International Financial Institutions!: Let'S Rid The World of The
International Financial Institutions!: Let'S Rid The World of The
International Financial Institutions!: Let'S Rid The World of The
must go!
INTRODUCTION
1) What are the International Financial Institutions?
The International Financial Institutions (IFIs) have, broadly speaking, similar functions and structures. They provide loans to governments to cover deficits and fund largescale infrastructure projects. Some examples of the most important are the World Bank (WB), the International Monetary Fund (IMF) and the Inter-American Development Bank (IDB). However, there are others. For example, in Central America there is the Central American Bank for Economic Integration. There is also the Asian Development Bank and the African Development Bank, but here we will only deal with the first three mentioned. Other names for the International Financial Institutions are: *Multilateral Banks *Multilateral Development Banks *Multilateral Economic Institutions Of all these names, we will only use International Financial Institutions or IFIs. Multilateral refers to the fact that these institutions receive funds to operate from many sources, that is, from the various countries that make up the institutions and from countries that they lend money to.
3) Are there differences among the organisations that make up the International Financial Institutions?
Yes, there are differences. The World Bank is not the same as the International Monetary Fund and the Inter-American Development Bank does its own thing. However, we are not going to split hairs here. What matters most, for our purposes, are the similarities, not the details that distinguish them. And one of the great similarities is that all the IFIs work under the neoliberal (or free-market) framework, which is to say, they work with a blind faith in the supposed efficiency of private enterprise. Neoliberalism prefers that schools, clinics or urban distribution of drinking water be run by a private company rather than by local or state government or by grassroots committees. So, rather than a public school to educate all girls and boys, the IFIs prefer private schools, but these enrol only children whose parents can pay tuition. The perversity of this logic is immediately apparent what matters to the private sector is maximising short-term profit. However, for some aspects of our life or community, we need to think about the long term. The well-being of our country depends on the education of ALL and the health of ALL, not just of those who can pay.
The IFIs neoliberal logic favours companies, in particular, big business, while ignoring peoples needs, particularly those of the poor, the marginalized, women and the elderly, in other words, the majority. The IFIs believe that if big business is strengthened and earns more money, the lives of the poor will be improved via the trickledown effect. That is, from the table of the rich, crumbs will fall and, if recognised and taken advantage of by the poor, will improve their well-being. If we went to Washington, D.C., the headquarters of some IFIs, and entered the World Bank building, we would see golden inscribed letters in the lobby that read, Our dream is a world without poverty. But instead of directly helping the poor, the World Bank prefers to help the rich get richer. Absurd, isnt it? It sounds quite absurd to us but thats how the IFIs work with this ridiculous logic. Unfortunately, the IFIs have promoted this logic for 25 years and the results have been disastrous. There is more poverty, insecurity and unemployment in the world. There is no worse blindness than those who will not see.
Even more disturbing is the IMFs demand that governments allow foreign capital to enter a country freely, without any control. The IMF says that it is good for a country to have greater capital, but uncontrolled capital flows do more harm than good. With no controls, millions of dollars can exit the country in seconds, often producing huge economic problems, destabilising the nations finances. When this happens, the government may be forced to devalue our currency leading to price increases for almost all goods.
In the face of so many disasters its worth asking, who benefits, who loses, why cant our government do anything to improve the welfare of our people? Or is it that it doesnt want to?
5) And if our government ignored the recommendations of the International Financial Institutions?
For one thing the IFIs would stop lending money to our country. But it doesnt stop there. They would also put our country on a Renegade List and no other banking institution would lend us money either. The United States could take reprisals, as it has in the past. For example, it could stop purchasing what we produce. If we couldnt export our products to the United States, our economy would be in a jam.
...and what if I didnt follow the IFIs recommendations?
Could we survive a situation like this? It all depends on whether or not we confront the situation alone or with other nations. If we unite with other countries to form a block of resistance, perhaps we could get through this and other difficulties. But our governments havent really wanted to unite theyve lacked the guts to build greater Latin American unity, and thus resist the aggressions of the IFIs and stronger nations.
Before:
We will decide where you can invest and we wont allow you to invest in areas reserved for the state.
