NGOs and Pretoria nod-nod, wink-wink to IMF/Bank

The 60th birthday of the Bretton Woods Institutions – the World Bank and International Monetary Fund (IMF) – will be formally celebrated early next month, amidst the distraction of the US presidential campaign. Finance ministers and bankers will gather in Washington for the terrible twins? annual meeting, and the DC-based Mobilization for Global Justice and 50 Years is Enough! Network will host some small-scale events.

The two major International Financial Institutions (IFIs) continue to show their disdain for societies and environments. Around the world, civil society groups, especially those associated with the “IFI’s -OUT!” movement have declared 1-12 October an international protest period.

The institutions are simply impervious to reform, as illustrated by last week’s sneaky $103 million Bank loan aimed at privatising Ghana’s urban water supplies (see http://www.wateractivist.org and Bond’s ZNet Commentary of 25 May 2001) was actively opposed by the mass Campaign Against Privatisation.

Let us first dwell a bit more on a problem briefly raised in Bond’s July 22 ZNet commentary: NGO collaborationism.

To illustrate, a few weeks ago, World Vision disturbingly requested a greater IMF role in country financial “surveillance,” in spite of the IMF’s record of incompetence during the emerging markets crises (https://worldvision.org.nz/reports/onestepforward.pdf).

Further, one reason for the World Bank’s awful August 3 decision to reject a recommendation to halt oil/gas financing made by its own multi-stakeholder Extractive Industries Review (EIR), was the NGO position adopted in preceding days. Weakening resolve, after a short burst of Seattle/Washington/Prague militancy in 2000, has become debilitating in many established NGOs, and in turn empowers the worst elements in the Bank and IMF.

Four years ago, more than 200 groups from more than 50 countries urged the Bank to stop financing fossil fuel extraction and mining projects. In December 2001, ten senior Bank managers met a dozen civil society leaders to explore a new framework for dialogue and engagement: the Joint Facilitation Committee (JFC).

New NGO alliances were seen as crucial in the recent wake of a World Commission on Dams harshly critical of Bank projects, and the damning Structural Adjustment Participatory Review Initiative, both of which the Bank tried to sabotage (by encouraging Third World state non-compliance and by walking out, respectively).

The JFC emerged just in time. The Bank established or expanded lucrative financial and institutional relationships with several key NGOs, including the US-registered, Johannesburg-based Civicus.

Alongside colleagues in the Association for Women’s Rights in Development, Europe-Central Asia NGO Working Group, the International Confederation of Free Trade Unions, the World Confederation of Labour, the Worldwide Initiatives for Grantmaker Support, and the World YWCA, Civicus purged the EIR recommendation to end oil and coal lending, in a letter to Bank president James Wolfensohn two months ago, by proposing much weaker reforms.

The July 19 JFC letter contained only a transparently hollow threat: “The World Bank’s future relationship and interactions with civil society are at stake.” But Civicus had provided Wolfensohn an internal poll twelve days earlier, in which 52% of its NGO members reported “good” relations with the Bank and 80% desired further JFC engagement – in sharp contrast to the growing global grassroots/labour mobilisation to disempower and defund the Bank (http://www.worldbankboycott.org).

Consider the cozy personal interconnections involved. During 2002, after Civicus took the lead JFC role, it paid Oxford-based Tim Cullen $51,981 for consultancy services. Until 1999, Cullen was World Bank senior advisor for external affairs and chief spokesman, after a career at Ford Motor Company and the subsequently-bankrupted Continental Illinois Bank. Perhaps the Cullen connection was a wise investment: the Civicus secretary general was subsequently invited to give the World Bank Presidential Lecture in February 2003.

Certainly, the JFC NGOs were not the only conflict-avoiders when it came to the main EIR recommendation. A July 7 NGO sign-on statement to Wolfensohn (arranged by can’tholic Relief Services) also failed to mention the EIR’s main recommendation, halting oil and coal financing. Many of the NGO signatories possibly put their name on the counterproductive letter out of ignorance, while some might argue that the main struggle was already lost.

But the letter to Wolfensohn included this brown-nosing Q&A: “Would the Bank continue to lend even if a government declined to be transparent about its own revenues? To do so would be to seriously undermine the Bank’s own credibility, and worse, its own aims of promoting development and reducing poverty.” Once you worry about Bank credibility and accept the myth of poverty-reduction, it’s time to look in the mirror and check whose side you’re on.

Likewise, at the beginning of last month, Civicus’ widely-distributed email newsletter ran the EIR debate as the main headline, yet only provided readers with the World Bank’s side of the story. Two days later, probably knowing that at least a critical mass of establishment NGOs would meekly accept the decision, Wolfensohn and his board rejected the recommendation to quit financing oil and coal.

A few NGOs, including Friends of the Earth International and the Institute for Policy Studies? Sustainable Energy and Economy Network, were appropriately furious, but the damage by their colleagues had been done. Global warming, resource wars, corruption, destruction and death in indigenous communities and ecological degradation will intensify, in part thanks to the collusion and failure of spineless NGOs.

Such elite-pacting tendencies are also a serious problem in South Africa – dating to the early 1990s when Pretoria’s outgoing racial-apartheid regime and Johannesburg big business together nurtured friendly African National Congress neoliberals to codify class apartheid. One marker was an $850 million IMF loan in December 1993, with formulaic neoliberal strings attached.

