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Lawyers, Guns and Money
The IMF and World Bank Celebrate Sixty Years of Infamy

By Benjamin Dangl

4/27/04

The Upside Down World news

Amidst belly dancers, jugglers and heavily armed police, activists from around the world converged in Washington DC on April 24, 2004 to wish the International Monetary Fund (IMF) and the World Bank a very unhappy 60th birthday. While international bureaucrats congratulated each other on one more year of “reducing poverty around the globe”, a colorful array of activists in the streets protested against over half a decade of IMF and World Bank structural adjustment programs, undemocratic decision making and destructive free trade agreements.

Yet unlike previous years, activists made no major attempts to block the transit of IMF and World Bank officials through direct action, and the low number of protesters in attendance was in sharp contrast to the enormous March for Women’s Lives the next day. Why did a million people show up at the March for Women’s Lives in DC on April 25 and only a few thousand at the IMF/World Bank march? The IMF and the World Bank are instituting policies that are destroying economies, ecosystems and the lives and rights of men and women around the world. Shouldn’t this result in a huge outpouring of protesters as well?

Some would say that people are more likely to head to the streets when their basic rights are directly under fire. Citizens in Bolivia protest when their water is privatized, or in India when a dam is going to flood a village, or in the US when the Bush administration tries to control what choices women have about their own bodies, and what kinds of health care and birth control are available. When the going gets tough, the tough get angry, and maybe the IMF and World Bank policies aren’t forcing millions of Americans to the streets because citizens don’t feel directly affected by these policies.

But they are. The fact that countless jobs are being exported from the US through IMF and World Bank facilitated programs and trade agreements such as NAFTA, which allows US businesses to exploit workers abroad and lay off workers at home, has become a hot issue in American politics and in the 2004 presidential election. Chris Doran, an organizer with the Mobilization for Global Justice, one of the groups in charge of the demonstration, commented on this. “What were we talking about five years ago at the protest in Seattle? Were we talking about poor people in the global south? No, we were talking US jobs going overseas – it’s not good for anyone. Five years later, we’re justified, we’re right. The fact that they’ve had to raise this issue of outsourcing in this presidential election is a tremendous victory for us.”

Many activists at the April 24, IMF/World Bank march had stories about outsourcing affecting their jobs and towns. Henrietta Levine from Rochester, New York explained how Eastman Kodak, located in Rochester, laid off nearly 40, 000 workers in 2001. The camera company is now employing much cheaper labor abroad. Her husband, Max, had a similar story, “In Buffalo, NY there was a windshield wiper company called Trico. They closed that plant down because the unions there were asking for a wage increase. They moved the complete plant down to Mexico and paid the workers there 50 cents an hour. The price of the wiper blade didn’t come down one penny.”

Besides outsourcing jobs in the United States, the other of side these policies play themselves out in farms, factories and sweat shops around the globe. As Ricardo Navarro, an El Salvadoran with Friends of the Earth International, explained, “The big food corporations are destroying small farmers in the US. They are also destroying farmers in other countries. This is not a fight against countries; on the contrary, it is a fight of people against transnational corporations.” And for 60 years, the IMF and the World Bank have been these corporations’ best friends.

Globalization and its Discontents

In 1944, at the Bretton Woods Conference, the IMF and World Bank were created to alleviate poverty and shape a new global economic order at the end of World War II.
Currently, the World Bank distributes loans to governments in need, but first requires that those governments win the IMF seal of approval. The IMF facilitates the structural adjustment programs and often, making sure the creditors get paid takes precedence over what would be beneficial for the country.

The IMF’s prescription for job creation and economic success often entails eliminating government intervention in business, lowering trade barriers, privatizing public sector organizations and opening economies to transnational corporations. This forced liberalization usually takes place too fast and without proper trade and business safety nets in place. And though foreign investment and business might create jobs and open up the country to new markets, they also squash local competition and use the monopoly to raise prices and exploit workers.

As Nobel Prize winning economist, Joseph Stiglitz points out in his book, Globalization and its Discontents, part of the problem with the IMF is that “it does not acknowledge that development requires a transformation of society.” He argues that instead of rapidly enforced free trade policies, the IMF should focus on programs in education, land reform and health care to generate social and economic improvements. In the end, as Stiglitz explains, “The only safety net is provided by family and community, which is why it is so important, in the process of development, to do what one can to preserve these bonds.”

Another criticism of these institutions is their notoriously undemocratic decision making processes. Unlike other international organizations, voting power at the IMF and the World Bank is based on financial clout. Within this framework, the US controls 17% of the voting power while world’s seven most powerful countries control 45% of it. Though IMF and World Bank policies deeply affect the world’s most impoverished nations, the IMF has always had a European president and the World Bank president has always been an American.

Alternatives

The demand at the April 24 march in DC to drop the debt of developing countries proposed a solution to these harmful policies. Many activists believed, for example, that nations in Africa should have the freedom to spend their resources on fighting the AIDS epidemic instead of using them to pay back enormous IMF and World Bank loans. The demand to drop the debt has been met, unsurprisingly, with resistance from the IMF and World Bank. However, the US government is currently pushing for the elimination of Iraq’s debt because, as US officials argue, much of the loans were illegitimately used by Saddam Hussein and therefore, the current citizens and political leaders shouldn’t have to repay them. Advocates for dropping the debt in other countries argue the same. Much of the current debt in Latin American and African nations was accrued by undemocratically elected and corrupt leaders, and is now being paid back with interest at the expense of the poorest sectors of society.

But there are success stories within this cycle. It is no coincidence that Mobilization for Global Justice suggested bringing pots and pans to bang on at the march in DC in the style of the piqueteros in Argentina. As an answer to their economic crisis in 2001-2002, Argentines have created some of the most remarkable experiments in direct democracy in Latin America. By organizing locally and occupying abandoned factories and buildings to create autonomous communities and programs, many Argentine citizens have responded effectively to the recent collapse of their economy.

Their president has as well. With support in the opinion polls at 85 percent, Nester Kirchner has taken on the neoliberal policies that led to the nation’s economic crisis. He has put public funding back into social programs and is also hinting that his administration may refuse to pay back their IMF and World Bank loans entirely. These kinds of unconventional practices resulted in a rapid economic growth rate of 8.6 percent for last year, with 7.1 percent projected for 2004.

The Backlash of Globalization

As the march gathered in front of the World Bank building in Washington DC, the reflection of a raucous collection of angry activists was mirrored in the institution’s shiny windows, and Ricardo Navarro screamed from the back of a pickup truck, “Latin America is not for sale, Africa is not for sale, Asia is not for the sale, the earth is not for sale!” The crowd screamed back.

Though the numbers of protesters at the April 24, IMF/World Bank march were low, the event was a somber reminder that even after sixty years of infamy, these organizations are still operating under the influence of shady intentions and institutional amnesia. While people in numerous countries have wide-ranging complaints about the IMF and the World Bank, more US citizens are joining this debate as outsourcing, destructive trade agreements and other effects of the backlash of globalization take their toll.

Copyright © 2004, The Upside Down World news

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