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The Bandung Process and Bretton Woods

The Bretton Woods structural bullying of nations:

He who gives the name, owns the game 

by John Y. Jones

www.globalresearch.ca 20 April 2005

The URL of this article is: http://globalresearch.ca/articles/JON504A.html


Summary:

This talk is about the last 25 years of structural adjustment policies spearheaded by the World Bank, IMF and multinational companies and their government supporters, and how it is characterized by increasing lobby power for big multinational companies; abdication of governments under the labels "good governance" and "public sector reform"; continuation of colonial style deindustrialisation of the South; a shift away from approaching the root causes of world injustices over to ineffective palliative measures that leaves their exploitative practices unchallenged.

The shifting of the centre of gravity in the way world development is orchestrated by leading powers, away from the UN towards the World Bank and the WTO; away from ideas of democracy – towards a one-dollar-one-vote approach; away from a declared people-centred development model – towards a capital-centred model.

As long as international financial institution like the World Bank are allowed and equipped to carry on the commoditisation of the assets and services of the world – through defining, financing, planning, implementing and evaluating development strategies – Southern countries will continue to be bullied Washington Consensus style, and all talk of democracy, national sovereignty and dignity will be insults in the face of the world’s poor. And we haven’t even begun introducing Wolfowitz to the equation.

* * *

An old and rather charming story from Norwegian church life, runs like this: The vicar, trying to loosen up the solemn first minutes of the Sunday morning church service, starts by giving the young ones a riddle to solve: What is small and brown, with a furry tail, climbing trees and cracking nuts with its big front teeth? he asks. A smart kid on the front row jumps to his feet, "It sounds like a squirrel," he shouts, "but you are a priest, so I guess it must be Jesus".

The smart kid had learnt that priests always talk about Jesus. You do not have to be a smart NGO, however, to know that the World Bank always preaches the gospel according to the Washington Consensus. If you forget that, you will easily be led astray. That is the first lesson this morning.

The second lesson is about the power in giving names, or the power of defining. Few aspects of the World Bank is more underestimated than its never resting appetite for launching of new initiatives, inviting new groups to new dialogues, new conferences and co-operations, introducing a new strategy, directing a new path: The Bank’s creation of new names and abbreviations, like The Development Marketplace: "with 183 finalists from 65 countries present innovative proposals for solving development problems"; Youth, Development and Peace Conference in 2003; or Tsunami victim’s relief engagement i January 2005. Most prominently is of course the abolition of ESAP and SAP and the introduction of "something entirely different", PRSPs. But let me for a minute focus on the very last fashion in Bank speak: The MDGs, or generally known as "The UN Millennium Development Goals":

You will be well acquainted with the fact that the World Bank started the new century launching a well publicised effort to eradicate poverty, and the "A better world for all" in June 2000 in Geneva. Jokingly, alert and smart NGOs on the front row, serious religious institutions and civil society groups that had done their homework, immediately retaliated and renamed the strategy "Bretton Woods for All". They had heard the preaching before and quickly dismissed the rhetoric. Behind the promises of removing all evil from the surface of the earth (aids, poverty, discrimination, corruption, and what have you) all the Better-World-For-All strategies and options were what NGOs had been rejecting since the morning of structural adjustment. Now the Bank repackaged this in fashionable design. The Bank had actually stolen a four-year-old text from a document by OECD (Shaping the 21st Century). And in June 2000 it co-opted Kofi Annan to join the Bank, together with the OECD and IMF, in launching this text. Another three months down the road – again with a new name – eventually this text became known as "The UN Millennium Development Goals".

It doesn’t take too much to reveal how shallow the Bank’s rhetoric is: Let’s e.g. look briefly at the Bank’s much publicised fight against corruption, with which I know APRN is familiar. In the Bank’s own World Development Report 1997 it addresses corruption, saying:

"Policies that lower controls on foreign trade, remove entry barriers for private industry, and privatize state firms in a way that ensures competition – all of these will fight corruption."

