Committee for the Abolition of Illegitimate Debt

Between 1958 – 1968, the World Bank World Bank
WB The World Bank was founded as part of the new international monetary system set up at Bretton Woods in 1944. Its capital is provided by member states’ contributions and loans on the international money markets. It financed public and private projects in Third World and East European countries.

It consists of several closely associated institutions, among which :

1. The International Bank for Reconstruction and Development (IBRD, 189 members in 2017), which provides loans in productive sectors such as farming or energy ;

2. The International Development Association (IDA, 159 members in 1997), which provides less advanced countries with long-term loans (35-40 years) at very low interest (1%) ;

3. The International Finance Corporation (IFC), which provides both loan and equity finance for business ventures in developing countries.

As Third World Debt gets worse, the World Bank (along with the IMF) tends to adopt a macro-economic perspective. For instance, it enforces adjustment policies that are intended to balance heavily indebted countries’ payments. The World Bank advises those countries that have to undergo the IMF’s therapy on such matters as how to reduce budget deficits, round up savings, enduce foreign investors to settle within their borders, or free prices and exchange rates.

loans made possible the financing of the “pro-White” projects : a thermal power plant (Eskom) which supplied electricity only to the whites and, a section of the railway network (South African railways/harbours) which was only accessible to the Blacks if they could prove that they were employed in a city connected by the network (they had to produce a travel authorisation).

In 1965, the Bank directly defied a resolution of the UN General Assembly, adopted in 1964, recommending all UN affiliated agencies – including the World Bank – to stop financial support to the South African apartheid regime since it violated the UN charter. The Bank argued that according to Article IV of its Articles of Agreement, it was not legally bound to follow UN resolutions. Even a personal plea by the UN Secretary General, U Thant to George Woods, the then president of the World Bank went in vain.

Table : The South African apartheid regime and its relations with the World Bank and the IMF IMF
International Monetary Fund Along with the World Bank, the IMF was founded on the day the Bretton Woods Agreements were signed. Its first mission was to support the new system of standard exchange rates.

When the Bretton Wood fixed rates system came to an end in 1971, the main function of the IMF became that of being both policeman and fireman for global capital: it acts as policeman when it enforces its Structural Adjustment Policies and as fireman when it steps in to help out governments in risk of defaulting on debt repayments.

As for the World Bank, a weighted voting system operates: depending on the amount paid as contribution by each member state. 85% of the votes is required to modify the IMF Charter (which means that the USA with 17,68% % of the votes has a de facto veto on any change).

The institution is dominated by five countries: the United States (16,74%), Japan (6,23%), Germany (5,81%), France (4,29%) and the UK (4,29%).
The other 183 member countries are divided into groups led by one country. The most important one (6,57% of the votes) is led by Belgium. The least important group of countries (1,55% of the votes) is led by Gabon and brings together African countries.

http://imf.org (IFIs – International Financial Institutions)

Source : Bond, Patrick, (2000), Elite Transition: From Apartheid to Neoliberalism in South Africa, Pluto Press, London.

The World Bank’s refusal to comply with UN demands concerning Portugal and South Africa

From 1961, when most colonial countries had won their independence and become UN members, the General Assembly on several occasions adopted resolutions condemning the apartheid regime in South Africa and Portugal’s iron dominance over several African and Asian countries. In 1965, in view of the continued financial support of the Bank and the IMF for these regimes, the UN made a formal demand: “To all the specialized agencies of the United Nations, and in particular the International Bank for Reconstruction and Development and the International Monetary Fund (…) to refrain from granting Portugal any financial, economic or technical assistance so long as the Portuguese Government fails to renounce its colonial policy, which constitutes a flagrant violation of the provisions of the Charter of The United Nations”  [1]. It issued a similar demand concerning South Africa.

The Bank’s directors met to take position and a majority of executive directors decided to continue making loans. To justify this decision, they invoked article 4, section 10 of the Bank’s statutes [2] which forbid political involvement! All the most industrialized countries, backed by a certain number of Latin-American countries, voted to continue the loans. In 1966, the Bank approved a 10 million dollar loan to Portugal and a 20 million dollar loan to South Africa. Subsequently, under further pressure, the Bank stopped making new loans to these countries. However, a UN structure, the Decolonization Committee, continued for 15 years to denounce the fact that the Bank allowed South Africa and Portugal to apply for World Bank financing for projects in other countries. In addition, the Bank sought the favours of South Africa to obtain donations to IDA [3].

The IMF, in spite of the condemnations and campaigns for the financial sanctions, lent to the apartheid regime 2 billion dollars during the decade of 1970s.

It was only after the US Congress ban on funding to South Africa did the IMF change its policies. However, far from heeding to the demands of the mass movements, the IMF, sent a team of advisers, every year since 1980s, to assist the South African government to implement neoliberal reforms.

Conclusion: We can affirm without any risk of exaggeration that in spite of clear international opposition to the IMF and the Apartheid regime, the IMF and the World Bank were accomplices of the racist and repressive South African regime with their financial and strategic support.