The resignation of the World Bank president should encourage countries to terminate all agreement with the Bretton Woods institutions

21 January by CADTM International


On the left, Jim Yong Kim (Photos: © WTO/Studio Casagrande - Flickr)

On Monday, 7 January 2019, Jim Yong Kim, President of the World Bank (WB) has announced his resignation. Kristalina Georgieva, the current Chief Executive Officer of the World Bank will assume the role of interim President effective February 1 till the President of the United States, Donald Trump designates Kim’s successor. Truly symbolic of this anti-democratic institution working against the interests of the people of the planet.

The 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.

, Jim Yong Kim, submitted his resignation with effect from 1 February 2019. He was nominated at this post by Barack Obama in July 2012, and Donald Trump maintained that. Trump also developed private interests with him through his family members. JY Kim left his post at the World Bank to join a big private investment fund Investment fund
Investment funds
Private equity investment funds (sometimes called ’mutual funds’ seek to invest in companies according to certain criteria; of which they most often are specialized: capital-risk, capital development funds, leveraged buy-out (LBO), which reflect the different levels of the company’s maturity.
specialised in the infrastructure sector. [1]

Although the Board of Executive Directors of the WB is expected to elect a president for a five-year term, in reality, a tacit rule decides that this post would be reserved for a US representative. He is directly appointed by the American president disregarding all democratic principles. Since 1946, twelve men have been named for the post, all Americans. [2]

Another form of US influence within this institution lies in the profiles of the “chosen few”, always linked to big capital, especially financial. The WB raises funds, mostly by issuing bonds and is thus economically and politically, extremely dependent on these same banks and other big American privately-owned financial institutions. The president of the World Bank from 1981 to 1986, Alden W. Clausen was the President and CEO of the Bank of America – then heavily involved in the Third World debt crisis – before and after his term at the Bank. Robert Zoelick held a high post at Goldman Sachs before carrying out his tenure at the WB in the midst of the financial crisis from 2007 to 2012. Likewise, Robert S. McNamara, the ex-president of Ford Motor Company, blithely participated in lending to dictatorial and corrupt regimes during the Cold War. For example, in Vietnam and in RDC, both when he was the US Secretary of Defence under John F. Kennedy and Lyndon B. Johnson and, the President of the Bank between 1968 to 1981. [3]

Even though JY Kim enjoyed a polished image because of his university education in medicine and anthropology, he did not go against the firmly entrenched Bank principles. As evidenced, especially, by the structural policies that he led within the WB since 2012. The $13 billion paid-in capital increase, endorsed in April 2018 [4] has seen a realignment of voting powers but without any fundamental questioning of its functioning. The US still commands 16.89% of the voting powers, de facto retaining its right to veto (in case of votes, a majority of 85% of the voting power has to be attained to come to any decision.) The domination of the US and their allies on this institution carries on. The other countries representing 80% of the global population does not count for even 50% of the voting rights.

More broadly, while the capitalist system – the primary cause of global warming and inequalities between the countries and also within the countries – encountered difficulties after the crisis of 2007-2008, the WB of JY Kim has strengthened the control of the forces of big financial capital by increasing its loans, now implemented at market rates. [5]

JY Kim has also worked to promote “shadow banking” and “securitisation” - at the core of the 2007-2008 crisis - to finance development [6], while intensifying the recourse to private sector through the International Finance Corporation (IFC), a subsidiary of the WB known for its close links with tax havens. The WB and JY Kim have thus, still failed to learn from the failure of Structural Adjustment Structural Adjustment Economic policies imposed by the IMF in exchange of new loans or the rescheduling of old loans.

Structural Adjustments policies were enforced in the early 1980 to qualify countries for new loans or for debt rescheduling by the IMF and the World Bank. The requested kind of adjustment aims at ensuring that the country can again service its external debt. Structural adjustment usually combines the following elements : devaluation of the national currency (in order to bring down the prices of exported goods and attract strong currencies), rise in interest rates (in order to attract international capital), reduction of public expenditure (’streamlining’ of public services staff, reduction of budgets devoted to education and the health sector, etc.), massive privatisations, reduction of public subsidies to some companies or products, freezing of salaries (to avoid inflation as a consequence of deflation). These SAPs have not only substantially contributed to higher and higher levels of indebtedness in the affected countries ; they have simultaneously led to higher prices (because of a high VAT rate and of the free market prices) and to a dramatic fall in the income of local populations (as a consequence of rising unemployment and of the dismantling of public services, among other factors).

