Multinational Monitor

SEP 2001
VOL 22 No. 9


Against the Workers: How IMF and World Bank Policies Undermine Labor Power and Rights
by Vincent Lloyd and Robert Weissman

Privatization Tidal Wave: IMF/World Bank Water Policies and the Price Paid by the Poor
by Sara Grusky

Dubious Development: The World Bank’s Foray Into Private Sector Investment
by Charlie Cray

Big Oil And The Bank: Clear And Present Danger
by Stephen Kretzmann


The Power of Protest: Critics Explain How People Can Affect the IMF and World Bank
interviews with
Njoki Njoroge Njehu, Joanne Carter, and Neil Watkins


Behind the Lines

Toward a New Washington Consensus

The Front
Coke Abuse in Colombia

The Lawrence Summers Memorial Award

Names In the News


The Power of Protest: Critics Explain How People Can Affect the IMF and World Bank

Interviews with Njoki Njoroge Njehu, Joanne Carter, and Neil Watkins

Njoki Njoroge Njehu is the director of 50 Years Is Enough, a U.S. network for global economic justice consisting of over 200 U.S. grassroots and policy organizations dedicated to the profound transformation of the World Bank and the International Monetary Fund (IMF).

Multinational Monitor: Where do you think the IMF and the World Bank are politically compared to where they were three years ago?

Njoki Njoroge Njehu: They are on the defensive. Activists and campaigners against the IMF and World Bank have been quite successful in putting the institutions’ track record into the public arena. As a result, they are better known, and not in a positive way.

I think they are struggling to come up with new rhetoric. They are not yet at the point where they want to enact the kind of changes that are required. They are figuring out new ways of saying, “Yes we care about poverty, look at how much we are doing about poverty.” An example is their outrageous display of a red ribbon on their Washington, D.C. headquarters for World AIDS Day in 2000.

They are at a point where they need to seriously reexamine their track record. It is not enough for [World Bank President] James Wolfensohn to say, “I’m not embarrassed to say that Cuba has done a lot better even though they haven’t followed our advice.” The Bank needs to examine why Cuba and other countries have succeeded in areas like healthcare and education, and what other countries could do to succeed as well, rather than continuing with the same orthodoxy.

MM: Do you attribute the Bank and IMF’s new posture and the new rhetoric to the protest movements?

Njehu: There’s no doubt that these cosmetic changes are at least partly a result of the protest movements. For decades, NGOs [non-governmental organizations] and Washington-based groups have been meeting with these organizations and not very much changed.

Because of the protests, the IMF and World Bank are more than likely to be questioned anywhere they go about what they are doing and about projects they are involved in. For five decades preceding, they had been perceived as being good for development. With the protests, the institutions’ track record has been put on the front pages of newspapers, and on radio and television.

The mass mobilizations are key to maintaining pressure on these institutions, and to creating the change we are talking about. It is quite impressive when you get millions of people saying, “Cancel the debt.” It is quite impressive when millions of people are saying, “Stop structural adjustment programs,” “Open your meetings” and “Stop environmentally destructive projects.” It is quite different than when you just have a few NGOs who are not necessarily pushing hard. I think the protests have also done a great deal to move a lot of middle-of-the-road NGOs into more progressive positions.

MM: To what extent have the rhetorical changes been matched by actual policy changes?

Njehu: The reality does not match the rhetoric. When ESAF [the Enhanced Structural Adjustment Facility] became embattled, what did the IMF do? They renamed it the Poverty Reduction and Growth Facility. Everything now has the poverty-reduction paint on it.

The institutions’ claims about fighting HIV/AIDS in Africa are not matched by reality: if their response is to lend more money, to create more debt to fight HIV/AIDS, then the rhetoric far outpaces the reality. That’s where our work is cut out for us.

