---------- Forwarded message ----------
Date: Sat, 4 Nov 2000 17:18:31 -0500
From: APIC <[log in to unmask]>
To: [log in to unmask]
Subject: Africa: Global Finance
Africa: Global Finance
Date distributed (ymd): 001104
Document reposted by APIC
+++++++++++++++++++++Document Profile+++++++++++++++++++++
Region: Continent-Wide
Issue Areas: +political/rights+ +economy/development+
+US policy focus+
Summary Contents:
This posting contains two documents on the power and policies of
international financial institutions, particularly the IMF and the
World Bank. The first is a speech by Archbishop Ndungane of Cape
Town to an NGO parallel gathering to the meeting of G-20 finance
ministers in Montreal. The second is an update by the 50 Years is
Enough Network on legislation passed by the U.S. Congress. This
mandates opposition to any loan by international financial
institutions which requires user fees or service charges on poor
people for primary education or primary health care.
In a related development, the non-governmental watchdog group Bank
Information Center is requesting support for demands for public
disclosure of the full range of bank documents related to
structural adjustment and other loans. For more information, visit
the Bank Information Center web site (http://www.bicusa.org) or
contact Graham Saul at the Center (phone: 202-624-0626; fax: 202-
737-1155; e-mail: [log in to unmask]). The Center's update and
request for signatures on a Global Call for Greater Transparency
can also be found at http://www.africapolicy.org/adna/wb0011.htm
+++++++++++++++++end profile++++++++++++++++++++++++++++++
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########################################################
DEFINING THE GOALS OF THE NEW STRUGGLE:
Power of financiers versus power of the people
By Njongonkulu Ndungane,
Archbishop Njongonkulu Ndungane is the Anglican Archbishop of Cape
Town. This is an excerpt of a talk he gave in Montreal on Saturday.
It previously appeared in Business Day (South Africa) October 23,
2000
Archbishop Ndungane was speaking at a Teach-In on Transforming the
Global Financial System, organized by the Halifax Initiative
Coalition to coincide with the meeting of the G-20 finance
ministers in Montreal (October 24-25). The G-20, set up "to promote
international financial stability, includes: Argentina, Australia,
Brazil, Canada, China, France, Germany, India, Indonesia, Italy,
Japan, Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey,
United Kingdom, United States of America, as well as the European
Union, the IMF and the World Bank.
For official information on the G-20, see the G-20 web site
(http://www.g20.org). Additional information on the teach-in and
related topics can be found at the non-governmental site
(http://www.g-20.net)
--------------------------------------------------------------
THE G-20 meeting that was held in Montreal, Canada, at the weekend
offered an opportunity to the international community to reflect on
where both official and popular reactions to financial
globalisation are headed.
SA Finance Minister Trevor Manuel could not have captured the
dilemma facing the world more aptly when he left last month's
annual meetings of the World Bank and International Monetary Fund
(IMF) a day early, in the wake of disruptive demonstrations in
Prague, shaking his head: I know what the protesters are against,
I just don't know what they're for.
And indeed, what are we up against? The two consistent threads of
concern in relation to international finance are instability and
systematic injustice.
Manuel is well placed as a respected politician and chairman of the
IMF/ World Bank board of governors to influence reform to both
ends. His attempts at changing voting rights and governance in the
Bretton Woods Institutions, and his arguments for more debt relief,
are also to be supported. But they don't go nearly far enough.
In contrast, the parallel Montreal meeting of nongovernmental
organisations (NGOs) and social/church movements debated more
creative options, including exchange controls, a redirection of
domestic investment into productive activity and credit aimed at
those who most need it.
But for all these measures to succeed we must first define the main
constraints to social progress. These undoubtedly include the two
Washington institutions recently labelled by Harvard University's
Jeffrey Sachs as masters of deceit.
US Treasury Secretary Larry Summers continues to use his veto power
over top personnel in the World Bank. Two leading bank reformers
Joseph Stiglitz and Ravi Kanbur have resigned in disgust over the
past year. And the bank continues to impose full cost-recovery
requirements on even water supply, with the result that when
low-income households can't pay their bills they are cut off. As SA
has seen in KwaZulu-Natal, people then become more vulnerable to
expensive health ailments.
Last week, the US Congress considered legislation proposed by
progressive NGOs which would prohibit the World Bank and IMF from
imposing user fees on primary health care and education. I am
informed that Summers remains adamantly opposed to the bill and
will probably have it vetoed [but see update below].
