Friday, May 18, 2007

"HEALING" AT THE WORLD BANK: WHO NEEDS IT?

THE WORLD BANK/IMF--Honestly, considering much of what they do is to develop regions for exploitation by multinationals, who really cares if they ever recover? I don't. Nearly everyone I know doesn't care, if they even know what the World Bank and the IMF exist for at all. Ostensibly, their stated mission is to lift people out of poverty, but if you look at their actual record, what they do is cause tiny nations to become indebted to the most economically powerful ones. Well duh. Here's an excerpt from their mission statement (mind the fine-print):

Our mission is to help developing countries and their people reach the goals by working with our partners to alleviate poverty. To do that we concentrate on building the climate for investment, jobs and sustainable growth, so that economies will grow, and by investing in and empowering poor people to participate in development. (worldbank.org)

Those are some pretty high-flown words. Most of the rhetoric of the World Bank is internationalist and has a ring of classical humanism and liberalism to it. That's usually where it ends. As with the failed war in Iraq, the reality of this rhetoric and the reality on the ground are substantially different things.

Many anti-globalization critics contend that the World Bank has hijacked the issue of poverty, purposely underestimating the real numbers of poor in the world, as well as science-fiction reports on actual-wages (and their very real drop in the developed world in the last 30 years). Without giving a rundown of the literature--which is vast--defining poverty is difficult. On the World Bank's site, there is a statement that a person making "$1 dollar a day" can be considered to be living-in-poverty, but this can be seen as culturally relative.

Take America's working-poor, who make several-times the income of people in the Third World, yet whose quality-of-life could be termed worse than someone with an average income in Russia, or a Guatemalan or Mexican peasant with a broader social-network that they can rely on (friends, extended-families, clan-ties, etc.). Also, purchasing-power doesn't necessarily equate to empowerment at all, something that should be obvious to anyone.

It doesn't translate into sustainability, but dependence on manufactured-goods, as well as the overarching-goal: domestic exploitation of natural resources for transnational corporations, including cheap-labor. It's not unlike the cartel model, but that's probably because it is. This is the realm of the "oligopoly," where democracy isn't part of the equation.

The primary property of oligopoly is a small number of competing firms. Thus, to be able to best compete, firms make decisions based on planning against their rivals. That is the key property of oligopolies: all firms in oligopolies execute strategic planning. Sometimes, a market is only an oligopoly in theory. Some oligopolies act as cartels, in which many firms act as one. There are technically several firms but they all confer together to act as a monopoly. This practice is illegal in many places, though it still does happen. (library.thinkquest.org, "Competition")

Oh yes, it does still happen. Considering that the World Bank consists of individuals attached to the major financial institutions--primarily Western ones--of the world, it's easy to see the World Bank as merely representing private banking, industry, and speculative interests. At the moment, America is predominant, and so has the ability to choose who heads the World Bank and the IMF, though there are trends that are increasing China's influence. Indeed, China is doing an incredible amount of lending in the Third World, not just underwriting the war in Iraq through the purchase of American currency bonds.

Wolfowitz is just a symptom of American dominance of the World Bank, but also a sign that that hold is eroding. Japan and Europe want more representation and influence within decision-making circles, as do delegates of the Third World. It's likely that Bush will choose the successor anyway, and will force it through if they and American economic & financial elites encounter any resistance. Yes, Mr. Swinging-dick is typical of appointments by American presidents, but one has to wonder if the Europeans and Japan are tiring of the games at the World Bank. Could they withdraw?

By tradition, the World Bank president has always been appointed by the US government, while the Europeans have had the right to nominate the head of the IMF. Now this convention is under attack. In a letter to the World Bank, 200 leading development organisations have called for and open process for selecting the new leader that includes "transparency of process, and competence of prospective leadership without regard to national origin". (BBC, 05.18.2007)

With American influence diminishing throughout the world, it's possible. Another galling appointment by George W. Bush could be the final straw. The influence of a nation on the executive board is based on the size of their economy, but with EU consolidation, and China's growth, the American veto could be endangered soon. Development: China's preferred region of development right now is in Africa, particularly where there are coveted natural resources like oil.

In January 2005, China offered Angola a $2 billion loan to repair its infrastructure. And this past January, China's top offshore oil producer, Cnooc, agreed to pay $2.3 billion for a stake in a Nigerian oil and natural gas field - its largest ever overseas acquisition. China has rejected Western efforts to attach aid and loans for African countries to demands for improved human rights and government accountability, saying countries should choose their own development priorities. (IHT, 05.22.2006)

And in 2006 they were loaning Nigeria $1 billion to rebuild their railway system so that China can import their oil more-readily. The Nigerian government has to match the funds in the deal. What does fighting poverty have to do with any of this?


It should be remembered at this point that Paul Wolfowitz was the architect of the war in Iraq, which never won him any friends outside of the White House (it went bad, so he's a loser) and the oil industry (same thing). Somehow, Wolfowitz thought he could literally do whatever he wanted to, but who taught him these lessons? Surely it was his faceless masters in finance, the military-media-technocratic-industrial complex, and all the other rich-backers who created him for us to be entertained by.

How else are we going to ignore the real individuals behind globalization? A diversion has always served them well, and Wolfowitz has played this role very well. He's playing it right now, just like George W. Bush. Here's to the imminent-collapse of the World Bank!

Many analysts expect that the new fund will look for ways to lighten China's holdings of dollar-denominated assets, particularly low-yielding U.S. Treasury bonds. At the end of 2006, China held $350 billion worth of T-bills. Fitch estimates that China holds another $230 billion in bonds from government-backed agencies such as Freddie Mac, Fortune 500 and Fannie Mae.
Others predict the fund will bankroll efforts of state-owned resource giants like Sinopec or CNOOC to secure oil, gas, coal and other raw materials abroad. But Arthur Kroeber, editor of the China Economic Quarterly, argues that Beijing will find it difficult to achieve either goal. Few assets offer the depth and liquidity of T-bills. And any effort to finance acquisitions by Chinese companies risks igniting the sort of controversy that scuttled CNOOC's bid for Unocal.
(CNN/Fortune, 05.03.2007)

This isn't good news for Western financial elites, and they're trying to contain the activity. What's interesting is that the Chinese want to dispense with the so-called legitimacy of the World Bank, and just go out and loan to nations whose resources they want--it's actually pretty transparent what they want. What they want to do is what the World Bank and the IMF do under the guise of humanitarian-rhetoric, and their directness is refreshing in a world of double-talk.

The West lacks such candor and openness on their methods, but that's an issue of perception management. With the rising power of China, the World Bank appears that it's going to be replaced soon anyway. They're irrelevant. With China's announcement on May 3rd of the creation of what is being termed "the world's largest investment fund," this is likely to become a reality...on the ground.

BBC today on the Wolfowitz resignation, and more: http://news.bbc.co.uk/1/hi/business/6668415.stm

Thinkquest.org on "Competition": http://library.thinkquest.org/C004323/low/micro2.html

The International Herald Times on some of China's international loans, 05.22.2006: http://www.iht.com/articles/2006/05/22/news/nigeria.php

CNN/Fortune magazine on China's world investment fund, 05.03.2007: http://money.cnn.com/magazines/fortune/fortune_archive/2007/05/14/100024842/index.htm?section=money_topstories