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The World Bank: a never-ending coup d’état. The hidden agenda of the Washington Consensus
by Eric Toussaint
4 April 2007

  • Patrick Bond, Director, University of KwaZulu-Natal Centre for Civil Society, Durban, South Africa:
    "Eric Toussaint has once again provided absolutely critical information. Anyone concerned with how excessive Northern wealth flows from sustained Southern poverty needs this analysis.
    It is a great book, one I look at regularly. Keep up the great work!
  • Gino Alzetta (World Bank Executive Director for Austria, Belarus, Belgium, Czech Republic, Hungary, Kazakhstan, Luxembourg, Slovakia, Slovenia and Turkey):
    “Eric Toussaint’s new book is very ‘engagé’, therefore provocative. The meticulous and excellent research which supports this book is, unfortunately, somewhat obscured by an excessive ‘devilization’ of the World Bank. This set aside, interesting reading.”
  • A summary of the book by Victor Isidro (UNAM, Mexico D.F.):
    The main conclusion of this book is that World Bank policy is concerned only with supporting and enforcing United States world leadership. That is why the World Bank makes no effort to promote development or the respect of human rights... The time has come for the World Bank to answer for its actions before a court of law.
  • Alex Wilks’s comments (Coordinator European Network on Debt and Development):
    The case against the World Bank, set out in no uncertain terms. Clear where he stands, Eric Toussaint displays his encyclopaedic knowledge of the World Bank’s economic and political impacts. Serious students of international financial institutions will find detailed accounts of the Bank’s history and the very heavy baggage it bears
    today. An impassioned and comprehensive expose of the power plays, misdemeanours and negative impacts of the world’s most powerful development institution.
  • Book Review from the April 2008 issue of the Socialist Standard by Janet Surman (
    Throughout this comparative study of official World Bank statements and internal memos, Eric Toussaint lays bare the absolute conflict between the public and private ideologies, time after time revealing the imperative of achieving US political aims above all other considerations. It is a very interesting book making the facts and figures of economics accessible to the layperson through ample explicit tables and clear explanations with minimum use of jargon.
    Contrary to common belief, the mission of the World Bank under the umbrella of the UN was not and is not to reduce poverty but (1) to rebuild Europe post second world war and (2) to promote the economic growth of the South through development. As a part of the World Bank Group the World Bank is (supposedly) bound by the UN Charter and according to the International Court of Justice it is the duty of the World Bank to respect human rights and customary law in general. However, nowhere is this obligation seen to be incorporated in the implementation of their policies; in fact examples abound as to how readily and easily these obligations have been circumvented or simply disregarded. In strict violation of a UN right of people to self-determination the World Bank granted loans in the 1950s to Belgium, France and Britain to finance projects in their colonies, mostly for mining for the benefit of the colonial powers and then, following independence, the debt was transferred to the newly emerging nations. This “odious debt” is a violation of international law which Toussaint describes as having been imposed on “the Bank, with the connivance of its main colonial shareholders and the blessing of the US”.
    The Bank’s mandate was to be purely economic, not to be involved in politics but even the first loan it granted in 1947, to France, was held up by the US government until Communist Party members were ousted from the coalition government. One chapter is specifically devoted to examples showing that the policy of granting loans is first and foremost determined by the US government often on the basis of purely political objectives. From the 1990s the US influenced against granting loans in areas that would compete with US products. Where oil was concerned drilling was encouraged, refining, not. In essence, more primitive accumulation, showing no regard for environmental concerns or human rights and contrary to the UN Charter. The over-riding message is the blatant, systematic disregard for the founding principles of the Charter.
    As to the answers to criticisms of the Bank’s succession of errors or bad management Toussaint reveals them to be “a deliberate part of a coherent, carefully thought out, theoretical plan, taught with great application in most universities.” The strategy, in a nutshell, is that providing infrastructure should fall on the state sector and anything that might prove profitable should be given to the private sector (preferably favouring multinational corporations), i.e. privatisation of profits combined with the socialisation of the cost of anything not profitable. Within the indebted country failing private companies would have their debt transferred to the state (as the military junta in Argentina transferred $12 billion of private debt to the state). Thus the capitalists in developing countries escape their debt, having it paid instead by the Treasury at the expense of the workers (Toussaint’s analysis). In Argentina in the 80s (just one typical example) even subsidiaries of transnational corporations indebted to their parent companies had their debts transferred to the Argentina Treasury; Renault, Mercedes-Benz, City Bank, Chase Manhattan, Société Générale etc. etc., all transferred their debt and as the government had no access to their accounts, one might raise an eyebrow!
    Describing the demise of Mexico in the 80s Toussaint is of the opinion that “Mexico has lost control of its destiny which, historically, has been the US’s objective since the nineteenth century.” By the end of the 90s all six major developing regions showed negative net transfer meaning simply that their debt to the World Bank was continuing to grow because they couldn’t keep up with the payments. Reports and internal memos reveal the Bank saw the crisis on the horizon but their “double discourse” informed the public and indebted countries that there was nothing to worry about. When the subject of Debt Reduction was eventually raised (in 1989) by the US government the Bank complied. This consisted of indebted nations buying US Treasury bonds in exchange for a reduction of their debt; in effect now the indebted countries were financing the policy of indebtedness of the US itself. As for the Bank’s own accounts, since its founding in 1946, they have consistently produced positive net results. Since 1985 each year has exceeded $1billion in profits whilst all developing countries’ net transfers since 1987 have been negative, resulting in increasing debt.
    Eric Toussaint is President of the Committee for the Abolition of Third World Debt (CADTM) whose mission is “to contribute to the emergence of a world based on the sovereignty of its peoples, on international solidarity, equality and social justice” with which we can broadly agree. Throughout the book he promotes “a break with the capitalist system” and tells us that “a system of redistribution of wealth is needed.” Point 30 of 31 indictments of the World Bank says “a new international, democratic institution must urgently be found to promote a redistribution of wealth and to support people’s efforts towards development that is socially just and respectful of nature.” Then he goes on to talk of 21st century socialism without addressing what this means except to break away from the Washington Consensus, the World Bank and the IMF in favour of new financial and monetary institutions and to point to possible alternatives such as Venezuela, Bolivia and Ecuador.