The companies and free-market neoliberals didnt like any government, particularly the government of a poor nation like our own, telling them what to do, and so they began an offensive to change the situation. The international financial institutions played an important role they demanded that poor nations change their laws so as to let companies do as they please. Today, governmental guidelines hardly exist and private investment does what it wants in pursuit of a single mantramaximize profits. It is not an exaggeration to say that things have run amuck. Rather than harnessing private investment to work for long-term development goals, governments are now at the beck and call of large companies. Countries offer their natural resources, raw materials and a cheap labour force, and companies repatriate profits to their headquarters. Think about it for a minute Isnt this the situation in our country? We, the local governments, totally agree.
Today:
Those who most benefit from this new situation are, undoubtedly, large companies. We the citizens, on the other hand, are the big losers. This new situation has brought more poverty, more unemployment, less economic growth and has worsened income distribution. It may sound like a clich, but official statistics confirm that the poor are getting poorer and the rich are getting richer. Many of the measures implemented by governments stem from obligations in agreements signed with the IMF and the World Bank, among others.
But its not that simple. Today our elected officials are in total agreement with neoliberalism. They sign agreements because they believe in them, because they also own large companies or because they know that some company is likely to compensate them with some cushy post when they leave government service. Others allow themselves to be corrupted during their time in government, and in this country we have lots of examples of corrupt officials. Our politicians are in cahoots with big business. They have no strategic vision for the nation, only shortterm entrepreneurial interests. They are not nationalists, just free-market capitalists. They dont have the interests of the majority in mind, only their own personal and class interests the interests of a small elite who control the economic and political life of the country.
IFIs
Companies
RECENT ACTIONS
8) Are there examples of the damaging actions of the international financial institutions?
Heres an example of how the neoliberal orientation of these international financial institutions is making poor people poorer. In some countries where IFIs are unable to immediately impose the privatisation of some basic public services such as education and health care, they call for user fees. In other words, in public education or health, the IFIs require the collection of user fees from students or patients. If a moderate fee is already in place, they have the fee increased. Suddenly the poor find themselves paying for a service previously offered for free, or virtually so, by the government. It has been a disaster. The poor stopped going to school or to clinics for medical checkups. The measure was particularly hard on women. Girls stopped going to school more so than boys and women stopped using health services more than men. Pregnant women in particular, who regularly went to the clinics for their prenatal check-ups, stopped going. The result? More infant mortality and deaths among pregnant women. The result of user fees was so negative that the IFIs, in this case the World Bank, a particular champion of these fees, decided to cease demanding them -- but only with respect to schools. In many countries, user fees still exist for other services, such as health care.
In Peru, the IDB will facilitate loans of around US$75 million for the extraction of gas from the Camisea deposits and the construction of two oil pipelines through indigenous lands in one of the best preserved and most important Amazon jungle zones. Two of the companies involved in the project are Hunt Oil and Halliburton, both of which have close ties to the Bush administration. The indigenous peoples most affected are the Nahua, the Nanti, the Kirineri and the Machiguenga, yet they have never participated in decisions regarding projects that will have a foreseeable devastating effect on their lives, lands and culture.
In Bolivia, the IDB forced the government to privatise the water system of Cochabamba, the third largest city in the country. An American company, Bechtel, bought the water system in Cochabamba and shortly thereafter raised rates by 300%. The increase left many people without water and so users, residents and workers of the company initiated a struggle to expel Bechtel and regain control of the water system. Bechtel ended up leaving Bolivia but only after hundreds of protestors were injured and a 17-year-old boy was shot dead.
11) Do the International Financial Institutions hold consultations with those most affected by their actions?
No way! IFIs are notorious for their secret procedures. They routinely hide information. Some civil society watchdog organisations have for years waged a tenacious struggle for greater transparency in the IFIs decision-making procedures and to make information available to those most affected by their projects and decisions. It is our opinion that these valiant efforts have made little progress. The IFIs know that there can be no real transparency nor will they submit to democratic procedures, since neoliberal measures would be rejected by the majority of the people. Transparency and democracy would hamper the way IFIs currently operate. Still, given the increasing pressure of civil society, the IFIs have had to implement some measures that give the appearance of greater accountability. But they are more for public relations. Things fundamentally remain the same as they have for years. Research has revealed that these bodies are deliberately lying to the public. They say one thing but then often act quite differently behind the backs of the people. The IFIs are, in essence, thoroughly antidemocratic. They make decisions affecting entire countries but are accountable to no one.
