THE WORLD BANK’S CUSTOMERS ARE DISAPPEARING

The personnel change from Paul Wolfowitz to Robert Zoellick will not stop the decline and fall

By Michael R. Kratke

[This article published in: Freitag 23, 6/8/2007 is translated from the German on the World Wide Web,  http://www.freitag.de/2007/23/07230201.php.]


In Heiligendamm, the big sponsors of the World Bank assembled. Nothing happens in international development assistance against the will of the G8 states. They are the main actors in the cartel of the creditor states of the North. For years, the World Bank has acted as their long arm and heavy club in the countries of the South.

In the meantime the World Bank has cleaned up its corruption affair. Wolfowitz left and Zoellick has taken over. Nothing is changed – either in the dominance of the US or in the inflexible neoliberal policy pursued by the Bank ever since it cooperated with its big sister, the IMF, in the eighties. Wolfowitz and Zoellick dine in the same neoconservative club. Both beat the drums for the Iraq war; both are closely allied with the Bush dynasty.

Still world bankers are corrupted even when the right things are verbally promoted. At the top of the hierarchy of the 10,000 highly trained economists employed by the enterprise, the executives receive $250,000 a year. A top functionary of the most powerful development assistance organization of the world earns more in a day than the per capita income of a third of the world’s population earns in a year. How can these people understand what they inflict with their credit policy? What for them is only the budgetary reorganization of a debtor country that must cut social- and education spending to appease its international creditors – is a catastrophe for the people who survive on less than two dollars per day: no schoolbooks, no medicines and no doctors.

The World Bank now has greater problems than narrow-minded and corrupt top functionaries. It is mired in the most serious financial crisis of its history. Its legitimation as a bank of developing countries is permanently damaged. Its customers run away. The Wolfowitz affair would have been a good opportunity for symbolic policy. There were many other candidates for the post of head of the World Bank – like Mohammed Yunus awarded the 2006 Nobel Prize for peace for his work for micro-credits. However a banker of the third world like professor Yumus obviously doesn’t get a chance in the elite circle of “global governance.” As the largest shareholder of the World Bank, the US traditionally has the privilege of proposing the president. The European partners may propose a candidate for the post of IMF head.

Up to today, the World Bank has awarded over $600 billion in credits to developing countries and has lived from the chronic debt crisis in this part of the earth for 25 years. Together with the IMF, the World Bank has hardened into the severe disciplinarian that drums economic rationality – above all “budgetary discipline” – into debtor countries. Many developing countries that only gained needed credits on World Bank conditions are poorer today than before. Wherever it can, the Bank meddles vigorously as an agent of the creditor cartel in the internal affairs of debtor countries (one example is the notorious structural adjustment program, SAP). This is still the crux of development policy. The G8, the big players in the World Bank, are mainly responsible for the disaster – as long as they understand development policy as the perpetual magic formula of neoliberal dogma: opening markets, liberalization and freedom of capital transactions! The World Bank still acts as the spearhead of privatization in the countries of the South and forces their governments to impose school fees and tuitions and transfer railroads, hospitals and water- and electricity supply to private profiteers. Terrible devastations occurred in the states handed over to this policy. Many experts of the World Bank have recognized this. Joseph Stiglitz is the most prominent rebel of the econocracy.

The Good News is that the cartel of creditors is dissolving. The wards of the World Bank are freeing themselves from its coercion. Brazil, Argentina, Ecuador, Chile and other threshold countries have paid off their debts ahead of time. In April 2007, the Venezuela government announced it would repay $3.3 billion of credits incurred before 1999, five years before their due date. Shortly after that, President Chavez declared Venezuela’s withdrawal from the World Bank and the IMF. It is no wonder he has advanced to the most-hated man by international financial experts because the World Bank lacks revenues, the constantly expanding credit sums. The world of international finance markets which includes the World Bank depends on the constant growth of credits and fictional capital or debts. A bank from which customers run away and revenues collapse has to close.

Even worse for the World Bank, former debtors threaten to become independent and have their own structures. Venezuela and Argentina have announced the founding of the Bank of the South. Brazil, Bolivia, Ecuador and Paraguay, other states in Central America and the Caribbean want to join. Venezuela and Ecuador are Latin America’s two largest suppliers of crude oil. Money is not lacking to give a good start to the new development Bank of the South. This policy could win many admirers.