Willow's Pagan Place

Click here to return to Activist Corner

MOBILIZATION FOR GLOBAL JUSTICE

DEFUND THE FUND! BREAK THE BANK! DUMP THE DEBT!

Stand up for economic Justice - Oppose Oppressive Globalization

We chalanged one of the most insidious tools of unaccountable profit driven rule, the World
Trade Organizaton, and we scored an important series of victories against
some daunting odds.

The WTO (World Trade Organization)'s goal is to create a global system of enforceable rules where corporations have all the rights, governments have all the obligations and democracy is trampled.

There are so many great websites about the WTO that we decided to link to some of them rather than creating our own. Please get involved because WTO will seriously impact the environment, human rights, labor rights and democracy.

• Independent Media Center
• Direct Action Network
• Global Exchange

SEATTLE WTO PROTEST IN REVIEW:

View images from the Protest of the Century -- Seattle 1999!

Read Paul Hawken's Retrospective of the WTO Protests. Many people consider this to be the best written assessment of the WTO events.

10 Reasons To Dismantle the WTO

1. The WTO prioritizes trade and commercial considerations over all other values. WTO rules generally require domestic laws, rules and regulations designed to further worker, consumer, environmental, health, safety, human rights, animal protection or other non-commercial interests to be undertaken in the "least trade restrictive" fashion possible -- almost never is trade subordinated to these noncommercial concerns.
2. The WTO undermines democracy. Its rules drastically shrink the choices available to democratically controlled governments, with violations potentially punished with harsh penalties. The WTO actually touts this overriding of domestic decisions about how economies should be organized and corporations controlled. "Under WTO rules, once a commitment has been made to liberalize a sector of trade, it is difficult to reverse," the WTO says in a paper on the benefits of the organization which is published on its web site. "Quite often, governments use the WTO as a welcome external constraint on their policies: 'we can't do this because it would violate the WTO agreements.'"
3. The WTO does not just regulate, it actively promotes, global trade. Its rules are biased to facilitate global commerce at the expense of efforts to promote local economic development and policies that move communities, countries and regions in the direction of greater self-reliance.
4. The WTO hurts the Third World. WTO rules force Third World countries to open their markets to rich country multinationals, and abandon efforts to protect infant domestic industries. In agriculture, the opening to foreign imports, soon to be imposed on developing countries, will catalyze a massive social dislocation of many millions of rural people.
5. The WTO eviscerates the Precautionary Principle. WTO rules generally block countries from acting in response to potential risk -- requiring a probability before governments can move to resolve harms to human health or the environment.
6. The WTO squashes diversity. WTO rules establish international health, environmental and other standards as a global ceiling through a process of "harmonization;" countries or even states and cities can only exceed them by overcoming high hurdles.
7. The WTO operates in secrecy. Its tribunals rule on the "legality" of nations' laws, but carry out their work behind closed doors.
8. The WTO limits governments' ability to use their purchasing dollar for human rights, environmental, worker rights and other non-commercial purposes. In general, WTO rules state that governments can make purchases based only on quality and cost considerations.
9. The WTO disallows bans on imports of goods made with child labor. In general, WTO rules do not allow countries to treat products differently based on how they were produced -- irrespective of whether made with brutalized child labor, with workers exposed to toxics or with no regard for species protection.
10. The WTO legitimizes life patents. WTO rules permit and in some cases require patents or similar exclusive protections for life forms.

Some of these problems, such as the WTO's penchant for secrecy, could potentially be fixed, but the core problems -- prioritization of commercial over other values, the constraints on democratic decision-making and the bias against local economies -- cannot, for they are inherent in the WTO itself.

Because of these unfixable problems, the World Trade Organization should be shut down, sooner rather than later.

That doesn't mean interim steps shouldn't be taken. It does mean that beneficial reforms will focus not on adding new areas of competence to the WTO or enhancing its authority, even if the new areas appear desirable (such as labor rights or competition). Instead, the reforms to pursue are those that reduce or limit the WTO's power -- for example, by denying it the authority to invalidate laws passed pursuant to international environmental agreements, limiting application of WTO agricultural rules in the Third World, or eliminating certain subject matters (such as essential medicines or life forms) from coverage under the WTO's intellectual property agreement.

These measures are necessary and desirable in their own right, and they would help generate momentum to close down the WTO.

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. They are co-authors of Corporate Predators: The Hunt for MegaProfits and the Attack on Democracy (Common Courage Press, http://www.corporatepredators.org).