Preface to Eric Toussaint’s book by Ajit Muricken - Director VAK

This commanding book by Dr Eric Toussaint is very timely today as we move to the post industrial age where new high-technology with its new found capacity for storage, processing, analysis and transmission of data makes it possible to transmit information around the globe and exercise control over production across the world in seconds thus making differences in space, time and distance almost irrelevant. The human race has thus stepped closer to a new world order of “convergence” that heralds a new horizon unthinkable even two decades ago. Simultaneously since 1980’s the process has also accelerated massive worldwide impoverishment resulting from a series of deliberate policies collectively referred to as neoliberalism or economic globalism.

This development is inseparable from the deregulation of financial trade and capital markets implemented by the governments of the major economic powers and the multilateral financial institutions at their service. The main powers of the capitalist centre control the World Bank and the IMF, which intervene daily in the political life of debtor countries to decide the main orientation of their governmental policies. This is in contravention of Article 4 Section 10 of its own statutes that clearly states that the WB and its officers shall not interfere in the political affairs of any member; nor shall they be influenced in their decisions by the political character of the member or members concerned. Only economic considerations shall be relevant to their decisions, and these considerations shall be weighed impartially in order to achieve the purposes (set by the WB) stated in Article I, “The quality of governments’ economic policies is not the determining element in its choices. The WB has often lent money to the authorities in countries despite the dismal quality of their economic policies and a great deal of corruption: Indonesia and Zaire are two cases in point. Specifically, its choices relative to countries that play a major political role in the eyes of its major shareholders are regularly linked to these shareholders’ interests and outlooks, starting with the United States.”

