By Lyndall Barnett
The World Bank and the International Monetary Fund were founded at the United Nations Monetary and Financial Conference, held in the New Hampshire resort of Bretton Woods in July 1944. Designed to regulate the postwar international economic order, the World Bank and the IMF have had a catastrophic effect on the environment and on the lives and human rights of the poor and indigenous peoples of the Third World. In this 50th anniversary year of the "Bretton Woods institutions", there is an international campaign to halt funding to the Bank and the IMF.
The annual general meeting of the World Bank is to be held in Madrid in October. From September 26 to October 1, a conference in opposition is being held by non-government organisations and anti-World Bank activists.
World Bank loans typically fund huge "megaprojects" which ultimately benefit only the local elite — higher government officials, industrialists and large landowners growing cash crops — while subsistence food producers and the poor lose out. The communities affected by the projects are never consulted, are usually offered grossly inadequate compensation and are often subjected to harsh political repression if they resist.
The World Bank has provided more than US$50 billion for the construction of more than 500 dams in 92 countries. Since 1948, these dams have forcibly evicted around 10 million poor and indigenous people from their homes and lands. An additional 2 million are expected to be displaced by World Bank projects scheduled to begin by 1996.
Resettlement sites are generally in radically different country (if land is available at all), with very little basic infrastructure. Suicide rates in displaced populations soar.
The bank's own 1994 "Resettlement and Development Review" concedes that there is not a single World Bank project where resettled people have managed to regain their prior level of income, or received any direct benefit from the projects for which they were forced to sacrifice their homes and lands.
War against the poor
The activities of the World Bank and the IMF have been described by Dr Walden Bello, executive director of the Institute for Food and Development Policy (Food First), as a "protracted war against the poor". Because voting rights are distributed in proportion to the capital contributions of the subscribers, the bank's agenda is set by the developed Northern countries, particularly the United States.
In his 1994 book Dark Victory: The United States, Structural Adjustment and Global Poverty, Bello traces the development of World Bank lending policies, and exposes the political motivations driving "development aid" generally.
Following the postwar decolonisation of the South, the countries emerging from colonialism were seen as crucial battlegrounds in the Cold War. Aid, whether in the form of "development" or the funding of armed counter-insurgents, was a means of destabilising communist and the nationalist movements.
The aim of the advanced capitalist countries was to develop Third World economies to the point where they represented relatively stable markets, which, however, could present no threat to the Northern domination of the international economy."Development" was something to be imposed from above by World Bank technocrats, and projects were often part of authoritarian modernisation programs.
The bank defied United Nations resolutions calling for the cessation of funding to various repressive regimes. In 1966, it lent US$20 million to the South African apartheid regime, and US$10 million to the European colonial power Portugal. By the late 1970s, five out of the top eight recipients of World Bank loans, including Brazil, Indonesia and the Philippines, were authoritarian regimes.
In this period, the lending of private banks to Third World countries also vast increased. By the early 1980s, Third World countries owed in excess of US$700 billion to US, European and Japanese banks. With the onset of economic recession in the North, the prices of raw materials from the South plunged. Variable interest rates added billions to the Third World debt.
Structural adjustment
These and other factors combined to precipitate the "debt crisis" of 1982. The World Bank stepped in to bail out the private Northern banks, offering "structural adjustment loans", with the understanding that countries which refused structural adjustment would be refused further credit from both private and multilateral banks.
In 1981, structural adjustment loans constituted 3% of World Bank lending. This had grown to 19% by 1986 and 25% by 1991 under constant pressure by the US to increase structural adjustment lending. By the end of 1992, about 267 structural adjustment loans had been approved.
Structural adjustment is characterised by massive privatisation and the reduction of the role of the state in economic life, in the name of efficiency and the free market. It also involves the drastic reduction of government deficit, achieved by slashing health, education and other social welfare budgets. Only the military budget is exempt from structural adjustment loan conditions; it usually soars as governments attempt to control the increased poverty, desperation and anger which structural adjustment engenders.
Other loan conditions include devaluation of the currency, the elimination of subsidies and price controls, the dismantling of trade and investment protectionist barriers and cuts or restraints to wages. As far as possible, production is shifted from the domestic to the export market, allowing governments to raise foreign exchange earnings in order to pay off debts.
Despite all this misery, Third World governments' debts increased. In 1982, Third World debt totalled US$785 billion. By 1992, this figure had escalated to US$1300 billion.
The structural adjustment of the 1980s countered the social and political gains which the decolonised countries had managed to make during the 1960s and 1970s. By the beginning of the 1990s, per capita income in Africa had plunged to the level of the 1960s.
Structural adjustment has been aptly named "recolonisation". Third World nations have been subjected to loss of economic sovereignty, political independence and living standards. Inequality escalated sharply during the 1980s, with small local elites profiting and the vast majority suffering.
It has been estimated that 13-18 million people, mainly children, die in the South each year as a result of hunger and poverty. Only 10-15% of hunger in the Third World is due to emergency: 85-90% is born of poverty. Many more die from diseases, brought on by malnutrition, which were long ago eliminated in the developed countries.
Environment
Structural adjustment has also been catastrophic for the environment, highlighting the link between impoverishment and environmental degradation.
For example, most of the top 15 Third World debtors have tripled the rates of exploitation of their forests since the late 1970s. This is partly the product of poor and landless people trying to survive, and partly of the pressing need to gain foreign exchange in order to make interest payments.
In the 1994-95 Australian aid budget, a total of $155.4 million will go to the multilateral banks, primarily the International Development Agency (the "soft loan" window of the World Bank) and the Asian Development Fund (of the Asian Development Bank, which has a nasty record of its own). It is projected that the proportion of Australian aid which is channelled through multilateral banks will increase from 10-11% to 18% in coming years.
The government stresses the commercial benefits to Australia via contracts to Australian companies on World Bank projects (totalling US$104 million in 1992-93) and Asian Development Bank projects (US$77 million in 1992-93). This obsession with commercial benefits is a theme through the whole aid budget.
In Australia, "50 Years Is Enough" campaigns in Sydney and Melbourne are demanding that Australian aid be diverted from the multilateral banks (which are, after all, banks, not aid agencies) and redirected into bilateral projects that operate at a grassroots level, addressing the needs and under the control of local communities, developed with the goals of environmental sustainability and social justice as integral components.