Committee for the Abolition of Illegitimate Debt

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:

• break all agreements with the World Bank, and more broadly with the International Monetary Fund 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 (IMF) and the World Trade Organization (WTO WTO
  World Trade Organisation The WTO, founded on 1^st January 1995, replaced the General Agreement on Trade and Tariffs (GATT). The main innovation is that the WTO enjoys the status of an international organization. Its role is to ensure that no member States adopt any kind of protectionism whatsoever, in order to accelerate the liberalization global trading and to facilitate the strategies of the multinationals. It has an international court (the Dispute Settlement Body) which judges any alleged violations of its founding text drawn up in Marrakesh.
  
  ), all three institutions working together;
• replace these institutions with democratic institutions that say no to the pursuit of profit Profit The positive gain yielded from a company’s activity. Net profit is profit after tax. Distributable profit is the part of the net profit which can be distributed to the shareholders. and prioritise the satisfaction of basic human rights and solidarity in the areas of development finance, credit and international trade;
• to establish a united front of the countries of the South against the repayment of illegitimate debts;
• deepen this momentum to break with the capitalist system - based on profit-seeking, growth at all costs, individualism and the destruction of living beings and nature - to build a society where social and environmental needs are at the heart political choices.

CADTM International Network, 11 January 2019

Translated by Sushovan Dhar