When we talk about good governance, we don’t mean Japan gets a few percentage points more in voting rights, we mean that the meetings are open to the public and the media. We mean that project-affected people are able to get the information they need before projects are approved. We mean that when civil society participates in the PRSP [Poverty Reduction Strategy Paper] process, as in the case of Tanzania, people there are able to get the draft document outlining national economic plans, without needing to rely on allies in Washington to obtain the documents somehow and send them to Tanzania — documents that were drafted in Tanzania in the first place. It is not enough to talk about debt relief; what we are talking about debt cancellation. It shouldn’t be about poverty reduction, but rather poverty eradication.

MM: What are the demands for this fall’s protest?

Njehu: First, there are demands on transparency and good governance: access by the media and the public to all the meetings of the IMF and World Bank. Second, debt cancellation by the Bank and the Fund, using their own resources, so they are not again feeding off the resources of taxpayers. Third, that they end policies that hinder people’s access to food, water, healthcare and the right to organize — that they stop user fees, privatization and other elements of the so-called structural adjustment programs that lead to reduced access to these basic necessities of life. Fourth, that they stop funding and supporting environmentally destructive projects, such as oil, mining and gas.

The crux of these demands is to say that these are public institutions, and they should be there for the public good, not for corporate good or corporate benefit.

MM: How will this particular round of protests affect the institutions’ policies?

Njehu: For the institutions, and for the media, there was this perception that there was going to be protest fatigue. Seattle happened, and then they got hit in April of 2000. I think they were hoping that they would not have to endure any more.

It is really important that this continues to move forward. In fact, it is moving forward, and our coalitions are bigger. There is a great deal of focus and coming together around the demands. It is not just that people are coming to protest; they are coming united in what they are demanding from the World Bank and IMF. This is a new phase, and one that enables us to send a clear and articulate message forward both to the institutions and to the general public, directly and through the media.

MM: What is the range of activities that will be going on during and around the protest time?

Njehu: It is quite exciting. The creativity and commitment of people is coming through, in terms of the events that are being planned. We have teach-ins, conferences where people will be schooled in the specific issues of concern relating to these institutions; we have rallies and demonstrations. We have requested debates and opportunities to dialogue with the institutions, not small and in a closed room, but in public and broadly distributed. We also have cultural events planned; and we have opportunities for our colleagues from the Global South to talk about their situation on the ground and about the initiatives and campaigns they are conducting to respond to the crisis that results from the institutions’ policies.

There are a lot of things being planned that are very exciting and that are a show of the kind of creativity that could flourish if we didn’t have just one model of development and one economic model, with nothing else allowed.

Joanne Carter is legislative director of Results, an international citizens’ grassroots lobby working to create the political will to end hunger and the worst aspects of poverty.

Multinational Monitor: Why has Results become interested in IMF and World Bank policies?

Joanne Carter: Results is a cross-section of people interested in addressing poverty-related issues in developing countries. Most of us haven’t been involved in global justice issues in other parts of our work, but it has become clear to us that you can’t address poverty issues such as access to healthcare and education unless you address World Bank and IMF policies. That’s how we began to focus upon the World Bank and IMF — because of the scope and influence of these two institutions.

We’ve done a lot of work over the years to increase the access poor people have to basic education and healthcare services. When we talked to people on the ground, they said that we have to address the impacts of World Bank policies, particularly the impact of user fees.

Within this larger framework, we took up the issue of user fees — fees for primary healthcare and education — because we heard repeatedly from Africa and Latin America that those were among the biggest barriers to people being able to obtain those services. Just putting more money into those areas was not resulting in more people having access to those services. In a lot of cases it was resulting in fewer people having access because of the policies associated with World Bank loans.

We started to gather information about the policies and began using the most powerful tools we have in the United States — grassroots pressure — to send a message to the Bank and the Fund and our representatives there from the U.S. Treasury about addressing those policies. We began to work with our grassroots network to educate members of Congress about these issues. We found that once people understood the impacts of user fees, they very much wanted to be involved in seeing these policies change.

MM: What exactly are user fees?