© Russell Mokhiber and Robert Weissman

The World Bank and Corporations

Every year the World Bank and its regional counterparts such as the Asian Development Bank, the Inter-American Development Bank, the African Development Bank, and the European Bank for Reconstruction and Development, collectively known as Multilateral Development Banks (MDBs), lend $45 billion to the so-called "developing" world.

This money in turn leverages support by bilateral aid agencies, private finance and other sources for projects and programs whose total cost is estimated at well over $130 billion.

The ostensible goal of this "development finance" is to alleviate poverty in the Third World by stimulating economic growth. Yet in many respects these loans, which have integrated vast human populations and expanses of natural resources into the world economy, deliver far greater benefit to the governing elite of stratified Southern societies, to transnational corporate contractors and investors, and to the globalization agenda of the donor governments of the industrialized North.

It is well documented that a broad array of MDB-financed projects and economic policy proscriptions have contributed to a deepening spiral of social and ecological poverty throughout the South. Such destruction has prompted a series of international campaigns aimed either at reforming or halting individual projects, as well as at reforming or closing down the MDBs themselves.

MDB policies have consistently served corporate interests in five key ways:

1. Corporate Contracts

The first and most obvious way that the transnationals benefit from MDB and bilateral aid is through contracts. In what is essentially a quid-pro-quo relationship, large corporations based in the countries that provide the MDBs with capital receive lucrative contracts for MDB financed projects.

• Overall, net disbursements by the World Bank (i.e., the balance of gross disbursements minus repayments to the Bank for previous credits) totaled just over $7 billion in 1993. But the borrowing countries paid out nearly an equivalent amount of money in contracts--$6.8 billion, to corporations from the 24 rich OECD nations--leaving only marginal positive cash flows into the coffers of recipient countries.
• The International Development Association, an arm of the World Bank designed to lend money to the poorest of the poor countries, doled out more money to British corporations for contracts in 1993 than it committed in future loans to Bangladesh, one of the most impoverished nations on earth.
• Switzerland, home to only six million people and some of the world's largest transnationals, got more money than Mali or the Philippines.

2. Infrastructure

The second way in which multilateral and bilateral aid has benefitted corporate interests is by building infrastructure such as roads, electrical grids, dams and power plants, that often serve to lay the groundwork for further transnational investment. Unfortunately, such infrastructure has also repeatedly led to social and environmental debacles.

For instance:

• World Bank infrastructure lending in the transportation sector has also supported corporate expansion, promoting the growth of the auto industry in the Third World rather than more accessible and ecologically sound rail transport. In 1993, for instance, 74 percent of the Bank's $3.2 billion in transportation loans went to road and highway construction.

  These policies exacerbate the already significant contribution that road vehicles make to local air pollution and global climate change.

• Lending for energy infrastructure has similarly catered to corporate interests while virtually ignoring environmental consequences and failing to promote alternatives.
  •  
  • The World Bank spends 40 percent of all its energy loans on oil and gas development, 15 percent on coal, and most of the rest on electrical transmission and fossil fuel powered generators.
  • MDB support for alternative energy development such as solar and wind power is virtually non-existent. Less than 3 percent of all Bank energy lending goes to renewable energy and energy efficiency projects.
  • These policies amount to subsidies for transnational oil and coal corporations, and make a signficant contribution to greenhouse gas emissions.

3. The Greenwash Route

The third way in which the World Bank and other MDBs support corporate interests is through their new found environmentalism.

As they have come under increasing fire for their socially and environmentally destructive behavior, these institutions have moved to address their critics. Parallel to the corporate response to environmentalism, the MDBs have taken a series of steps to absorb the ecological question into their agenda.

• In the early 1990s, the Bank had initiated a "forest management and protection" project in the West African country of Guinea; the effort turned out to be an initiative to deforest two- thirds of the remaining pristine rainforest in the country.
• A 1990 World Bank forestry conservation project in the Cote d'Ivoire put a half-million-hectare rainforest under the management of the same corporations that had pillaged the country's timber resources during two previous decades. This logging project, which was approved in 1990 under the Bank's supposedly "environmental" forestry policy, also set the stage for the potential displacement of over 200,000 people who depended on the forest.
• A similar dynamic has taken place with the advent of the Global Environment Facility (GEF), a multi-billion dollar joint project between the World Bank, the UN Development Programme and the UN Environment Programme. For instance, a "model" GEF Natural Resources Management Project in the Congo, which was designed to integrate isolated rainforests into the global economy by opening them up to corporate logging under the pretense of protecting them.