12) Arent the international financial institutions reforming? Isnt there supposedly more transparency now than there has been for years?
The truth is that the institutions dont want us to know how they function, what projects are being supported, with how much money, what environmental destruction is going to occur, how many thousands of people will be affected, displaced from their homes, etc. Even today, in the best of the cases, information given out is too little too late. An eternal problem is that the IFIs dont release information about a potential project or loan until it is a done deal. This prevents civil society from articulating opinion on time. In spite of the thousands of persistent requests that necessary information be made public before decisions are made, the IFIs continue to keep civil society in the dark.
Many of us believe that the IFIs cant be reformed. IFIs are incapable of dialoguing meaningfully with civil society. Proposals made by civil society are often scorned and ultimately ignored. The IFIs continue to do their own thing.
13) But dont the international financial institutions now have environmental and social statutes to limit the damage caused by their projects and loans?
This is where we say that the changes are more apparent than real. Yes, in effect, some of the IFIs now have such statues and so they say they are responding to the protests and demands of civil society. However, in our opinion, such statutes are a deception. As an example, the Camisea project in Peru, mentioned in an earlier answer, has had widespread criticism as unsound both for environmental and social reasons but the IDB is pushing it forward as fast as it can.
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BATTLES AGAINST
THE
IFIS
14) So, is it necessary to reform the international financial institutions or abolish them?
Those who have studied the IFIs say that they have a plan to counteract reforms. This plan is called gradual reform. In other words, the IFIs will change the least they can. This is the worst kind of irresponsibility -- in the face of millions of people who suffer hunger or die due to flawed and irresponsible policies. Another part of the plan is to co-opt opponents. IFIs call for dialogue with opponents, inviting them to discussion forums and civil-society consultations, incorporating them into their circles. Little by little, radical demands are weakened. Unfortunately, some opponents let themselves be fooled. They agree to go to IFI forums, talks and projects. Then we see them travelling on IFI expense accounts, and even take on roles as consultants to the institutions and some even end up receiving a good salary. But their opposition to the IFIs obviously disappears. This is precisely the IFIs policy of co-optation. It helps legitimise the IFIs supposed outreach to civil society. Although many well-intentioned folks are working to reform the IFIs, we cant help but conclude that theyre banging their head against the wall. Why not start afresh? More on this later.
15) What are people doing to resist the international financial institutions?
For decades the IFIs have promoted policies contrary to our interests. But only recently have social and civil organisations made the decision to confront, uncover and oppose these organisations. In 2003, at the IV Meso-American Forum in Honduras, an information and education campaign on IFIs was launched, with particular reference to the InterAmerican Development Bank. The IDB was chosen because it is the institution that loans the most money to Latin America (almost 9 billion dollars in 2003). Another reason is that the IDB promotes the same environmentally and socially unsound policies as the World Bank and the IMF, yet we know almost nothing about the IDB. As we said earlier, the IDB is one of the most important financiers of Plan Puebla Panama (to the tune of over US$4 billion), which has met widespread grassroots resistance in Mexico and Central America.
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IT IS OURS!!!!
IN
THE
FUTURE
today in China, Mexico and Honduras. We should seek these people out. We should demonstrate our solidarity and organise with them in order to resist the advance of IFI projects. But we should also seek out people with similar concerns close to home, and find out what projects the IFIs are pushing in our community. Were we informed? Were we given a chance to voice our views? Were our interests and concerns taken into account?
