The Story of Stuff - Annie Leonard [96]
In fact, there’s a ton of empirical evidence that proves otherwise. In spite of (actually, partly because of) all these required economic “reforms,” loans, and “development” projects targeting developing countries, there’s still a massive net flow of wealth out of them into the richest countries. This is partly because each time the World Bank or IMF loans a developing country money, some of that money goes right back to the lender countries via the purchase of technologies or international consultants from the lending countries. Then there are interest payments, often at crippling rates, and the payment of the loan principal, which becomes more onerous when developing countries’ currencies decline in value (which happens most of the time). Zambia’s 2004 loan repayments to the IMF alone, for example, amounted to $25 million, more than the education budget for the entire country.107 In 2005–06, Kenya’s budget for debt payments was as much as for water, health, agriculture, roads, transport, and finance combined.108 Overall in 2006, the world’s poorest countries (with annual average incomes of less than $935 per person) paid more than $34 billion in debt service (payments of interest and principal), which works out to $93 million a day. If you include all developing countries, the amount was $573 billion.109 According to the Jubilee Debt campaign, which provides those numbers, although there was some debt cancellation in 2007 and 2008, today’s figures are likely similar; there were also plenty of new loans.110
Finally, there’s the transfer of wealth from the export of valuable natural resources—remember the resource curse I mentioned in the extraction chapter? So the World Bank and IMF have contributed to a situation where most borrowing countries pay way more than they ever receive in international aid.
But why is this our concern? These are international institutions, right? Actually, the United States provides 18 percent of the World Bank’s funding. And the United States controls 18 percent of the voting power at the IMF—in effect a veto power, since an 85 percent majority is required for a decision.111 This means the United States has a disproportionate share of influence over both the IMF and World Bank. And it means we U.S. citizens are involved by providing our tax dollars, as well as by benefiting from interest repayments the World Bank makes on its bonds that are bought by our pension funds, municipalities, and church or university endowments. We’re paying for all these environmentally destructive projects, ruthless economic reforms, and bad loans that are suffocating many developing countries’ economies. So we have both the responsibility and the right to check out what the IMF and World Bank are doing, and to rein them in.
It is simply not possible for developing countries to pay back the crippling debt on these international loans, many of which were made under misleading or coercive terms for poorly planned projects. Or were made with undemocratic and corrupt leaders who diverted the funds for their personal use, or spent them on arms to secure their hold on power. And it is even more impossible to expect poor countries to be able to chart a path of sustainability, of just and healthy economic development, while being held hostage to decades-old debt. If the World Bank and IMF are even remotely interested in improving the life of the world’s poor, these debts need to be canceled. Instead, the Bank and IMF should offer ecological-debt repayments to communities worldwide to compensate for the social and environmental damages these institutions caused with