Carter: User fees are fees that are imposed for services. We’ve focused on fees for primary healthcare and primary education, because those are the most basic vital services and often are ones that poor people struggle most to access. They are often fees for services that previously were free or provided at nominal cost, such as fees to attend schools or health clinics, or fees for medications that used to be free.

The whole policy of imposing user fees was strongly promoted in the last decade and a half by the World Bank in particular, in conjunction with the IMF. In reducing overall budgetary spending in poor countries, one of the areas that was most heavily impacted was basic healthcare and basic educational services. IMF belt-tightening forces cutbacks in overall spending, and the areas that get cut first are those with the least political support, such as healthcare and education for the poor. As a result, you have policies which are supposed to substitute — people themselves having to struggle to find the dollars to pay for what once was publicly supported healthcare or education.

MM: What was done in the U.S. Congress on user fees?

Carter: We worked with members on a key committee in Congress that oversees the annual foreign aid budget to include language that would address user fees. Last year, language was included in the foreign aid bill for 2001 that requires the U.S. representatives to the Bank and IMF — meaning our representatives at the Treasury Department — to oppose any loan or other kind of agreement, such as a broader structural adjustment agreement or debt relief agreement, that would include user fees for primary school or primary health care services.

Now we’re struggling to see that language implemented. There have been struggles with both the U.S. Treasury in terms of the implementation, and with the Bank itself. Treasury has tried to evade actual implementation of the law by using a technicality in the language.

MM: That language was passed in a Congress controlled by the Republican Party?

Carter: Our experience has been that this is not a partisan issue. When you talk very broadly about structural adjustment, it’s difficult for people on the Hill and in the media to understand, but when you talk about how much of a disaster these specific policies have been for people on the ground, we’ve gotten support from both parties. They say they don’t think these policies should be continued; they don’t want to see more kids out of school or more people dying from a lack of access to health care. They also think these institutions have overreached in terms of telling countries what to do, controlling both the budgets and the social policies of poorer countries. We’ve found that if you get specific and explain the actual policies to people, there ends up being bipartisan support to change them.

MM: You’ve also done work on debt cancellation?

Carter: In the past, when we worked on debt cancellation, we were very concerned that the existing debt initiative was linked to these structural adjustment policies. One of the reasons that we began to work forcefully on the user fees issue was to begin to address some of those policies, which in some cases were linked to debt relief agreements. We work to ensure that debt relief is not linked to those kind of harmful policies. We also continue to work more broadly on the issue of debt cancellation.

We’ve been calling for the cancellation of impoverished countries’ debts by the World Bank and the IMF, using the institutions’ own resources. The resources are available in these institutions, particularly at the IMF, to cancel a broad swath of debts.

MM: How has that message been received in the U.S. Congress?

Carter: It’s been an educational process, because there has been a debt relief initiative put forward by the Bank. So a lot of people thought the issue had been dealt with. But less than a third of the debts have actually been addressed for these poor countries. Even the countries that have so far qualified have had less than 30 percent of their debts cancelled.

When they understand that the U.S. and some of the other G-7 countries have committed to cancelling the debts of a certain subset of the poorest countries owed directly to them, and that the World Bank and IMF haven’t even done that much, Members of Congress are often ready to act. When they understand that the IMF has a range of resources that are potentially available to cancel these debts, then they’re interested. It’s going to take some kind of political demand and grassroots call to action to get this higher on the radar screen of the Bush administration. But we feel that Members of Congress are potentially interested in the issue, it’s just a matter of moving it politically, which will require more public outcry and public demand.

MM: How has this kind of work in Congress affected the actual policies of the institutions?

Carter: It’s been a bit of a shock to the institutions and our representatives at the Treasury Department that some of these issues have become the political priorities that they are. It’s been extremely useful to raise the political profile of issues like user fees. There have been Congressional hearings where members of Congress are asking questions of representatives of the U.S. Treasury, where letters are going to the institutions both from non-governmental organizations as well as from the Hill.

