Bris tolD is s e nt! Brie fing So w h at’s th e diffe re nce ?

O n th e l arge scal e of th ings th e IMF and W orl d Bank pl ay

e sse ntiall y th e sam e rol
e in inte rnationalpol itics. But th e y are

IN FORMATION FOR ACTION com pl e te ly se parate (al

th ough ofte n co- ope rating) institutions
and h ave diffe re nt purpose s.

TH E IM F, W orld Bank & W TO Th e IMF w as original

curre ncie s in re l
l
y founde d to stabil ise countrie s’
ation to e ach oth e r, and to ove rse e th e curre ncy
e xch ange m ark e t. Since th e IMF is not re al ly a bank , it doe sn’t
give l oans as such . R ath e r, it h as a poolof m one y from w h ich
Th e IM F & W orld Bank
m e m be r countrie s can borrow w h e n th e y ne e d to stabil ise th e ir
Th e IMF (Inte rnationalMone tary Fund) and th e W orl d Bank ,
curre ncy q uick l y. Th is can be com pare d w ith an ove rdraft on a
both form e d in 19 44, are gl obalorganisations w h ose m ain
curre nt account. Al ll oans from th e IMF m ust be paid back
purpose is to m anage th e gl obalfinancialsyste m , and to provide
w ith in 5 ye ars.
loans for m e m be r state s th at ne e d th e m . Both h ave 184
m e m be rs.
Th e W orl d Bank on th e oth e r h and, give s l
onge r te rm l oans for
m ore ge ne ral purpose s. As an inve stm e nt bank w h at it
Th e IMF and W orl d Bank l e nd m one y to poor countrie s both
e sse ntial
ly doe s is to inte rm e diate be tw e e n l e nde rs and
by th e m se l
ve s, and th e y also act as age nts for poor countrie s in
borrow e rs. It se l l
s bonds to corporations, individual s, and
arranging l oans from oth e r countrie s. But th e y w il lonl y do th is
som e tim e s gove rnm e nts, and l e nds th at m one y to borrow ing
if th e gove rnm e nt of th e borrow ing country agre e s to ce rtain
gove rnm e nts.
conditions – ce rtain ch ange s in its state apparatus and infra
structure –ch ange s of a capital ist and libe ral
ist nature . In oth e r
w ords, th e IMF and W orl d Bank w il lprom ise to l e nd th e poor
country m one y, but onl y if th e poor country privatise s and cuts
back its publ ic se ctor.

Th e m ain goalof th e IMF and W orl d Bank is to boost so- cal led
fre e trade –a conce pt de ar to capital ists. Th e probl e m w ith
th e ir notion of fre e trade , h ow e ve r, is th at since th e ir pow e r
structure s are so dom inate d by a fe w rich countrie s, prim aril y
th e USA, th e y te nd to w ork for th e be ne fit of th ose countrie s
rath e r th an for unbiase d fre e trade . Th e finance m iniste rs of th e
se ve n m ost industrial ise d nations (USA, UK, France , Canada,
Japan, Ital y, Ge rm any) control45% of th e vote s in th e IMF’s
board. Th e 41 m ost inde bte d nations controlonl y 3% of th e
vote s.

