About the IMF and World Bank
The International Monetary Fund and the World Bank are both intergovernmental institutions that were created to support the structure of the world's economic and financial order. The governments of their member nations govern each organisation, and both institutions are focused on strengthening the economies of member nations. The differences between the two are as follows. The International Monetary Fund's purpose is to preserve a regular system of receipts and payments between nations, while the World Bank, with the official name of International Bank for Reconstruction and Development, is a development institution involved in providing development projects for countries needing assistance. Both of these institutions, since they contribute much to the economies and development of each nation, have the ability to influence the governments to improve human rights as well as assist countries in need in order to repair infrastructure, stabilize economies, and provide humanitarian aid.
The World Bank is concentrating more on poverty elimination, but it does have the Social Development group, which is part of the Environmentally and Socially Sustainable Development (ESSD) network of the World Bank. The purpose of the World Bank is to "promote economic and social progress in developing countries by helping to raise productivity so that their people may live a better and fuller life."i Unfortunately, the World Bank does not have a human rights policy, something that many other development institutions have. Instead, the World Bank bases it's activities on its charter, which prohibits political activities and forces the institution to consider economic projects and a slow "increase in human rights and de facto adoption of certain human rights conditionalities in its operations."ii In 1998, for the commemoration of the 50th anniversary of the UDHR, the Bank published Development and Human Rights, which emphasized the important contributions of the organization in securing and promoting economic, social and cultural rights but also noted the more indirect impacts of governance lending on building a favorable environment for a "broader range of human rights."iii The International Monetary Fund and the World Bank are two of the most powerful intergovernmental organisations in the world. The International Monetary Fund (IMF), which preserves receipts, payments, and currency valuation throughout the world, could contribute greatly to human rights by attaching stipulations to their loans regarding human rights, but refuse to do so. The same happens with the World Bank, but not as often as the IMF. The World Bank has had mild reforms in regards to working in human rights conditions into it's development projects, but the potential to do more for human rights is there. Both of these institutions assist countries economically or with development, so why not work on improving the human rights as well? We will look at how the IMF and the World Bank effect human rights, and how they can improve their practices.
About the IMF and World Bank
The International Monetary Fund and the World Bank are both intergovernmental institutions that were created to support the structure of the world's economic and financial order. The governments of their member nations govern each organisation, and both institutions are focused on strengthening the economies of member nations. The differences between the two are as follows. The International Monetary Fund's purpose is to preserve a regular system of receipts and payments between nations, while the World Bank, with the official name of International Bank for Reconstruction and Development, is a development institution involved in providing development projects for countries needing assistance. Both of these institutions, since they contribute much to the economies and development of each nation, have the ability to influence the governments to improve human rights as well as assist countries in need in order to repair infrastructure, stabilize economies, and provide humanitarian aid.
The World Bank is concentrating more on poverty elimination, but it does have the Social Development group, which is part of the Environmentally and Socially Sustainable Development (ESSD) network of the World Bank. The purpose of the World Bank is to "promote economic and social progress in developing countries by helping to raise productivity so that their people may live a better and fuller life."i Unfortunately, the World Bank does not have a human rights policy, something that many other development institutions have. Instead, the World Bank bases it's activities on its charter, which prohibits political activities and forces the institution to consider economic projects and a slow "increase in human rights and de facto adoption of certain human rights conditionalities in its operations."ii In 1998, for the commemoration of the 50th anniversary of the UDHR, the Bank published Development and Human Rights, which emphasized the important contributions of the organization in securing and promoting economic, social and cultural rights but also noted the more indirect impacts of governance lending on building a favorable environment for a "broader range of human rights."iii Also in 1998, the Comprehensive Development Framework (CDF) "takes a holistic approach to development. It seeks a better balance in policymaking by highlighting the interdependence of all elements of development - social, structural, human, governance, environmental, economic, and financial" and the CDF acknowledges that "without the protection of human and property rights, and a comprehensive framework of laws, no equitable development is possible." iv Now the World Bank's policies have many provisions pertaining to the environment, the need for social assessments, and protection of cultural property. They are adopting a rights-based approach that takes into consideration three key areas of sustainability - environmental, economic, and social. What remains to be seen is how effective these measures are, how the World Bank will monitor the progress, and if countries are willing to adopt the measure put forth by the Bank.
