STWR - Share The World's Resources

11th September 07 - Shalmali Guttal, Focus on the Global South

Every year, the World Bank (Bank) channels US$ 18-20 billion to developing countries in the form of loans and grants with the ostensible aim of reducing poverty and promoting economic growth. The Bank always acts in tandem with its sibling agency, the International Monetary Fund (Fund), even in countries that no longer borrow from the Fund. Not all Bank financing and support goes to governments. A significant amount goes directly to the private sector, especially large corporations, in the form of loans, technical assistance and mitigation of investment risks.

24th August 07 - David T. Rowlands, Green Left

Popular resistance to neoliberal “reform” was the underlying cause of Peru’s July general strike. On July 5, public schoolteachers walked off the job over government plans to privatise education. Within days, discontented workers from other industries joined the embattled teachers. Before long, schools, mines, factories and construction sites were shut down as tens of thousands of striking protesters took to the streets of every major city demanding higher pay, improved conditions and revisions to the US-Peru free-trade agreement. Peasant farmers joined the mass mobilisation, closing roads and paralysing transport networks.

12th August 07 - Bretton Woods Project

After reviews of its engagement with low-income members the IMF is in the process of redesigning its programmes, but its recent changes on dealing with aid inflows have not satisfied critics of the Fund’s inflexibility in allowing the scaling up of social spending.

16th July 07, Peter Chowla, Foreign Policy in Focus

In contrast to the circus atmosphere that surrounded the World Bank presidency, a surprise handover of the reins at the International Monetary Fund (IMF) should prove to be a quiet affair. It will be conducted mostly out of the media spotlight and by the prevailing tradition, meaning that another European male will govern an institution that because of its chequered past is facing serious questions about its future. If the United States and Europe continue to throw away chances for reform, the IMF will become even more marginalized.

12th July 07 - Robert Wade, OpenDemocracy.org

The fight between the Americans and the Europeans over the fate of Paul Wolfowitz obscured the bigger question of whether the world still needs the World Bank. The immediate contest may be over and Robert Zoellick installed as the new president (nominated by the White House / United States treasury), but the question looms over everything the bank does.

Before addressing this question, however, two points should be made about the Wolfowitz affair. First, the blame for the scandal that brought him down was not entirely on his side, and on its own it would not have led to his departure. In particular, the bank's ethics committee gave him muddled advice when he approached it about a conflict of interest between him being president and his then romantic partner being a bank employee.

7th July 07 - Marwaan Macan-Markar, IPSnews.net

As the Asian financial crisis struck 10 years ago, beginning in Thailand and then spreading rapidly to eight other economies in the region, the desperate call for help was answered from the West.

In rode the International Monetary Fund (IMF) with the customary swagger of a powerful moneylender. For the next two years, the Fund supplied over 38 billion US dollars in loans to the affected countries, according to available reports.

This financial bailout and other economic prescriptions to the affected countries such as Indonesia, South Korea and Thailand were given on conditions that the Washington D.C.-based international financial institution (IFI) thought was best, including strict austerity measures.

But times have changed. A meeting on Monday in Manila, hosted by the Asian Development Bank (AsDB), conveyed the tone of contempt with which finance and economic officials from the affected countries now view the IMF.

It is a view built around the region’s rapid economic recovery over the past decade and its abundant foreign reserves to stave off a repetition of a similar crisis. The officials from Thailand, Malaysia, South Korea and the Philippines who spoke at the meeting are also warming up to the idea of an Asian Monetary Fund created through regional financial cooperation as an alternative to the IMF.

‘’Looking ahead, we need to take responsibility. Asia now needs to be the one to manage the global financial system,’’ said Thai Finance Minister Chalongphob Sussangkarn, according to Reuters news agency. ‘’We cannot let debtor nations manage the global financial system. The International Monetary Fund is more like a debtor monetary organisation, we need a creditor monetary organisation.’’

Long-time critics of the IMF are hardly surprised by the hostility leading financial and economic players in the region still harbour towards this IFI. ‘’This is to be expected since the IMF positioned itself on the wrong side of the Asian financial crisis. Its solutions made the situation worst,’’ Walden Bello, executive director of Focus on the Global South, a Bangkok-based regional think tank, told IPS. ‘’The IMF lost its legitimacy and relevance in the region as a result.’’

Among the IMF’s solutions were the financial packages aimed to save foreign banks and speculative creditors who took a beating as economies contracted than to help the local people, who were the worst affected, added Bello. ‘’The IMF also used the crisis to push through economic liberalisation policies that it and its backers in the U.S. failed to achieve earlier in these Asian economies.’’

‘’The IMF’s policies after the crisis caused much damage in Indonesia,’’ said Donatus Marut, executive director of the International NGO Forum on Indonesian Development (INFID). ‘’They were more interested in privatising state enterprises without thinking about the cost to people.’’

‘’People are still very angry with the IMF and its policies,’’ he added during a telephone interview from Jakarta, where his non-governmental organisation (NGO) is based. ‘’The IMF’s prescription for economic reform created massive unemployment.’’

Such views were mirrored in the commentaries that appeared this week in the region’s press. The IMF’s multi-billion dollar rescue packages, ‘’with their excessive policies,’’ exacerbated the problem, argued The Jakarta Post in an editorial. ‘’In Indonesia, the number of poor people jumped from 34 million in 1996 to almost 50 million in 1998.’’

Even renowned experts like Joseph Stiglitz have not spared the IMF during this 10th anniversary of the financial crisis. ‘’The IMF and the US Treasury marched in, took away economic sovereignty and demanded policies intended to enhance repayments to Western creditors, which plunged (the affected Asian) economies into deep recessions and depressions,’’ the Nobel laureate in economics wrote in a commentary that appeared Monday in The Nation, an English-language daily in Thailand.

Till the crisis, which began on Jul. 2, 1997, the affected countries had ridden a wave of prosperity and growth that earned them names such as the ‘’Asian Tiger economies’’ or being known as the ‘’Asian miracle.’’ But when Thailand floated its currency, the baht, after having pegged it to the U.S. dollar for years, its value sank dramatically. This financial flu spread to Indonesia, Malaysia, Philippines, South Korea, Singapore and Taiwan, among others. Some currencies lost over 50 percent in values, while some economies contracted by 13 percent soon after the crisis.

Working women in countries like South Korea, Thailand and Indonesia were among the worst hit as companies went bankrupt, according to the International Labour Organisation. These women were among the first to be retrenched, lose social welfare from the state or, if hired later, were only taken back as part-time, contractual labour.

The cold stares that the IMF is receiving this month adds to a growing trend pointing to its irrelevance in the developing world, says Bello, of Focus on the Global South. ‘’Countries are looking for other sources of finance than the IMF. China has emerged as a major player.’’

This shift away from an IFI set up 60 years ago to give loans to countries struggling with financial problems was brought to relief by the end of 2006. Rather than borrowing from it, more developing countries are paying back past loans. From lending over 100 billion U.S. dollars annually up to four year ago, the IMF was reported to have given 20 billion dollars in loans annually in the years since.

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5th July 07 - Bretton Woods Project

Member countries are increasingly rebuffing World Bank and IMF programmes, advice and even membership, with Latin American nations withdrawing from the Bank's investment arbitration mechanism. (see ICSID article).

The most outspoken critics of the international institutions are in Latin America, especially Venezuela’s president Hugo Chavez. In a surprise pronouncement at the end of April, Chavez said he would formally pull Venezuela out of the World Bank and IMF, which he dubbed “the tools of the empire” that “serve the interests of the North”.