dollars in 2001 to 4.4 billion dollars in 2004, while income from the = Bank's investments went from 1.5 billion dollars in 2001 to 304 million = dollars in 2004. China, Indonesia Mexico, Brazil and many of the more = advanced developing countries are going elsewhere for their loans.
The budgetary crisis is, however, only one aspect of overall crisis of = the institution. The policy prescriptions offered by Bank economists is = increasingly seen as irrelevant to the problems faced by developing = countries, says de Tray, who served as the IMF's resident officer in = Hanoi and the World Bank's representative in Jakarta.
The problem, he said, lies in the emphasis at the Bank's research = department on producing "cutting edge" technical economic work geared to = the western academic world rather than coming out with knowledge to = support practical policy prescriptions. The Bank is currently staffed by = some 10,000 professionals, most of them economists, and de Tray claims = that "there is nothing wrong at the World Bank that a 40 per cent staff = reduction would not fix."
Woods supports de Tray, writing in a recent report that the "most common = complaint in the field is that the Fund and Bank staff have no policy = experience. Having completed doctorates in economics or finance, the = staff is ill-equipped for the complex and messy work of the political = systems in which they work."
The disdain for politics that incapacitates many staff in dealing with = the developing world is often coupled with a blind eyes to the fact that = politics of a more consequential kind than complex developing country = politics also influences the policy prescriptions of the Bank and the = Fund.
"Politics has always influenced the advice offered by the IMF and World = Bank," writes Wood. "South Korea's first standby agreement with the IMF = in 1997 was clearly decorated with conditions which had been added at = the behest of the United States. In Russia through the 1990s, political = pressures in the G7 pushed the Bank to make loans, which were never used = (but for which Russia had to pay charges), and pushed the IMF to turn a = blind eye to failures to meet its targets. World Bank projects are = sometimes covertly shaped by preexisting agreements for contracts = between large companies backed by powerful governments and borrowers."
How to hide a crisis
One of those present at the meeting of non-governmental organizations at = the Institute for Policy Studies was Robin Broad, an associate professor = at American University. A long-time student of the World Bank whose = book, "Unequal Alliance: the World Bank and the Philippines," is = regarded as a classic case study of the institution's relations with its = client countries, Broad claims that the World Bank is, in fact, in more = of a crisis than the IMF but that this is less visible to the public.
"The IMF's response has been to withdraw behind its four walls, thus = reinforcing the public perception of its being besieged," she notes. = "The Bank's response, however, has been to engage the world to hide its = mounting crisis."
She identifies three elements in the Bank's offensive. "First, it goes = out and tells donors that it is the institution best positioned to do = lending to end poverty, for the environment, for addressing HIV-AIDS, = you name it . when in fact its record proves that it's not. Second, it = has the world's largest 'development' research department -- funded to = the tune of about 50 million dollars --whose raison d'etre is to produce = research to back up predetermined conclusions. Third, it has this huge = external affairs department, with a budget of some 30 million dollars -- = a PR unit that feeds these so-called objective research findings to the = press and fosters the image of an all-knowing Bank."
But, she concludes, "This can't last. Inside the Bank, they know they're = in crisis and are scrambling. And sooner or later, if we do our work, = the truth will come out."
Reaction to new initiatives
At the NGO meeting, people dismissed World Bank president Paul = Wolfowitz's much publicized anti-corruption campaign as another public = relations stunt designed to shore up the Bank's faltering legitimacy.
"Talk about being hypocritical," said Shalmali Guttal of the = Bangkok-based Focus on the Global South. "He was the US ambassador to = Indonesia in the mid-'80s, when corruption involving World Bank projects = was rife, and he never did anything about it. About one out of every = three dollars that the Bank gave Suharto government over a 30-year = period from the mid-'60s to the mid-'90s went to the pockets of = Suharto's people. This came to about $10 billion of the $30 billion = World Bank lending program. Wolfowitz, in fact, was known as a great = friend of the Suharto regime."
Deep skepticism also met the plan to increase the voting power of some = the big developing countries, such as China and Brazil, and the = announcement that a few more poor countries would be made eligible for = debt reduction under the Bank-managed "Highly Indebted Poor Country = Initiative" (HIPC). The latter was seen as a PR effort to shore up a = faltering program while the former was seen as a desperate attempt to = head off the move of many developing countries to move away from = dependence on the two institutions.
End of reform?
There was little talk at the meeting about reforming the Fund and the = Bank's lending and project policies, the preferred approach of many of = the bigger international NGO's in the nineties. Sameer Dossani, = coordinator of the 50 Years is Enough! Campaign expressed the meeting's = doubts about the viability of a reformist approach: "We criticized = structural adjustment programs, and they came up with PRSPs [Poverty = Reduction Strategy Papers]. We called for debt cancellation, and they = came up with HIPC. With these initiatives now mired in failure, isn't it = time for another approach?"
With the deepening crisis of the two institutions, the critics sense an = opportunity for putting in place a more radical strategy. "We've united = around a strategy of disempowering the Bank and the Fund," Lidy Nacpil = of Jubilee South, a global coalition demanding debt cancellation, at the = conclusion of the two-day meeting. Instead of attaching conditions to = IMF and Bank operations in order to reduce their negative impacts, the = new approach would identify the most vulnerable operations or divisions = of the two institutions and wage global campaigns to shut them down with = the strategic goal of eventually rendering the two institutions with = radically reduced power and influence.
"It's like cutting off the tentacles of an octopus," Dossani said. "You = start with the most vulnerable parts, then move on."
Among two initiatives considered by the new campaign are international = mass mobilizations at the time of the World Bank-IMF Fall Meeting in = Singapore during the third week of September and an international = conference on "Alternatives to the World Bank and the IMF" timed to = coincide with the Fall meeting.
Walden Bello is professor of Sociology at the University of the = Philippines and executive director of the Bangkok-based Focus on the = Global South.
Arthur