IMF : http://www.worldbank.org/
Plans and continue the dismantling and weakening of public sector in favour of private companies whose projects translate into serious human rights violations: land grabbing, repression, displacement [7], arbitrary arrests or killings in order to silence protests. [8]

Defending the interests of the world’s largest political power more directly, in May 2017 JY Kim joined Ivanka Trump, daughter of the misogynist billionaire president, on a business trip to Saudi Arabia, a historic political ally of the United States. This visit allowed the Saudi monarchy, ultra-reactionary and continuously trampling the rights of women, to offer a progressive image at low cost, through a pledge of donation for the Women Entrepreneurs Fund. Of course, the very purpose of this fund, launched under the auspices of Ivanka Trump, JY Kim and Justin Trudeau, is to participate in capital accumulation at the global level by claiming to advance women’s emancipation.

Contrary to the flattering portrayal of some, JY Kim has not at all reformed the World Bank. It has always defended the interests of capital and the richest and most powerful countries (United States, Canada, Western Europe and Japan at its head) at the expense of human rights and the preservation of the planet.


Following the announcement of the resignation of JY Kim and considering the destructive policy that has been applied without exception by the World Bank since 1946, the CADTM International network
:

  • denounces the influence of the United States, their allies and big capital within this institution;
  • denounces the very low representation of the so-called “Southern” countries’ positions in decision-making;
  • reiterate that the World Bank is a major player causing political and economic problems faced by the peoples of the planet, particularly through taxation and deepening:
    - the preponderance of financial markets and large private industrial enterprises, agribusiness and trade;
    - Doing Business projects creating precarious work and Enabling Business of Agriculture touting agribusiness which contributes to greenhouse gas emissions, and drives peasants into a unsustainable debt spiral [9] ;
    - policies of speculation and land and water grabbing, of which the southern populations are the main victims;
    - microcredit policies imposing an equally unsustainable debt burden on women and people in the South;
    - structural adjustment plans, under this name or another, yesterday and today;
  • denounces that, despite its justiciable nature under the 1947 UN Convention and its annexes, the World Bank remains above the law and the people, never condescending to face competent judicial authorities [10] for its responsibilities even though it is regularly found accused of corruption, falsification of data, denial of basic human rights and other misconducts;
  • affirms that, therefore, the World Bank can in no way be an ally for the peoples of the world confronting climatic, social, political and economic challenges.


Therefore, the CADTM International network calls for the strengthening of actions and mobilisations aimed at
:


CADTM International Network, 11 January 2019


Translated by Sushovan Dhar



Footnotes

[1See Mihir Sharma, “Is It Time to Give Up on the World Bank?”, Bloomberg Opinion, 8 January 2019, https://www.bloomberg.com/opinion/articles/2019-01-08/world-bank-s-jim-yong-kim-had-good-reason-to-resign

[2Particularly see Eric Toussaint, The World Bank, A never ending coup d’Etat, 50.

[3Ibid, Chapter 5.

[4See the World Bank press release of 21 April 2018 “World Bank Group Shareholders Endorse Transformative Capital Package” http://www.worldbank.org/en/news/press-release/2018/04/21/world-bank-group-shareholders-endorse-transformative-capital-package

[5This choice is all the more questionable, since at the same time, the World Bank and the IMF officially worry about a new debt crisis for the countries of the South because of the significant exposure of their external debts to the financial markets...

[6Particularly see Nicolas Sersiron, Banque de l’ombre et titrisation, le cynisme des financiers pour les pays pauvres!, 23 October 2018, http://www.cadtm.org/Banque-de-l-ombre-et-titrisation-le-cynisme-des-financiers-pour-les-pays

[7Particularly see Eric Toussaint, The support of the World Bank to forced displacement, 18 April 2015, http://www.cadtm.org/The-support-of-the-World-Bank-to

[8Particularly see Emilie Paumard, Le FMI et la Banque mondiale ont-ils appris de leurs erreurs?13 October 2017: http://www.cadtm.org/Le-FMI-et-la-Banque-mondiale-ont

[9Particularly see Rémi Vilain, “The New Green Revolution”, 5 September 2016: http://www.cadtm.org/The-New-Green-Revolution and Sushovan Dhar, “The unbearable burden of being an Indian farmer : shot dead for demanding debt relief”, 19 June 2017: http://www.cadtm.org/The-unbearable-burden-of-being-an

[10See Eric Toussaint, “Pourquoi il est possible de traduire la Banque mondiale en justice”, 16 October 2017: http://www.cadtm.org/Pourquoi-il-est-possible-de,2344 and Renaud Vivien, Banque mondiale, une zone de non-droit protégée par les juges, 23 July 2016: http://www.cadtm.org/Banque-mondiale-une-zone-de-non

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