Mind you: Less than 10 years after large scale privatization of public property in the former Soviet Union had left Moscow with more billionaires pr sq. mile than New York, through a privatization process that Chrystia Freeland called "The Sale of the Century" or an unprecedented process – where the government galvanized by consultants from IMF/WB – that led to what can best be described as theft and robbery of communally owned property. In the face of this the Bank has the guts to claim, without even trying to substantiate it, that lowering of controls, removing barriers for private industry and the privatization of state firms – "will fight corruption"!

In the MDGs one will find that these very same strategies promises to eradicate poverty, aids, sexual discrimination and child mortality. The Washington Consensus strategies are indeed a panacea, a medicine to cure all ills.

But what is even more frightening, is that when the Bank comes up with its new words for its old gospel, be it "A Better world for all" or "Fighting Corruption" or "Good Governance", "policy reform" or "MDGs"– when it is presenting the holy trinity of the Washington Consensus – it is actually allowed to get away with it! Well meaning – and not so well meaning – governments continue to pump in billions to the Bank’s soft section (IDA) allowing it to lay Santa Claus and continue its arm-twisting through setting up conditionalities and dismantling democracies.

The answer to the world’s needs – since it is the Bank that is asking – is always deregulate! liberalise! and privatize! Always seeking effective strategies to open up countries and economies for exploitation through commercialization.

But too many NGOs have stopped looking for the reality behind the rhetoric. In stead they engage in whatever task they are invited to engage in: in introducing Poverty Reduction Strategy Papers (PRSPs), Debt Campaigns for Highly Indebted Poor Countries (HIPC), in fighting corruption campaigns, in god governance strategies, in UN Millennium Development Goals, (MDGs) and in the UN Millennium Declarations. And over and over and over again, NGOs give the benefit of the doubt to the Bank bureaucrats. Many Civil Society organisations spend their entire energy, day after day trying to solve the riddles and accepting the naming game and the agendas that the Bretton Woods institutions lay out before them.

Let us for a moment look at the geography of world power as it unfolds in Washington DC. If you walk three blocks East of the HQs of the WB and the IMF in Washington DC, you come to the White House and the Treasury and the people who appoint the World Bank president. And further down Pennsylvania Avenue, you find the 535 members of Congress. But if you walk North, you’ll come to K-street. Along the K-street Corridor, says Kenneth Dam, you find 20512 registered lobbyists continuously addressing the members of the Senate and the House of Representatives at a costs of 1.4 billion dollars (1998). That amounts to 38 registered lobbyist and 2.7 million dollars in lobbying expenditures for every member of Congress. What Kenneth Dam for some reason did not put into the equation, is that these lobbyist also effectively address the IMF and the World Bank in their daily activities.

It is between these nodes of power that not only America’s destiny is forged, but that of World economics. This triangle of power:

this triangle is found within an area less that one square kilometre. And, mind you, this is a triangle in which the parts are not trying to balance the forces of power: they are all pulling in the same corporately led direction.

***

When Madeline Albright in 1997 stepped down as US ambassador to the UN to become the first woman Secretary of State for the US, on a full hour talk-show on CNN, she pleaded with the American people to support US activities in the UN, saying "We cannot change the world all by ourselves," she pleaded, "We need the UN to do it for us."

The prospect of using the UN as a tool in the global US hegemonic service is far from secret. And contrary to what many may believe, it is currently an American bipartisan project. And it fills naturally in with

rank high on a long and scary list that can easily be extended.

When former UN Secretary General Boutros Boutros-Ghali last month addressed the issues of the challenges for the United Nations, he did that from his position as the chairman of the Board of the South Centre in Geneva and in te spirit of Bandung. "In its essence," Boutros-Ghali says, "the crisis of the UN today is a North-South crisis." He continues:

It has also become easier to dismiss the notion of sovereign equality and advance in its stead the notion of economic and political power making some states "more equal" than others. This in turn, means downgrading the importance of the UN General Assembly and, shifting the centre of gravity to the more collegial and easier to manage entities, such as the Security Council and the executive boards of the Bretton Woods institutions.

