By Mercia Andrews and George Dor
February 14, 1999 During the World Bank Chief Economist and Vice President, Joseph Stiglitz' recent visit to South Africa, he and his entourage of staff met with about 50 people working in NGOs at the South African NGO Coalition (SANGOCO) offices in Johannesburg. In the course of the meeting, the illusion that the World Bank is undergoing fundamental transformation was shattered.The World Bank and International Monetary Fund (IMF) are notorious for imposing structural adjustment programmes on and entrenching poverty in countries across the globe. These institutions have played a significant role in redirecting South Africa's transformation from the rights, policy directives and targets as set out in the Constitution and the RDP to an approach more in keeping with structural adjustment. The World Bank has been an important player in, to mention a few examples, the post- 1994 market-driven housing and land policies, the user pays approach to water delivery, the increasing privatisation of infrastructure and services, the Growth Employment and Redistribution Strategy (GEAR) and cuts in spending on education, health and social welfare. We heard nothing from Stiglitz to suggest that we can now expect the bank to shift to a more people-centred approach.
Yet, his visit generated extensive media publicity portraying the man and the bank in glowing terms. As such, he succeeded to a significant degree in achieving perhaps the primary objective of his visit, legitimising the World Bank in denial of the poverty and hardship it is responsible for. This is well illustrated by the title, subtitle and content of the Mail and Guardian article on January 15 to 21 1999, "Unemployed can bank on Stiglitz: Reflecting the changing face of the World Bank, Joseph Stiglitz is a hero in some left-wing circles", in which the author concludes: "His intention ... is noble: to free the poor from the powerlessness that is such a feature of poverty."
The seriousness with which Stiglitz and the World Bank are pursuing the appearance of legitimacy is reflected in the various meetings allocated to church leaders, NGOs and other non-governmental agencies in South Africa, one of a series of visits to countries affected by the bank. The lack of a critical approach by the media in the face of the World Bank's impact on the South African majority and the ease with which Stiglitz has been able to achieve his objective in many quarters is alarming. For some, it is a case of money talks: the bank's offer of working with the Independent Development Trust (IDT) and the financial benefits this entails for the IDT is perhaps too tempting to refuse. For others, it is more a case of failing to scratch beneath the surface and perhaps a yearning for a "hero" to get us out of the chaos of the current global crisis. The superficial appearances are thus conveyed as fact and the reality of the World Bank's ongoing negative impact remains hidden.
Much of the impetus for the more positive way in which the World Bank is being portrayed emanates from a talk by Stiglitz in Helsinki in January 1998, in which he criticised the "Washington Consensus", namely the World Bank, IMF and US economists and their neo-liberal structural adjustment approach. We asked him for his views on the contradiction between his speech in Helsinki and the World Bank contribution to the Growth, Employment and Redistribution (GEAR) strategy [SA's homegown structural adjustment programme]. He told us he didn't know much about South Africa.
We asked specifically about the World Bank staff member responsible for GEAR's severe fiscal deficit targets, the resultant cuts in spending on meeting basic needs and whether the more flexible approach he conveyed in Helsinki should have been followed in South Africa. His performance during the meeting was that of a conductor of a united entourage, creating the image of a World Bank working in harmony. Yet he responded that the World Bank "is not militaristic" and that "there is no litmus test" for bank staff or, to put it in other words, there is no clear bank policy on critical issues and bank staff have substantial leeway to do as they please.
We put it to him that perhaps the bank should take action against its staff member on the GEAR team who got the employment predictions so horribly wrong by suggesting that GEAR would generate hundreds of thousands of jobs each year when, in reality, hundreds of thousands are being lost. Everything in his tortuous reply suggested that he was not particularly concerned whether bank staff members produce work of poor quality and that staff members can get away with shoddy work that has a profound impact on people's chances of finding employment.
On the call to cancel third world debt, he questioned whether the resources required can't be put to better use elsewhere, asserting that the World Bank will continue to determine whether to grant debt relief and how much to give on the basis of its level of satisfaction with indebted countries' economic policies.
On the basis of his input to the meeting, we asked him whether he still stood by the things he said in Helsinki. In that speech, he criticised the "Washington Consensus" for policies that "are neither necessary nor sufficient, either for macro-economic stability or longer-term development", "at best incomplete and at worse misguided" and that "neglect ... fundamental issues." He toned down this criticism by telling us that his "main critique" is that the "Washington consensus" is "oversimplistic" and that "those policies are advisable but not sufficient".
In Helsinki, on the trade off between lowering inflation and creating employment, he criticised the "Washington Consensus" for its "single-minded focus on inflation" and that it "typically downplays stabilising output and unemployment". He argued: "In 1995 more than half the countries in the developing world had inflation rates of less than 15 percent a year. For these 71 countries controlling inflation should not be an overarching priority." He repeatedly stressed the need to prioritise employment creation and suggested that prioritising inflation was only necessary in extreme cases: "Controlling inflation is probably an important component of stabilisation and reform in the 25 countries ... with inflation rates of more than 40 percent a year." In Johannesburg, he lowered the number of countries that don't need to prioritise inflation to only those with an inflation rate below 8 percent.
With regard to privatisation, he told us that "government should focus its attention on areas where the private sector can't operate". He stressed the role of the private sector in infrastructure and service delivery and repeatedly referred to the state as having a role in "justice and law enforcement", in other words, focusing on the state's responsibility for ensuring a profitable environment for private sector delivery.
Our engagement with him highlights a significant retreat from his Helsinki position. There are a number of possible reasons. His Helsinki speech may have been a deliberate strategy to create the impression of change. He may have been reigned in by the World Bank after Helsinki. Perhaps he felt restrained in Johannesburg by the need to talk the language of his entourage. He portrays the confidence that he has the ear of the institution but insider talk suggests that he is seen as a maverick who is not to be taken too seriously. Whatever the reason for his retreat, his hero's halo has now vanished.
The two faces of the World Bank are there for all to see. On the one hand, Stiglitz in Helsinki, his mooting of a "post-Washington Consensus", the World Development Report publicity events and, in instances, content, the Inspection Panel, the World Bank NGO forums, all these represent part of the World Bank's international legitimacy strategy.
The World Bank staff in South Africa, the Southern Africa region and other countries and regions of the South represent the other face of the World Bank, the World Bank as it affects real people. The sinister implication of Stiglitz' response to the question of bank staff policy inputs in South Africa, that individual staff members can determine the well-being or lack thereof of people in their countries of operation, is probably only half the truth. The regularity with which bank staff impose structural adjustment policies throughout the countries of the South strongly suggests that they have clear instructions in this regard and that the "Washington Consensus" is very much in place. We can expect more of the same. In a recent example, a World Bank evaluation of the generalised failure in South Africa to extract payment from the rural poor for water from communal standpipes recommends intensifying the squeeze on rural people by introducing mechanisms that withhold water until payment is received.
Stiglitz' Helsinki speech remains a beacon in the history of the World Bank and, as a critique from within, in the face of the manifest failure of the "Washington Consensus" to eradicate poverty and initiate development, it remains an important document to refer to in challenging the bank. However, the false sense that Stiglitz represents a way forward for the World Bank and for sustainable development in the South needs to be replaced by heightened levels of organisation to ensure that the people of the South recapture their right to shape their own development.
This
article will be published in an upcoming issue of International
Viewpoint as well as South African periodicals.
and was a speaker at the October 1998 meetings of 50 Years is Enough.
George Dor works for the Alternative Information and Development Centre http://www.aidc.org.za
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