The International Monetary Fund and Human Rights
While other institutions are progressively moving towards human rights issues in policies, the International Monetary Fund is to be lagging far behind, and they seem to be comfortable with their position. In 2001, the International Monetary Fund, hereafter known as the IMF, "has declared that it is not obligated to promote human rights around the world."v Grant Taplin, an assistant director for one of the IMF's regional offices, went even further and told a panel organized by the United Nations sub commission for the Promotion and Protection of Human Rights that "human rights were not mentioned in the articles of agreement"vi, referring to the international accord that created the IMF. But the sub commission still found that "the IMF (is) bound by obligations enshrined in international human rights covenants, and must incorporate human rights considerations in the formulation and review of the Poverty Reduction Strategy Papers."vii
This type of behaviour is not new for the IMF. It is known as an institution that is "secretive and insulated from democratic accountability and that doesn't really listen to the developing countries it is supposed to help."viii Canada has criticized the IMF for this, calling the IMF "one of the world's most secretive bureaucracies."ix Other institutions, such as the World Bank, now release studies regarding the countries they invest in, while the IMF does not. Even member countries such as Canada, wish to see the IMF be more open, noting that "the Fund offers little in the way of public documentation to explain the rationale behind it's own decisions"x. Canada realizes that it is harder to have programs that work without consultation, and with the closed-door policy they practice, the IMF "undermines its credibility and allows the Fund to dodge accountability."xi Non-governmental organizations have repeatedly tried to get the IMF to listen, but their stance on the human rights issue has been constant; human rights will continue to fall behind the so-called economic "improvements" within the countries receiving assistance.
Because of this, the Canadian Standing Committee on Foreign Affairs has recommended that the Canadian government should "Persuade other IMF member countries of the need for increased transparency of (the) IMF" and "the IMF should be required to provide a full explanation of the conditions, lending terms, and rationale of it's lending activities." xii Clearly, the IMF and the world could benefit from these recommendations.
The IMF claims to be promoting human rights through their poverty-fighting programs. Clearly poverty reduction is important, but it is not the only thing that people in developing countries need. The way that the IMF fights poverty has been ineffective for the most part. In 2001, a United Nations sub-commission on human rights found that the IMF's "emphasis on free market reforms and conditionality...deprived communities of the right to health, education and basic welfare."xiii Rather than helping citizens improve human rights conditions, the IMF all too often focuses on restricting or removing the rights of a worker. This has happened in many countries and will be looked at later on due to the World Bank's involvement as well. Removing these labour laws have been a disaster, and has prompted politicians in the United States to say that the IMF "should link its loans to improvements in human rights and labour laws."xiv Destroying labour unions, freezing wages, and cutting pensions do not bring people out of poverty.
One of the most disappointing moves by the IMF is their reluctance to forgive massive debts owed by developing countries. If this were to happen, monies could be redirected from paying down interest into to areas such as education, health care, the environment, or creating sustainable housing. The IMF could reduce the debt for these countries when and if these countries would show improvements in human rights as well. Canada has adopted this practice, and "debts will be forgiven when the countries fulfill promised democratic and human-rights reforms."xv This type of policy promotes the development of human rights while helping the economy because the governments will have more money to invest in infrastructure, education, health care, and other social institutions. Governments in poor countries are one of, if not the largest employer, and "sudden and massive cuts in government spending can throw tens or hundreds of thousands out of work, and contribute to a surge in unemployment, and to a consequent reduction in the bargaining power of all workers." They will be able to pay workers better or hire more for development purposes. The IMF and their economists disagree, warning that "large-scale debt forgiveness could have an adverse effect on the economies of countries that are home to the World Bank's and the IMF'S largest institutional lenders, including the United States."xvi This is a very protectionist stance, and gradual debt forgiveness should not affect the economies of lending countries much at all.
Because of this, the Canadian Standing Committee on Foreign Affairs has recommended that the Canadian government should "Persuade other IMF member countries of the need for increased transparency of (the) IMF" and "the IMF should be required to provide a full explanation of the conditions, lending terms, and rationale of it's lending activities." xii Clearly, the IMF and the world could benefit from these recommendations.
The IMF claims to be promoting human rights through their poverty-fighting programs. Clearly poverty reduction is important, but it is not the only thing that people in developing countries need. The way that the IMF fights poverty has been ineffective for the most part. In 2001, a United Nations sub-commission on human rights found that the IMF's "emphasis on free market reforms and conditionality...deprived communities of the right to health, education and basic welfare."xiii Rather than helping citizens improve human rights conditions, the IMF all too often focuses on restricting or removing the rights of a worker. This has happened in many countries and will be looked at later on due to the World Bank's involvement as well. Removing these labour laws have been a disaster, and has prompted politicians in the United States to say that the IMF "should link its loans to improvements in human rights and labour laws."xiv Destroying labour unions, freezing wages, and cutting pensions do not bring people out of poverty.