Throughout this book Dr. Eric reminds us that the World Bank’s never ending coup d’état have created debt and global impoverishment on a massive scale and the role it plays in international economic and political processes have changed the world dramatically in the past three decades. He delves deep into the strategies and tactics the Bank uses to lure poor nations by creating an illusion of hope of prosperity and well being. If allure fails, the Bank brandishes threats to impose curbs or cut-off development assistance unless the particular government of the country in the South accepts the economic and political strictures of the North.

Eric provides a penetrating analysis of how debts reproduce poverty and dehumanization - a situation that runs counter to common belief. And the twin institutions IMF/ WB are instruments designed to subordinate indebted nations to the interests of the worlds most industrialized hegemonic powers. Eric analyses the evolution of the debt of the Southern countries with the support of great details of various cases. He also exposes the dominant neo-liberal economic axiom that holds that development of the South has been delayed due to insufficient domestic capital. This formulation actually means that countries wishing to accelerate economic growth must first appeal to external aid, then attract foreign investments and thirdly, increase exports in order to procure the hard currencies necessary for the purchase of foreign goods that facilitate further growth.

To ensure the return of the loan - not so much the capital borrowed but the regular payment of interest - the creditors impose severe conditionalities. Thus they impose macro economic reforms on to the borrower countries leading to strict structural adjustment programmes. The prescription includes measures like devaluation of local currency, liberal industrial policy, liberalization of imports, and privatization of domestic economy including natural resources. The conditions, whether they carry the name Structural Adjustment Programme or Poverty Reduction Strategy, all push the debtor country in one direction. The debtor country has to accept an insertion in the world economic system and world markets in a particular manner. It has to accept and adopt neo-liberal prescriptions (globalization, privatization, modernization, rationalization, and ‘liberalisation’). This stability and adjustment only inserts the debtor country in the new world economic order and places it firmly (of course, as a subsidiary entity) in the system of new international division of labour. The compulsion to liberalise and open up the economy - sector after sector - to the global capital, rapidly changes the economic structure of the country - the manufacturing process is trans-nationalised, fragmented and dispersed across the country. It becomes extremely capital-intensive and constantly replaces labour. Through the imposition of export led growth, financial and trade liberalization, fiscal austerity, privatization and deregulation the third world economies remain sources of cheap raw materials and pools of cheap labour to serve the interests of the industrialized countries.

Legitimation for the neo-liberal economic model was provided by the hidden agenda of the Washington Consensus - intensifying the productivist approach. It aims both at maintaining the US global leadership and at freeing capitalism of the shackles it had to accept in the wake of WWII. These limitations resulted from powerful social mobilizations in both countries of the North and of the South, from nascent emancipation movements in the colonies, and from attempts at rejecting capitalism.

In most cases the debt was contracted by non democratic governments that were often supported by industrialized countries. The borrowed money was used to finance repressive if not genocidal policies (as in Rwanda in 1994) and never helped the people of the indebted countries. The embezzlement of public funds created through the loasns was in full knowledge of public and private lenders in industrialized countries. In terms of international law the ‘odious’ debt that results from such loans is invalid.

The mechanisms of debt cycle have subjected the developing countries to the demands of Washington (where IMF, World Bank and US Treasury are all found). Most of the economic policy is decided outside the country concerned. Now there is no valid reason why IMF and World Bank should interfere in every economic decision a debtor country makes. Debt enables the creditors to exercise exorbitant power over the indebted countries. It has enabled the dominant classes in the North to overcome the rest of the world. It is a modern form of slavery.

The cancellation of Third World debt remains economic, moral and political imperatives and it is only a matter of justice that the cancellation should be accompanied by freezing the fortunes stolen and often placed abroad by dictatorships and corrupt regimes, so that they can be returned to the local populations and contribute to their development. It is also necessary to abolish a system that has the arrogance to impose an unjust economic model on the whole planet. Under the pretext of favouring growth through competition, mega-projects initiated by the World Bank, and the ‘dictatorship of the market’ lead to dispossessing the people of their present and of their future by depriving them of any independent initiative. They have to adapt and suffer.

