Committee for the Abolition of Illegitimate Debt

On February 23, 2023, the White House issued a statement: “Today, President Biden announced that the United States is nominating Ajay Banga, a business leader with extensive experience leading successful organizations in developing countries and forging public-private partnerships to address financial inclusion and climate change, to be President of 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.

.”

Once again, the President of the World Bank is American, he is a man, and he comes from high finance, which seems to be a guarantee of success for Joe Biden: “Ajay is uniquely equipped to lead the World Bank at this critical moment in history. He has spent more than three decades building and managing successful, global companies that create jobs and bring investment to developing economies, and guiding organizations through periods of fundamental change.”

The CADTM International network condemns this nomination because:

• Ajay Banga is once again man. The 14 Presidents of the World Bank since its creation in 1945 have been men.
• Ajay Banga was born in India and took US citizenship, and it is partly for this reason that he could be chosen for the position of President. Traditionally, the President of the World Bank is American and the President of 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 is European. This remains the same: an American to defend the interests of the United States, its allies, big private companies and the richest 1% of the planet.
• Ajay Banga is once again a man with ties to big business and finance. If that background is a guarantee of success for Joe Biden and the White House, we would argue otherwise. Ajay Banga was CEO of Citigroup, one of the largest US investment banks, for its Asia-Pacific operations between 2005 and 2009, before becoming CEO of Mastercard... His track record as a leader of large financial capitalist groups like Citigroup and Mastercard clearly indicates that during his tenure, Ajay Banga will continue to promote an extractivist capitalist system via neoliberal loans and conditionalities imposed by the World Bank.
• Ajay Banga has no experience in ’development’ policies, nor in climate and environmental issues.
• Ajay Banga is a member of the Trilateral Commission. This Commission, founded in 1973 by David Rockefeller, is a private club for consultation and orientation of the international policy of the United States, European countries and Japan. It played an active role in the neoliberal offensive of the 1980s [1].
• The appointment of Ajay Banga as the next President of the World Bank is welcomed by the Indian ultra-nationalist right.

The CADTM International network had no illusions: any decision taken by the IBRD (International Bank for Reconstruction and Development) must receive 85% of the votes to be adopted. However, the United States has 15.47% of the voting rights for each of the important decisions, so it has a de facto veto right. So there will be no positive change within the World Bank. As long as it continues to exist, it will remain an institution serving the interests of the United States, whether or not it is chaired by a US citizen drawn from big business and finance. It will continue to provide loans, usually onerous, in exchange for conditionalities that reinforce and deregulate capitalism, increase social and gender inequalities and worsen the climate and ecological crisis.

The CADTM International network calls once again:

• The strengthening of actions and mobilizations against the Bretton Woods institutions, towards a united front of the countries of the South against the repayment of illegitimate debts, towards the abolition of these institutions and the capitalist, patriarchal and extractivist system.
• A counter-summit of social movements to the IMF-WB Annual Meetings to be held in Marrakech from 9 to 15 October 2023.
• The cancellation of the debts claimed by the IMF and the World Bank.
• The prosecution of the World Bank’s leaders.
• The establishment of a new international architecture.
• The replacement of the World Bank by a regionalised Bank that would distribute loans at very low or zero interest rates Interest rates When A lends money to B, B repays the amount lent by A (the capital) as well as a supplementary sum known as interest, so that A has an interest in agreeing to this financial operation. The interest is determined by the interest rate, which may be high or low. To take a very simple example: if A borrows 100 million dollars for 10 years at a fixed interest rate of 5%, the first year he will repay a tenth of the capital initially borrowed (10 million dollars) plus 5% of the capital owed, i.e. 5 million dollars, that is a total of 15 million dollars. In the second year, he will again repay 10% of the capital borrowed, but the 5% now only applies to the remaining 90 million dollars still due, i.e. 4.5 million dollars, or a total of 14.5 million dollars. And so on, until the tenth year when he will repay the last 10 million dollars, plus 5% of that remaining 10 million dollars, i.e. 0.5 million dollars, giving a total of 10.5 million dollars. Over 10 years, the total amount repaid will come to 127.5 million dollars. The repayment of the capital is not usually made in equal instalments. In the initial years, the repayment concerns mainly the interest, and the proportion of capital repaid increases over the years. In this case, if repayments are stopped, the capital still due is higher…
  
  The nominal interest rate is the rate at which the loan is contracted. The real interest rate is the nominal rate reduced by the rate of inflation. to finance projects that respect social and environmental standards and fundamental human rights. This new World Bank must be the instrument of an exit from the capitalist system, which is harmful to the countries of the “South”, of the fight against the patriarchal system, of a drastic improvement in the living conditions of the majority of people, of an exit from extractivism and of an urgent ecological bifurcation.