One of the most disappointing moves by the IMF is their reluctance to forgive massive debts owed by developing countries. If this were to happen, monies could be redirected from paying down interest into to areas such as education, health care, the environment, or creating sustainable housing. The IMF could reduce the debt for these countries when and if these countries would show improvements in human rights as well. Canada has adopted this practice, and "debts will be forgiven when the countries fulfill promised democratic and human-rights reforms."xv This type of policy promotes the development of human rights while helping the economy because the governments will have more money to invest in infrastructure, education, health care, and other social institutions. Governments in poor countries are one of, if not the largest employer, and "sudden and massive cuts in government spending can throw tens or hundreds of thousands out of work, and contribute to a surge in unemployment, and to a consequent reduction in the bargaining power of all workers." They will be able to pay workers better or hire more for development purposes. The IMF and their economists disagree, warning that "large-scale debt forgiveness could have an adverse effect on the economies of countries that are home to the World Bank's and the IMF'S largest institutional lenders, including the United States."xvi This is a very protectionist stance, and gradual debt forgiveness should not affect the economies of lending countries much at all.
An argument can be made that the World Bank is investing in these countries hoping that change will come once poverty is eliminated and citizens are more educated. They hope by improving "income poverty, illiteracy, poor health, insecurity of income, and powerlessness"xxiv the end result will be an increase in "the control that poor people have over their lives, through education, health, and greater participation, as well as income gains."xxv To an extent this may be true, and by looking at Table 1 you can see they are trying to improve their lives by focusing on countries with partially democratic societies and fair human rights, but is it working?
In Latin America and the Caribbean, it didn't seem to work. In terms of improvements in democracy and human rights, the overwhelming number of projects had no effect, and more countries deteriorated than improved in places where the Work Bank provided their loans. Table 2 shows the data.
Table 2
This data is just further proof that the Banks policies did not work in changing the human rights or democracy for the most part.
Human Rights when the IMF and World Bank Work Together
Human rights supporters and unions claim that lending agencies, such as the IMF and the World Bank, favour countries that do not have religious freedom and have sweatshops, some with children. Both institutions have publicly stated that they are against "slavery, discrimination, and in most cases - child labour"xxvii, but they do not recognize the fight of association and the fight of collective bargaining. All five of these together are the core labour standards of the International Labour Organization Conventions. For institutions that care about ending poverty, one would think that these standards would be recognized due to the influence unions have to improve work standards and wages. Obviously this would improve the lives of those involved, but the IMF and the World Bank believe it harms the economy, and believes in restructuring policies for countries receiving loans.
A good example of this would be Argentina since it is the most recent failure of World Bank and IMF policy. In the past 10 years the loans received by Argentina came with conditions, which included "removing legal protections that inhibit employers from firing workers; revamping its pension system to generate new savings by cutting back on benefits for retired workers; slash government worker salaries; (and) privatize financial and energy operations of the government."xxviii A civil service downsizing was also found in the conditions of many other countries. Not only did this anger the labour organisations within the country, it caused long strikes that crippled the economy. The Multinational Monitor investigated the policies of the IMF and World Bank, and found striking similarities in 26 other loans. They found that "the institutions' loan conditionalities include a variety of provisions that directly undermine labour fights, labour power and tens of millions of workers' standard of living."xxix How? These conditionalities open the door for transnational corporations (TNC's) to take over previously state-owned operations such as water, energy, and postal services. TNC's are more focused on maximizing their profits than improving workers rights or living conditions, which redistributes the money from the poor to the rich. The IMF and World Bank remove the rights of workers and unions in order to make the market more attractive to the private sector, because "TNCs tend to have a non-union preference."xxx As stated before, the IMF and World Bank have done this in many countries in order to attract TNC's, and they argue that the conditions "may inflict some short-term pain, but are necessary to create the conditions for long-term growth and job creation."xxxi The international community does not agree with this notion and argue that these anti-labour policies cause unnecessary suffering.
