> would any of the fine folks on the list be willing to deconstruct this?
> -----------------
> With more than 1.2 billion of the world's people still living on less
> than $1 a day, there is no more important challenge than improving
> living standards and eliminating poverty.
It's never what they say, it's what they leave out which is interesting. O'Neil mentions the WB, the ADB, and the EBRD. He signally left out two other banks: the European Investment Bank and the Japan Bank of International Cooperation, which collectively dispose of over $400 billion in assets and have proven instrumental in bailing out/kickstarting Eastern Europe and SE Asia, respectively.
> capital. Not all capital investments are equal. Economic history has
> taught us, for example, that investing in agriculture while laying the
> foundation for diversifying into competitive, privately owned
> manufacturing is a key to development.
If only. Land reform, i.e. political redistribution, was the key to development in Taiwan, South Korea, and China; the EC's agrarian policy weighted its subsidies to the poorer countries, which enabled them to grow. Just pouring resources into agriculture won't necessarily do the trick.
> Investments should support the
> production of real products for real customers in competitive markets:
> it is important that the banks do not induce countries to invest in
> business sectors that are already globally oversupplied.
This is a polite way of saying, US exporters are getting their asses kicked by South Korean firms bailed out by the SK government -- a mere rhetorical sop to the nationalist wing of the Republocrats, nothing more.
> The banks must also adopt a bolder, more aggressive stance on the use of
> outright grants of money, as well as loans.
The IMF has been plenty bold and aggressive in running the Third World into the ground for thirty years. The problem isn't the loans or some lack of controls, the problem is unchecked, toxic neoliberalism and its dogmatic, one-size-fit-all models of a completely unrealistic world of frictionless markets, perfect information and identical consumption patterns, onto very fragile, complex societies, burdened by 300 years of colonialism.
> Countries that do not have access to capital lent by private financial
> institutions are in the greatest need of the development banks'
> resources.
Nonsense. They're in need of *social revolutions* capable of building powerful developmental states and *protecting* those countries from bubble-mad financial markets and rapacious multinationals. If China and Vietnam can do it, so can Brazil and Indonesia.
> As the financial conditions of individual countries improve,
> we should create a system of loan rates that moves toward the
> private-market interest rate. This will keep the development banks from
> competing with the private sector and help concentrate their lending on
> countries that lack access to the private financial markets.
This is interesting: the banks which actually make those loans are, for the most part, the Eurobanks (the BIS data on this is at http://www.efn.org/~dredmond/bankwtch.html). Apparently, O'Neil is going out of his way to reassure the Eurobourgies that the interest rate in question will be that of the *euro*. Bye, bye, American pie, hello Eurohegemony!
> progress toward development objectives; we must be hard-minded and
> demanding about the necessity that the money lent really produce
> results.
Translation: if our East Asian and EU masters, whom we owe 2 trillion EUR to, and who supply the $400 billion annual inflow of foreign capital vital to our economy, tell us to gut the IMF, we will.
-- Dennis