4. Structural Adjustment

The fourth way in which MDB policies serve corporate interests is through so-called "policy based lending" or structural adjustment.

From the 1980s onward, the World Bank/IMF attained a position from which it could dictate macroeconomic policies and effectively wrest sovereign control of entire economic sectors from Southern governments. By 1996 about one-quarter of all World Bank lending was in the form of structural adjustment programs.

These lending policies effectively deconstructed much of the Third World nation state. They did so by conditioning loans designed to resolve balance of payments crises on the privatization of national industries, the removal of barriers to foreign investment in key sectors, the "reform" of financial systems, the gutting and privatization of social and environmental services, and the redirection of economies toward an increasing export-orientation.

Together, all of these components of adjustment effectively pried open previously protected markets to escalating transnational corporate investment.

• Structural adjustment also increased poverty and inequality, while heightening environmental degradation by intensifying the exploitation and export of natural resources.
• Transnational corporations also assumed responsibility for a number of environmental problems as they bought up what had been state-owned power plants, chemical factories, mines and forests.
• The World Bank's adjustment policies exacerbated the South's environmental crisis in no small part, as Philippine scholar Walden Bello writes, through an "ideological bias...against any disincentives that might stand in the way of the operation of market forces...This translated into opposition on the part of the economic authorities to effective environmental regulation by the state."

5. Underwriting Private Capital Flows

The fifth and newest way in which the MDBs serve corporate interests is by either directly lending to or investing in transnational corporate projects, and providing risk insurance for their endeavors in the Third World.

By dismantling key sectors of the nation-states that the World Bank and its sister institutions are chartered to lend to, the MDBs have, in a sense, been working themselves out of a job. Undaunted however, they are remaking themselves as privatized public investors and bankers for the transnationals.

This shift has also allowed the MDBs to sidestep some of the environmental and social controls that more than a decade of activists' campaigns had forced upon them.

• In 1995 the International Finance Corporation (IFC) an arm of the World Bank, was making nearly $3 billion in loans and equity investments for 213 corporate projects in 67 countries.
• The IFC's support for and participation in these investments leveraged another $15 billion in financing for these corporate ventures.
• The World Bank has also created a new entity, the Multilateral Investment Guarantee Agency (MIGA) to provide risk insurance for corporate investment in Southern nations.
• And, with the new slogan "catalyst for private capital flows" the Bank itself has jumped into the private investment business.
• Overall, the World Bank Group, as it is known, takes credit for supporting "about $25 billion of private-sector finance a year, or 10 percent of all investment by private enterprise in developing countries."
• A quick glance at IFC lending also shows that many of the investments and loans it makes are in the most environmentally hazardous economic activities such as power plants, mining, chemical, petrochemical and oil refining, timber, pulp and paper, food and agribusiness, and the automotive industry.

The Future of the World Bank

Promoting private investment in the Third World is not necessarily a bad thing. But when it comes at the cost of social equity and ecological sustainability it is a questionable endeavor at best.

The World Bank Group and its regional cousins would best serve their mandate of eradicating poverty and promoting sustainable development by subsidizing, guaranteeing, financing and investing in ventures that foster organic agriculture, solar and wind power, public transportation, chlorine-free, tree free paper made from agricultural byproducts, and the like.

If these global economic institutions are not able to promote such transformations, it may be high time to close them down.

source: all information from Joshua Karliner, The Corporate Planet: Ecology and Politics in the Age of Globalization, (Sierra Club Books, 1997), now available in bookstores or from Corporate Watch (see below).

WHAT IS WRONG WITH THE WORLD BANK AND THE IMF?

What is the World Bank?

Created at the Bretton Woods Conference in 1944, The World Bank Group is comprised of five agencies that make loans or guarantee credit to its 177 member countries. In addition to financing projects such as roads, power plants and schools, the Bank also makes loans to restructure a country's economic system by funding structural adjustment programs (SAPs). The Bank manages a loan portfolio totaling US $200 billion and last year loaned a record US $28.9 billion to over 80 countries.

What is the IMF?

Also created at the Bretton Woods Conference, the mission of the International Monetary Fund (IMF) is to supply member states with money to help them overcome short-term balance-of-payments difficulties. Such money is only made available, however, after the recipients have agreed to policy reforms in their economies-- in short, to implement a structural adjustment program.

