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FINANCE: IMF and World Bank Fire Development Blanks at Meetings

Analysis - By Emad Mekay

WASHINGTON, Apr 14 2003 (IPS) - Despite launching their semi-annual get together asserting that they are not political bodies, last weekend revealed that the International Monetary Fund (IMF) and World Bank are prone to manipulation by their richest members, a weakness that can have the effect of sidelining pressing development issues.

"We are not a political institution, and our articles of agreement prevent us from interfering in the political or domestic affairs of a country," Jean-Louis Sarbib, vice president of the Bank’s Middle East and North Africa regions, declared to the gathering of some of the world’s top economic officials and development activists on Friday.

Yet within two days, Washington managed not only to impose the reconstruction of Iraq – a country it is invading – along with a proposal to cancel part of the country’s debt, on the meeting’s list of priorities, it succeeded in getting the initially reluctant institutions to pledge to act as soon as possible.

An originally non-committal Bank President James Wolfensohn, who first said he needed U.N. approval before his mammoth organisation could intervene in Iraq, said at the meetings’ final press conference that the Bank is now poised and ready to do its bit in rebuilding Iraq and studying what to do with its debt.

No U.N. approval is needed, he added.

The institutions’ officials told reporters that it is certain now that they will send fact-finding missions to the devastated Arab country to assess the cost of reconstruction, debt relief and how to get the nation working once security is returned.

While that is good news for the country that laboured under economic sanctions for more than a dozen years before the U.S.-led invasion, development, poverty, education, public health, developing countries’ debts and AIDS – all major world crises that threaten the lives of billions of people and represent the two agencies’ original mandate – appeared to take a distant backseat this weekend.

The Bank’s chief economist, Nicolas Stern, half-heartedly repeated warnings, heard so many times in the past two years that they have become a standard line, that the U.N.’s so called Millennium Development Goals to improve the living standards of the world’s poorest people will not be achieved without additional aid and freer trade.

But even that could be highly self-serving. The Bank has been accused by Washington of not employing its aid to achieve progress on the ground. The institution’s stock answer, repeated at these meetings, is that aid is working but that more is needed to produce even better results.

Free trade has proved to be a red herring towards development, since the Bank admits that while poor nations have liberalised their trade, much remains to be done by rich nations, which subsidise and support much of their economies.

The development committee, the senior decision making body of the Bank and IMF, was also short on results this weekend. It reiterated a commitment to meet another serious challenge – financing the first group of countries in its Education Fast Track Initiative, an ambitious plan to put some 120 million children back in primary schools.

But no new money was offered and no clear time frame for expanding the programme was released, complained Oxfam, a leading development group.

"Rich countries are firing blanks in the war against poverty. They couldn’t find 430 million dollars to kick-start the Fast Track initiative to get every child into school in seven countries," said Phil Twyford, advocacy director.

The speed with which political will and resources were mobilised to invade, bomb and possibly reconstruct Iraq stands in stark contrast to the willingness of the rich countries to tackle poverty in developing countries, he added.

Twyford said that while some 80 billion dollars, approved by the U.S. Congress last week for the war on Iraq, can be found for military action ”in a second”, there was no sign of the 50 billion dollars needed to reach the Millennium Goal of halving poverty by 2015.

”It’s a clear case of money for the war, but nothing for the poor," he said

Hopes among some developing nations and civil society groups, which in many ways function as watchdogs over the two now controversial institutions, that poor nations would receive more authority within the Bank and IMF were also dashed.

The best that Manuel Trevor, South Africa’s finance minister who heads the development committee, could report was that the issue remains on the agenda for upcoming meetings.

Representation was supposed to be high on the list of priorities at the meetings. The G7 most industrialised nations and other Western states can boast of one executive director each on the boards of directors, while the ratios are 20:1 for some African countries.

Nor did the meetings produce significant reports of progress on poverty reduction in developing countries or in addressing their crippling debts, which as in the case of Iraq, were often incurred in previous decades by undemocratic regimes and dictators who have been replaced.

AIDS, believed to be the greatest global threat to human security today, was, too, a word mentioned in passing at the gathering. Washington-based Africa Action reacted by launching a call for ”Money for AIDS, Not for War” on Monday, backed by dozens of civil society groups.

”It is both a rejection of U.S. aggression in the Persian Gulf and an affirmation of the real priority that we should be addressing – the global AIDS crisis,” Executive Director Salih Booker said in a statement.

”This year, while the U.S. focuses on potential threats in Iraq and possible terrorist attacks here at home, it is certain that AIDS will kill more than three million people globally, most of these in Africa,” he added.