Policy mistakes and World Bank immunity

Mohammad Zakaria, The Daily Star, Asia News Network, Dhaka

Nobel prize-winning economist Joseph Stiglitz has written: "Globalization today is not working for many of the world''s poor, for much of the environment, for the stability of the global economy. The West has seriously mismanaged the process of privatization, liberalization, and stabilization. By following its advice, many third world countries today are actually worse off now."

For example, under pressure from her creditors, Malawi exchanged maize -- her people's main staple -- for dollars to repay debt. And now it is getting another loan to purchase genetically modified food from the United States. The impending famine in sub-Saharan Africa opens up a new market to sustain the multi-billion dollar biotechnology industry. What happens to human health in the South is not at all a concern in the immoral Washington consensus.

Globalization is accelerating the process of marginalisation of farmers in the third world. To go back a little, Amartya Sen explains in his well known theory of entitlements, the Bengal famine was not the result of a drastic slump in food production but because the colonial masters had diverted food for other commercial purposes. Recent development adequately shows -- the past is very much alive.

It is worth mentioning here that WB-IMF structural adjustment programs (SAPs), imposed as a conditionality for loans, had a negative impact in many southern countries including Bangladesh, including:

o Closure of mills and factories.

o Creation of massive unemployment in a labor surplus economy -- a fuel to domestic terrorism and chandabajee.

o Destruction of our jute industry.

o Farmers made poorer by making landlords the new water lords through cheap ownership of deep tube-wells.

o Service sector made more expensive.

SAPs pressurized for withdrawal of subsidies in our countries while heavy subsidies are allowed in the rich northern countries. Livestock subsidies in the northern countries of one dollar per day per cow contributed to collapse of our milk industry. The Earth is one -- but the world is not. What is play to them is death for us. Poor cow-raising women in the remote villages of Bangladesh receiving micro-credit under harsh conditions find it very difficult to earn a livelihood despite hard work, and encounter a hostile market to sell milk even though their product is cheaper than bottled water because of dumping of powdered milk. Similar is the case with rice farmers. SAPs insist on reducing service sector, prioritizing export oriented productions rather than producing necessary consumer items for meeting domestic needs, and removing steps meant for protecting domestic industries.

In the PRSP (Poverty Reduction Strategy Paper) process, the Bank initially talked about public participation and raising the issue to the parliament, but these ideas were not followed through. PRSP is nothing but another label for SAP! Tanzania, once being respected for Ujama model of self reliance, is now categorized as a heavily indebted poor country (HIPC) with debt at two and half times its revenue. Recent debt relief under HIPC initiative took place in exchange for a new set of policy conditionalities. ActionAid research shows that donors have substantial leverage over countries'' policy choices including water privatization.

In Dar es Salam, city water was privatised despite wide spread public opposition. There has been very little meaningful public participation or consultation and no transparency around the privatization process. Even the country''s elected MPs were kept largely in the dark. Now water tariffs have increased, water quality has not improved. Higher tariffs means that people living in the poorer areas without water connections are likely to face higher water bills from their neighbors and water vendors. Donor resources and government''s current and future tax revenues, will be used to fund a project in which 98 percent of the money will be spent on the richest 20 percent of the population.

I chose to quote an insider in the World Bank in the very opening paragraph as background to understanding the possible implications of immunity. Now the bank is pressurizing a sovereign state. It is pity that the Bank -- which talks so much of transparency, good governance, and accountability -- is now asking for immunity from accountability. Every action must be followed by accountability -- irrespective of whether individual or organization. It is very natural to raise the question why. In a recent article, economist Anu Muhammad has rightly pointed out connectivity between corruption and support base.

Since Adam Smith wrote "The Wealth of Nations," the world has undergone dramatic changes. Now the reality now is the poverty of nations and wealth of transnational corporations. What a world we are heading towards. The wealth of the world has increased -- multinationals are becoming wealthier, but the majority of the people of the world and most nations of the world are becoming poorer.

In a situation where the government role is gradually shrinking and proving too weak to counter external forces and market forces are increasingly taking over, civil society organizations and citizens must assert their own space. The government seems to be too weak to protect the rights of the citizens and defend the national interest. This is why it agrees to immunity.

Perhaps we are heading towards a new reality -- to ponder the new paradigm of people''s sovereignty and increased CSO or citizen role to supplement weaker governments in the South.

For instance, what happened in Tanzania with water privatization could not be repeated in Bolivia due to steep resistance from the consumer citizens.

Countries such as Malaysia, China, and Japan that did not follow the dictates of the IMF and World Bank are now reaping the benefit. Countries having the guts to say no and to opt for local solutions have been able to reduce poverty at a faster rate.

It is time for donors to stop tying aid. Donor conditionality should be limited to what is necessary to ensure that aid money is spent on the people it is intended to benefit. Donors need to give countries space to develop their local solutions.