[1]
The point of departure in these external encounters should be “the loving message of Jesus: that all should have life in all its fullness, here and now, and in the future.” -Giving Witness
[2] Two encounters between mid-level staff of the World Council of Churches (WCC), the World Bank (WB), and the International Monetary Fund (IMF) commenced this year, at the invitation of the IMF and WB. Representatives from the two institutions met in February and again in October seeking both a clarifying of respective philosophies and better understanding.
[3] Just before the second meeting, the WCC held an internal gathering at which participants determined the WCC should focus on bringing the perspective of victims of injustice to the next meeting. In particular the WCC was concerned that “the harsh economic measures imposed by the IMF and WB as ‘conditionalities’ for providing loans, debt relief and bail-outs in times of crises as well as the unremitting flow of payments for debts often incurred by governments under illegitimate conditions are having far reaching and adverse impacts on the basic human rights and survival of millions of impoverished and vulnerable people in these countries.” (“Giving Witness”)
[4] WCC General Secretary Konrad Raiser addressed the internal encounter on a “Spirituality of Resistance.” He stated that spirituality “as the energy for life in all its fullness implies the commitment to resist all forces, powers and systems which reduce, deny or destroy life.” Rogate Mshana, WCC program executive for economic justice, pointed out that “our global problem is the inequality in global resource sharing.” He described a “champagne glass economy,” in which the top 20% of the world’s population accounts for 83% of the world’s consumption, the next 20% just 11%, while the bottom 60% consume only 6%. He noted that “this inequality will not be solved by growth alone; equitable distribution is also necessary.” That is why “justice is at the heart of our encounter with the international financial institutions.” (PU 03-36)
[5] When the WCC, WB and IMF convened again in October, the three institutions agreed that the Millennium Development Goals adopted at the UN Millennium Summit, such as sharply reducing poverty and hunger, increasing health care, and achieving universal primary education by 2015, are “mutually held” goals. Nevertheless, there are sharp differences between the WCC and the International Financial Institutions (IFIs) on development paradigms as well as the particular socio-economic policies to attain these objectives. The IMF and WB admitted to some mistakes in the past in both policies and projects. But the question raised by the WCC (and other civil society groups) as to who takes responsibility for these mistakes, whose costs have been borne primarily by poor people, was not clearly answered. The WCC pressed for compensation for environmental and other damages, as well as cancellation of debts acquired under illegitimate circumstances. The IFIs, though, were concerned to develop responses which will not undermine the international banking system. They are putting policies in place which they think will avoid similar mistakes, by taking better account of the particular contexts and concerns of poorer countries. (“Common Goals,” pp. 1-3)
[6] Agreement was also reached on the point that economic globalization has not benefited all people equally and that some have lost out. All three institutions shared similar concerns about inequities in the global trading system under the rules of the World Trade Organization (WTO). One example would be domestic subsidies to agricultural sectors in developed countries which harm farmers and rural communities in developing countries.[1] However, the WCC is concerned that the neo-liberal economic thinking which we believe guides IFI policies (liberalization of trade and finance markets, deregulation, and privatization) is negatively affecting the social, economic and cultural rights of the majority of the world’s people, as well as increasing the disparity between the wealthy and poor between and within countries. Other continuing points of contention are the dominance of the market as a mechanism for distribution and the centrality of growth in attaining sustainable development. (“Common Goals,” pp. 5-6)
[7] At this stage, joint case studies between the three institutions on topics like water privatization have been proposed, although the details are still being worked out. A high-level summit of the boards of the WCC, IMF, and WB has also been proposed, with a tentative date of fall 2004. Issues to be discussed would likely include whether a common understanding of the challenges of globalization can be agreed to and the best ways to deal with them.
[8] Mshana stated after the second encounter that “so far, the encounters have been open, transparent and mutually challenging, and we have deepened our understanding of the dynamics of the international financial institutions. But we still don’t know if they are prepared to move away from the neo-liberal paradigm, which we see as responsible for much of the suffering in our world today.” (PU 03-40) This is a concern I share with other members of the WCC team.
