New approach to debt called for

Chris Burford cburford at gn.apc.org
Thu Sep 2 16:00:20 PDT 1999


At 07:40 02/09/99 -0500, Christian wrote:


>FDI = foreign direct investment. World Total FDI inflows 1998: $400 billion;
>inflows to Africa, $4.7 billion. 1.17% of total.
>
>My point: $200 billion could make a difference in Africa, but I think the
>likelihood of its getting there is pretty slim. "Official" organizations
>like the World Bank and the IMF still need motivations to send huge sums of
>cash that way. They won't send it out of the goodness of their hearts. I
>suspect that they would need motivations that could also draw FDI there in
>the first place.

Thanks for coming back to clarify our differences. Thanks for conceding that $200 billion dollars could make a difference to Africa.

I doubt the merit of your category of total FDI, however. The great amount of this is presumably capitalist investment for profit. Posing the question this way assumes that that is the only way capital gets transferred. In fact even the most laissez faire capitalist state has always used state policy to transfer large sums for social purposes. It is not capital in the strict marxist sense in that it does not exploit labour, but it is certainly a significant part of the social product. This could be anything from a giant stature of Bismarck, to a new embankment on the Seine, to a new ring road around Vienna to replace the 17th century city walls. It might be a cholera or an influenza hospital. It might be to fund missionaries to China. It might be more recently to stop adolescents passing HIV through infected needles. It might be a vast Bill Gates or George Soros charitable fund to earn fame and honour which money does not automatically carry with it.

I am talking about structures of world government deliberately transferring large chunks of surplus product to Africa, just as the USA federal government dishes out capital construction projects to the different states of the union, or the EU has a development fund for the poorer regions.

I find the suggestion that official organs need motivation puzzling. Of course such organisations are dominated by capitalism, but they are also arenas of struggle.

I attach some faq comments from the web site

http://www.brettonwoodsproject.org

This has been set up by NGO's trying to reform world institutions.

Chris Burford

_____________

What is the World Bank?

The World Bank aims to help countries reduce poverty by making

long-term loans to governments for projects such as dams or

bridges, or to back economic reform programmes. The World

Bank also produces many influential research reports and has

affiliates which back private companies investing in poor

countries.

What is the IMF?

The International Monetary Fund seeks to maintain an orderly

balance of international trade and payments by regularly

assessing economies and making short-term loans to those with

balance of payments difficulties. Countries wanting to join the

World Bank must first become members of the IMF.

Why are they so important?

The two agencies determine whether developing countries get

access to aid money and how it is spent. Northern governments

use them to carry out certain foreign and commercial policy

objectives, but as multilateral institutions they have the potential to

foster cooperative international approaches on key issues such

as environmental change.

Can they be reformed?

Most incoming World Bank Presidents promise major reforms,

normally emphasising poverty and the environment. The latest,

James Wolfensohn, is being particularly bold in his aims and has

unveiled a number of positive initiatives towards openness and a

more balanced view of economic reform. But many previous plans

have been thwarted by the Bank's institutional culture, which

prevents internal debate, and rewards large loans regardless of

whether they help poor people. The IMF remains a very secretive

and technocratic organisation with little concern for poverty or

environmental issues, but recently has made some attempts to

open up.

Back to the top

Who makes the decisions?

Each country is formally represented in each institution by a

Governor (normally the Minister of Finance or of Overseas

Development), but in practice almost all decisions are delegated

to an Executive Director, an official who is posted to Washington

for about 3 years. Whilst 180 countries are now members of the

IMF and World Bank, there are only 24 Executive Directors.

Voting power is allocated according to the amount of money

contributed to the Bank, which in turn depends on the country's

economic strength. For example the UK has a voting share of

about 5.5 per cent and the US nearly 20 per cent. The President

of the Bank is, by convention, a US citizen and the Managing

Director of the IMF is a European.

How can I make a difference?

Get informed and tell others. Not enough people know what is

going on with these distant international agencies. If you are from

a rich country your government (Finance, Foreign Affairs or

Aid/International Cooperation Ministries) is contributing your aid

money to the World Bank and IMF, and will have a strong voice in

how Bank money is used. You can contact your Ministers or

officials to make your views known and ask for their response. If

you are from a developing country then you now have the right to

obtain information about what the World Bank and IMF are doing

in your countries.

Best books for a more in-depth background

Mortgaging the Earth, The World Bank, Environmental

Impoverishment and the Crisis of Development Bruce Rich,

Beacon Books (USA), Earthscan (UK), 1994, ISBN 1 85383 221

9

Masters of Illusion, The World Bank and the Poverty of Nations,

Catherine Caufield, Henry Holt and Co (USA), Macmillan (UK),

1997, ISBN 0 333 66262 8

Peace Without Profit: How the IMF Blocks Rebuilding in

Mozambique, Joe Hanlon, James Curry, London and New York,

1996, ISBN 0 85255 800 7

Silent Revolution: The Rise of Market Economics in Latin

America, Duncan Green, Cassell/Latin America Bureau, London,

1995.



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