The problem is sometimes counteracted by activist pressure. In late 1996, IMF managing director Michel Camdessus visited Johannesburg, catalysing the launch of the Campaign Against Neoliberalism in SA (the main precedent to the Social Movements Indaba, which hosts South Africa’s anti-imperialist demonstrations). Camdessus attracted several vigorous protests, and trade unionists angered finance minister Trevor Manuel by refusing an invitation to chat with the IMF boss. When Camdessus? successor, Horst Kohler, arrived four years later, Jubilee SA and their community allies welcomed him with a spontaneous, disruptive demo.

This week, Kohler’s replacement, former conservative Spanish finance minister Rodrigo de Rato, maintained the legacy, by asking on very short notice to meet the “Community Constituency” of the National Economic Development and Labour Council (a deal-making stakeholder forum). The convenor, Selby Shezi, organised a boycott: “We are aware that he has spent days talking to business and government but did not even have the courtesy to notify the community and labour constituencies that he would be visiting until the eleventh hour.

Even if there’s a new managing director, it is business as usual at the IMF. The Fund is not serious about addressing the problems of economic development in South Africa and is not interested in the views of the workers and poor of our country.”

Aside from invitation etiquette, why is civil society so hostile to Rato? Johns Hopkins University professor Vicente Navarro provided the IMF leader’s unauthorized biography (on 19 June at http://www.counterpunch.org): “Rato is of the ultra-right. While in Aznar’s cabinet, he supported such policies as making religion a compulsory subject in secondary schools, requiring more hours of schooling in religion than in mathematics, undoing the progressivity in the internal revenue code, funding the Foundation dedican’ted to the promotion of francoism (i.e., Spanish fascism), never condemning the fascist dictatorship, and so on.

In the economic arena, he dramatically reduced public social expenditures as a way of eliminating the public deficit of the Spanish government, and was the person responsible for developing the most austere social budget of all the governments of the European Community. The elimination of the deficit in the Spanish government’s budget has had an enormous social cost.”

The World Bank’s September 8 Press Review service summed up the marching orders: “During his two-day visit, de Rato praised President Thabo Mbeki and his economic team for the progress South Africa had made in rebuilding its economy. The IMF particularly supported the government’s policy of privatising state assets, he said.

Asked about the job losses associated with privatization, he answered that the loss of jobs should be compensated for by increased growth and efficiency in the country as a whole. The IMF recommended a more flexible labor market to increase employment in South Africa. “It is not good for government to intervene,” de Rato said. “The IMF saw room to ‘s trengthen’ privatisation of the country’s electricity sector.”

In reality, South Africa has lost at least 100,000 jobs due to privatisation, as unemployment has doubled since liberation in 1994. Periodic labour/community campaigning has at least slowed down electricity privatisation, so de Rato was making quite a brutal political intervention.

Surely then, Rato was a good choice to run a pathologically undemocratic institution. Recall that Sub-Saharan Africa has only two executive director seats on the 24-member IMF/Bank board, while eight rich countries have one seat each. In response, the policy-making Development Committee, chaired by South Africa’s Manuel, offered merely a “narrow, technocratic” governance strategy – as the Financial Times interpreted – which would add just one additional representative from the Third World to the board.

At the 2003 IMF/Bank annual meeting in Dubai, when asked why no progress was made on Bank/IMF democratisation, Manuel answered, “I don’t think that you can ripen this tomato by squeezing it.”

The reluctance to squeeze was again evident in March this year, when Manuel sent a sparing two-page letter to fellow Committee members, arguing that reforms on IMF/Bank voting rights were “likely to be postponed for some time”. At the following month’s Bank/IMF spring meetings in Washington, Manuel made no progress, even on his milquetoast idea that an ?eminent persons group? produce a neutral report on board governance within a year. Nor did Manuel’s letter refer to the highly controversial question of who would run the IMF.

There was, at that very moment, a minor palace revolt underway – involving even some leading IMF/Bank directors – against the selection method. Ironically, notwithstanding four years of lobbying by Manuel and other Third World politicians for Bretton Woods reform, the succession of IMF leadership was less amenable to Africa in 2004 than in 2000.

In the earlier struggle over the job of managing director, Africa’s finance ministers adopted what Time magazine described as a “clever” strategy: nominating Stanley Fischer, the Zambian-born, South African-raised acting managing director of the IMF.

Fischer’s “fatal flaw”, according to Time, was his US citizenship. Kohler got the job instead, thanks to the unwritten rule that divides such spoils between the US and Europe. In 2004, the African finance ministers made no such clever attempt, and instead meekly expressed hope for a few more advisors to Rato and a few more resources for the two African directors.

Meanwhile, the continent’s popular movements continue to speak out against the Bretton Woods Institutions. Three months ago, a Cape Town meeting of Jubilee South Africa members and allies from ten African countries, Latin America and Asia called for full unconditional cancellation of Africa’s total debt; reparations for damage caused by debt devastation; an immediate halt to Bank/IMF debt relief and poverty-reduction scam programmes; and a comprehensive audit to determine the full extent and real nature of Africa’s illegitimate debt, the total payments made to date, and the amount owed to the continent’s people.

Last week, IFIs-OUT! issued a call for robust protest against the Bank and IMF in early October. Their statement can be found and endorsed at http://www.ifi-out – if you can’t be in Washington to demand the institutions’ early retirement – at 60, what any civilised society should offer as an option – then please help the IFI-OUT! demonstrators get more publicity and resources for their worthy cause.

(Dorsey is assistant professor at Dartmouth University. Bond – [email protected] – is author of *Talk Left, Walk Right: South Africa’s Frustrated Global Reforms*, http://www.unpress.co.za.)

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