Is structural adjustment working?

No. Structural adjustment has exacerbated poverty in most countries where it has been applied, contributing to the suffering of millions and causing widespread environmental degradation. And since the 1980s, adjustment has helped create a net outflow of wealth from the developing world, which has paid out five times as much capital to the industrialized countries of the North as it has received.

I know there are a lot of qualified people at the World Bank and IMF who are experts in economics and other fields. If structural adjustment doesn't work, then why are they promoting it?

The wealthy Northern countries which control the World Bank and IMF dictate the agendas of these institutions, and their interests are best served by defending the status quo. Furthermore, the Bank's staff is currently dominated by economists who have spent their careers defending the validity of neoclassical economics, the foundation of the World Bank model of development. This orthodox view holds sacred the efficiency of free markets and private producers and the benefits of international trade and competition. Given the lack of accountability to outside parties, there is little incentive for the Bank and IMF to alter the design of structural adjustment, even when faced with mounting evidence attesting to the failure of these programs.

I hear a lot about the debt crisis in the Third World and know that many of the loans are owed to commercial banks and Northern governments. People say that some or all of this debt should be canceled to give developing countries a chance to recover economically. Shouldn't they pay?

Much of this debt dates back to 1970s, when it was lent irresponsibly by commercial banks and borrowed recklessly by foreign governments, most of which were not popularly elected and which no longer hold power. The advent of the debt crisis, which occurred in the early 1980s due to a worldwide collapse in the prices of commodities that developing countries export (e.g., coffee, cocoa) and to rising oil prices and interest rates, forced these countries into a position where they were unable to make payments. Yet there's no such thing as bankruptcy protection for a country, regardless of the circumstances. When the U.S. department store Macy's filed for bankruptcy under chapter 11 in January 1992, it received instant protection from creditors and working capital to keep open. At the same time, when Russia told the West that it could not meet government had to wait for more than a year before the IMF provided financial help.

What is relationship the between debt and structural adjustment?

Since the 1980s the debt situation has steadily worsened, so that now the total debt of the developing world equals about one-half their combined GNP and nearly twice their total annual export earnings. Because of this crushing debt-service burden, foreign governments have virtually no bargaining power when negotiating a structural adjustment program and must accept any conditions imposed by the World Bank and the IMF. And SAPs themselves, by orienting economies toward generating foreign exchange, are designed to ensure that debtor countries continue to make debt payments, further enriching Northern creditors at the expense of domestic programs in the South.

How's the World Bank's record on responsible lending?

In 1992, an internal World bank review found that more than a third of all Bank loans did not meet the institution's own lending criteria and warned that the Bank had been overtaken by a dangerous "culture of approval." Bank officials, in other words, felt heavy pressure to push through new loans even when presented with overwhelming evidence that the project in question was ill advised.

Who makes decisions at the World Bank and IMF?

Decisions at the World Bank and IMF are made by a vote of the Board of Executive Directors, which represents member countries. Unlike the United Nations, where each member nation has an equal vote, voting power at the World Bank and IMF is determined by the level of a nation's financial contribution. Therefore, the United States has roughly 17% of the vote, with the seven largest industrialized countries (G-7) holding a total of 45%. Because of the scale of its contribution, the United States has always had a dominant voice and has at all times exercised an effective veto. At the same time, developing countries have relatively little power within the institution, which, through the programs and policies they decide to finance, have tremendous impact throughout local economies and societies. Furthermore, the President of the World Bank is by tradition an American, and the IMF President is a European.

How is it that U.S. business and other companies benefit from the lending programs at the World Bank?

Development projects undertaken with World Bank financing typically include money to pay for materials and consulting services provided by Northern countries. U.S. Treasury Department officials calculate that for every U.S.$1 the United States contributes to international development banks, U.S. exporters win more than U.S.$2 in bank-financed procurement contracts.

Why is this bad?

Given this self-interest, the Bank tends to finance bigger, more expensive projects--which almost always require the materials and technical expertise of Northern contractors--and ignores smaller-scale, locally appropriate alternatives. The mission of the World Bank to alleviate poverty, not provide business for U.S. contractors.

