by Ward Morehouse*

In 1994, the World Bank and the International Monetary Fund celebrated 50 years of reeking enormous harm on human beings, the environment, and democratic practice all around the globe and especially in the Third World. This dismaying record of hurting vulnerable human beings and trashing the environment provoked a variety of non-governmental organizations to launch a campaign on the theme, "Fifty Years is Enough."

Their initiative was well intentioned but they got the goal implicit in the name of the coalition wrong. After half a century of causing such mayhem all over the place, it should have been clear even then that 50 years is too much.

Consider these searing charges leveled against both institutions in a ten-count indictment handed down by the International People’s Tribunal to judge the G-7, which was held in Tokyo in July 1993. (1)

1. A consistent failure by the World bank to implement its own policy directives relating to participation in World Bank projects, such as the requirement of submitting Environmental Impact Assessments before projects are implemented, thus giving a chance for those who will be affected by a project to present their concerns and defend their interests.
2. The consistent failure of the World Bank and the IMF to establish policy directives ensuring popular participation in the formulation and implementation of structural adjustment policies and programs.
3. The failure by the World Bank and the IMF to make public the periodic evaluations of their structural adjustment policies and to take appropriate action in response to deficiencies identified.
4. Conducting World Bank and IMF negotiations and other activities in a covert manner, relying on secrecy to preclude criticism and oppositions, a set of practices that are anti-democratic in their essence and contrary to the spirit of transparency.
5. Coercion through imposition of structural adjustment policy packages upon governments in no position to refuse.
6. The imposition of deprivations and harm upon peoples and the degradation and destruction of their environments through structural adjustment policies and programs another development projects.
7. Displacement of people and disruption of communities in large scale World Bank development projects, such as dam and infrastructure projects, and failure to protect adequately the rights of such displaced persons.
8. The failure to protect rights of indigenous peoples, minorities, and other vulnerable groups affected-by structural adjustment policies and programs and other development projects.
9. The failure of the World Bank and the IMF to institute adequate mechanisms of accountability on behalf of the people affected by their policies and projects and evasions of such obligations to accountability by recourse to an internal conspiracy of silence, reinforced by bureaucratic constraints on disclosure.
10. The insulation from liability by the World Bank and IMF even in instances of gross wrongdoing through the inclusion of immunity clauses in their agreements.

A revelation of just how bad the performance of institutions with such lofty goals could get is found in the accusations hurled at the IMF by a senior economist at both the Fund and the Bank, Davison Budhoo from Grenada. He charged the Fund with statistical fraud in imposing a harsh set of conditionalities on Trinidad on the basis of falsified evidence. And to this day, the Fund has yet to answer his charges which were contained in a book length "Open Letter" to the Managing Director of the Fund after Budhoo resigned as an act of conscience. (2)

More than five years later, the Bank and the Fund are still on their same destructive paths. No matter that the Chief Economist for the Bank has rejected the "Washington Consensus" as the underlying cause of human suffering in the Third World. The heads of the two Bretton Woods Institutions have joined forces with the Director General of the discredited World Trade Organization to assert "policy coherence" (the new code word for globalization from above) in stuffing more of the same down the throats of the poor everywhere. And they have the audacity to proclaim this united front in the tear-gassed debacle in Seattle! (3)

The neo-liberal policy prescription of the Bank, the Fund, and WTO -- i.e., the Washington Consensus -- has its overriding purpose assuring the security and mobility of capital. What it is doing, however, is carrying inequality to new, ever more obscene levels. Consider these numbers from the 1999 Human Development from the United Nations Development Program, which was is devoted to documenting the consequences of corporate-driven globalization:

• The assets of the 200 richest people are more than the combined income of 41 percent of the world’s people.
• A yearly contribution of 1 percent of the wealth of the 200 richest people could provide universal access to primary education for all ($7-8 billion).
• The assets of the three richest people are more than the combined GNP of all least developed countries. (4)

Furthermore, the rate at which inequality is growing is itself accelerating. From 1965 to 1980, 200 million of the world’s people lost income. For the period 1980 to 1993, that number had risen to 1 billion! And while this was occurring the world’s poorest, Bill Gates of Microsoft, arguably the richest person in the world, saw his assets in creased to the point where they are greater than the combined net worth of 45 percent of all US households! (5) ---The "technical-agreement" creating- the World Trade Organization (Final Act of the Uruguay Round) formally establishes "Triangular Division of Authority" between the WTO and its sister organizations, the Fund and the Bank. That agreement has created a fundamentally illegitimate institution with the power (in its dispute settlement mechanisms and other provisions) to blatantly violate the rights of natural persons all over the world. (6)

Even if the Bretton Woods Institutions might at some point been legitimate (in their original and much more limited functions), they have now become thoroughly contaminated by the illegitimate WTO. The time for their abolition is long overdue and can be accomplished in the following steps:

1. Unconditional cancellation of all debts created by IMF and World Bank loans to Third World countries.
2. Payment of compensation or reparations to victims of Bank-Fund Structural Adjustment Programs (SAPS) -- the basis for the indictment of the Bank, the Fund, and the G-7 governments set forth above.