In 1980, according to the World Bank, the total external debt of the developing countries came to about $580 billion. At the end of 2002, it came to about $2.4 trillion, a fourfold increase. Between 1980 and 2002, the developing countries repaid their creditors a little more than $4.6 trillion. Thus, countries in the periphery have repaid eight times the amount they owed, only to find themselves four times more indebted.

Ever since the debt crisis in 1982, the flows have been going from the Periphery to the Centre, and not the other way round as the leaders of the international financial institutions would have us believe. In order to estimate real flows, as detailed in Chapter 1, the following factors have to be taken into account: repayment of the external debt; capital outflow due to residents of Periphery countries; the repatriation of profits by multinational firms (including invisible transfers, especially via such procedures as “over” or “under” pricing, billing on invoices); the acquisition of privatised businesses in the Periphery at knock-down prices, by capitalists of the highly industrialised countries; the purchase at low prices of raw materials produced by the populations of the Periphery (degradation of the terms of exchange); the “brain drain”; genetic pillage; pillage of natural resources and destruction of the eco-system. The donors are not the ones we are led to believe. It is a gross error of language to consider the OECD countries, members of the Committee for Development Aid and the Bretton Woods institutions as “donors”.

Debt repayment sucks up part of the social surplus produced by the workers of the South (whether salary earners, small individual or family producers, or workers in the informal sector) and directs this flow of wealth toward the holders of capital in the North, with the ruling classes of the South taking their commission. Thus, the latter grow rich, while the national economies they head stagnate or regress and the populations of the South grow poorer.

Another important dimension which Eric highlights is environmental debt versus financial debt.

The countries of the Global South, blessed with the gifts of natural resources, are today under the spell of the neo-liberal economic growth model. These natural resources are now commodified and no sphere can escape this process. The goal is that of granting capital totalitarian control over human and biological life and development. This shameful pillage of humanity’s collective resources is committed under the spell of the neo-liberal economic model. Even those areas of life-forms once considered sacred, like the genetic codes, flora, fauna, seeds and even natural resources like water once considered common heritage of humanity are now converted into commodities and tradable items to be exploited for profit.

Pillage of genetic material, excessive exploitation of natural resources, and colossal attacks against the environment have had disastrous effects on the countries of the periphery. To get the hard currency needed to repay debts, which the rich countries and the international financial institutions insist must be given top priority, the governments of the indebted countries have been obliged to sell off their natural resources to the highest bidder, at the same time seriously overexploiting them, with no consideration of medium - and long-term consequences.

The capitalist system and its corollary, the debt, have led the countries of the periphery into an impasse, threatening the ecological balance of the world itself. In such conditions, it is legitimate to introduce the notion of environmental debt, owed by the governments of the highly industrialized countries, transnational firms, governments of the periphery, and local capitalists to the populations of the periphery. Indeed, this environmental debt is real, since such environmental degradation thrusts the people of the periphery each day deeper into hardship.

Can the IMF and the World Bank be reformed? The answer is obvious: according to Eric, these institutions should be abolished and replaced by other global institutions. They should be abolished because their property-based constitutions, their allegiance to a very limited number of countries (of which only one, the United States, has the veto on any decision it may wish to block, even if all 183 other members wanted it to go forward) and the distribution of power within their ranks are incompatible with any truly democratic reform. Other multilateral institutions should be set up in their stead (whether with the same names or different ones does not matter) based on the democratic principle contained in the UN Charter (one State, one vote) and with the mission of ensuring monetary stability internationally, controlling capital movements, offering low-interest loans not tied to neo-liberal monetarist conditionalities, and returning what was stolen from them to the countries of the Periphery. Mankind should be endowed with international institutions where every people of the world can really find its place. Institutions where the national delegates could debate questions central to humanity in public (broadcast on television and radio). These will be Institutions where the GDP or the military force of certain countries - or of one country - would have no weight in the decision-making process.

