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Why the IMF & World Bank should accompany neoliberalism into the dustbin of history

IMF World Bank meetings logoWe are constantly being told that 2014 is the centenary of the start of the First World War, but rather less – or indeed nothing at all – is being made of the fact that this year is also the 70th anniversary of the establishment of the IMF and World Bank. That is more than a pity because both these institutions are redolent of the Washington Consensus, the darker side of US foreign policy. And of the domination of the Western countries over the former colonies and the emergent economies, all of which are now under profound challenge and being forced to give way to new structures of power.

As neo-liberalism has become increasingly volatile and toxic under the impact of financialised capitalism over the last three decades, it has become more and more clear that a new model of global governance is needed that fits these new constellations of power. It would also be helpful if Labour, which has so far concentrated exclusively on domestic issues, could extend its reach by highlighting how its domestic vision of the realignment of corporate power should apply also within the world community.

Certainly the record of the IMF and World Bank has been abysmal. They have consistently supported corrupt and dictatorial regimes so long as they served Western interests – in the Congo, Rwanda, Indonesia, Philippines, Tunisia and Egypt. They used their resources and power to undermine and destroy outbreaks of democracy – Mossadegh in Iran, Arbenz in Guatemala, Goulart in Brazil, the Sandinistas in Nicaragua, Allende in Chile, and many others. When countries, despite the efforts of the IMF and World, nevertheless gained their independence in the 1950-60s, they forced these fledgeling independent states to repay the odious debts contracted by the previous authoritarian and corrupt regimes.

They continued to provide financial back-up to countries like apartheid South Africa and Portugal in their suppression of the countries and races they controlled whether in Africa or the Pacific. In terms of the environment and climate change, they overwhelmingly backed the fossil fuel industries and multinational exploitation of indigenous resources in the newly independent developing countries. The World Bank financed projects that flagrantly violated human rights such as the enforced displacement of populations in Indonesia. And their signature policy, the liberalisation of capital flows, has paved the way for the current industrial-level tax avoidance, extensive corruption, and abrupt flight of capital that is so badly damaging emerging markets.

So what should be done? What is needed is an alternative to the World Bank that allows regionalised banks in different continents, particularly in the South, to supply very low interest loans or grants to emerging economies on condition that they observe strict social, employment and environmental standards and respect fundamental human rights. Equally the IMF should be transformed to its real mandate to ensure currency stability, replace its neoliberal dogma with a genuine developmental model, and coordinate international action to crack down on tax havens and tax avoidance in all its forms.

3 Comments

  1. eric clyne says:

    Britain does not have the power or influence to fundamentally change ANY global institution.

    If the World Bank did not support post-colonial regimes, the complaint would be that it didn’t.

    The forced migrations which have taken place in Indonesia are 100% the responsibility of the Indonesian Government. It is with good reason that the nickname for Indonesia has been ‘The Greater Javanese Empire’.

    When the Dutch East Indies was granted independence the archipelago was foolishly made into one country. It should have been ten or more. But that was seen as balkanising colonies.

    Hence ungovernable countries across the post-colonial world with separatist movements and insurgencies.

  2. swatantra says:

    Bankers do what Bankers do ….ie lend money to whoever asks, without questioning the ethics of their customers. Now we need to change all that, and make Ethical Banking the foundation of all Banking.

  3. ray davison says:

    O what a rhapsody comrade on a winter’s night! Near midnight shakes my memory of a PLP that might have been but is not. Still we can dream and tomorrow we will run faster.Never give up.

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