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New World Development Report Repackages Old Ideas

WASHINGTON, Apr 11 2011 (IPS) - With over 1.5 billion people living in countries blighted by incessant or recurring violence, the World Bank’s annual World Development Report (WDR), with this year’s focus on how conflict derails development, was anxiously received Monday by scores of development agencies, governments and NGOs all over the world.

But many progressive economists say the document does not stray far from the neoliberal policies that have maintained a global status quo of inequality.

“Though the World Bank stresses the need for stronger institutions, this rhetoric is not always in line with actual policy,” Mark Weisbrot, economist and co-director of the Washington-based Center for Economic and Policy Research (CEPR) told IPS.

“In South America, for example, a lot of governments are trying to do the right thing but don’t have the administrative capacity and that’s something the World Bank could actually contribute to,” he said. “The problem is that the World Bank is part of a consortium with the International Monetary Fund and so they end up generally supporting policies that reduce the capacity of governments by focusing on aid from the outside.”

“Though I agree with the World Bank’s priority to engage with civil society, this needs to be combined with broader economic reforms. For example, of the 51 countries classified as Least Developing Countries 40 years ago, only three have graduated. So this shows you what a structural problem we are dealing with,” Weisbrot added.

In search of historical context

In a press release accompanying the report's launch, Zoellick argues that failed states "drag down neighbours with violence that overflows borders, because conflicts feed on narcotics, piracy and gender violence and leaves refugees and broken infrastructure in their wake […] Their territories can become breeding grounds for far-reaching networks of violent radicals and organised crime."

According to Dahi, "This discussion completely ignores how neo- colonialism and imperialism has played a role in causing states to fail. The post-war period saw extensive interference into the politics and economics of developing countries primarily by the U.S. and West - Afghanistan did not become a failed state on its own, it was made a failed state by outside powers."

He added, "Without the recognition of this historical role we cannot begin to reverse these processes. What about Mexico? Can the problem of organised crime and poverty be separated from the disastrous NAFTA, which was blessed by all multinational institutions, including the World Bank?"

"Also, what about states that regularly invade, bomb, and assassinate people in other countries, or that occupy an entire population, such as the U.S. and Israel?" Dahi asked. "Are these examples of successful states? These are questions that need urgently to be addressed in the coming years."

The WDR 2011, entitled “Conflict, Security and Development”, is essentially the brain-child of World Bank president Robert Zoellick.

Addressing the International Institute of Strategic Studies in 2008, he first highlighted the grave impacts of what he calls “fragile states”, institutionally, politically and economically weak nations that are an international impediment to the Bank’s twin goals of sustainable growth and poverty-alleviation.

According to the WDR, children living in fragile states are twice as likely to be undernourished and three times as likely to be out of school; no low-income ‘fragile’ or conflict-ridden country has yet achieved a single Millennium Development Goal (MDG); and poverty rates are 20 percentage points higher in countries affected by cycles of violence than other countries.

Civil conflicts cost the average developing country roughly 30 years of GDP growth – all undeniable indicators that exhaustive changes in the global system are required in order to overcome downward-spiraling conditions for over 17 percent of the world’s population.

In a positive step forward, the WDR this year adopted a unique compilation methodology, prioritising pre-existing local research and national data while generating its own broad conclusions and recommendations.

“We realised that the international community has to do things differently,” Nigel Roberts, co-director of the WDR, told a press conference here Friday.

“Violence in the 21st century is fractured, intense, complex, entrenched and hard to remove, so national efforts are required over and above solutions imported from the outside; knowledge of how to deal with violence lies with local practitioners, not with Western agencies and international academic institutions,” he said.

The report enumerates four basic tenets that must be urgently addressed if cycles of violence are to be halted and lasting progress brought into states that have endured several generations of terror, political repression and economic injustice: improving institutional legitimacy; investing in citizen security, justice and jobs; adopting a multi-tiered national-cum-regional approach to change; and being mindful of a changing global landscape where emerging middle-income countries and regional institutions must be empowered to play a much greater role in defining the 21st century agenda.

Poignantly, Justin Lin, the chief economist of the World Bank, proclaimed, “Bread and freedom is not a question of either/or. Each is a prerequisite for the other and we must strive simultaneously for both.”

Various economists and policy heads note that such grandiose plans, re-packaged for a new year, do not stray from the old neoliberal agenda, whose methods have been tried and failed, largely to the detriment of the very populations they supposedly seek to fortify.

“In the last decade the World Bank has been trying to reverse its disastrous neoliberal stance of the 1980s and early 1990s by focusing more on human development,” Omar Dahi, a professor of development economics at Hampshire College, told IPS. “However, it is still an open question whether they have abandoned the neoliberal model at the macro level with its focus on trade liberalisation and reliance on foreign investment.”

“This model is no longer tenable,” he stressed.

“The current focus on institutions is a welcome departure from mere focus on integration (i.e. trade and financial liberalisation) but institution building is a difficult process,” he added. “Take Egypt, where the elite capture of the state prevented any meaningful attempt to reform or produce independent institutions, for example – this is where supporting grassroots organisations can be helpful since they act as both an alternative development model that does not rely on the paradigm of growth as well as acting as checks and balances on the performance of the state.”

“I stress the need to empower labour and peasant organisations – cooperatives rather than NGOs,” Dahi said. “The former are ones that are truly representative of the working and poor class whereas many NGOs usually reflect the opinions of a very few people, no matter how well intentioned those people are.”

While espousing support for strong democratic institutions, the WDR also fails to acknowledge that the World Bank’s executive board – its most powerful decision-making body – is dominated by the five richest donors, currently the United States, Japan, Germany, France and the Britain United Kingdom.

“This is a moment for the World Bank itself to be democratised so that developing countries can have a larger say in the way it operates. They cannot push for good governance when they are an example of authoritarian governance,” Dahi told IPS.

In response to the report’s discussion of terrorism, Daniel Gorevan, a spokesperson for Oxfam International, said, “One issue that the report fails to address is the impact international assistance focused on short-term military or security objectives may have on exacerbating violence.”

“We’re seeing a worrying increase in the level of militarised or politicised aid. That’s problematic, especially if this assistance doesn’t address the root causes of conflict and puts communities or aid workers’ lives at risk,” Gorevan added.

“Since 2001, there has been a growing trend of aid being used to win ‘hearts and minds’ in conflict but it is often poorly conceived, ineffective, and in some cases has turned beneficiaries and aid workers into targets for attack. Aid directed to short-term political and military objectives fails to reach the poorest people. It also fails to build long-term security either in fragile states or, ultimately, for donors themselves,” he concluded.

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