Monday, April 16, 2007

The World Bank's real victims

The furore at the World Bank over Paul Wolfowitz’s unilateral decision to promote his girlfriend and give her a pay rise, stands in marked contrast to the disastrous results of the organisation’s policies in developing countries. The bank’s loans are often tied to ruthless Structural Adjustment Programmes (SAPs). These require poor countries to reduce spending on things like health, education and development. Debt repayment and economics policies like privatisation have been made the priority. Other "adjustment" policies include currency devaluation, increased interest rates, labour market "flexibility", and the elimination of subsidies on basic food commodities. Forced to join the global market economy on unequal terms, poorer countries are then confronted with falling export prices as a result of competition, which benefits the rich capitalist countries. So countries have had to increase exports on a continuous basis to increase foreign currency earnings and to try to repay international debt. A 2006 study by Oxfam revealed that more than 50% of Africa’s export earnings are derived from a single commodity; numerous countries are dependent on two commodities for the vast majority of their export earnings; and there are a number of other countries in Africa heavily dependent on very few commodities. Ultimately, countries find it increasingly difficult to purchase imported goods and services or generate income for development programmes. The SAPs have contributed to what the economist J.W. Smith has called the "the greatest peacetime transfer of wealth from the periphery to the imperial centre in history".

The term "Structural Adjustment Programme" gained such notoriety, and met with fierce resistance on the streets in a number of countries, that the World Bank and IMF rebranded it, and it is now called the Poverty Reduction Strategy Initiative. This compels countries to develop Poverty Reduction Strategy Papers (PRSP). While the name has changed, the World Bank is still forcing countries to adopt the same types of policies as SAPs. Africa Action, an organisation working for political, economic and social justice in Africa notes: "The basic assumption behind structural adjustment was that an increased role for the market would bring benefits to both poor and rich. In the Darwinian world of international markets, the strongest would win out. This would encourage others to follow their example. The development of a market economy with a greater role for the private sector was therefore seen as the key to stimulating economic growth." The results? The gap between the wealthiest nations and the poorest has grown. The United Nations has said that the millennium goals set in 1999 will be missed by a "wide margin" on present trends. Six out of ten people in the developing world have no access to basic sanitation, and one in three are without safe drinking water. More than 1.2 billion people exist on less that $1 a day. Wolfowitz, of course, practised structural adjustment elsewhere, most notably in Iraq, before he was appointed president of the World Bank in 2005. He was George Bush’s deputy defence secretary and the chief ideological architect of the 2003 invasion. His alleged crimes and misdemeanours at the World Bank pale into insignificance compared with the ruination of an entire country that is the result of the four years of occupation of Iraq.

Paul Feldman, communications editor

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