Earth 1, IMF and World Bank 0

The International Monetary Fund (IMF) and the World Bank had their annual fall meeting this weekend in Washington, DC. It was originally scheduled to span the entire week, but they decided to cut it down to just the weekend in order to save some money on security costs. You see, the IMF and World Bank have become rather unpopular and their meetings draw thousands of protesters virtually anywhere they go.

Protesters, this weekend, marched with thousands of others and heckled delegates to voice their disapproval of IMF and World Bank structural adjustment policies (or their equivalent), which they believe are harmful to developing nations. Some believe that these international institutions of finance should be abolished while others seek systematic reforms.

Critics of the World Bank and IMF argue that structural adjustment policies (also known as SAPs) do not help developing nations, but rather contribute to their impoverishment. Although these institutions have stated missions of altruism, many of their actions have shown just the opposite _ nothing but self-interest.

Some SAPs aim to reduce government spending, privatize public goods, and open the economy to foreign investment. The reduction of government spending oftentimes comes at the expense of social services. These cuts in services, however, can happen in nations with large populations of economically impoverished people _ where these social services are needed most.

SAPs force countries to reduce public subsidies for critical resources such as water and impose user fees on necessities such as health and education. These fees make up a small percentage of the income for government, but even the most modest of fees will reduce access to resources people need to survive.

The privatization of public goods also reduces access to resources in developing nations. With privatization often come job losses, reduced wages, and lack of accountability. Labor laws are not as strong in developing nations, which puts the economically poor at risk. But some countries cannot simply improve their labor laws because then international investors will flock to countries where they can be more profitable _ leaving those who do improve labor standards high and dry.

Opening the economy to foreign investment may sound like a positive goal, but it can have disastrous effects. In theory, companies that are better at producing X should be able to produce X over companies that are not as good at it. But in practice, the morally impoverished companies of the overdeveloped world (like in the United States) have the most advanced technology and have the greatest amount of resources. So to open the economies of the developing world to foreign investors will force their local companies to compete with these larger international conglomerates.

Not only that, but while local companies circulate resources within the country, it seems that large international companies extract funds from developing nations and funnel it to overdeveloped nations. This would be like a major league baseball team playing their minor league counterpart and whenever the minor league team gets a good player, the major league team takes that player. This already happens, but in this case the major league team and the minor league team are in the same league. How can we expect the minor league team to ever be competitive!

In order to attract foreign investment in the first place, developing countries need to provide the most profitable environment for business _ especially since nations are competing against each other for the same business. Labor laws and environmental policies are common roadblocks that obstruct the bottom-line for business. Thus, in order to remain competitive, nations must be more lenient on environmental policies and step back when it comes to protecting the rights of workers. As a result, the developing nation's environment is mistreated and people have to work on comparatively low wages and in poor working conditions.

Small subsistence farmers that have been growing indigenous foods for decades cannot compete with the large plantations and are forced to sell their farmland and work for the large plantations. These larger plantations oftentimes grow foreign crops for export. They are also called "cash crops" because they are grown for the purposes of maximizing profits for the large company.

The environmental impact is significant as well. The large plantations focused on cash crops plant their seeds in a monoculture, meaning they cultivate only one crop at a time. This makes the harvesting process more cost efficient, but causes the soil to become weak, causing erosion. Monocultures are also more susceptible to pests, making the use of pesticides necessary for crops to survive. Pesticides are often applied by aerial spraying. Much of the pesticides do not actually land on the intended targets and end up floating into local streams and rivers intoxicating those who dare drink.

It is not so simple for countries to simply refuse these loans. Some countries cannot get around it. There are a variety of reasons why some nations are now heavily in debt. Some are in debt because international financial institutions lent money to their country when the political system was undemocratic. In these cases, the political leader would take out a loan, keep the money, and leave the country in debt. Others are in debt because of economic destabilization or recessions.

Whatever the reason, the IMF and World Bank have refused to cancel the debts of countries that cannot pay these loans. It is not surprising that the World Bank and IMF have created a situation where the money is flowing from developing nations into overdeveloped nations since the countries that have the most pull in these institutions are the overdeveloped nations.

This problem however, is not one without solution. There are many proposals for reform. Some want grants to be given in addition to loans, to lessen the burden of the countries in most need. Clearly, the processes of these financial institutions should be more transparent. They are international institutions yet their Board of Directors meetings are held behind closed doors. Environmental impact assessments should be made on all sectoral and structural adjustment loans _ even the US military runs environmental impact assessments when building foreign bases. Developing nations need increased resources allocated to promoting internal development. The World Bank and IMF need to be held accountable to their mandate of promoting economic development, not stagnating it, as has been the trend in many Latin American and African countries.

There is hope for these changes to move forward. With protestors at the meeting of the IMF and World Bank in DC and the millions around the world who disapprove of their morally impoverished policies, we can begin to shift the paradigm. We can move from a worldview that values money and commodities to one that values people and communities.