nine good reasons for turning your back on the world bank
1 Lack of democracy
The World Bank is the largest biggest provider of development aid (loans) in the world and it has a major influence on the politics of developing countries.
However, prosperous industrial countries have the power over decisions in the Bank, because the number of votes in the board of directors is based on the amount of capital invested by each country group.
Forty-nine low income countries, representing 1/2 of the world's population, have only 9% of the votes, whereas the richest Western countries have nearly half of the votes.
The United States among others has, in practice, a power of veto over the Banks' decisions.
This sort of undemocratic institution cannot be given the task of worldwide control. Instead, the international economy must be regulated and directed democratically.
In addition to the expanding of the economic power of the UN, civil society organizations have made proposals which would democratize the world economy in such ways that benefit the majority of mankind. In many of these models the World Bank has no role, or the Bank would only be a small financier of unproblematic structures.
Friends of the Earth Finland proposes that the World Bank and other Bretton Woods institutions would be replaced by establishing other institutions for economic regulation and steering that are controlled by the marginalized majority of the mankind.
2 Parliaments and people have no say in Poverty Reduction Strategies
Since Poverty Reduction Strategy Papers, (PRSPs) were launched in 1999, much research has been undertaken into the process followed in individual countries. There have been many limitations on ‘country ownership' of the 42 PRSPs, such as:
economic policy has not been debated publicly and alternative solutions from civil society have been ignored;
parliaments have not been involved in the process and specific policies have been imposed on countries by the donors.
Whilst PRSPs are intended to direct a country's policies for three years, in most countries parliaments rarely have a say on their contents. According to a study by World Development Movement (May 2005) parliaments have not been involved in debating or drafting the strategies, and in only five countries have they had a vote on the final document[1].
As external aid is dependent on passing the document, parliaments are unable to insist on major changes at the end of the process.
In Ethiopia, despite the fact that the constitution stipulates that any national development plan needs to be passed by Parliament, the parliament had no role in the PRSP process or any vote on the final document.
By contrast, the International Financing Institutions can influence the content throughout the process. The PRSPs are supposed to be country owned, yet the national parliaments and civil society have little say in their creation or approval.
3 Forcing countries to “free” trade
The World Bank's neo-liberal approach to development is still based on the assumptions that economic growth measured with the GDP leads to better living conditions for the majority of people, and that growth can be accelerated through liberalization of trade and investments.
In practice this has meant giving foreign investors and transnational companies almost total freedom to invest in developing countries and to make profits without paying much or any taxes.
Trade liberalization is a strict pre-condition for the World Bank's loans, and now also a precondition for debt cancellation. Trade liberalization has lead to accelerated the stripping of natural resources from the developing countries to the so called developed countries. Some citizens – usually the elite in the developing countries may well become richer. The World Bank assumes that the wealth also “trickles down” to the less well off. But usually the lives of the poor depend on those natural resources that are continuously being plundered in the name of economic growth or development.
Increasing incomes or growing GDPs do not necessarily correlate with the real wellbeing of the majority. This kind of development approach and the unsustainable use of natural resources as its result, does not increase future generations' chances for humane and dignified life, or give future generations the right to a clean and healthy environment.
The massive amounts of regulation and bureaucracy needed to maintain programs called as ”free trade” have severely limited the freedom of countries and people to produce and change products according to their own democratic decisions. Trade liberalization has also displaced tens of millions of small scale farmers from their homes in different parts of the world. The UN special reporter of human rights points out that the developed countries are obliged to rectify the violations of human rights caused by the World Bank in the developing countries.
The UN Commission on Human Rights states in its resolution on the World Bank programs (2005/19) that all nations have a primary duty to promote their peoples' development and right to food, residence, clothing, work, education, health care, healthy environment and basic social services. It is against human rights obligations to attempt to deny these rights under the precepts and restrictions of public expenditures set by the World Bank. (See e.g. paragraphs 3, 4 and 18 in the resolution) [2]
4 The World Bank uses over-optimistic poverty statistics to justify its neoliberal “development” policies
The World Bank justifies its neoliberal approach to development by using its own statistics to show a decrease of relative poverty in the world during the last decades when economic globalization and liberalization has accelerated. However, many researchers have shown that the World Bank statistics and the one dollar indicator do not tell us much about the real state of poverty the world. The World Bank's statistics and income based indicators do not take into enough account the actual product prices paid by the poor, unequal income distribution within the families, the vanishing traditional forms of change or other economic activities taking place in the informal sector. Also the extra costs of commercialization of new sectors of life and environmentally destructive development efforts are being neglected in the official poverty measurements.