For more information on the World Bank, the IMF and the 50 Years I s Enough Network contact:

50 Years Is Enough
U.S. Network for Global Economic Justice
1247 E Street, SE
Washington, D.C. 20005
tel: (202) IMF-BANK/ fax: (202) 544-9359
email: wb50years@igc.org

March/April 2000

On the occasion of the first meetings of the governing bodies of the International Monetary Fund and the World Bank in the 21^st century, we call for the immediate suspension of the policies and practices that have caused widespread poverty, inequality, and suffering among the world’s peoples and damage to the world’s environment. We assert the responsibility of these anti-democratic institutions, together with the World Trade Organization, for an unjust world economic system. We note that these institutions are controlled by wealthy governments, and that their policies have benefited international private sector financiers, transnational corporations, and corrupt officials.

We issue this call in the name of global justice, in solidarity with the peoples of the Global South and the former "Soviet bloc" countries who struggle for survival and dignity in the face of unjust, imperialistic economic policies. We stand in solidarity too with the millions in the wealthy countries of the Global North who have borne the burden of "globalization" policies and been subjected to policies that mirror those imposed on the South.

Only when the coercive powers of the international financial institutions are rescinded shall governments be accountable first and foremost to the will of their peoples. Only when a system that allocates power chiefly to the wealthiest nations for the purpose of dictating the policies of the poorer ones is reversed shall nations and their peoples be able to forge bonds - economic and otherwise - based on mutual respect and the common needs of the planet and its inhabitants. Only when integrity is restored to economic development, and both the corrupter and the corrupted held accountable, shall the people begin to have confidence in the decisions that affect their communities. Only when the well-being of all, including the most vulnerable people and ecosystems, is given priority over corporate profits shall we achieve genuine sustainable development and create a world of justice, equality, and peace where fundamental human rights, including social and economic rights, can be respected.

With these ends in mind, we make the following demands of those meeting in Washington April 16-19, 2000 for the semi-annual meetings of the World Bank and the International Monetary Fund:

1. That the IMF and World Bank cancel all debts owed them. Any funds required for this purpose should come from positive net capital and assets held by those institutions.

2. That the IMF and World Bank immediately cease imposing the economic austerity measures known as structural adjustment and/or other macroeconomic "reform," which have exacerbated poverty and inequality, as conditions of loans, credits, or debt relief. This requires both the suspension of those conditions in existing programs and an abandonment of any version of the Heavily Indebted Poor Countries (HIPC) Initiative which is founded on the concept of debt relief for policy reform.

3. That the IMF and World Bank accept responsibility for the disastrous impact of structural adjustment policies by paying reparations to the peoples and communities who have borne that impact. These funds should come from the institutions' positive net capital and assets, and should be distributed through democratically-determined mechanisms.

4. That the World Bank Group pay reparations to peoples relocated and otherwise harmed by its large projects (such as dams) and compensate governments for repayments made on projects which World Bank evaluations rank as economic failures. A further evaluation should determine which World Bank projects have failed on social, cultural, and environmental grounds, and appropriate compensation paid. The funds for these payments should come from the institutions' positive net capital and assets, and should be distributed through democratically-determined mechanisms.

5. That the World Bank Group immediately cease providing advice and resources through its division* devoted to private-sector investments to advance the goals associated with corporate globalization, such as privatization and liberalization, and that private-sector investments currently held be liquidated to provide funds for the reparations demanded above.

6. That the agencies and individuals within the World Bank Group and IMF complicit in abetting corruption, as well as their accomplices in borrowing countries, be prosecuted, and that those responsible, including the institutions involved, provide compensation for resources stolen and damage done.

7. That the future existence, structure, and policies of international institutions such as the World Bank Group and the IMF be determined through a democratic, participatory and transparent process. The process must accord full consideration of the interests of the peoples most affected by the policies and practices of the institutions, and include a significant role for all parts of civil society.

The accession to these demands would require the institutions' directors to accept and act on the need for fundamental transformation. It is possible that the elimination of these institutions will be required for the realization of global economic and political justice.

We commit to work towards the defunding of the IMF and World Bank by opposing further government allocations to them (in the form of either direct contributions or the designation of collateral) and supporting campaigns such as a boycott of World Bank bonds until these demands have been met.

*The International Finance Corporation (IFC) is a division of the World Bank Group. Also included is the Multilateral Investment Guaranty Agency (MIGA), which insures private investments in Southern countries.

 To add your organization to the list of endorsers of these demands, send an e-mail message to <demands50years@yahoo.com> 
with the organization's name, location (city, state, country), and contact person