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Don't save the Banks



September 23, 2008 – Comments (0)

 Celebrate their demise, before things get worse. 

"The World Bank wields great power in the Third World because of the loans it provides to governments or to private corporations within these countries. Many countries are on a debt treadmill, where they need to take loans to pay back earlier loans by the World Bank or other lenders. Earlier loans were often given irresponsibly by the bank to dictators and other leaders who siphoned off the money to cronies or to foreign bank accounts. In many cases these loans went to large dam projects which displaced hundreds of thousands of people from their homelands or to mining or oil-drilling projects which harmed the environment.

And yet now the impoverished people of these countries are forced to suffer great hardships to pay back loans that not only didn't benefit them, but actually harmed them. Shouldn't the bank take some of the responsibility for these harmful loans? Jeffrey Sachs, economics professor at Harvard University, thinks so and has suggested that the bank completely cancel the debt of these poor countries. But the bank has adamantly refused to forgive any of these debts in their entirety.

Instead, in return for loans, the World Bank requires over 60 countries to radically change their economic systems under its structural adjustment policies (SAPs). World Bank SAPs include requirements that: countries privatize their public services; charge fees to poor people for health, education, food and public transportation; remove protective measures for their fragile local industries and businesses; increase interest rates; eliminate regulations on foreign ownership of businesses; and re-orient their economies from growing food and manufacturing products for their own people to producing goods for export to the wealthier countries.

In a recent letter to James Wolfensohn, president of the World Bank, over 350 leaders of economic and environmental justice movements from 35 countries in the Third World cited the following negative effects of SAPs: the crippling of economic growth and hindering of economic development; increasing misery and poverty; the increasing socio-economic burden on women; the promotion of sweatshops; the denial of workers' rights to organize and to earn a decent living; destruction of peasant-led agricultural production and the abilities of countries to feed themselves; the accelerated destruction of the natural environment; the degradation of their cultural integrity by changing their models of consumption and their relationship with nature; and the significant increase in the external debt burden.

Most fundamentally, SAPs have undermined the democratic aspirations of people in countries of the Third World by placing their economic systems in the hands of outsiders. The main interest of most of these outsiders is to increase the profits of multinational corporations, not to promote the wellbeing of the people of those countries. The hopes and the dreams of these people for democracy and greater equality have been crushed by these policies.

World Bank policies and projects also harm working people of the Third World and in our own country by promoting a "race to the bottom" in terms of wages, working conditions and labor rights. The World Bank does not recognize the right to unionize and to collectively bargain for just wages and working conditions. In 1995 in Haiti, one of the poorest countries in the Western Hemisphere, the World Bank opposed increasing the minimum wage in factories where workers were making less than $1.20 per day.

In spite of its promises to protect the environment, the bank continues to promote environmentally destructive projects and fossil fuel development, rather than ecologically sound alternatives. Given the scientific evidence for global warming, this support for fossil fuels is inexcusable. The bank's recent loan to the governments of Chad and Cameroon to build an oil pipeline through fragile rain forest is just one example of its disregard for the environmental effects of its projects.

We believe that reasons to join the World Bank Bonds Boycott are compelling. Boulder should add its voice to the millions of people around the globe opposing the devastating effects of World Bank policies. We urge the Boulder City Council to continue its tradition of taking positions against social and environmental injustice".

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