I know for a fact that people at the very highest levels of the World Bank and IMF are aware of the Congressional interest that exists and the U.S. public support for addressing issues like user fees, multilateral debt cancellation and related issues. My sense is that we have to keep the pressure on and go further. Congress has to not just pass a law and raise the questions, but demand oversight. They have to go farther and demand a response from the Bank and the Fund.

I had an opportunity to meet with the managing director of the IMF. The fact that he was aware of the user fees issue shows the fact that the involvement of Congress and other organizations is having a political impact.

Neil Watkins is coordinator of the World Bank Bonds Boycott, an international grassroots campaign that is building political and financial pressure on the World Bank in the spirit of the anti-apartheid movement.

Multinational Monitor: What is the World Bank bonds boycott?

Neil Watkins: The World Bank bonds boycott is a campaign that is putting grassroots pressure on the World Bank to make fundamental changes.

It was launched in August 2000 by leaders of Global South economic and environmental justice movements. It has been spreading across the U.S. and other parts of the world for the past year.

The campaign is based on the fact that the World Bank gets about 80 percent of its funds by issuing bonds on the private financial market. These bonds are purchased by a wide range of institutional investors. We’ve been focusing on getting city governments, trade unions, churches, socially responsible investors and others to adopt policies against buying World Bank bonds. The campaign is organized very much in the spirit of the anti-apartheid divestment. We’re trying to build similar pressure on one of the main institutions that promote corporate globalization — the World Bank.

MM: Are you asking institutions and people to sell bonds?

Watkins: We are focusing our effort on getting institutions to make a commitment to not buy bonds in the future. So it’s not explicitly a divestment campaign, it’s a campaign asking for commitments against future purchase.

However, a number of institutions have decided to divest as part of this effort, including the Unitarian Universalist General Assembly, which voted to divest this summer, as well as the Marianist brothers and priests and a number of smaller churches and religious orders.

It is harder for a city government or university to divest, because of concerns about their fiduciary responsibilities. We want to get as many pledges from the broadest possible range of groups. That’s why we’re focusing on the boycott rather than calling for divestment.

MM: How widely held are these bonds?

Watkins: The World Bank issues about $20 billion in debt securities every year. The usual holders of World Bank bonds are large institutional investors — including public employee and other pension funds — who want to invest their money conservatively, because World Bank bonds are AAA-rated. They’re similar to U.S. Treasury bonds, and are perceived as very secure. We’re working to make investors perceive them as less secure, as a way to put pressure on the Bank.

MM: Are individuals who have some modest holdings in the stock market likely to have these bonds as part of a mutual fund?

Watkins: It is possible. Some of the largest, most popular mutual funds, including some managed by Fidelity and Vanguard, invest in World Bank bonds as part of their portfolios. It depends on where your investment money goes.

MM: Why is the Bank in the business of floating these bonds if it’s getting contributions from national governments?

Watkins: The historical reason for this was pointed out in the Brookings Institution’s two-volume, several-thousand-page history of the World Bank. Reading that, you find out that when the Bank was set up, there was a lot of concern about how to avoid meddlesome interference from groups like the U.S. Congress, which were at that time a bit skeptical of these international institutions. One of the reasons for making the Bank bond-financed was to avoid the kind of scrutiny that would come from having it solely government-appropriated.

There are two main branches of the World Bank that lend money directly to governments — the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA). The IBRD, which makes loans to low and middle-income country governments at rates that are slightly below market interest rates, is about 95 percent bond financed. In the IBRD you find most of the “structural adjustment” programs, which are the kinds of programs that have been of much concern in the Global South for years — programs that push governments to privatize industries, open up their economies to foreign investors with few restrictions and other measures. Right now about half of the IBRD’s lending goes towards structural adjustment.

IDA is financed by government contributions. IDA’s loans go to the very poorest countries at below market rates.

