If Martians invaded Earth whose side would [Africans] be on? Many say they would join the Martians against Americans and Europeans.
So writes Victor Youmbi, a community activist in Cameroon, this week on openDemocracy. Why? Because nothing makes people more angry than humiliation and unfairness, whether it be the state of Africa or climate change.
The World Bank (motto: Our Dream is a World Without Poverty) is supposed to be the central plank in building a fairer world. For many years, it has been under attack from both left and right.
The pressure continues. On 12 February 2004, Archbishop Desmond Tutu of South Africa joined four other Nobel Peace Prize winners and over 300 international organisations in calling on the World Banks president, James Wolfensohn, to adopt the recommendations of a review that he commissioned into the extractive industries (mining, oil and gas).
James Wolfensohn, plutocrat for the poor, initiated the Extractive Industries Review (EIR) in 2000. The aim was to assess how far these industries can contribute to poverty alleviation. According to civil society groups, the final report, to be published soon, validates many of the concerns that communities and NGOs have been raising for more than two decades (see press release here).
The Archbishop and his friends are concerned that the Bank is evading a commitment to make changes necessary to ensure that poverty is alleviated and local communities benefit from World Bank investments. They cite as evidence a draft copy of the World Bank managements response to the recommendations leaked last week.
The roots of evil
Doubt as to the good faith of the Bank does not come out of nowhere. Back in 1995, for example, the World Bank began a joint review with civil society groups of the impact of structural adjustment policies (these are policies designed to open markets and reduce the states role in the economy in the wake of economic crises).
The study, starting with nine countries (Bangladesh, Ecuador, El Salvador, Ghana, Hungary, Mexico, Philippines, Uganda and Zimbabwe), was remarkable for its depth and range. Moreover, each stage of the review from its overall remit to its research, analysis and reporting was jointly agreed by the World Bank and hundreds of NGOs across the countries concerned in a network called SAPRIN. We levelled the playing field so that SAPRIN had as much power as the bank Doug Hellinger of the Development Group for Alternative Policies, SAPRIN's global secretariat, tells Globolog.
The findings of that Herculean task, which have just been published in book form by Zed Books (Structural Adjustment: the policy roots of economic crisis, poverty and inequality), are devastating according to Hellinger and his colleagues. In nine chapters, covering trade and financial sector liberalisation, employment, privatisation, agriculture and other aspects of structural adjustment, they detail overwhelmingly negative effects.
What is remarkable says Hellinger, is that this work could be done jointly with the Bank and yet so profoundly undermine the policies the Bank imposed.
And the response, according to Saprin, has been zilch-a-mundo. In a letter sent to a senior World Bank official in October 2003, SAPRIN wrote:
Over two years since the completion of the SAPRI and we have yet to see the Bank take any serious action to respond to the myriad problems inherent in its adjustment agenda despite the fact that it received clear, grounded and incisive assessments of these policy failures from civil society during the five year initiative. The end of the Washington Consensus?
For Hellinger and his colleagues, one of the lessons of the Bank's behaviour is that change is not going to come through engagement. "We didnt necessarily expect it to", he told Globolog; but we all felt that it was important to demonstrate the capacity of civil society to contribute to economic decision making, to help it mobilize around this issue, and to show, in conjunction with the Bank and governments, that the foundations of the Washington Consensus have collapsed".
Ah, the Washington Consensus. John Williamson, who coined the term, says it is time to move beyond it. But the problem, he argues in an article that appeared in the September 2003 edition of Finance & Development, lies not in the key concepts it embodies, but in how those concepts have been interpreted and the addition of neo-liberal doctrines that are conspicuous by their absence from his list.
(The key concepts that are on his list include fiscal discipline, reordering public expenditure priorities, tax reform, liberalisation of interest rates, a competitive exchange rate, trade liberalisation, liberalisation of inward foreign direct investment, privatisation, deregulation and property rights. The ones that are not include monetarism, low tax rates, the minimal state that denies any responsibility for correcting income distribution or internalising externalities, and free capital movements).
John Williamson suggests a way forward in After the Washington Consensus, co-edited with Pedro-Pablo Kuczynski. In Latin America, concentrate on domestic reforms; international institutions like the World Bank, meanwhile, could do less and do it better.
For SAPRIN, the future is for more countries to regain control of their own policies. Malaysia, which strongly resisted International Monetary Fund prescriptions, points the way: Were not talking about the end of the capitalist system, says Hellinger. But we have to put control back with the countries themselves, under political arrangements where governments are accountable to their own civil society, and national economies are not under the control of elite and foreign forces.
Hellingers formulation sounds appealing, especially for countries that start in a weak position, such as many of those in Africa. The trouble is that, going by the track record, the prospects for such accountability look remote, especially where Africas resources interest outsiders. Take the Democratic Republic of Congo, Africas largest country, which reports an improving investment climate for foreign mining firms, even as exploitation of forest resources is set to accelerate. Capturing revenue flows and applying them to building a strong domestic economy and society (dont mention the environment or indigenous peoples) would be something new in Congos history. Its hard to see how it can happen without more effective foreign aid programmes, if not a larger World Bank.
In other regions, such as East Asia, South Asia and Latin America, calls for greater national control will be criticised by those who see a danger that local business incumbents will combine with opponents of globalisation to promote a corporatist form of capitalism, which, they argue, slows wealth creation. Martin Wolf is one of those who highlights this concern (see, for example his recent Financial Times column The Davos-Mumbai Threat subscription only). Better, as he sees it, is an alternative in which activists recognise that competitive world markets do not enhance corporate power, but constrain it.
Wolfs formulation sounds like perfect academic theory. In practice, it is unlikely to be sufficient. Innovative NGOs and disruptive social entrepreneurs of the kind identified by John Elkington, together with new forms of regulation, are likely to be necessary to constraint corporate power. That means a new politics, all the more needed as the World Banks rhetoric, and action, to redress inequality is ever less in accord with the concerns of the United States administration.