The World Bank is going through the worst period of its history. Its
situation has never been so precarious. Rejected by a growing number of
social movements, its credibility has been further undermined by
revelations of nepotism on the part of its president, Paul Wolfowitz. At
the same time, it is coming under fire from several Latin American
governments that are setting up a Southern Bank with radically different
perspectives. Could the deathblow be on the way ?

The fiasco of its actions over the last 60 years is clearly what has done
the World Bank most damage. It will need to answer for a number of acts
of which the following is not an exhaustive list:

– during the Cold War, the World Bank used indebtedness to achieve
geopolitical ends, systematically supporting the allies of the Western
bloc, particularly dictatorial regimes (Pinochet in Chile, Mobutu in
Zaire, Suharto in Indonesia, Videla in Argentina, the apartheid regime in
South Africa, etc.) which violated human rights and embezzled considerable
amounts of money, and it still supports such regimes today (Deby in Chad,
Sassou Nguesso in Congo-Brazzaville, Biya in Cameroon, Musharraf in
Pakistan, etc.);

– at the turn of the 1960s, the World Bank transferred the debts
contracted by the former colonial powers to several newly independent
African countries (Mauritania, Gabon, Algeria, Congo-Kinshasa, Nigeria,
Kenya, Zambia, etc.), in total contravention of international law;

– a very large part of the loans granted by the World Bank served to carry
out policies which caused considerable social and environmental damage
(huge and often inefficient dams, extractive industries like open-cast
mines and pipelines, export agriculture at the expense of food
sovereignty, etc.), with a view to facilitating cheap access to the rich
natural resources of the South;

– after the 1982 debt crisis, the World Bank supported the structural
adjustment policies promoted by the major powers and the IMF, leading to
drastic cuts in social spending, abolition of subsidies on basic
necessities, massive privatizations, taxation that worsened inequality,
forced liberalization of the economy and unfair competition between local
producers and the big multinational corporations – all measures which
seriously deteriorated people’s living conditions and amount to nothing
less than economic colonization;

– the World Bank has carried out policies that have reproduced poverty and
exclusion instead of fighting them, leaving the countries that applied
them to the letter mired in deep hardship. In Africa, the number of
people having to survive on less than 1$ a day has doubled since 1981,
over 200 million people suffer from famine and for 20 African countries,
life expectancy has fallen below the age of 45;

– despite resounding announcements, the problem of Third World debt
subsists, since far from total cancellation, the World Bank contents
itself with skimming off the top of the debt of a few docile countries,
never touching the actual mechanism itself. Instead of signalling the end
of relentless domination, debt reduction is just a smoke-screen hiding the
draconian economic reforms demanded in exchange, in a continuation of
structural adjustment.

In such conditions, the situation has become explosive. One recent event
threatens to light the fuse: the current president of the World Bank,
Paul Wolfowitz, has admitted to intervening personally to obtain a high
salary increase (+45%!) for his partner. The World Bank set up an ad
hoc Committee which has just heard him in the course of an enquiry ordered
for violation of house regulations.

There have been numerous declarations demanding his resignation: from the
World Bank association of staff and former executives; from one of the
Executive Directors, the New-Zealander Graeme Wheeler; from high-ranking
officials of the U.S. Democrats such as John Kerry; from international
networks like the CADTM; the European Parliament, etc. But the U.S.
government continues to support him through thick and thin and by clinging
to his post, Wolfowitz is dragging the World Bank down with him.

A month after these revelations, no solution has been found. The World
Bank’s past is far too problematic for the status quo to be acceptable.
Now there can only be one possible way out: the abolition of the World
Bank and its replacement within a new international institutional
architecture. A global development fund, within the United Nations, could
be connected to regional development banks in the South, directly run by
the governments of the South, using democratic process and transparency.

The way ahead is clear and two bombshells have just been dropped on the
neoliberal establishment. Venezuela announced on 30 April that it is
leaving the IMF and the World Bank. A few days earlier, Ecuador decided
to expel the permanent representative of the World Bank, Eduardo
Somensatto. For the Ecuadorian president, Rafael Correa, has a good
memory. In April 2005, when he was the Minister for the Economy, he had
attempted to reform the way petroleum resources were used so that some of
the money, instead of going to repay the debt, should be used for social
spending, in particular for the Amerindian population. In reprisal, the
World Bank blocked a loan of 100 million dollars and pressure from
Washington forced Correa to resign. Offended, he declared that « no-one
has the right to punish a country for changing its laws ».

Rafael Correa was democratically elected president of Ecuador in November
2006 and has just carried the referendum for calling a constituent
assembly with a clear majority. By expelling the representative of the
World Bank, he has reasserted the dignity and sovereignty of Ecuador in
the face of an institution that has taken the liberty of systematically
violating its own statutes, which prohibit it from interference in the
domestic affairs of any member State.

Several Latin-American countries (Argentina, Bolivia, Brazil, Ecuador,
Paraguay, Venezuela) are laying the foundations for two fundamentally new
institutions: a Monetary Fund of the South and a Bank of the South.
Various experts, including several members of the CADTM, have taken part
in these discussions which aim to modify significantly the global balance
of power, on the ruins of the World Bank.