This volume of essays by Dr. Eric Toussaint “The World Bank - A never ending coup d’état” introduces new debates, positing a new approach and methodological enquiry that goes way beyond the usual broader and generalized notions of globalization.

Dr. Eric Toussaint exposes this fallacy of the neoliberal theoretical ‘certainties’ held forth in recent years that are no more valid than those of the conservatives that held power in the 1920s on the eve of the financial meltdown. The economic failure and social disaster created by today’s neoliberals might well lead to a round of major political and social changes. Globalization is not a steam-roller that crushes everything in its path. Resistance is alive and well in many places.

Globalisation is a long way from having created a coherent and harmonious economic order. There are many contradictions within the Triad (US, Europe, Japan), contradictions between imperialist powers, contradictions between companies, social discontent, a crisis of legitimacy of the existing political system, and growing criminalization in the behaviour of the main economic players - Enron, Andersen, Merrill Lynch, Citigroup - a crisis of legitimacy of the World Bank, the IMF and the WTO.

The tremors of rebellion can be felt the world over. Wherever one goes one can find people angered in the face of premeditated indignity, urged on by aspirations toward a better life, up in arms over the injustice and violence of the system portrayed as the be-all and end-all celebration of the ‘end of history’.

It is important to realize that in many places around the world, the warlords of neoliberalism have not gone unchallenged.

Dr. Eric in his writings challenges the idea of inevitability. The ideological propaganda that ‘there is no alternative’ to economic globalism has itself become the ruling ideology of the dominant classes and their allies in the intelligentsia, to “make believe” that globalization is beneficial in the long run and that it has come to “stay”.

Eric Toussaint in his writings suggest the following alternative agenda - a democratic and internationalist alternative to neoliberal capitalist globalisation; supremacy of human rights, social rights and the rights of the environment over the demands of capital; the need to bring about equality between women and men; need to deepen the crisis of legitimacy of the World Bank, the IMF, the WTO, the Davos Forum, the G8 and the big multinationals; demand for the unconditional cancellation of the Third World debt and the abandonment of structural adjustment policies; demand for a halt to trade deregulation and rejecting the present definition of trade-related intellectual property rights; demand for the protection of natural resources and public property by preventing their privatisation; demand for a ban on the use of genetically modified plants and patents on life; obstruct the arms trade and militarist policies (such as the US Colombia Plan); and assert the right of populations to endogenous development.

We are extremely grateful to Dr. Eric Toussaint of CADTM for making these papers available for publication in India.

We hope that our readers will find this work a useful contribution to the continuous debate necessary to clarify and arrive at a better understanding of the various dimensions of IMF World Bank and its impact.

Ajit Muricken - Director VAK

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Eric Toussaint

is a historian and political scientist who completed his Ph.D. at the universities of Paris VIII and Liège, is the spokesperson of the CADTM International, and sits on the Scientific Council of ATTAC France.
He is the author of Greece 2015: there was an alternative. London: Resistance Books / IIRE / CADTM, 2020 , Debt System (Haymarket books, Chicago, 2019), Bankocracy (2015); The Life and Crimes of an Exemplary Man (2014); Glance in the Rear View Mirror. Neoliberal Ideology From its Origins to the Present, Haymarket books, Chicago, 2012, etc.
See his bibliography:
He co-authored World debt figures 2015 with Pierre Gottiniaux, Daniel Munevar and Antonio Sanabria (2015); and with Damien Millet Debt, the IMF, and the World Bank: Sixty Questions, Sixty Answers, Monthly Review Books, New York, 2010. He was the scientific coordinator of the Greek Truth Commission on Public Debt from April 2015 to November 2015.