World Bank says foreign investors are crowding out African producers

July 28th., by Katie Allen (The Guardian)

Leaked report says wealthy investors are threatening local resources as they buy up farmland to gain on commodity prices

After a spate of investments in African land by sovereign wealth funds looking for gains on rising commodity prices and by countries such as China worried about their own food security, the World Bank launched research into the area. Its report is due to be published next month, but a draft copy leaked to the Financial Times painted a picture of largely speculative investment badly lacking agricultural expertise, and a rush towards countries with lax laws. It mentioned only a handful of successes.

We Need Sustainable Development Banks, Say NGOs

MEXICO CITY, Jul 5, 2010 (IPS)

Non-governmental organisations from across the Americas are demanding that the World Bank and the Inter-American Development Bank institute policies that favour sustainable energy and help mitigate climate change.

(Mis)Investment in Agriculture

The Role of the International Finance Corporation in the Global Land Grab

As a major two-day conference on Land Policy & Administration, hosted by the World Bank, gets under way to supposedly “improve land governance” and “contribute to the well-being of the poorest,” Oakland Institute’s new report, (Mis)Investment in Agriculture: The Role of the International Finance Corporation in the Global Land Grab, exposes the role of the Bank’s private sector branch, International Finance Corporation (IFC), in fueling land grabs, especially in Africa.

Global climate battle plays out in World Bank

(Reuters) - The United States and Britain are threatening to withhold support for a $3.75 billion World Bank loan for a coal-fired plant in South Africa, expanding the battleground in the global debate over who should pay for clean energy.

The opposition by the bank's two largest members has raised eyebrows among those who note that the two advanced economies are allowing development of coal-powered plants in their own countries even as they raise concerns about those in poorer countries.

While the loan is still likely to be approved on April 6 by the World Bank board, it has revealed the deep fissures between the world's industrial powers and developing countries over tackling climate change.

World Bank briefing on Copenhagen Outcomes

Internal memo from Kathy Sierra, 12 January 2010

Internal memo from Kathy Sierra to the World Bank executive board on outcomes of the Copenhagen summit on climate change

ED letter to President Zoellick regarding U.S . coal guidelines

Letter written by nine executive directors, representing several middle- and low-income countries, to World Bank President Robert Zoellick in response to guidelines released by the US treasury to guide MDBs away from investments in coal.

Expanding global cooperation on climate justice

December 1st., 2009 

A new article by former president of Ireland Mary Robinson and Senior Fellow at the Miller Institute Alice Miller have written a new article about the social impacts of climate change. They argue that if the World Bank is going to be the default institution for climate financing, it can vastly improve its practices to live up to this role.

Bank wrestling for control of climate finance

November 20th., by Bretton Woods Project 

With much awaited climate talks in Copenhagen in December, the World Bank and its supporters are positioning the institution to play a significant, if not dominant, role in future climate finance.

While interim UN climate negotiation meetings took place in Bangkok in October, senior Bank officials at the Bank's annual meetings in Istanbul emphasised that they would wait to see the outcome of the Copenhagen climate talks to decide what role the Bank would play.

However, in a panel discussion, Michele de Nevers, senior manager of the Bank's environment group, asserted that the institution is best placed to manage climate finance because of its ability to leverage funding and its strong fiduciary, procurement and safeguard policies.

Text of Senator Kerry's speech at the World Bank

November 19th., 2009 by BIC 

In a speech titled “Building a Twenty-First Century Development Bank: New Challenges, New Priorities,” Chairman of the Senate Foreign Relations Committee John Kerry laid out his vision for the role of the US and the World Bank in tackling climate change, energy investment, and economic development.

Climate financing and the World Bank – The IMF and the World Bank to the rescue?

by  Barbara Unmuessig

The World Bank is moving to become one of the major institutions taking on climate change through its Climate Investment Funds, among other policies. However, Heinrich Boell Foundation president Barbara Unmuessig believes that without reforms, the Bank will not be able to effectively or fairly alter the course on global warming.

The monster is still untamed

Istanbul meetings legitimized the debate on the "Tobin tax" on international financial transactions or the idea of imposing a "global tax" on banks to bail out poor countries in case of a crisis, just as savings are ensured at the national level. According to DSK, "this is the starting point for a new IMF and you can proudly tell your grandchildren that you were in Istanbul when it all started."

The World Bank in times of crisis: too many commitments and few disbursements

During the fiscal year from 1 July 2008 to 30 June 2009, the World Bank’s activity was defined mainly by the global financial and economic crisis and the effects it caused in low and middle income countries. The official discourse highlights the range of initiatives implemented by the institution and the record amounts pledged to meet the crisis. However, the Annual Report 2009 figures reveal a significant difference between the promised amounts and those actually disbursed, which challenges the Bank’s activity in response to the crisis.

World Bank Group Energy Strategy Concept Note

World Bank Group Energy Stretgy

Concept Note

Sustainable Development Network

July 8, 2009

CSO letter on IFC policy review

The DFID white paper and the World Bank: Missing the point?

