Global Policy Forum

World Bank Nervous Over Growth of Bond Boycott


By Todd Tucker and Neil Watkins

July 4, 2001

The World Bank Bonds Boycott marked its one-year anniversary in April 2001 with an announcement that nearly 30 entities throughout the U.S., including city governments, trade unions, churches and investment firms, have committed not to buy World Bank bonds. Officials at the World Bank are getting the jitters.

Among the new institutions that have made the commitment in just the past few weeks are the American Federation of Government Employees (AFGE), the International Longshoremen Workers Union (ILWU), and the Unitarian Universalist General Assembly.

These new institutions join the international unions of Communication Workers of America (CWA) and United Electrical Workers (UE); the cities of San Francisco, Oakland, Berkeley, and Takoma Park, MD; the religious communities of the New York Province of the Marianist Brothers and Priests, and the School Sisters of Notre Dame; the Central Labor Councils of San Francisco, Alameda County, and Northeast Indiana; and various union locals including SEIU Local 250 and United University Professions (the largest AFT affiliate with 24,000 members).

Also this spring, the student governments at Clark University and the School of the Art Institute of Chicago (SAIC) passed resolutions encouraging their administrations to adopt the boycott.

Said Takoma Park city council member Marc Elridge, "If we're spending our money, we ought to have something to say about how it's used. And it should not be used to support policies that we wouldn't support in our own country."

The World Bank is becoming increasingly concerned about the growing campaign. Calvert Group's statement of policy against buying Bank bonds caused the Bank to be concerned that the growing campaign might endanger its 'AAA' bond rating, and similar resolutions more recently from Harrington Investments, and L.L. Blake and Associates have enhanced that fear. High-level Bank staff have lobbied city councils against passage of a resolution in Madison, Boulder, and Los Angeles. Moreover, we have heard that the boycott is encouraging liberal Bank staff to move the Bank in a more sustainable direction on some issues, out of fear that the challenge presented by the boycott will grow. Bank staff have referenced the boycott as a reason to develop quickly, for example, a more "green" procurement policy.

As the campaign grows in the U.S., so it is growing around the world. Social movements in Pakistan, Honduras, Italy, and Senegal have recently joined others in Asia, the Americas, and Africa that are already working on the boycott. The group Action for Solidarity, Equality, Environment and Democracy (ASEED) is planning a Europe-wide launch of the boycott this summer.

The World Bank Bonds Boycott demands an end to structural adjustment programs and similarly harmful lending practices; 100% cancellation of debts owed to the World Bank without using citizens' tax dollars; and an end to environmentally destructive project lending, such as for oil, mining, and gas projects.

The campaign works this way: the World Bank gets about 80% of its money through the sale of bonds (listed under the name 'International Bank for Reconstruction and Development'). Large institutional investors, including unions and their pension funds, city and state governments, universities, churches, and mutual fund investors, are potential buyers of World Bank bonds. The campaign works to get these types of investors to adopt resolutions against buying the bonds in the future. The boycott hits the Bank at its twin Achilles' heels: its public image and its financing.

The World Bank is trying to repaint itself as an institution that promotes social welfare. But the reality is that the Bank continues to push policies like user fees on health care, privatization of essential services like water provision, and policies that suppress workers' abilities to organize and raise their standard of living. The boycott demands an end to these policies, which place corporate rights over human rights.

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