It may well be, in reality, that poverty is actually increasing instead of decreasing, but this critique has not been taken seriously in the World Bank. [e.g. 3, 4, 5, 6]
In many countries, like India , malnutrition is measured through income poverty indicators, which leads to questions on the reliability of official hunger statistics. If the statistics were corrected to more accurately describe the present poverty and hunger situation, the bottom would fall out from under the World Bank's claims that “globalization has helped to draw hundreds of millions of people out of poverty”.
It is regrettable that the UN has taken both the statistics and the neo-liberal development approach of the World Bank as its basis for achieving the Millennium Development Goals. It is evident that economic globalization fosters not only the widening of the gap between the rich and the poor but also makes the rich even richer and poor become poorer. The MDGs will never become achieved through accelerating the globalization of neo-liberalism.
5 Fossil fuels and the oil war in Iraq
The World Bank is a leading source of global fossil fuel financing. Between 1992 and 1997, it has spent US $ 13.6 billion on fossil fuel projects, which is 25 times more than on the renewables. Over the next 20 to 50 years, these projects will add carbon dioxide emissions to the Earth's atmosphere, equivalent to 1.3 times the total amount emitted by all the world's countries in 1995 [7].
China burns more coal than any other country in the world. The World Bank has spent over $1.3 billion on coal fired power in China for four massive coal burners, ensuring that much of China's future power will continue to be derived from the dirtiest and most carbon intensive of fossil fuels. These four burners alone will eventually release more than 2 billion tons of CO2 into the Earth's atmosphere. [8]
Wolfowitz served earlier as the deputy defence minister in the government of George W. Bush, and he was one of the head architects of the attack to Iraq . It is no surprise that the World Bank works in Iraq in cooperation with the occupiers in order to provide the necessary conditions for the private investments of the oil sector. Through the Trade Bank of Iraq and the Development Fund for Iraq the World Bank and the United States control the profits made by selling Iraq 's oil resources. It is likely that the profits will not be invested in satisfying the basic needs of the Iraqi people, but they do end up in the coffers of multinational oil companies. [7]
6 Dam construction in Laos and India
In March 2005 the World Bank lent $270 million for the Nam Theun 2 hydropower project in Laos , which will allow Laos to sell energy to Thailand . The 1070 MW Nam Theun 2 dam will forcibly displace 6,200 indigenous people and devastate fisheries, water sources, and riverbank gardens of more than 100,000 downstream villagers. In the light of the Lao Government's record of corruption, secrecy and human rights violations, it is unlikely that the revenue would be used to fund poverty alleviation programs. By supporting the project the World Bank has ignored the recommendations of the World Commission on Dams as well as its own social and environmental standards. [9]
The Nam Theun 2 dam in Laos is only one out of many examples of mega-projects, which negative impacts exceed the local benefits and economic returns, and which are funded by the World Bank. For example in Uttaranchal, the Indian Himalayas, the Tehri dam project supported by the World Bank is estimated to inundate around 100 villages and force about 40 000 people to leave their homes [10].
Villagers have strongly protested against the project. They had no chance to participate in the decision-making processes leading to the dam construction, and there is no proof that the project would increase the general wellbeing in this ecologically fragile mountain area.
7. Soya plantations in Brazil
In September 2004 the IFC, the private sector arm of the World Bank, granted a $ 30 million loan to Brazilian Amaggi in Mato Grosso. Amaggi, a.k.a. André Maggi Group, is a soya producer, processor, merchant, crusher and exporter in Brazil . It is owned by Blairo Maggi, governor of the state of Mato Grosso. Thanks to the loan, Blairo Maggi can use public funds to expand his soy plantations and ensure gains for his company. Soya plantations have expanded rapidly over the last years and threaten to destroy biodiversity and ecosystems. [11, 12]
8 The Marlin gold mine in Guatemala
In June 2005 the IFC granted $ 45 million to Canadian Glamis Gold Ltd to build a gold mine in western Guatemala . The Marlin mine is expected to start producing gold by the first quarter of 2006 and it is hoped to invigorate investment in the mining sector.
