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World Bank and The International Monetary Fund
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Created after World War II to help avoid Great Depression-like economic disasters, the World Bank and the IMF are the world's largest public lenders, with the Bank managing a total portfolio of $200 billion and the Fund supplying member governments with money to overcome short-term credit crunches. But the Bank and the Fund are also the world's biggest loan sharks.
When the Bank and the Fund lend money to debtor countries, the money comes with strings attached. These strings come in the form of policy prescriptions called "structural adjustment policies." These policies—or SAPs, as they are sometimes called—require debtor governments to open their economies to penetration by foreign corporations, allowing access to the country's workers and environment at bargain basement prices.
Structural adjustment policies mean across-the-board privatization of public utilities and publicly owned industries. They mean the slashing of government budgets, leading to cutbacks in spending on health care and education. They mean focusing resources on growing export crops for industrial countries rather than supporting family farms and growing food for local communities. And, as their imposition in country after country in Latin America, Africa, and Asia has shown, they lead to deeper inequality and environmental destruction.
For decades people in the Third World have protested the way the IMF and World Bank undemocratically impose such policies on their countries. In just the last year, those protests have spread to the power centers of the developed world. In April, some 20,000 people gathered in Washington, DC during the institutions' spring meetings to demand a more democratic kind of international decision-making. Similar protests took place in Prague, Czech Republic in September of that year. By dragging the Fund and the Bank into the light of public scrutiny, the Washington protests re-invigorated a public dialogue about the growing wealth inequalities within and among nations, and they put the institutions on notice that they can't continue business as usual.
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The Origins of the IMF and World Bank
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The World Bank and International Monetary Fund (IMF) were created at the end of World War II by the U.S. and British governments. During the war the business classes of Europe were either supporting the Nazis, getting their banks and factories bombed into oblivion or they fled Europe with all the money they could carry. On the other hand, socialists, communists and anarchists had high credibility because they were the leaders of the Resistance to Nazi occupation. In order to prevent leftists from coming to power in western Europe, it was crucial to U.S. and British elites to get the business classes back into power. This required international institutions that would promote capitalist policies and strengthen the power of the corporate sector. .
The World Bank focused on making loans to governments in order to rebuild railroads, highways, bridges, ports and other "infrastructure", i.e., the parts of the economy that are not profitable for private companies to build so they are left to the public sector (the taxpayers). After an initial focus on western Europe the World Bank shifted its lending toward the third world.
The IMF was established to smooth world commerce by reducing foreign exchange restrictions and using its reserve of funds to lend to countries experiencing temporary balance of payments problems so they could continue trading without interruption. This pump-priming of the world market would benefit all trading nations, especially the biggest traders, the U.S. and England.
The unwritten goal of the IMF and World Bank was to integrate the elites of all countries into the capitalist world system of rewards and punishments. The billions of dollars controlled by the IMF and World Bank have helped to create greater allegiance of national elites to the elites of other countries than they have to their own national majorities. When the World Bank and IMF lend money to debtor countries the money comes with strings attached. The policy prescriptions are usually referred to as "structural adjustment" and they require that debtor governments open their economies up to penetration by foreign corporations, allowing them access to the workers and natural resources of the country at bargain basement prices.. Other policies imposed under structural adjustment include: allowing foreign corporations to repatriate profits, balancing the government budget (often by cutting social spending), selling off publicly owned assets ("privatization") and devaluing the currency.
Many grassroots groups in the Third World talk about the recolonization of their countries as they steadily lose control over their own land, factories and services.
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| source: Global Exchange |
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