August 13th, 2009

by Bretton Woods Project

The latest DFID white paper strengthens the UK’s target setting for the World Bank, but fails to adequately tackle the crucial questions of governance, conditionality, human rights accountability, and climate finance. A recent Tory Party policy paper leaves it unclear whether they would do any better.

The white paper begins by lauding the achievements of the G20 including the supposed $1.1 trillion package of global financial support (see Update 65), of which a large proportion has yet to be delivered (see G24 briefing).  It heavily promotes the role of the IMF and World Bank in resolving the crisis, but does admit “The old Washington Consensus – with its advocacy of structural adjustment and a one size fits all approach to policy making – failed because it was imposed from the outside and was not tailored to country circumstances.” And it promises to “monitor carefully how the IMF works with developing countries, to ensure it does not use a one-size-fits-all approach to adjustment.”

Are We Nearly There?- Bridging UK supported funds and a post 2012 climate architecture

A number of 'pilot' funds are underway to develop climate related interventions in key sectors. Significant UK financing has been dedicated to these funds, primarily through the World Bank, and has served in both designing them and leveraging funding from other donors.

It is critical, for reasons of practicality and trust, that these pilot programmes can be seen as building blocks towards an appropriate post 2012 financial architecture. Based on an emerging civil society consensus this paper highlights the form that this architecture should take, what development models it should build upon and what technological approaches it should encompass while evaluating existing climate funds.

The IMF is hurting poor countries

Mark Weisbrot. May 13, 2009. 

The IMF's conditions on financial aid to poor countries are unnecessary. It can afford to be more generous.

The World Bank is redefining what is good for business. If you say so ...

by Roberto Bissio

A legend says that the teacher Nasreddin Hodja, who was invited to dinner by the sultan Timur Lan, praised excesively each dish. "I didn't like the cabbage very much," says Timur, finally. "You're absolutely right, Your Majesty," Hodja answered immediately, "too much vinegar, perhaps to conceal it was not very fresh." The Monarch, arching eyebrows, says: "As my adviser, how do you explain this sudden change of opinion?" "It's because I work for the Sultan,” answered Hodja. “And not for the cabbage.”

In an unexpected change of heart about what is good for development, the World Bank announced on April 28 changes in the methodology used for its report "Doing Business", the most influential publication of the institution, which ranks all countries of the world as more or less attractive to investors depending on how easy or difficult it is to establish, lead and close a business, or obtain credit. Several of the ten indicators that define the place of each country in the table of "Doing Business" will be changed in the 2010 report, to be published in September this year, announced the World Bank.

The index "Paying Taxes" (PT) will be reviewed by a panel of experts and redefined. Until now, the PT average property taxes were not many, that amount was small and easy to pay. This had the consequence that many of the countries mentioned by the Organization for Economic Cooperation and Development (OECD) in their lists "gray" and "black" of tax havens have a very favorable place in the PT. The index "Employing Workers" (EW) rewards those countries where firing workers is easy and cheap, since it is assumed that employers will not hesitate to hire new people if firing does not generate tragedies.

It will now be replaced by "Protection Working" (PW), which now rewards countries that meet "the letter and spirit" of the conventions of the International Labor Organization (ILO). "We recognize that well-designed protection of the rights of workers are good for society as a whole," says the World Bank. The EW shall cease to be used as a component of the country assessments. An explanatory note sent to all governments and officials and consultants from the World Bank makes clear that the EW index does not represent the policy of the Bank and should not be used as a basis for advising the government or be cited in papers that describe the development strategy of any country. Now World Bank emphasizes the need for regulatory approaches that promote job creation in the formal sector of the economy, protection for workers' rights and vigilance against the tendency to shift the risk of firms to workers and families of low income.

“In this times of crisis,” says the World Bank, “it is important that the actions of governments do focus on the needs of workers and the poor as well as in the survival and growth of business. “In this perspective, access to unemployment insurance and social security is a key aspect.” However, a week after the announcement, the website of the World Bank continued to distribute a "simulator" in which the relative position of a country in the world ranking improved if the dismissal or lower working hours are flexible or reduce taxes on company profits. Since its first publication in 2003, "Doing Business" has been criticized by unions worldwide, who see in it an instrument of pressure to weaken the labor laws and social protection of their countries.

While the report presents itself as a mere intellectual exercise, its inclusion in the set of indicators on a country's performance makes the countries applying for loans or grants, if not in a good position in the report, try to make at least some "progress" in the way that until last week was considered correct. In the last three years, the ILO criticized "Doing Business" for referencing labor agreements (which have the value of international law) as an impediment for a country to improvements in the table. The Financial Services Committee of the House of Representatives of the United States held hearings on the subject in October 2007. In its conclusions, the chairman, Barney Frank, said: "Excessive inequality can be politically dysfunctional and in the sense that it starts to reduce consumption or the ability of producing savings it may become also economically dysfunctional ...

It bothers me a lot that the report “Doing Business” of the World Bank reinforces these trends.” In June 2008 the own internal audit of the World Bank criticized the report, noting that the assumptions made for the study were not proven and that what is good for a separate company (like paying less taxes or lay off workers easily) can not be for the whole group of companies and the business operations in general. Real investment (before the crisis) would not flow to countries with a high ranking on "Doing Business" report, with often authoritarian regimes and the "competitiveness index" developed by the World Economic Forum in Davos, a business entity, which ranks the first places to the Scandinavian countries that have the highertaxes and social protection in the world.