The Bretton Woods institutions are "easier to manage" not only for the Americans, but for all the governments that pursue the neo-liberal globalisation model. The democratic nature of the General Assembly is a problem to these forces. The pompously named High-Level group on UN reform therefore suggests that those who contribute more to the financing of the UN should be given a proportional as rewarded for that. "One dollar one vote" seems to be the tune of the day. That way the rich countries, ironically, do not have to shift the gravity away from the UN to the Bretton Woods, they de facto shape the new UN in accordance with the Bretton Woods architecture, making the UN into a company of shareholders.

It is worth remembering that the World Bank is a company of shareholders and not a democratic organisation or reporting to the UN General Secretary or any UN body. The last year the Bank has tried to blur this by increasingly being given access to the floor of the UN. This is a dangerous precendent that gives the Bank for free what corporations pay heavily to create the illusion of: credibility and a human face.

It is also worth remembering a long forgotten piece of British legislation, the Bubble Act of 1720, in which the British Parliament made it illegal to create "share holders corporations" due to the basic unethical set-up of combining limited responsibility and unlimited profit potential for investors. It was called a recipe for theft. Needless to say: This body that was made a criminal offence in 1720 is to day a corner stone for big capital’s global domination. The World Bank and the IMF are both staunched supporters of, and in their own structures such companies, with unlimited powers for profit, but limited responsibilities. Their annual 60 billion dollar lending/investing under unprecedented guarantees give annual profits and high investment ratings on the global bonds’ market. The imposition of the structural adjustment conditionalities on country after country does not legally bind these institutions to any accountability. When the medicines prescribed by the conditionalities imposed through PRSPs and HIPCs e.g. fail – and they do – it is the patients that have to pick up the ashes, carry the consequences – and on top of it all repay for money consumed in the failed experiments.

Whereas banks and companies in general can go bust if they invest irresponsibly and unwisely, the World Bank and the IMF can chase its loans into eternity, irregardless of the loans being given to dictators, embezzlers or incompetent borrowers and irregardless of whether the money ends up in the Cayman Island, Swiss bank accounts – or reach the poor. The Bank pr definition cannot lose.

As Boutros-Ghali correctly saw, the international finance institutions of today are substituting democratic bodies, and even being introduced as more "just" bodies than e.g. the UN general Assembly, since they give financial contributors to the UN system a proportional share in the power of these institutions. This way the UN undoubtedly will become more "relevant". These same institutions prove their "relevance" through becoming tools for private capital. As we have seen, this is sometimes called "fight against corruption", but we also find them concealed under heading like MDGs, HIPC or PRSPs.

That is also why one should not expect any reaction or emerging controlling counter force to the American hegemonic strategies from Europe or other large economies or states. The intra-empire rivalry is exaggerated, if not entirely a myth.

"We are the companies’ government" George Bush triumphantly declared in so many ways in his first days in power. After the downfall and disgrace of close allies like World Com and Enron, this melody has been dampened a couple of notches, but it remains the policy of that government. Bush’s appointing of ambassadors and people to other political positions – of which vice president Cheney of Halliburton is the gravest example – bares witness to this. It is right that the Americans have given preference to their own industry in e.g. the build up process in Iraq. But the critique they meet is not based on the injustices committed to the Iraqi people, and will be forgotten as soon as London, Paris, Moscow and Bonn is allowed more access to the spoils of this war. If Rio, Delhi and Pretoria will follow suit, remains to be seen.