However, the IFC had to investigate the mine after receiving complaints about violence, lack of consultation with indigenous people, and environmental impact. The report, released in September, criticizes the IFC, Glamis Gold and government agencies. The report states that indigenous communities near the mine were not given sufficient information about the mine and its likely adverse impacts on the communities and their environment. The IFC did not consult with the local communities as required by Guatemalan law and international treaties. Local indigenous communities have objected to the mine and raised concerns that mining will harm their natural resources and violate their religious and cultural rights.
In early 2005, local people protested by blocking roads leading to the building site. The military broke up the protests, injuring 11 people and killing one. An essential function of the World Bank funding is to contribute significantly to development. The IFC's stated Environmental and Social Safeguard Policies require projects to be “environmentally and socially sound and sustainable". The Marlin project does not seem to follow either of these principles. [13, 14]
9 The programs of the World Bank destroy the living conditions and territories which hold the indigenous peoples
In India millions of indigenous people have been forced to move away from forest areas where they have lived sustainably for centuries. The World Bank has been widely financing such programs in which indigenous communities and their environment and sustainable means of existence have been destroyed to clear the way for mines, logging, dams, tourism and other “development” activities. The Bank markets these projects as “participatory development” and “eco development”.
For publicity the Bank also has its own regulation systems, which are used by the Bank to pursue its own interests. Many indigenous peoples who have become homeless after being evicted from their traditional environment hope that they can get rid of this kind of “development” projects and would be allowed to go back to continue their sustainable life in the forests. [15]
References
[1] Tim Jones & Peter Hardstaff (2005). Denying democracy: How the IMF and World Bank take power from people. http://www.wdm.org.uk/resources/briefings/index.htm
[2] The UN Commission on Human Rights (2004). Human Rights Resolution 2005/19. Effects of economic reform policies and foreign debt on the full enjoyment of all human rights
http://www.derechos.org/nizkor/econ/61chrdebt.html
[3] Thomas W. Pogge (2003). The First Millennium Development Goal.
http://www.carnegiecouncil.org/viewMedia.php/prmTemplateID/17/prmID/1040
[4] Thomas W. Pogge & Sanjay G. Reddy (2003). Unknown: The Extent, Distribution, and Trend of
Global Income Poverty. http://www.socialanalysis.org
[5] Olli Tammilehto (2003). Globalization and Dimensions of Poverty.
http://global.finland.fi/english/publications/pdf/tammilehto_globalisation.pdf
[6] Gurleen Popli, Ashok Parikh & Richard PalmerJones
(2005). Are the 2000 poverty estimates for
India a myth, artifact or real? Economic and Political Weekly. October 22, 2005 . Sameeksha Trust Research Foundation, Mumbai.
[7] Sustainable Energy & Economy Network (2003). The World Bank and Fossil Fuels: At the Crossroads. http://www.seen.org/pages/reports/WB_brief_0903.shtml
[8] The Whirled Bank Group (2003). Fossil Fuels and the World Bank.
http://www.whirledbank.org/environment/fuels.html
[9] Environmental Defense (2005). Environmental Defense Condemns World Bank Decision To Support The Nam Theun 2 Dam In Laos .
http://www.environmentaldefense.org/pressrelease.cfm?contentID=4406
[10] Citizens' Global Platform (2005). On Ecological Democracy: Land, Water, Food, Environment and Survival of Agriculture. (In: Unheard Voices of the Majority report for the Helsinki Process.)
http://www.globalplatform.fi/en?sid=258
[11] Adolfo Boy et al. (2004). Greenwashing the Soy Industry.
http://www.wervel.be/EN/dossiers/fm_200502/fm_2005020501.htm
[12] CAO (2005). Audit of IFC's Environmental and Social Categorization of the Amaggi Expansion
Project http://www.caoombudsman.org/pdfs/AmaggiFinal_Editedversion_052605.pdf
[13] Reuters News Service (2004). World Bank OKs loan for Glamis' Guatemala gold mine.
http://www.planetark.com/dailynewsstory.cfm/newsid/25790/story.htm
[14] Oxfam America (2005). World Bank Report Describes Mining Problems in Guatemala .
http://www.oxfamamerica.org/newsandpublications/news_updates/news_update.20050923.3194264505
[15] Citizens' Global Platform (2005). Indigenous Survival and the Modern World. (In: Unheard Voices of the Majority report for the Helsinki Process.) http://www.globalplatform.fi/en?sid=258 6
