Development & Aid, Economy & Trade, Headlines, North America

DEVELOPMENT: IMF, World Bank Butt Heads With Critics

Emad Mekay

WASHINGTON, Apr 22 2004 (IPS) - Leaders of the World Bank and the International Monetary Fund (IMF) Thursday disputed charges from critics and activists that the lenders have aggravated poverty in the developing world and devalued the rights of millions of people affected by their programmes.

During the institutions’ spring meetings here, the officials took credit for helping to stabilise the world economy, pull people out of poverty, and educate millions of children. But the opposite is true, argued critics.

"The world economy as a whole has enjoyed a rate of economic growth never before realised in world history," IMF Acting Managing Director Anne Krueger said on the 60th anniversary of both the IMF and World Bank.

"We have had a growth of international trade. We’ve had liberalisation of trade, which has spurred that growth. We’ve had living standards, life expectancies, any measure you name – not just incomes – life expectancies, educational attainments and what have you, going up."

Krueger, whose Washington-based institution is often blamed for the resounding financial meltdown in Asia in the 1990s and in Argentina two years ago, said that the IMF and World Bank had brought about a "better framework internationally, where international financial stability is important."

She also gave the IMF credit for price stability, steady inflation and a better general understanding of governments’ role in the economy.

"Even though we still have many poor peoples, even though we have a lot to do, what we’re forgetting is where things were 50 years ago," added Krueger.

World Bank President James Wolfensohn echoed those statements during a press conference Thursday, disputing some of the accusations of activists and critics from the so-called "global justice movement".

"We’re saying that there has been good progress over 20 years, over the last 20 years, and that is true … and it’s been good progress on a number of things: on literacy, on life expectancy."

The IMF and World Bank came into existence at Bretton Woods in the U.S. state of New Hampshire following the Second World War with the purpose of building a stable global economic framework.

But their critics – who have grown quickly over the past decade as part of the international anti-globalisation movement and include many people from developing countries – gave the two institutions low grades on some of the same issues the lenders boasted about.

At a press conference economists and activists grilled the IMF and the bank about their roles in plunging millions of people into poverty.

"On its 60th anniversary, the World Bank seems to be suffering from a case of institutional amnesia," said Peter Bosshard, policy director at California-based International Rivers Network.

Bosshard told reporters that the bank – which has continually supported major infrastructure projects, including dams – has had a part in displacing more than 10 million people and flooding millions of hectares of land.

Because of its insistence on such mega-projects and its financial backing for them, which eventually found its way to large multinational firms based in rich nations, the World Bank had also helped to push many countries deeper into debt, he added.

"In its 60th year, one would hope that the bank would be a bit wiser by now," Bosshard said.

But Wolfensohn argued that his organisation is much improved, and that critics were focused on old problems.

"I’d say to them that we’re doing a 10 times better job than we ever did in the ’80s, because I think everybody now is coming to understand that the issue of human rights, that the issue of effectiveness of programmes on relocation, is not just a fringe activity but that it is central," Wolfensohn said.

But the international advocacy group Oxfam also contradicted the rosy assessment of the top officials.

"The bank and donor countries are still failing the poor," said Max Lawson, Oxfam policy advisor. "Urgent increases in both debt relief and donor aid are vital. After 60 long years, the bank is old enough to know better."

"Donor decisions are crippling countries twice over – through failing to deliver debt relief while at the same time refusing to provide aid so that millions of children will never complete a basic education," Lawson added.

The critics, who include religious groups and other civil society organisations, said the institutions need to act on many fronts.

They demanded that the bank and the IMF open their meetings to the media and the public and end proposals, including privatisation of national assets and introduction of user fees, which hinder people’s access to food, clean water, shelter and health care..

They also called on the bodies to stop supporting socially and environmentally destructive projects, like oil and gas developments and dams. The insisted that the two lenders cancel impoverished nations’ debts, a call that Wolfensohn rejected.

"No one wants to not have social programmes, but as with an individual who has some debts, it would be much better to be able to spend it on things that you want, and ignore obligations," he said.

"And at some point as an individual, you can’t just go on not paying your credit cards and not paying your bank and not paying your mortgage, and saying ‘but really what I want to do is to educate my kids’."

"Well, of course you want to educate your kids," Wolfensohn added, "but at a certain moment the rules are that if you want to keep playing the game, you do have some other obligations."