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IMF, World Bank & Trade

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Creating Poverty: World Bank's Latest Passion
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The World Bank has strange ways of eradicating poverty. Considering that sustainable agriculture is the established link to poverty eradication, the World Bank/IMF forced developing countries to shift from staple foods (crucial for food security needs) to cash crops that meet the luxury requirement of the western countries.


19th December 2005, Devinder Sharma ~ STWR

In tune with the world’s latest fad, the World Bank prominently displays a slogan in its Washington DC office: ‘The purpose of the World Bank is to fight poverty with passion’. In fact, such has been the global effort to eliminate poverty and resulting hunger that over the past 25 years, despite every international treaty and agreement swearing in the name of poor and downtrodden, the number of absolute poor continues to grow unabated. World Bank is no exception

If statements and slogans could translate into action against poverty and hunger, the world would have emerged from the glaring inequalities long ago. Poverty could have been easily eclipsed from the face of the globe. Even the World Bank has very conveniently used the emotive appeal of fighting hunger to push in reality the commercial interests of the private corporations. Ever since it launched (along with its sister organisation, the IMF) the holy grail of structural adjustment and pushed for globalisation, it has helped corporates wield more power, it has helped the rich get richer while the rest of the world remains caught in an unending recession – the inevitable consequences of an inherently faulty economic thinking.

In 1960, before globalisation became the buzzword, the richest fifth of the world’s population were 30 times better off than the poorest fifth. By 1997, that figure had increased to 74. Between 1970 and 1995, the number of multinational companies jumped from 7,000 to 40,000. Five corporations have a combined income greater than the total income of the poorest 46 countries. Such has been the economic downslide that the past decade, the World bank calls it a great decade, fifty-four countries, almost half of them in Africa, were poorer now than in 1990, and some will not meet the development goals for 50 years.

James Wolfensohn, president of the World Bank, however continues to paint a rosy picture. He is after all paid to do so, and so does his 93 per cent employees (as he states in an interview) who agree with the Bank’s approach.

Unrepentant and unrelenting, even after the colossal defeat of its poster boy – the unfazed Chandrababu Naidu, the former chief minister of Andhra Pradesh in south India, who broke all international lending norms to bypass the national government and act directly with the World Bank – lost the elections in May 2004 by a startling mandate, Wolfessohn says “In case of Andhra Pradesh, I thought the former Chief Minister N. Chandrababu Naidu had remarkable foresight. He ran the state in a very modern way. But from what I understand the benefits hadn't reached many people in rural areas and they voted him out. In a democracy you can be right and still lose power. I personally think that he was extraordinarily innovative, but did not deliver quickly enough for the state.”

Mr Naidu was in power for nine years, and was still swept away by a tidal wave of the angry farmers. The small and marginal farmers, in tandem with the landless labourers, who constitute nearly 80 per cent of Andhra’s 80 million people, gave their verdict: the industry-sponsored economic reforms are anti-poor. Blindly aping the World Bank model of agriculture (as suggested by McKinsey), Andhra had pumped in huge finances to push in an industry-driven agriculture that has not only exacerbated the crisis leading to an environmental catastrophe but also destroyed millions of rural livelihoods. Thanks to World Bank policies, the State has turned into a national capital of shame for farmers’ distress, visible more through the increasing rate of suicides in the rural areas.

In reality, Andhra only made it smoother for the industry to move into the rural areas. APs Vision 2020 document talked of reducing the number of farmers in the state to 40 per cent of the population, and did not have any significant programme to adequately rehabilite the remaining 30 per cent of the farming population. The objective was to promote the commercial interests of the agribusiness companies (read foreign financial institutes and international bankers) and the IT hardware units. All benefit would have accrued to these companies in the name of farmers. In fact, these two sectors, along with biotechnology, were being heavily subsidised in the name of efficiency and infrastructure whereas the poor farmers were being divested of their only source of income – their meagre land holdings.

Thousands of farmers were migrating every season looking for menial jobs in the urban centres. Mofussil newspapers in the heartland of the cyberstate – that’s how Mr Naidu wanted the state to be called – were full of advertisements inviting people to mortgage their gold and silver belongings. Livestock deaths and the plight of dalits and other landless and marginalised no longer adorned the headlines. Farmers were asked not to produce more rice (the staple food) as the State had no place to stock it. Farmer’s suicides had become so common that Mr Naidu had actually sent team of psychiatrists to convince them against taking their own lives.

For James Wolfensohn, this must be the passionate way to eradicate poverty -- remove the poor and poverty will automatically be taken care of.

At the global level too, the World Bank has strange ways of eradicating poverty. Considering that sustainable agriculture is the established link to poverty eradication, the World Bank/IMF under the Structural Adjustment Programmes (SAP) tied up credit with crop diversification. They forced developing countries to shift from staple foods (crucial for food security needs) to cash crops that meet the luxury requirement of the western countries. It therefore forced developing countries to dismantle state support to food procurement, withdraw price support to farmers, dismantle food procurement, and relax land ceiling laws enabling corporates to move into agriculture. Farmers need to be left at the mercy of the market forces. Since they are ‘inefficient’ producers, they need to be replaced by the industry.

The same prescription for farming has never been suggested for the rich and industrialised countries. Let us be very clear, one part of the world that needs to go in for immediate crop diversification is the industrial world. These are the countries that produce mounting surpluses of wheat, rice, corn, soybean, sugar beat, cotton, and that too under environmentally unsound conditions leading to an ecological catastrophe. These are the countries that inflict double the damage – first destroy the land by highly intensive crop practices, pollute ground water, contaminate the environment, and then receive massive subsidies to keep these unsustainable practices artificially viable. These are the countries that are faced with the tragic consequences of massive farm displacements, and are in the grip of food calamities arising from industrial farming. And yet, the World Bank does not fault this industrial model of growth but is keen to push this on to the rest of the world.

Macro-economic policies that the World Bank preaches have a strong and persistent urban and industrial bias. These adverse terms of trade have had a devastating effect on the livelihood of small and marginal farmers and thereby the landless workers. The Bank however continues to come out with faulty analysis that reaffirms faith in agribusiness at the cost of several million small and marginal farmers. Pushing these farmers out of farming is a sure recipe of disaster, it is sure to add on to burgeoning poverty and hunger, and yet the mainline economists remain oblivious to the emerging socio-economic crisis and a political catastrophe that awaits.

James Wolfensohn needs to understand that the statistics he flouts are not merely numbers, these relate to human beings. The passion that he talks about therefore is completely missing. The first and foremost task is to draw a balance sheet of the socio-economic and environmental impact of the World Bank policies. Not by a team of blind macro-economists but by a group of people known to fight for human rights and social upliftment.


Devinder Sharma is an award-winning food and agriculture policy analyst and a regular contributor to STWR. His writings focus on the links between biotechnology, intellectual property rights, food trade and poverty.