Development & Aid, Economy & Trade, Global, Global Geopolitics, Headlines

DEVELOPMENT: IMF, Bank Also Promote Unfair Trade, Say Activists

Emad Mekay

WASHINGTON, Sep 25 2003 (IPS) - Groups that campaigned against the failed World Trade Organisation (WTO) talks earlier this month are warning developing nations of ”hidden culprits” in the unjust global trading system that they successfully opposed in Cancun..

Organisations that monitor the International Monetary Fund (IMF) and the World Bank say that the two bodies, and not only the WTO, have long sought to impose trade rules that favour rich nations at the expense of developing countries. They are warning countries to beware of the institutions’ trade advice.

The groups say the IMF and the Bank should also share responsibility for an unfair trading system that is putting increasing pressure on the world’s poor and the environment.

In Cancun, a strong alliance of developing countries, the ”Group of 22”, backed by protest groups, banded together to demand that the WTO make trade more just. Ultimately, the talks failed after the new group accused rich countries of ignoring their concerns, particularly agricultural subsidies.

But activists fear developing nations may be less suspicious of the two northern-dominated Washington-based institutions because the IMF and Bank push so-called free trade under the guise of superior knowledge.

The World Bank in particular has sought to position itself as the ”knowledge bank”, because of its self-styled capacity for ”high-quality” data-gathering and analysis, while its sister institution, the IMF, claims superior economic insight and extremely qualified staff.

Both organisations boast huge numbers of PhD holders and it is not unusual for their employees to include former finance and economic ministers.

But the protest groups charge that the bodies’ staffs offer a unilateral view on the world economy – a neo-liberal assessment dictated by their political masters from the Group of Seven (G7) most industrialised nations, including the United States and Britain.

”They are all trained along the same lines with little room for disagreements and dissent,” said Korinna Horta, an economist at Environmental Defence.

Developing countries, she added, ”should be encouraged to raise more questions”.

”The Bank research machinery is at the service of one thing: torture the numbers until they confess what the interests of the most powerful members want them to confess,” says Aldo Caliari, from the Washington-based Centre of Concern.

For example, in its annual publication, ‘Global Economic Prospects’, released days before Cancun, the Bank asserted that a successful outcome of the trade talks would enable ”144 million additional people” to escape from poverty by 2015 – a figure reminiscent of promises made after the Uruguay Round of trade talks in 1994.

”When you see those figures being thrown out you can’t help but recall the Bank figures that predicted huge income gains for developing countries coming out from the Uruguay Round. And then, what happened?” Caliari asked, referring to current high levels of poverty worldwide.

Recent announcements demonstrate that the two international financial institutions (IFIs) came close to echoing demands by rich nations that developing countries further open their markets, despite growing public calls that world trade would best be served if rich nations cut their domestic subsidies.

Just as the WTO talks began Sep. 10, the World Bank and the IMF said they were launching new initiatives to help poorer developing countries liberalise their trade.

The Bank said it would offer specific loans that could be used to expand activities to up-grade nations’ competitiveness, such as training workers and reforming trade-related institutions according to Bank prescriptions.

”Such loans can be accelerated and, depending on country circumstances, could be additional to existing country lending levels,” added the Bank.

Also ahead of the Cancun meeting, IMF Managing Director Horst Koehler and World Bank President James D. Wolfensohn sent a joint letter to Supachai Panitchpakdi, director-general of the WTO, reiterating the institutions’ commitments to persuade developing countries to bend to a more open trading environment.

They would assist in ”designing policies, institutional reform, and investment programmes to address obstacles to trade expansion” in developing nations, they wrote.

Both institutions also released a number of publications and policy advice that included strong messages to poor nations to open their doors and liberalise trade, including the IMF’s semi-annual World Economic Outlook, which gives the Fund’s predictions for the global economy.

Bank publications included regional studies, such as a report on trade and job quality in Latin America and another on the impact of trade and integration in East Asia and the Middle East.

At the country level, in the past two years the Bank has launched comprehensive studies on ways to bump up trade in 20 low-income countries, in many of them as part of the so-called Integrated Framework for Trade-Related Technical Assistance.

And although the Bank and the IMF have called on rich nations to open their markets to products from poor nations – most recently at this week’s annual meetings in Dubai – the critics say that the bodies base their support for free trade on the wrong grounds.

”For the last two years, the World Bank has been arguing the case of developing countries, saying the north should reduce its agricultural subsidies,” said Demba Moussa Dembele of the Forum for African Alternatives in Dakar, Senegal, in a statement.

”But it was the World Bank itself which insisted our countries open up to trade and investment from the north, and told us to trust in global markets. Did they not know then about the market distortions created by the subsidies and trade restrictions in the north?” he asked.

The activist said that after ”advice” like that, the Bank and the IMF should not just be urging rich nations to change their policies, but ”should take material responsibility for misleading us down the path of rigged prices and poverty”.