Reform while Summers holds veto power over IMF/World Bank decisions
is, it appears, utopian. That is why the global movement for
justice is making the case that Washington's financial boot, now
pressed against Africa's neck, must be lifted, even if that means
abolishing the bank and IMF.
Because many World Bank/IMF loans to Africa are channelled to repay
old loans and to import luxury goods for the elites, mobilising
domestic resources would be far preferable, even if that means more
expansive monetary policies as a substitute for foreign loans.
Through campaigning by the Jubilee 2000 movements across the world,
debt cancellation is also closer. The return of stolen wealth such
as former Nigerian dictator Sani Abacha's Swiss bank hoardings, and
reparations for what technically can be termed odious debts already
repaid, are also on the agenda.
If the World Bank, for instance, was serious about owning up to
past mistakes and malpractice, it would take responsibility for its
200m in loans to apartheid, its rejection of a UN general assembly
mandate not to lend to Pretoria in 1966, and the fact that $100m in
Eskom credits during 1950-60 helped expand SA electricity supplies
but only for white households, although the entire society repaid
those loans.
Surely reparations would help clear the bank's conscience?
In recent months I have raised the Swiss banks apartheid debt
directly with their government officials and I hope that instead of
waiting the five long decades they did before reimbursing Nazi
victims, we may soon see some kind of southern African reparations
fund for apartheid's victims to which Swiss and other European and
US financiers will willingly contribute. This initiative is
important as a disincentive for these banks to ever fund apartheid
or similarly despotic regimes again.
Commercial banks will always hesitate to consider moral issues, but
the World Bank's rhetoric on governance leads us to believe that
bank president James Wolfensohn may look at reparations more
seriously. Rhetoric is easy, however, and if moral carrots such as
the opportunity to provide reparations do not work, there is also
a stick.
Jubilee 2000 SA [South Africa] was one of the initiators of a World
Bank bonds boycott to defund the bank by having pension funds,
church and university endowments, and municipalities tell their
investment managers not to buy bank bonds.
Through such tough tactics the global movement for justice is
introducing social values to an economic system that often seems
topsy-turvy. But we also will recognise the importance of restoring
national sovereignty over capital flows. To that end, debates
continued this weekend over the apparent success of Prime Minister
Mahathir Mohamad's exchange control system in Malaysia, endorsed by
some leading economists.
A Tobin tax of 0,5% on international financial transactions was
recommended by the Canadian parliament last year. SA lags behind,
having dropped its main capital control the rand in 1995, at the
expense of seeing much wealth immorally accumulated during
apartheid leave the country and leaving our currency extremely
vulnerable to the kind of havoc experienced in early 1996,
late-1998 and at present.
And as for mobilising our own internal development finance
resources, everyone now recognises that government has been
lackadaisical in regulating banks to serve society's interest. The
marches against financial injustice in SA on Saturday, catalysed by
the SA Communist Party, may have forced authorities to finally gain
the political will to stiffen a spine that has so far bent over
backwards in the bank's interest.
At the end of the day, this is about power: the power of
international and local financiers and allied bureaucrats versus
the power of people. I have been through such a power struggle once
before and will be with the global movement to the end of this one.
============================
speech previously posted by:
World Bank bonds boycott campaign, Center for Economic Justice,
1830 Connecticut Ave., NW, Washington, DC 20009 phone: (202)
299-0020 fax: (202) 299-0021 web: http://www.worldbankboycott.org
To stay updated on the World Bank bonds boycott, join their
listserve: Send blank e-mail to [log in to unmask]
************************************************************
50 Years is Enough Network
[log in to unmask]
http://www.50years.org
Analysis of the User Fee Provision Passed by the U.S. Congress
PLUS
A Request for Information, Especially From the South
Last week we posted a press release and a news story on the victory
in the U.S. Congress regarding "user fees," the charges that many
IMF and World Bank programs insist on for services like education
and health care.
As you might remember from those postings, Congress has mandated
that the U.S. representatives to the boards of not only the IMF and
World Bank, but also the regional multilateral development banks
(Inter-American, African, Asian, and possibly some smaller
institutions) oppose any programs that include requirements that
user fees be charged to the poor for provision of primary health
services or primary education.
The bill has been passed by both the House and the Senate, and is
awaiting the President's signature; there have been no threats to
veto the bill.
We want to express a huge THANKS to the many activists around the
country who responded to our alerts. Your calls and letters had a
major impact. This genuine step for a measure of justice for people
in the South (and East) could not have been achieved without you.
