In 1994, when the IMF and World Bank were celebrating the fiftieth anniversary of their creation, very few people in this country could tell you anything about the twin fixtures of corporate globalization. "Globalization" itself was only beginning its life as a buzzword, almost always used to celebrate an uncontroversial march of progress into the 21st century. Ten years, several regional financial crises, and hundreds of worldwide protests later, the cheerful anonymity that shielded these institutions from criticism has long since disappeared.
On April 24, protesters rallied outside the spring meetings of the IMF and World Bank to wish the financial bodies an unhappy sixtieth birthday. They highlighted the dramatic manner in which the development debate has changed in just a few years. And they denounced the nefarious IMF/World Bank policies that remain important elements of the Bush administration’s imperious foreign policy.
Much of the credit for the IMF/World Bank’s deepening image crisis of past years belongs to the organizations of the 50 Years Is Enough Network. Ten years ago, a diverse coalition of environmental, faith-based, and development policy groups formed the network, which has expanded to include over 200 US organizations and 185 international partners in more than 65 countries.
Their aim was to publicize grassroots criticisms of the harms inflicted by the IMF and the World Bank on the developing world, and to advance a series of sweeping reforms. In the fall of 1995, they gathered over a hundred people to demonstrate outside the institutions’ meetings. By April 2000, in the wake of the Seattle protests, that number grew to 25,000. US mobilizations have been mirrored by raucous demonstrations overseas, many in the countries most affected by IMF/World Bank policy.
The demands of the weekend’s protest mirror the original platform promoted by the network ten years ago: democratic reforms to force greater openness and accountability upon bodies accustomed to directing foreign economies based on closed-door sessions in Washington, DC. An end to structural adjustment mandates which increase poverty and inequality in the developing world. Discontinuation of the many IMF/World Bank projects that failed to meet even rudimentary environmental standards. And debt cancellation for poor countries whose foreign debts prevent them from making basic investments in health and education.
Today the legitimacy of those demands, or at least moderate versions of them, is acknowledged by virtually all fair-minded observers of development policy, including a growing number who have defected from the World Bank itself. Joseph Stiglitz, a Nobel laureate and former Chief Economist at the Bank, states that "even those in the Washington establishment, now [agree] that rapid capital market liberalization without accompanying regulations"–a core element of neoliberal globalization that contributed mightily to financial collapse in East Asia–"is dangerous." Stiglitz further argues that demands "such as the need for better ways of restructuring debts might have seemed controversial a short while ago. Today they are either in the mainstream or are gradually being accepted."
By 1997 Bank President James Wolfensohn was compelled to admit to critics that "Adjustment has been a much slower, more difficult and more painful process than the Bank recognized at the outset." A few years later, "structural adjustment" had become a taboo phrase, eliminated altogether from IMF/World Bank rhetoric.
Other changes go beyond rhetoric. In 2000, the Congress passed a measure requiring US opposition to any IMF/World Bank loan mandating "user fees or service charges on poor people for primary education or primary healthcare." The institutions have since abandoned such fees.
In past months Argentina, a star pupil of the IMF which saw its economy implode in late 2001, has bucked the Fund’s demands to cut public spending to benefit private creditors. Bank officers and activists alike recognize that this successful act of defiance could make Argentina an influential role model for other countries seeking ways to break the neoliberal stranglehold on their economies.
Social movement pressure, along with its own failure to deliver on promises of economic growth, is spelling out a slow but steady decline for the neoliberal paradigm that reigned over mainstream development thinking for over two decades. Nevertheless, many US officials are doggedly trying to hold on to the "Washington Consensus."
The Bush administration’s "America First" nationalism has created rifts between the US and many long-standing allies, and (by fostering stalemates in such venues as the WTO talks in Cancún) has even scuttled much of the multilateral "free trade" agenda that proponents of corporate globalization would like to see enacted. Yet in spite of this unilateralist turn, the US still uses IMF/World Bank actions as key mechanisms for regulating foreign economies–probably because the White House is effectively able to dictate policy to these institutions.
Recent IMF/World Bank reforms have real limits, deftly illustrated by the cause of debt cancellation. Ministers from wealthy nations have almost universally conceded that debt is a crisis, but assistance has been slow in coming. The creditor-based system of debt relief administered by the IMF/World Bank doles out aid at levels based more on poor countries’ ability to cough up future payments than on what they actually need to reach humanitarian targets like the Millennium Development Goals.
As economist Jeffrey Sachs writes, "It is perfectly possible, and indeed is currently the case, for a country or region to have a ‘sustainable’ debt" under IMF/World Bank definitions "while millions of its people are dying of hunger or disease."
Throughout the developing world, huge debts persist despite the fact that many countries have paid back their original loans several times over. As the American Friends Service Committee reports, Nigeria has paid over $16 billion on its original $5 billion loan, yet finds itself owing $32 billion on that same debt.
A second problem is that the IMF and World Bank still make relief contingent on conditions like market liberalization and privatization of public services–many of the same mandates that were the core of previously discredited policies.
The IMF and the World Bank now prefer to describe their structural adjustment as "Poverty Reduction and Growth Facility Programs." However, advocates in the developing world report that ostensibly "participatory" processes leave much to be desired. While the financial institutions may now offer NGOs and governments a seat at the table in drafting their national economic programs, they don’t allow local participants the opportunity to challenge the market fundamentalism or faulty macroeconomic assumptions that continue to guide IMF/World Bank decisions.
How does all this fit in with the White House’s wider foreign policy? A pro-corporate vision of "free enterprise" has always held a central place in President Bush’s militaristic quest to spread "freedom" throughout the world. In its short time in Iraq, the occupying authority has already succeeded in conducting a radical economic restructuring, privatizing the bulk of the economy and working to chain the country into a multi-billion loan package from–guess who?–the IMF.
Asked whether they intend to change the name of their network, the leading critics of IMF/World Bank policy say they will not. Fifty years was enough. And ten years later, an end to neoliberal economic policy is long overdue.
– Mark Engler, a writer based in New York City, can be reached via the web site http://www.DemocracyUprising.com. This article first appeared on TomPaine.com. Research assistance provided by Jason Rowe.