That George Bush now has appointed a trusted neo-liberal to the position of president of the Bank – and the fact that the world community at large has accepted it, is a testimony to the fact that the Bank is a relevant tool to corporate lead globalisers. Wolfensohn or Wolfowitz are both guarantors for this. It is actually hard to see any issue hat can be further aggravated by the appointment of Mr. Wolfowitz, than what has been done under Wolfensohn. From a civil society perspective we can only hope for a more openly hard core operating Bank, cleansed of its human-face rhetoric, which will help exposing the true nature of its operations and ambitions. And consequently become easier to stop.

But the easy NGO talk of democratizing the Bank, or making it more transparent or accountable or more communicable and more sensitive to critique, research and experience, is of little significance in the world of realpolitik. And no face-lift improvement matters if we do not address the very core of the Bank’s being, the fundamental commodification and cost-recovery efforts carried out daily through Bank policies, and on which the Bank is founded. Through commodification and commercialisation of common goods, state owned properties, services and rights, the developing world have be made "relevant" to the profit-seeking institutions of the West. The main activity of the World Bank, the investment in profit seeking activities which has made the Bank a popular investment channel and the real rational for its being, is founded not on soft loans and gifts to the needy, but on hard core investment propped up by harsh debt service procedures. And mind you, more than 80% of the Bank’s assets come from money raised in the international marketplace, among people who expect to get the best interest there is. This market is the real owner of the Bank.

And here we are at the core of national sovereignty and democracy in a Wold Bank led world: promises of popular participation and national ownership and control are set within the tight limits given to it by the neo-liberal paradigm and will only be allowed as long as it serves the larger goals of the Bank:

As long as they serve these purposes, national players will be allowed to carry on by leading actors in the corporate globalization race.

But the moment countries move in an opposite direction – when local needs and preferences make it imperative, e.g. when democracy claims its space and say – the World Bank and IMF will trigger the repercussions embedded in debt repayment deals and imposition of conditionalities.

I need not tell the Philippine or Indonesian people of the many atrocities that have been committed through impositions from the World Bank, and the burden you still carry from former injustices, not only in the form of heavy debts and harsh repayments, but in terms of structural adjustment policies that have harmed the poor also in your countries, and left local democratic forces with little room for economic space and freedom. You have indeed seen your freedom taken away from you through decisions taken in far away places to serve hidden goals and financial powers.

For the developing world – in cooperation with its civil society and informed and supportive people’s groups in the North – to be able to regain the initiative, it cannot build on the rubble of the present day international financial institutions and the World Bank. The way the democratic forces have been brushed aside after the fall of the wall, galvanized by the 9/11 and subsequent events, is evidence to this. But the path towards creating good institutions for the developing world will have to be hammered out by the South itself. It will have to

The history of Bandung has shown that the South is able to come together in a forceful way to change the direction of global development – a different globalization. Rather than seeking a post-Washington Consensus, one will have to compost Washington Consensus all together, and disclose its underlying motives, targets and interests, and reinstate people’s participatory powers and competence. Long and short term goals for the enhancing of world democracy and national sovereignty is intrinsically linked to the dismantling of the international finance institutions.

With the introduction of Mr. Wolfowitz, the architect of the infamous invasion of Iraq, to the position for president of the World Bank, this work has become more clear and obvious. It will be impossible to portray the Bank as a United Nations of good will and altruism. If we are alert NGOs on the first benches.

But it has also sent a strong signal that present day globalization is not merely a question of americanization, but a formidable alliance of corporate forces without borders. A renewal of the pledges from Bandung could be a start where The South must play a leading role. I hope you will find a place for solidarity contributions also from the North. But we all know that that role must be very different from the present day aid-regime as spearheaded by the World Bank. With the South taking the lead, I will join in the ambitions of Kevin Danaher, who says

We abolished slavery

we abolished child labour

we abolished the exclusion of women from voting

we can abolish international banking institutions that do more to prevent democracy than promote it.

 

John Y. Jones is director of IGNIS, Norway. April 13-14 2005 to APRN conference on Bandung 50 years

note: the footnotes do not appear in this online version of Dr. Jones article


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