Below is the actual legislative language:
======================
USER FEES
Sec. 596. The Secretary of the Treasury shall instruct the United
States Executive Director at each international financial
institution (as defined in section 1701(c)(2) of the International
Financial Institutions Act) and the International Monetary Fund to
oppose any loan of these institutions that would require user fees
or service charges on poor people for primary education or primary
healthcare, including prevention and treatment efforts for
HIV/AIDS, malaria, tuberculosis, and infant, child, and maternal
well-being, in connection with the institutions' lending programs.
========================
Attached to that is explanatory language, which provides more
detail on what Congress demands:
Joint Explanatory Statement of the Conference Committee: Sec. 596.
User Fees
The conference agreement includes a provision which requires the
United States Executive Directors at all multilateral development
banks and the International Monetary Fund to oppose any loan which
requires user fees or service charges on poor people for primary
education or primary health care. The managers further agree that
user fees should not be imposed or required through Bank or Fund
sponsored `community financing,' `cost sharing,' or `cost recovery'
mechanisms prepared in conjunctions with loans, structural
adjustment schemes or debt relief actions.
The managers direct that the Committees on Appropriations be
notified within 10 days if any loans, community financing, cost
sharing, or cost recovery mechanisms requiring the imposition of
user fees are approved by any multilateral development bank or the
International Monetary Fund.
=======================
50 YEARS IS ENOUGH NETWORK ANALYSIS
The Good News:
This is the first time that the U.S. Congress has taken enforceable
steps to have a concrete influence on the policies mandated by
these institutions under structural adjustment programs. The
original amendment called for the requirement to be delayed until
2002, but now the provision will take effect from the time of the
President's signature.
Another improvement over the original language is that this goes
beyond the IMF and World Bank to include the regional development
banks. These institutions frequently follow IMF/WB policies, and
likely have a number of programs supporting the imposition of user
fees for health & education.
The enforcement mechanism here (the last paragraph) is interesting
-- requiring that the Treasury Department report to Congress within
ten days on the passage of any program with user fees. Although it
doesn't literally "enforce," this move says "tell us each time the
institutions go against our position" AND "tell us any time there
are fees that you did not think it necessary to oppose." This is
designed to make sure the Executive Directors signal U.S.
opposition to discourage Treasury from applying its own judgement
about how to signal opposition and when to desist from doing so.
Previous attempts to influence policy at the institutions has
called for the Executive Directors to use their "voice and vote" --
something they ducked by explaining that votes are seldom taken and
minutes of their conversations are not made public. This
enforcement mechanism, attached to an appropriation bill, contains
within it the implication that future appropriations may be held up
if user fees continue to be imposed.
While the U.S. cannot simply legislate policy changes at
multilateral institutions, it is very influential. Its position on
an issue can have a persuasive effect on other governments, and can
be taken as a policy guideline by the institutions themselves.
The best news, of course, is that by passing this amendment, we may
actually succeed in eliminating some of the most egregious
obstacles to people getting the health care and education that they
need.
The Less Good News:
The original amendment had a stronger enforcement mechanism: the
threat of a cutoff of funds for the institutions if they were still
imposing user fees in 2002 (the one-year delay would have given
them a chance to reform gradually, you see). The IMF and World Bank
usually prove impervious to demands for change from the outside
unless their money is threatened, so we felt this threat was the
best way to go. However, it did not survive the political
negotiations around the appropriations bills. We can take some
consolation from that fact that the enforcement mechanism detailed
above has never been tried before, and looks promising.
However, the multilateral institutions and the Treasury Department
are adept at circumventing demands they don't like. We shall have
to be vigilant as this law comes into effect to see if it is being
obeyed. In terms of making sure this law is followed, we are
hampered by the fact that the Treasury Department, which is charged
with following it, was opposed to it. We can therefore not be
confident that they will adhere to it without prompting and
monitoring.
Request for Information
This provision will become law soon. We need to hear from our
colleagues in borrowing countries about new World Bank, IMF, IBD,
AfDB, and ADB programs that mandate user fees for education and
health care. Please monitor the introduction of such fees in your
country and the reason for their imposition. Send information to us
at <[log in to unmask]> and/or <[log in to unmask]>.
Thank you!
Soren Ambrose
50 Years Is Enough Network Washington, DC USA
************************************************************
This material is being reposted for wider distribution by the
Africa Policy Information Center (APIC). APIC provides accessible
information and analysis in order to promote U.S. and international
policies toward Africa that advance economic, political and social
justice and the full spectrum of human rights.
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