MM: If the boycott becomes successful and a substantial number of institutional investors agree to stop buying the bonds, what effect would that have on the Bank?

Watkins: The boycott is working to have two different kinds of effects. One is a political and moral effect. The other is a financial impact.

The campaign is based on the anti-apartheid divestment movement model. What worked in terms of generating public awareness and sensibility about the impacts of apartheid was the fact that thousands of churches and universities and city governments and a whole cross-section of the country over a number of years decided not to invest in corporations that did business in South Africa. There was an upsurge of political and moral pressure in that movement and we’re trying to create the same kind of pressure around the World Bank, which until very recently has not been a well-known institution — it has escaped the light of public scrutiny.

Over time, as we get more of the larger institutional investors, we think we’ll have a financial impact. We now have five city governments. As we get other city governments, state governments, other larger pension funds, we think we will start to have a larger financial impact.

We’ve already seen some indication that the Bank is concerned at a financial level. When we got the Calvert Group, one of the largest socially-responsible investment firms in the country, to adopt the boycott last year, we heard that the Bank’s financial department — the folks who have to worry about protecting the Bank’s AAA-rating — expressed some concern.

It doesn’t take too much to worry the Bank. A lot of what supports the Bank’s AAA-rating is psychological. If we can grow the campaign and get a wide range of institutional support, over the long term the bigger financial threat will create some leverage for change.

MM: What does it mean if the Bank loses its AAA-rating?

Watkins: The AAA-rating is the safest rating that a bond can have. If we’re able to create the kind of pressure that would cause the financial markets to perceive the World Bank as meriting a less than totally-safe rating, that would put real pressure on the Bank and limit its ability to actually raise funds on private financial markets. That would be an indication to them that they need to listen to the demands of the campaigns in the Global South and make some changes or else continue to face a financial threat like they haven’t faced before.

MM: What are the demands of the campaign?

Watkins: There are three demands. First is an end to structural adjustment and related policies. The reason we say “related policies” is that the World Bank is now calling structural adjustment a wide range of other things like “poverty reduction support credits” and “development support loans.” We want to target any kind of lending that is like structural adjustment.

The second demand is unconditional 100 percent debt cancellation for impoverished countries, following the demand of the global Jubilee movement.

Our third demand is an end to all environmentally destructive projects, especially oil, gas and mining lending from the Bank Group, as well as an end to lending for dams that have forced relocation as part of the package. Those are our central demands. We’re trying to make it clear that these are the demands of many of the groups around world that are fighting World Bank and IMF policies.

MM: Have you had any interaction with the Bank since launching the boycott?

Watkins: We have not yet been approached by the Bank or had any significant interaction, but every time anyone passes a resolution — whether it’s a union local in California or a church in Minnesota — we pass that along to the Bank. We also try to get their attention by doing press work any time anyone signs on to the campaign.

Their response has evolved over the year and a half since we launched the campaign. At first, their line to the press was that the campaign would hurt the poor and wouldn’t affect them. They’re now changing their tune a little bit. They’re finding out where city councils are considering the boycott and sending officials out to those cities to lobby against the resolution.

While they at first said “this doesn’t bother us,” it’s clear now that it does — they have either dispatched a representative or devoted staff time to trying to stop the resolution when it has been introduced in a number of cities, including Boulder, Los Angeles and Madison.

MM: Who in the Global South is supporting the campaign?

Watkins: The campaign was launched by way of a letter from leaders in the Global South. It was written by PAPDA, the Platform for Alternative Development in Haiti, and Jubilee South Africa. When we launched the campaign on April 10, 2000, we released a letter to World Bank President Wolfensohn signed by about 350 people from 35 Global South countries, representing a wide range of environmental and social movements and nongovernmental organizations working on these issues.

Now there’s an active international coordinating committee on the campaign with people from 11 countries, representing a wide range of issues, but mostly focused on debt, development or environmental issues. That group is really the group that is framing the political demands of the campaign.


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