PENANG, Malaysia - Can the World Bank and
the International Monetary Fund (IMF) be reformed
or should they both be boycotted and dismantled?
This is the growing debate in the aftermath of the
organizations' annual meetings in Singapore last
week.
Both these international financial
institutions attempted a "makeover" of sorts to
overcome a crisis of legitimacy, budgetary
constraints and an identity
crisis over their heavily criticized roles in the
global economy.
Under siege, the IMF
tinkered with its member nations' voting structure
as a prelude to further minor adjustments, leaving
richer nations still firmly in control even as the
IMF's neo-liberal policies continue to have
disastrous implications for poorer nations.
The World Bank, on the other hand,
launched a public relations offensive with its
good-governance and anti-corruption drive. Critics
say this drive is misguided and could hurt aid to
poorer countries while allowing the bank to
sidestep national democratic institutions.
Some analysts were not buying these
"reforms", pointing out that both these global
financial institutions are part and parcel of the
same controlling system of disciplinarian
neo-liberalism hailed by Wall Street.
"There's no doubt in my mind that the IMF
and World Bank cannot be reconstructed,'' said
Glasgow-based political scientist and author John
Hilley, who has written about neo-liberal
militarism, the IMF and the World Bank. "Both need
to be replaced by bodies concerned with people and
planet rather than austerity prescriptions and
business values.''
Critics said the
suppression of dissident voices in Singapore
should serve as a reminder that these bodies
cannot be "constructively engaged".
Hundreds of civil-society activists were
forced to divide their numbers between Singapore,
where accredited activists were "constructively
engaged" inside the convention center, and
neighboring Batam in Indonesia, where others held
protests and parallel meetings. This
divide-and-rule tactic may have weakened the
overall impact of the usual civil-society protests
surrounding such meetings.
"The Singapore
meetings really showed how undemocratic the bank
and the fund were,'' said Achmad Ya'kub of the
Indonesian Federation of Peasant Unions (FSPI),
who was deported after being interrogated for 14
hours in Singapore. "They lost the very little
credibility that they still had.''
The
sentiment in some activist circles is that
civil-society organizations should boycott all
future meetings with the World Bank. Civil-society
"engagement" in the consultative process, it is
argued, indirectly helps to legitimize the World
Bank-IMF annual proceedings.
Hilley
warned that no one should be taken in by the
supposedly more benign face of the bank. "The
Wolfowitz presidency, the IFC's business agenda
and the resolute adherence to growth-based
policies are all testament to the bank's real
priorities,'' he said. The International Finance
Corp is the private-sector arm of the World Bank,
whose president, Paul Wolfowitz, is widely seen as
an architect of aggressive US foreign policy in
the Middle East.
Former Indonesian president
Abdurrahman Wahid said globalization had entered
people's lives and they had to find different ways
of dealing with it. "You have taken the path of
resistance, and I respect that,'' he told a
conference in Jakarta organized by the
international peasants' movement, La Via
Campesina, to protest against the World Bank-IMF
meetings.
Many grassroots activists regard
public demonstrations as the most effective
pressure tactic against the World Bank and IMF.
Even though there was an effective ban on outdoor
protests in Batam and Singapore, activists and
farmers held rallies and protest marches in the
streets of Jakarta from September 18-20.
Some 1,000 activists marched to the office
of the Indonesian finance minister and the
presidential palace calling for the ouster of the
World Bank-IMF from their lives. In other events,
farmers turned out in numbers to protest against
rice imports and call for agrarian reforms while
Indonesian women's groups and social movements
also held a march.
In Singapore, key IMF
participants such as British Chancellor of the
Exchequer Gordon Brown made strenuous efforts to
reshape the fund's agenda and profile. These were
broadened to include supposedly closer involvement
in World Trade Organization-related trade issues
rather than just debt, aid and structural
adjustment programs.
"But like Brown's
inability to disguise his own lust for
privatization and his Treasury's funding of the
slaughter in Iraq, World Bank-IMF is now
witnessing the exposure and fallout of its own
disastrous neo-liberal interventions,'' said
Hilley.
These two organizations now rely
heavily on developing countries to finance their
operating and administrative costs. That's not
all: the bank itself recognizes that developing
countries are net lenders to the most
industrialized countries.
The IMF, for its
part, is not the global financial juggernaut it
used to be. It only has the equivalent of about
US$9 billion directly in circulation at its
disposal, notes Eric Toussaint, president of the
Committee for the Cancellation of Third World
Debt, in a preliminary conference paper published
on the organization's website. The committee,
founded in Belgium, is a network of individuals
and local committees on four continents.
Moreover, the IMF's lending portfolio is
no more than $35 billion, making it look like a
dwarf next to 20 developing countries, he pointed
out.
The foreign reserves of many
developing countries have surged in recent years
on the back of higher prices for exports of oil,
raw materials and certain agricultural products.
Not surprisingly, developing countries now have
more than double the foreign-exchange reserves of
the most industrialized countries at their
disposal, observed Toussaint.
But
absurdly, he added, these developing countries are
using their reserves to repay debts, to lend to US
and Western European treasuries, or to contract
new debts with private foreign banks or financial
markets - instead of using them to invest in
education, health care, and agrarian reform.
Activists feel that with the fund and bank
in such a relatively weak financial position, the
time is right for developing countries to push for
alternatives such as a "Bank of the South" or
alternative regional trade agreements such as the
Bolivarian Alternative involving Venezuela,
Bolivia and Cuba.
But this may not be
enough. They are also questioning whether
capitalism as a system is capable of promoting a
just distribution of wealth in the South, pointing
out that elites have benefited from the system
even as income disparities within their countries
widen. Major structural reforms looking into the
ownership of common goods and public resources may
be required.