W h ile th e IMF and W orl d Bank m ak e sure to re m ove subsidie s

in poor countrie s, th e y continue to incre ase financialassistance
and subsidie s for Am e rican agricul ture , cotton and ste e l. Th e
IMF al so facil itate d Pak istan in re sch e dul ing $12.5 bil lion in
outstanding de bt to W e ste rn countrie s, afte r Pak istani
Pre side nt Ge ne ralMush arraf de cide d to go against th e publ ic
opinion of h is country and support th e w ar on te rrorism afte r
th e Se pte m be r 11 attack s. Afte r Mush arraf’s de cision to support
Since th e W orl d Bank , l ik e any inve stm e nt bank , m ak e s a living
th e w ar on te rror, th e USA al so de cide d to cance l$1 bil l
ion of
out of l e nding m one y, it te nds to e ncourage poor countrie s to
Pak istans bil ate ralde bts to th e US.
tak e m ore l oans, re gardl e ss of w h at th e y are for. For e xam pl e,
th e W orl d Bank w as q uick to offe r l oans to India for th e
Note : Bil ate ral= be tw e e n onl y tw o partie s; a loan from one
buil ding of a col ossaldam proje ct in th e Narm ada Val le y. Eve n
single nation to anoth e r. Th e IMF and W orl d Bank de alw ith
be fore any final costs h ad be e n com pute d, and be fore any
m ultilate rall oans, i.e . th e y co- ordinate l
oans from groups of
studie s h ad be e n done on th e h um an cost or e nvironm e ntal
nations to oth e r groups of nations, or from groups of nations to
im pact of th e dam s, th e W orl d Bank offe re d a l oan of $450
single nations.
m illion to ge t th e proje ct starte d. Late r, an inde pe nde nt re vie w
sh ow e d th at th e proje ct w as l udicrous. Th e re se ttl e m e nt and In May 2003, th e USA gove rnm e nt fil e d a com plaint unde r th e
re h abilitation of al lth e pe ople displace d by th e proje cts w as not W TO 's dispute se ttl e m e nt proce ss against th e EU ban on
possibl e , and th e e nvironm e ntalconce rns w e re too gre at. O nl y GMO s. Th e W TO ch al le nge w as l aunch e d de spite th e fact th at
afte r a se cond re vie w h ad criticise d th e proje ct furth e r did th e th e EU w as pl anning to l ift th e ban w ith in m onth s. Th is case is
W orl d Bank final ly pul lout. a scare tactic by th e USA to “e ncourage ” countrie s in th e South
to agre e to ope n th e ir m ark e ts to ge ne tical l
y e ngine e re d (GE)
Th e W TO food. Many countrie s now fe ar th at if th e y re je ct GMO s, th e y
Th e W TO (W orl d Trade O rganisation) is an inte rnational w illbe m e t w ith h uge trade sanctions (w h ich coul d be w orth
organisation, w h ich ove rse e s a l arge num be r of agre e m e nts h undre ds of m il lions, or e ve n bil lions of dol lars) in th e W TO .
de fining th e "rul e s of trade " be tw e e n its m e m be r state s. Th e Th e US h as aggre ssive l y gone afte r a num be r of de ve l oping
W TO h as tw o basic functions: as a ne gotiating forum for country gove rnm e nts al re ady, th re ate ning th e m w ith action
discussions of ne w and e xisting trade rul e s, and as a trade unde r th e W TO if th e y pass l aw s on GMO s, such as product
dispute se ttle m e nt body. It h as 148 m e m be r countrie s. labe l
ling th at w oul d give consum e rs th e righ t to ch oose w h e th e r
or not th e y w ant to e at th e se foods.
Th e W TO w as cre ate d in 19 9 5 to re pl ace th e Ge ne ral
Agre e m e nt on Tariffs and Trade (GATT), a se rie s of trade W TO D e cis ion m ak ing
tre atie s aim e d to abol ish inte rnationaltrade barrie rs such as Th e W TO , unl ik e oth e r inte rnationalorganisations, base s its
custom s dutie s and trade taxe s. Be fore th e W TO , gove rnm e nts de cision m ak ing on conse nsus. Th is m e ans th at th e m e m be rs,
w oul d tax im porte d goods so th at th e y w oul d be com e m ore rath e r th an voting, ne gotiate untilan agre e m e nt is re ach e d.
e xpe nsive th an dom e stic goods and th e re fore be l e ss attractive W h at's m ore , al lissue s m ust be re sol ve d at th e e nd of a W TO
to consum e rs. Th e W TO w ants to w ork against such taxe s, trade m e e ting –th e re m ust be agre e m e nt on al lissue s, or e lse
since it se e s th e m as an obstacl e to fre e trade . If a m e m be r state th e re is agre e m e nt on none and th e m e e ting w il le nd in fail ure .
th ink s th at anoth e r m e m be r state h as bre ach e d a pre viousl y Th is puts a gre at de alof pre ssure on countrie s th at m ay be
m ade agre e m e nt, it can fil e a com pl aint to th e W TO , w h ich "h ol ding out" on one issue , to give in - or face a pol iticaland/or
th e n acts as a k ind of court. e conom ic back l ash from oth e r m e m be rs. Th is al so cre ate s a
syste m of “trade - offs”, w h e re , be cause al lissue s form part of
Th e W TO is a capital ist organisation conce rne d w ith th e w e l
l one pack age , gove rnm e nts w il lofte n trade off som e th ing th e y
be ing of transnationalcorporations. It puts fre e trade above w ant on one issue , to give th e m a be tte r ch ance of w inning
anyth ing e l se –be it h um anitarian conce rns or th e e nvironm e nt. som e th ing im portant on anoth e r issue .
In 2002 for e xam pl e , th e USA stoppe d an agre e m e nt de signe d
to give poor countrie s be tte r acce ss to ch e ape r drugs to pre ve nt Be fore e ach Ministe rial m e e ting, th e re are ofte n "m ini-
dise ase s l
ik e aids, m al aria and TB. Th e agre e m e nt w oul d h ave m iniste rials" w h ich are m e e tings of gove rnm e nt Ministe rs h e l d
m ade it possibl e for African, Asian and Latin Am e rican to try to buil d conse nsus be fore th e big m e e ting. Th e m ost
countrie s to buy ch e ape r Braz il ian, Indian and Th ai im itations difficul t issue s are discusse d, and countrie s start to w ork on
of e xpe nsive Am e rican pate nte d m e dicine s. But th e USA "de al s." H ow e ve r, be cause th e se m ini- m iniste rial s are by
th ough t th is w as “unfair” and bl ock e d th e ne gotiations. invitation onl y, onl y a h andfulof countrie s are e ve r pre se nt. US,
EU state s, Canada, Austral ia and Japan are a fe w of th ose al w ays
W ith th e abol ition of inte rnationaltrade barrie rs com e s th e pre se nt.
possibility for corporations to m ove th e ir factorie s to poore r
countrie s w h e re unions are w e ak or non- e xiste nt, and w ork e rs Re s ource s :
are m ore lik e l
y to acce pt bad w ork ing conditions. w w w .w ik ipedia.or g
w w w .z m ag.or g
Th e W TO can al so be use d to l im it th e use of e nvironm e ntal w w w .im f.or g
labe ls such as th e Fore st Ste w ardsh ip Council(FSC) l abe l. Th e w w w .w or ldb an k .or g
FSC l abe lconfirm s th at a product h as com e from a “sustainabl y w w w .w to.or g
m anage d” fore st. Th e probl e m is th at th e se l abe l
s can be w w w .ifiw atch n et.or g
conside re d “discrim inatory” unde r W TO rul e s. W orrie d about w w w .gr een peace.or g
risk ing trade sanctions by using th e FSC l abe l, countrie s w il
lbe w w w .jub ilee2000uk .or g
le ss l
ik e l
y to use th e e nvironm e ntallabe l . Nor een a H er tz I.O .U. Pub l
ish ed b y Four th Estate 2004
Ar un dh ati Roy: Th e Cost O f Livin g, Pub l ish ed b y Fl
am in go 19 9 9

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