The World Bank's friendly face for Africa
Some sectors of the NGO milieu have argued that the World Bank is undergoing a fundamental transformation. This illusion was dispelled during the Bank's recent meeting with the S. African NGO Coalition SANGOCO. George Dor The World Bank and International Monetary Fund (IMF) are notorious for imposing structural adjustment programmes, and entrenching poverty in countries across the globe.
These institutions have played a significant role in redirecting South Africa's transformation away from the basic rights and targets set out in the Constitution and the Reconstruction and Development Programme, towards an approach more in keeping with structural adjustment.
The World Bank has been an important player in the post-1994 market-driven housing and land policies, the user pays approach to water delivery, the increasing privatisation of infrastructure and services, the Growth Employment and Redistribution Strategy (GEAR) and cuts in spending on 22 International Viewpoint #310 April 1999 education, health and social welfare.
During his visit to South Africa, the Bank's Chief Economist and Vice President Walter Stiglitz said nothing to suggest that the bank will shift to a more people-centred approach.
Yet, curriously, his visit generated extensive media publicity portraying the man and the bank in glowing terms. As such, he succeeded to a significant degree in achieving perhaps the primary objective of his visit, legitimising the World Bank in denial of the poverty and hardship it is responsible for.
"Unemployed can bank on Stiglitz: Reflecting the changing face of the World Bank, Joseph Stiglitz is a hero in some left-wing circles", headlined the Mail and Guardian. "His intention... is noble: to free the poor from the powerlessness that is such a feature of poverty."
The seriousness with which Stiglitz and the World Bank are pursuing the appearance of legitimacy is reflected in the various meetings allocated to church leaders, NGOs and other nongovernmental agencies.
As well as South Africa, the Bank is sending high-level representatives to several countries affected by the bank.
The lack of a critical approach by the media in the face of the World Bank's impact on the South African majority and the ease with which Stiglitz has been able to achieve his objective in many quarters is alarming. For some, it is a case of "money talks": the bank's offer of cooperation and the financial benefits this entails for the NGO partner is perhaps too tempting to refuse.
For others, it is more a case of failing to scratch beneath the surface and perhaps a yearning for a "hero" to get us out of the chaos of the current global crisis. The reality of the World Bank's ongoing negative impact remains hidden.
Much of the impetus for the more positive way in which the World Bank is being portrayed emanates from a talk by Stiglitz in Helsinki in January 1998, in which he criticised the "Washington Consensus". , namely the World Bank, IMF and US economists and their neoliberal structural adjustment approach.
But there is little or no substance to these criticisms. We asked Stiglitz for his views on the contradiction between his speech in Helsinki and the World Bank contribution to the GEAR strategy. He told us he didn't know much about South Africa.
We asked specifically about the World Bank staff member responsible for GEAR's severe fiscal deficit targets, the resultant cuts in spending on meeting basic needs, and whether the more flexible approach he conveyed in Helsinki should have been followed in South Africa.
His performance during the meeting was that of a conductor of a united entourage, creating the image of a World Bank working in harmony. Yet he responded that the World Bank "is not militaristic" and that "there is no litmus test" for bank staff or, to put it in other
words, there is no clear bank policy on critical issues and bank staff have substantial leeway to do as they please.
We put it to him that perhaps the bank should take action against its other staff member on the GEAR team who got the employment predictions so horribly wrong by suggesting that GEAR would generate hundreds of thousands of jobs each year when, in reality, hundreds of thousands are being lost.
Everything in his tortuous reply suggested that he was not particularly concerned whether bank staff members produce work of poor quality, even if this has a profound impact on people's chances of finding employment.
On the call to cancel third world debt, he questioned whether the resources required can't be put to better use elsewhere. He confirmed that the World Bank will continue to determine whether to grant debt relief and how much to give on the basis of its level of satisfaction with indebted countries economic policies.
We asked him whether he still stood by his much-reported criticism of the "Washington Consensus" for policies that "are neither necessary nor sufficient, either for macro-economic stability or longer-term development" , "at best incomplete and at worse misguided" and that "neglect. fundamental issues."
He toned down this criticism by telling us that his "main critique" is that the "Washington consensus" is "oversimplistic" and that "those policies are advisable but not sufficient". The soft tongue...
In Helsinki, while discussin the trade off between lowering inflation and creating employment, he criticised the "Washington Consensus" for its "singleminded focus on inflation" and that it "typically downplays stabilising output and unemployment"
He argued: "In 1995 more than half the countries in the developing world had inflation rates of less than 15 percent a year. For these 71 countries controlling inflation should not be an overarching priority.*
He repeatedly stressed the need to prioritise employment creation and suggested that prioritising inflation was only necessary in extreme cases: "Controlling inflation is probably an important component of stabilisation and reform in the 25 countries... with inflation rates of more than 40 percent a year."
In Johannesburg, he lowered the number of countries that don't need to prioritise inflation to only those with an inflation rate below 8%.
With regard to privatisation, he told us that "government should focus its attention on areas where the private sector can't operate". He stressed the role of the private sector in infrastructure and service delivery and repeatedly referred to the state as having a role in "justice and law enforcement" in other words, focusing on the state's responsibility for ensuring a profitable environment for private sector delivery.
Our engagement with him highlights a significant retreat from his Helsinki position. There are a number of possible reasons. His Helsinki speech may have been a deliberate strategy to create the impression of change. He may have been reigned in by the World Bank after Helsinki. Perhaps he felt restrained in Johannesburg by the need to talk the language of his entourage.
He portrays the confidence that he has the ear of the institution but insider talk suggests that he is seen as a maverick who is not to be taken too seriously. Whatever the reason for his retreat, his hero's halo has now vanished. ...and the iron teeth
The two faces of the World Bank are there for all to see. On the one hand, Stiglitz in Helsinki, his mooting of a "post-Washington Consensus", , the World Development Report publicity events and, in instances, content, the Inspection Panel, the World Bank NGO forums, all these represent part of the World Bank's international legitimacy strategy.
The World Bank staff in South Africa, the Southern Africa region and other countries and regions of the South Remember D Diego Garcia rarely makes newspapers outside Mauritius, from which it was separated in 1965.
United Nations Resolutions occasionally condemn Britain for illegally occupying the Islands. The Non-Aligned Movement and Organisation for African Unity pass resolutions. Questions are occasionally asked in the British Parliament, or the US Senate-Senator Edward Kennedy expressed his horror at the "depopulation" of the Islands when the Mauritians living there were forcibly removed to make way for the base.
Diego Garcia was almost in the news during the Gulf war, when it is the base from which the B-52s took off to bomb Iraq. It still is. The US missiles launched against both Sudan and Afghanistan last year, in the wake of the Nairobi and DarEs-Salaam bombs, were launched from vessels based at Diego Garcia.
When US President Clinton protested about Indian nuclear tests, his Indian counterpart, Prime Minister Atal B. Vajpayee, remarked that the US stocks its own nuclear weapons on Diego Garcia-ready for use anywhere in the
LICS represent the other face of the World Bank, the World Bank as it affects real people.
The regularity with which bank staff impose structural adjustment policies throughout the countries of the South strongly suggests that they have clear instructions in this regard and that the "Washington Consensus" is very much in place. We can expect more of the same.
In a recent example, a World Bank evaluation of the generalised failure in South Africa to extract payment from the rural poor for water from communal standpipes recommends intensifying the squeeze on rural people by introducing mechanisms that withhold water until payment is received