In 1994 the Bretton Woods Institutions — the World Bank and the International Monetary Fund — planned a major celebration on the occasion of their 50th anniversary. At the same time, a burgeoning and increasingly well-organized global movement of activists across a spectrum of issues organized a very different kind of party.

Environmental, debt, labour, church and other social justice movements used the anniversary as an opportunity to condemn these institutions and highlight the environmental, economic and human devastation wrought by their policies and to declare that “50 Years is Enough.” It turned out to be a public relations disaster for the institutions, but especially for the Bank, which had at least cultivated the pretence that it was concerned for the poor and the environment.

In the wake of that 50th anniversary, the new president, Jim Wolfensohn, initiated an entirely different approach with the Bank’s critics. He met with those who were formerly his harshest critics in the key areas of economic policy and the environment. His strategy was to invite the Bank’s critics “inside the tent” with access to the corridors of the institution and the potential for influencing policy.

Moreover, he used these engagements as a wedge against those who called for shutting down the Bank. Two of the largest engagement processes that the Bank undertook are the Structural Adjustment Participatory Review Initiative (SAPRI) and the Extractive Industries Review (EIR).

Soon after taking the helm of the institution, Wolfensohn held a meeting with key NGO critics who challenged him to involve the Bank in a full participatory review of adjustment with civil society and governments as full partners in the exercise. In agreeing to the exercise, Wolfensohn admitted that “policy reform has had a mixed track record,” and committed the Bank to “a different way of doing business in the future.”

From this was born the Structural Adjustment Participatory Review Initiative Structural Adjustment Participatory Review Initiative (SAPRI) involving massive civil society mobilization processes in nine countries covering four continents. “Structural adjustment” required poor countries to reduce spending on things like health, education and development, while debt repayment and other economics policies were made the priority. What the Bank hoped to achieve through an appearance of co-operation was to mute the cascade of critical voices on its most contentious policies. It was also confident that its cadre of economists could run circles around NGOs in the arena of macro-economic policy.

Fully aware of the Bank’s motives, the NGOs were equally confident that a process empowering local civil society organizations would yield a solid and irrefutable body of evidence that clearly demonstrated the harmful impacts of adjustment policies. As a full partner in the exercise, the Bank would then be accountable to these public findings. In addition, and just as importantly, massive grassroots organizing and cross-sectoral mobilization in the country exercises would result in lasting networks with the capacity to challenge and engage on issues of economic policy with the World Bank and their governments.

In spite of a series of delays the country processes did unfold with in-depth participatory investigations into a set of adjustment policies selected by civil society in each country. However, as the damaging impacts of adjustment policies began to emerge from the studies, the Washington office of the Bank gradually distanced itself from the process and findings.

By 2001 the Bank abruptly announced that its involvement in SAPRI was coming to an end as it tried to thwart efforts to present the results of the findings publicly to the Bank and to Wolfensohn personally. After receiving negative publicity about its abdication of responsibility Wolfensohn intervened and agreed to receive personally the final report and follow up on the findings. After two subsequent meetings with Wolfensohn, however, there has been no movement from the Bank to act on any of the findings from the review. Instead, the new operational guidelines provide the Bank with even more flexibility to entrench adjustment, increasing its ability to extend its reach further into the areas of privatization of public utilities and the liberalization of southern agricultural markets.

After issuing the final report of the joint findings as a book in early 2004, Structural Adjustment: the Policy Roots of Economic Crisis, Poverty and Inequality, the SAPRIN Steering Committee wrote a final letter to Wolfensohn, to announce its own disengagement with the Bank.

Extractive Industries Review

The Extractive Industries Review (EIR) was initiated in 2000 by Wolfensohn after discussions with NGOs and based on his promise to evaluate the criticism that extractive industries — mining — contributed to poverty and environmental destruction. Many environmental movements viewed the process and outcome to be rigged in favour of industry.

However, a global mobilization and the relentless persistence of mining-affected communities to have their voices heard finally got the attention of the Chair and the Commission undertook extensive consultations around the world. The final report, Extractive Industries Review Final Report: Striking a Better Balance calls on the Bank to adopt significant reforms including:

  • Pulling out of oil projects by 2008 and ending the funding of coalmining
  • Increasing its lending for renewable energy, emissions reduction, energy efficiency and conservation projects and
  • Obtaining “free prior and informed consent” from local communities and indigenous peoples before funding any extractive projects. (www.eireview.org).

Since the Report’s release Bank management and the extractive industries lobby have been engaged in an effort to have its recommendations shelved. On the other side a global coalition of environmental activists, Nobel Prize winners and religious leaders is calling on Wolfensohn to adopt the recommendations in full. While the final outcome of this exercise is not yet clear the Bank’s Management response points to a selective and watered down response to the report and its continued dependence on fossil fuel projects as a significant element of its loan portfolio.

What do these processes taken together tell us? The Bank has shredded the goodwill it cultivated in the early Wolfensohn years by walking away from the findings of processes in which it has been deeply involved.

In the cases of SAPRI and the EIR, NGOs were adept at gaining and maintaining equal control of the process and results, implicating the Bank deeply in the findings, and finally exposing the hypocrisy of the institution when the Bank tried to ignore the findings. These processes have also amassed an impressive body of evidence refuting the core policies of the Bank that has the Bank’s fingerprints all over them.

As for actual changes in the Bank, any realistic assessment would have to conclude that there has been little actual movement by the Bank on any of these fronts and arguably a further entrenchment in some areas. Now that several important engagement processes have been completed and little change has taken place it is time for NGOs to assess the implications of this experience for civil society strategies and positions vis-à-vis the World Bank.

One of the ongoing debates among NGOs who work on the Bank is whether to adopt a reform or abolish position toward the institution. The “50 Years Is Enough” slogan and campaign was carefully crafted to keep both reformists and abolitionists under one banner. However, over the past decade many organizations have invested considerable resources into the engagement strategy. Relationships have been forged and there is a perceived benefit to an “insider” strategy that can demonstrate real achievements. Yet, this has also resulted in a self-reinforcing set of relationships that serve the Bank’s interests as well.

Another set of activists continues to call for fundamental reform or a dismantling of the World Bank as well as the IMF. They have developed a sophisticated analysis for determining whether and when to engage the Bank. Their long-term vision is democratic multilateral development institutions that truly serve the needs of global equitable and sustainable development. For them, the language of abolition does not articulate the vision for alternatives that exists. These groups are opposed to any further serious engagement with the World Bank until the Bank deals seriously with the recommendations of previous engagements like the EIR and SAPRI.

There is growing common ground among these various positions relating to the World Bank and IMF. They are rooted in the conviction that further engagement and campaigning should be clearly aimed at taking away power from these institutions. Campaigns like World Bank Bonds Boycott and the growing southern-based campaigns to “kick the IMF out” are two examples where these interests converge.

As the World Bank and IMF celebrate their 60th birthday and prepare for their annual fall meetings, the terrain of struggle is clearly shifting to the south as the southern-based civil society movements and networks gather strength. The important victories led by southern NGOs against the World Trade Organization and in countries like Argentina that are successfully defying the IMF’s medicine are evidence of a Southern-based movement that has learned the lessons of engagement. The challenge for Northern-based NGOs is to support these struggles and help to forge similar ones in the North.