This torrents of criticism always fell on deaf ears until, suddenly, the World Bank last week announced sweeping changes. The immediate cause was not self-criticism, an academic opinion or a formal recognition of the failure of the policies implemented so far, but a more prosaic one.

To obtain the release of 4,500 million United States dollars which will provide the World Bank with much needed as part of what was promised by the G-20, it requires the approval of Congress and Congressman Barney Frank was able to condition the delivery of such funds to the review of “Doing Business” . A policy, moreover, consistent with the president Barack Obama, who said on Tuesday, May 5 that he will fight the companies that export job positions overseas “and evade U.S. taxes through offshore banking and tax havens”. Thus the World Bank, as the wise old Hodja, do not work for unions, not even for employers. Works for the U.S. government.

IMF Shouldn’t Get Money Without Reform

April 24, 2009,  New York Times and International Herald Tribune

The International Monetary Fund turns 65 this year. Until the current economic crisis, it had reduced its workload drastically to a near-retirement level. Its total loan portfolio plummeted by 92 percent in four years. But like many senior citizens who have been hit by the world recession, the Fund has kept working past retirement age – and is now expanding its responsibilities.

The IMF has a track record, which seems to have been almost completely ignored in discussions of a proposed $750 billion increase in its resources. Nearly twelve years ago a financial crisis hit Thailand, South Korea, Indonesia, the Philippines and Malaysia. The word “contagion” became part of the financial reporting lexicon as the crisis spread to Russia, Brazil, Argentina and other countries.

   
The IMF’s response to that crisis was roundly criticized by economists at the time. Jeffrey Sachs, then at the Harvard Institute for International Development, called the IMF “the Typhoid Mary of emerging markets, spreading recessions in country after country.” Nobel Laureate economist Joseph Stiglitz, also criticized the Fund for its mishandling of the Asian crisis, and went on to write systematic critiques of a number of IMF policies.

In the Asian crisis, the Fund failed to provide desperately needed foreign exchange when it was most needed. It then imposed policies that worsened the downturn. It did the same in Argentina, and lent tens of billions of dollars to prop up an unsustainable exchange rate, which inevitably collapsed along with a record sovereign debt default.

After that experience, many middle-income countries piled up reserves so that they would never have to depend on the Fund again.

No one at the IMF was held accountable for the mistakes that caused so much unnecessary unemployment, lost output, and poverty. Nor were any major reforms of the institution introduced. The Fund has 185 member countries, but a handful of rich countries – mostly the U.S., Europe, and Japan – have a solid majority and the U.S. Treasury is the Fund’s principal overseer.

The IMF claims that it has changed, but a look at nine “standby arrangements” – its basic short-term loan agreement -- that it has negotiated since September of last year reveals a number of the same mistakes that it made in the last crisis. All of them provide for spending cuts, despite the IMF’s avowed commitment to a worldwide fiscal stimulus.   

El Salvador has signed an agreement with the IMF that prevents it from using expansionary fiscal policy – as the United States is now doing – to counter a downturn. Since El Salvador has the U.S. dollar as its currency, fiscal policy – increased spending or lower taxes – is practically the only tool it has to fight a recession that is practically inevitable as the U.S. economy continues to shrink. El Salvador gets 18 percent of GDP in the form of remittances from the U.S., and exports about 9.6 percent of GDP there.

Pakistan has agreed to significant spending cuts, as well as raising interest rates, despite negative demand shocks to the economy. Ukraine has also had to battle with the Fund over public spending cuts, despite the fact that GDP is falling by 9 percent this year and the country has a low public debt.

These and other examples indicate that in spite of the depth of the world recession, the Fund is too willing to sacrifice employment, and increase poverty, in pursuit of other goals. A country can always reduce a trade deficit by shrinking its economy, since that causes households and businesses to import less. The main purpose of IMF lending in the current crisis should be to enable low- and middle-income countries to do more of what the rich countries are doing: adopt stimulus packages that counter the downturn.

Most countries can do this, if they do not run into balance of payments problems. China, for example, has nearly $2 trillion in international reserves, and can therefore pursue a large fiscal stimulus. If the IMF were willing to help, more countries could follow suit.

Governments should not commit more money to the IMF without requiring that institution revisit its recently negotiated agreements, and adopt serious reforms that will require accountability and changes in policy.  

See article on original website
En español

IMF Voting Shares: No Plans for Significant Changes

This issue brief examines voting shares of members of the International Monetary Fund (IMF), including voting shares prior to changes agreed in 2006, the voting shares after the 2006 changes were implemented, and proposed reforms of the voting shares currently under consideration. It finds that there has been insignificant change in the voting shares, and that there is little reason to believe that significant reforms will be implemented in the near future. Instead, countries that have traditionally held a disproportionately large share of votes at the IMF, such as the U.S. and European countries, will continue to do so, while low - and middle-income countries can expect no significant increase in their representation at the Fund.