Socialist Worker

Enforcing the drive for profit

Issue No. 1692

World Bank and IMF

Enforcing the drive for profit

ANTI-CAPITALIST protesters are taking to the streets of Washington DC this weekend. They are protesting at the spring meetings of the World Bank and the International Monetary Fund (IMF). The two institutions chain poor countries to debt and impose Structural Adjustment Programmes. These dismember the economy, open it to multinationals, privatise state-owned assets, outlaw workers' rights and destroy the environment.

"IT'S NOT right for a bank to run the whole world." So says a Zambian opponent of the deadly stranglehold the World Bank and the IMF have over the Third World. The World Bank and IMF receive more in payments than they originally lent out. The majority of current loans are merely to service interest on past loans. According to United Nations figures, between 1980 and 1992 the World Bank and IMF presided over interest payments from "developing countries" totalling $771.3 billion, plus $891 billion in repayment of the original loans.

During this period the poorest countries paid three times more than their 1980 debt, only to find themselves three times more in debt at the end of it. The IMF and World Bank have also imposed their savage brand of Thatcherite free market madness on those least able to take it. Governments and multinationals would love to see the "experiment" that is being carried out on the Third World imposed full scale on workers in the West.

9 steps to hell

THE WORLD Bank and IMF programmes: 

  • Break the link between earnings and inflation, slashing wages. 
  • Force public spending down to a bare minimum.
  • Divert government revenues into paying the foreign debts.
  • Outlaw subsidies to and price controls on staple goods. The price of petrol increased 3,000 percent overnight and bread by 1,100 percent after IMF shock treatment in Peru in 1991. 
  • Open sectors such as food to foreign markets which then drive local producers to the wall. 
  • Dictate bank interest rates, leading to price rises and a fall in consumption.
  • Demand the privatisation of state- owned companies. In Zambia this resulted in 420,000 people losing their household income.
  • Impose "labour market reforms". This means destroying job security. As the World Bank put it in 1995, "The quest for greater worker mobility will often mean implementing measures that allow the process of job destruction." The minimum wage is outlawed.
  • Break trade unions. The World Bank regards workers' organisations as "heightening privilege" and says, "Trade unions have on occasion used their political power to oppose structural adjustment."

Their sick programmes

THE WORLD Bank and the IMF see state subsidies to healthcare as creating an undesirable "market distortion". The World Bank says that total annual spending per person on healthcare should be around 5. If governments under the World Bank's thumb exceed this they are punished. As one commentator says, this means "an across the board collapse of preventative and curative medicine. Public health facilities in sub-Saharan Africa, and some countries in Latin America and Asia, have actually become breeding grounds for sickness and infection." Diseases such as cholera, hepatitis and typhoid have made a comeback.

Health advances made in African countries in the 1960s and 1970s are being wiped out as they are flayed by Structural Adjustment Programmes. The World Bank boasts that Ghana's "structural adjustment" was a "success story". The bank forced the Ghanaian government to reduce its health budget by 47 percent.

This has been repeated across much of Africa. Senegalese nurse Demba Djemay works in a hospital where there are two nurses and one part time doctor serving 250,000 people. Demba told a journalist, "My work is one frustration after another. I simply can't provide my patients the kind of care they urgently need." Zambia is another World Bank "success story". Today one in five children in Zambia dies before the age of five. The average life expectancy has fallen from 54 in the mid-1980s to 40 today.

US hands on the levers of power

THE WORLD Bank and the IMF were set up in 1944 at a conference in Bretton Woods in the US. The US came out of World War Two confirmed as the most powerful economy. US president Roosevelt raised the slogan "Free trade" as he promised that the prosperity enjoyed by the US would be spread across the globe. When interest rates soared in the late 1970s and early 1980s poor countries, still suffering the effects of colonialism, could no longer keep up debt payments.

The IMF offered them new loans, but tied to structural adjustment. The ruling classes of the top capitalist countries, mainly the US, run the World Bank and the IMF. Representatives from the ten richest industrialised countries control 52 percent of all votes. Forty five African countries together only muster 4 percent of the votes. IMF and World Bank officials live in Washington DC. The head of the World Bank has always been an American appointee, and the head of the IMF a European candidate.

Who's helped?

THE WORLD Bank set up the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA). These organisations are supposed to fight poverty. In reality they support Domino's Pizza in South Africa and cable television in Brazil. They invest in breweries in Romania, Russia, Tanzania and the Czech Republic, as well as in expensive private schools in Pakistan and Uganda, and luxury hotels from Egypt to the Maldives. The IFC and MIGA's list of "clients" it gives aid to include Citibank ($220 million), ExxonMobil, Elf and BP ($150 million), Coca-Cola and Pepsi Cola ($60 million) and Kimberley-Klark ($8 million).

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Article information

Fri 14 Apr 2000, 00:00 BST
Issue No. 1692
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