[9] I would like to conclude this report with a few observations from my participation in these encounters. I am the only U.S. citizen on the core WCC team. It is very challenging to learn from some IMF and WB staff about the pressure the U.S. government brings to bear on the policies of these institutions. Both IFIs have a voting system based mainly on the value of the shares held by its member countries. The U.S. effectively has veto power in both institutions. A particularly wrenching example of use of this power is U.S. opposition to a debt restructuring mechanism for highly indebted low and middle income countries. A proposal for such a mechanism has been one of the demands of the international debt forgiveness campaign, in which many churches have participated. This past April the U.S. vetoed a proposal for such a mechanism.[2]
[10] High levels of debt, some of it illegitimate, continue to put a drag on the economies of many developing countries and contribute to the suffering of poor people. This summer the LWF adopted a resolution on illegitimate debt, noting that “the debt burden has increased and is today a major barrier against eradication of poverty and fulfillment of basic human rights for all.” This is a crucial issue for churches, particularly those in the U.S. and Europe. The LWF calls for the “member churches in the industrialized countries to challenge their governments to advocate for the cancellation of illegitimate or odious debts.” (“Message”) There are other issues which need to be addressed – trade and development policies, corporate social responsibility, provision of water – on which both the LWF and WCC have proposals. From my point of view, illegitimate debt is one of the most pressing issues and one on which we could make a difference. We must pressure the governments of our countries to move forward with effective mechanisms to solve this problem.
References
“Common Goals, Separate Journeys? Synthesis of Discussions and Summary of Agreements,” The 2nd Encounter between the World Council of Churches, International Monetary Fund and World Bank, prepared by WCC staff.
“Giving Witness of the Hope that Is in Us: Our Passion for the Possible,” Main conclusions, Internal Encounter of Churches, Agencies and Other Partners on the Policies of the International Monetary Fund and the World Bank, 11-12 September 2003, Geneva, available at http://www2.wcc-coe.org/wcc/what/jpc/200309conclusions.html.
“Lead Us Not into Temptation: Churches’ response to the policies of international financial institutions. October 2001, http://www.oikoumene.org/index.php?id=2535.
“Message from the LWF Tenth Assembly,” July 2003, Appendix 3, Lutheran World Federation,” availableat www.lutheranworld.org.Press release 03-09, The WCC, World Bank and IMF organize a joint seminar on development, 12 February 2003, available at www.wcc-coe.org.
Press update 03-04, WCC, “World Bank and IMF to continue dialogue,” 20 February 2003, available at www.wcc-coe.org.
Press update 03-36, “WCC and international financial institutions: discussing reforms while looking forward to a fundamental shift,” 17 September 2003, available at www.wcc-coe.org.
Press update 03-40, “WCC and international financial institutions to continue encounters next year,” 4 November 2003, available at www.wcc-coe.org.
Pamela Brubaker was a participant in all three encounters. She presented a paper on the ecumenical perspective on wealth creation and social justice at both the first WCC/WB/IMF encounter and the internal encounter and on globalization at the second WCC/WB/IMF encounter. She is the author of Globalization at What Price? Economic Change and Daily Life (Pilgrim Press, 2001).
[1] A September 2003 study from the Agricultural Policy Analysis Center at The University of Tennessee (commissioned by Oxfam) found that that the focus of US farm policy has shifted in the last decade as the government abandoned historical market stabilizing tools in favor of “decoupled” programs and trade liberalization. “Since then, U.S. crop exports have remained flat or declined, farm income derived from the marketplace has fallen dramatically, government payments to farmers have skyrocketed, and consolidation and corporate integration of farm assets in agricultural sectors such as livestock have reached record levels.” The authors point out that the consequences have been global, with dramatic drops in world prices for America’s four chief farm exports – corn, wheat, soybeans and cotton – more than 40%. They conclude that “In their wake, farmers from the U.S. to Peru, from Haiti to Burkina Faso have harvested poorer incomes, hunger, desperation and migration.” Ray, Daryll, Daniel De La Torre Ugarte, and Kelly Tiller, Rethinking U.S. Agricultural Policy: Changing Course to Secure Farmer Livelihoods Worldwide, Agricultural Policy Analysis Center, The University of Tennessee, September 2003, pp. 2-3.
[2] The proposed mechanism did not meet most of the criteria of the debt forgiveness movement but the U.S. administration found even this weak mechanism unacceptable. For an overview of the proposed mechanism, see IMF, “Proposals for a Sovereign Debt Restructuring Mechanism (SDRM): A Factsheet,” January 2003. For a helpful analysis of various proposals for dept relief and its relationship to meeting the Millenium Development Goals, see Greenhill, Romilly and Sasha Blackmore, “Relief Works: African proposals for debt cancellation – and why debt relief works,” A Report from Jubilee Research at the New Economics Foundation, August 2002, http://www.jubileeresearch.org.