up its power to tell them how to live. Until that happens, everything the prime minister says about “partnership” and “solidarity” with the world’s oppressed is humbug. – The Guardian News & Media

IMF nations urge speedy WTO deal

Sun, 15 Apr 2007 03:43:16 Leading industrial and developing nations have urged major international players to reach a speedy world trade deal to end the six-year deadlock.

Citing the threat of protectionism, a 24-nation group in the International Monetary Fund (IMF) on Saturday welcomed the latest agreement by six powers to resume talks on the so-called Doha round of world trade talks, DPA reported.

"The global economy risks from a possible rise in protectionism and the substantial foregone growth, should the Doha Round fail make trade policy a key medium-term concern," the IMF members said in a statement.

Saturday's meeting in Washington gathered finance officials from most major economic powers, including the United States, the European Union, Japan, Brazil, India and China also known as G6.

The G6 agreed Thursday in Indian capital New Delhi to resume talks that can pave the way for a breakthrough in global talks under the World Trade Organization (WTO), which stalled last year with the US and the EU blaming each other for the collapse.

WTO talks aimed at liberalizing world trade stalled mainly because the US, European nations and other WTO members such as Brazil and India were unable to reach agreement on key issues such as farm tariffs.

The talks were re-launched in January, but major sticking points remain unresolved, in particular the US refusal to reduce its agricultural subsidies to farmers. The demand for cuts is supported by the EU and the G-20 group of countries that includes India and Brazil.

The IMF called on WTO members to work with a renewed commitment to urgently achieve an ambitious outcome.

There is also a sense of urgency around the talks with the US president's special authority to fast-track trade deals set to expire on June 1. Once that authority lapses, US negotiators will have to go back to the Congress to seek approval for any concession they want to make at the trade talks.

This is while British Chancellor of the Exchequer Gordon Brown has said a WTO agreement is critical to guarantee that the benefits of globalization are widely shared.

Meanwhile, German anti-globalization groups are preparing for a series of violent and non-violent protests during the upcoming G8 summit, scheduled to take place in the Baltic Sea resort of Heiligendamm from June 6-8.

"There is an ongoing debate among anti-globalization groups as to how to protest during the G8 summit. Some are calling for soft actions but some are calling for more violent measures such as blocking airports and throwing stones," said the spokesman of a Berlin-based non-government agency (Venro), Gerhard Gad during a recent press briefing.

"Groups like Attac have harsher positions," he added.

More than 100,000 people are expected to demonstrate against the G8 summit as a record number of over 16,000 police will be ready to contain the protest wave, making it the largest security operation in the history of Germany.

Protestors hope to stage a sit-in at the military airport in the northern city of Rostock-Laage where the G8 delegations are due to land, in a bid to block their arrival.

Anti-G8 demonstrators will include also labor union, pro- environment, student, pacifist and radical leftist groups.

AS/AVA
http://www.presstv.ir/detail.aspx?id=6095&sectionid=3510213