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It is not difficult to dream of alternatives. Its the first step towards building them. An activist from civil society who has begun to dream wrote the following:
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Why not replace the IMF [and] the World Bank [...with others that] work to achieve equity, solidarity, diversity, self-management, and ecological balance in international financial, trade and cultural exchange. They would seek to direct the benefits of trade and investment disproportionately to weaker and poorer parties, not to richer and more powerful ones. They would prioritise national aims, cultural identity, and equitable development above commercialism. They would protect domestic laws, rules, and regulations designed to promote worker, consumer, environmental, health, safety, human rights, animal protection, or other non-profit centred interests by rewarding those who attain such aims most successfully. They would advance democracy by enlarging the choices available to democratically controlled governments and subordinating the desires of multinationals and large economies to the survival, growth, and diversification of smaller units. (The author is Michael Albert and the citation is from
his book, Parecon: Life After Capitalism, Verso Books, London & New York, 2003, p.5)
Its true, its easy to dream! But its important that we all participate in creating expectations of a better world and unite with each other to build these dreams.
This means nothing less than banning beliefs such as neoliberalism that have allowed the international financial institutions to operate with impunity.
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IN CANADA:
Kairos 129 St. Clair Ave. W. Toronto, ON M4V 1N5 (416) 463-5312, ext. 225 [email protected] www.kairoscanada Halifax Initiative 153 rue Chapel St., Suite 104, Ottawa, ON K1N 1H5 (613) 789-4447 Fax: (613) 241-4170 [email protected] [email protected] www.halifaxinitiative.org
IN HONDURAS:
COPINH (Consejo Cvico de Organizaciones Populares e Indgenas de Honduras) Barrio Lempira, cuadra al oeste, Plaza Lempira, Intibuc (504) 783-0817, 783-0816 [email protected]
IN MEXICO:
CIEPAC (Centro de Investigaciones Econmicas y Polticas de Accin Comunitaria) Calle de la Primavera #6, Barrio de la Merced 29240 San Cristbal de Las Casas, Chiapas (967) 674-5168 [email protected] www.ciepac.org RMALC (Red Mexicana de Accin frente al Libre Comercio) Godard #20, Col. Guadalupe Victoria 07790 Mxico, D.F. (55) 5355-1177, 5356-0599
IN COSTA RICA:
Encuentro Popular [email protected] www.encuentropopular.org
IN NICARAGUA:
Centro de Estudios Internacionales Apdo. Postal 1747s, Managua (505) 278-5413 Fax: 267-0517 [email protected] www.ceinicaragua.org.ni
IN PANAMA:
Critas Panam Corregimiento de Ancn, Avenida Frangipani, Casa 437-A Apartado postal 1149, Zona 9A, Panam (507) 262-3777 Fax (507) 262-3648 [email protected] [email protected] www.caritaspanama.org
IN GUATEMALA:
CEIBA (Asociacin para la Promocin y Desarrollo de la Comunidad Km. 56.5 Carretera interamericana, Aldea Buena Vista, Chimaltenango (502) 839-6033 [email protected] www.ceibaguate.org
IN EL SALVADOR:
Equipo Maz 29 Avenida Norte, No. 1117 Apdo. Postal 27 26 San Salvador (503) 225-3810, 225-0488, 225-0490 Fax: (503) 235-1200 [email protected]
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Out with the World Bank and the Inter-American Development Bank in Latin America! LETS PROTECT OUR LANDS AND OUR RESOURCES! LETS BUILD BROTHERHOODS AND SISTERHOODS! LETS JOIN IN SOLIDARITY TO FIGHT AGAINST THE INTERNATIONAL FINANCIAL INSTITUTIONS, THE IMF, THE WB AND THE IDB!
Thank-you to the following solidarity organisations for their support in this pamphlets creation and publication: Cafod (England) Development and Peace (Canada) Eusko Jaurlaritza-Gobierno Vasco(The Basque Country) Global Human Rights (USA) Kairos (Canada) Public Welfare Foundation (USA) Solidago Foundation (USA)
CIEPAC, A.C.
Calle Primavera No. 6, Barrio de la Merced 29240 San Cristbal de Las Casas, Chiapas, Mxico Tel/fax: in Mxico (01 967) 674-5168, outside Mxico +52 (967) 674-5168 [email protected] www.ciepac.org
Centro de Investigaciones Econmicas y Polticas de Accin Comunitaria
Text: Miguel Pickard; Design and illustrations: Paco X. Gonzlez Muoz [email protected]; Translated from the spanish by: Sherry Telford and Miguel Pickard;