Compensation would be determined by people’s tribunals which would be set up by and for the poorest and most vulnerable segments of society, leading to the further articluation of a new "People’s Jurisprudence" based on the principle of common human decency, which in turn is reflected in the norms set forth in the Universal Declaration of Human Rights and the Algiers Declaration of Rights of Peoples.

As meaningful compensation for all of the harms caused by SAPS over the last two decades would doubtless run into the hundreds of billions of dollars, fresh payments to the Bank and the Fund would be required and should come from a global tax on the 200 richest persons in the world today.

3. Having accomplished these two steps, the Bank and the Fund would be relegated to oblivion by revoking the charters that were issued to them at Bretton Woods more than half a century ago and which have been so distorted and abused that in the intervening decades that they bear little resemblance to the institutions created then and as a consequence are as illegitimate as the World Trade Organization.

Those who embrace TINA (There Is No Alternative), can be heard already, moaning about how desperate poor countries are for foreign investment. But eliminating repayments of IMF/Bank loans and other forms of debt service would free up more funds than most countries are getting through foreign investment on commercial terms. And the payment of compensation or reparations would, at long last, reverse capital flows so that they would once again move from North to South rather than the other way around as has been the case in recent decades (i.e., poor countries are paying more to rich countries than the rich are to poor countries).

It may indeed be that there is some limited need for helping the very poorest countries, but this could be met through by other agencies in the development business such as the United Nations Development Program which asserts that its primary mission is poverty eradication or smaller entities like the International Fund for Agriculture Development based in Rome which is working with small and intermediate scale farmers throughout the Third World. (However, UNDP would have to scrub once and for all its disastrous flirtation with giant global corporations causing great harm -- namely, the Global Sustainable Development Facility, which is neither sustainable nor has anything to do with development but probably could be said to be global!)

If we go a step further and stop the exchange rate scam which is keeping Third World countries in perpetual bondage to the industrialized economies of the world, we would largely eliminate the need for IMF’s original function of helping countries deal with short term balance of payments problems. But as a kind of insurance, a small balance of payment adjustment fund might be created in place of the present day octopus which strangles poor communities and devastates the environment wherever its tentacles reach.

The exchange rate scam refers to the existing situation in which exchange rates are essentially determined by the central banks of the leading industrialized countries. But they are set to favor those countries and disadvantage the Third World by adjustments that over time diminish what exports from the Third World earn while making ever more dear the finished goods (and now also increasingly services) sold by the rich countries to the poor ones. (7)

Relieved of debt service and with a fair return on existing exports, Third World countries will not need the foreign investment for which the Bank and the Fund seek to prepare them. This would also set the stage for reversing the prodigious growth in size of the world’s largest corporations (with combined assets at least one-third of global GDP) and set the stage for dismantling the world’s 1000 largest corporations in the world today which are beyond democratic control of even the largest nation states, let alone the poorest countries in the Third World.

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* REVISED (WM): March 18, 2000 For Washington Days Of Action: April 15 - 16, 2000

(1) International People’s Tribunal to Judge the G-7, The People vs. Global Capital: The G-7. TNCs. SAPs. and Human Rights (Report of the Tribunal, Tokyo, July 1993), Tokyo, Hong Kong, New York, and Goa, India: Pacific Asia Resource Center, ARENA, The Apex Press, and The Other India Press, 1994, pp. 134-136.

(2) Davison L. Budhoo, Enough Is Enough: Dear Mr. Camdessus.. Open Letter of Resignation to the Managing Director of the International Monetary Fund, New York: New Horizons Press, 1990.

(3) Center of Concern, News and Notices for IMF and World Bank Watchers Promoting Internationalization. Not Globalization. January 2000, p 3.

(4) United Nations Development Programme, Human Development Report 1999, New York and Oxford: Oxford University Press, 1999, p 38.

(5) Council on International and Public Affairs and United for a Fair Economy, Too Much (Quarterly Commentary on Capping Excessive Income and Wealth), Winter 2000, pp. 2-3.

(6) Michel Chossudovsky, "Seattle and Beyond: Disarming the New World Order", (Department of Economics, University of Ottawa, Ottawa, Canada), November 1999 (e-mail: chossudovsky@videotron.ca).

(7) For an analysis of the exchange rate scam and what can be done to fix it, see Arjun Makhijani From Global Capitalism to Economic Tustice. New York: The Apex Press, 1992.

Ward Morehouse, Program on Corporations, Law, and Democracy, 777 United Nations Plaza, Suite 3C, New York, NY 10017. Tel. 212-972-9877 Fax 212 972-9878 Tel/Fax 914-271-6590 E-mail: cipany@igc.org