There has been even more unnecessary suffering caused by the IMF and the World Bank. In the 1970's, the government of Tanzania, under the guidance of the World Bank, created a program of collective farming. Using the military, the government "drove 13 million peasants (about 90% of the population) from their land, burned their homes, loaded them into trucks and moved them to new sites where they were ordered to build new homes."xxxii This is a gross violation of human rights. Moving people and burning their homes is inhuman treatment. Worst of all it did not help the country at all, instead it created a drop in food production. This did not stop the IMF and World Bank from doing it again, for only a few years later and over a period of ten years, they helped Indonesia forcefully resettle over 6 million people, not only creating environmental problems but massive displacement and starvation. When this program was extended to 1998, there was great resistance found in East Timor, which was met with brutal repression by the government, and this "led to the death of an estimated 150,000 Timorese at the hands of the military."xxxiii
The human rights continues to worsen in Indonesia, but in 1998 a $43 billion package was put together, and in return Indonesia promised to "make its trade practices fairer and its markets more open"xxxiv, and the IMF continues to ignore the more important issue of human rights improvements, instead favouring economic policy.
Conclusion
The IMF and the World Bank are two very powerful and influential institutions that distribute billions of dollars each year to countries in need. They have the ability to persuade governments to make radical reforms their economies, and even resettle millions of people at a time. Unfortunately, the IMF and the World Bank fail miserably to improve the human rights in the countries they are trying to assist. While some of their actions do bring economic stability to regions, the costs cast upon the citizens if the nations are not always worth it. The continued funding of military regimes and repressive governments does not help the credibility of the institutions, and they must begin to improve human rights through their assistance packages. Of the two, the IMF will be the most difficult to reform because of their refusal to include human rights in the conditions they force upon governments, even though it has been found that they should be considering human rights when making their conditions.
Endnotes
i The IMF and the World Bank: How do they differ? IMF External Relations Department, 1987
ii Brodnig, Gernot, The World Bank and Human Rights: Mission Impossible, 2001
iii For a number of documents and other resources on the CDF, see the Bank's website at
http://www.worldbank.org/cdf .
iv For a number of documents and other resources on the CDF, see the Bank's website at
http://www.worldbank.org/cdf .
v Capdevila, Gustavo, IMF Not Taking into Account Human Rights Issues, 2001,
vi Capdevila, Gustavo, IMF Not Taking into Account Human Rights Issues, 2001,
vii Bretton Woods Project, IFIs must respect human rights, see bib.
viii Stiglitz, Joseph, What I Learned at the World Economic Crisis, The Insider, 2000
ix The Standing Committee on Foreign Affairs, Crisis in Asia: Implications for the Region, Canada, and the World, 1998
x The Standing Committee on Foreign Affairs, Crisis in Asia: Implications for the Region, Canada, and the World, 1998
xi The Standing Committee on Foreign Affairs, Crisis in Asia: Implications for the Region, Canada, and the World, 1998
xii The Standing Committee on Foreign Affairs, Crisis in Asia: Implications for the Region, Canada, and the World, 1998
xiii Bretton Woods Project, IFIs must respect human rights, see bib.
xiv Christian Science Monitor, The US, 5/4/98, Vol. 90, Issue 110, p2
xv Human-rights reforms, Sault Star, 2000
xvi Tebo, Margaret Graham, Power Back to the People, ABA Journal, Jul2000, Vol. 86 Issue 7, p52
xvii Forsythe, David, The United Nations and Human Rights in the New Millennium
xviii Forsythe, David, The United Nations and Human Rights in the New Millennium
xix Danaher, Kevin, Down with the World Bank, Progressive, Dec94, Vol. 58 Issue 12, p14
xx Danaher, Kevin, Down with the World Bank, Progressive, Dec94, Vol. 58 Issue 12, p14
xxi Rich, Bruce, Fifty years of World Bank outrages, Earth Island Journal, Winter93/94, Vol. 9 Issue 1, p34
xxii Rich, Bruce, Fifty years of World Bank outrages, Earth Island Journal, Winter93/94, Vol. 9 Issue 1, p34
xxiiixxiii Valverde, Gilbert, Democracy, Human Rights, and Development Assistance for Education
xxiv Stern, Nicholas, The Role and Effectiveness of Development Assistance, World Bank 2002
xxv Stern, Nicholas, The Role and Effectiveness of Development Assistance, World Bank 2002
xxvi Valverde, Gilbert, Democracy, Human Rights, and Development Assistance for Education
xxvii Edwards, Beatrice, IMF and World Bank to Labor Unions: Drop Dead, NACLA Report on the Americas, Jan/Feb2001, Vol. 34 Issue 4, p4
xxviii Lloyd, Vincent; Weissman, Robert, Against the Workers, Multinational Monitor, Sep2001, Vol. 22 Issue 9, p7
xxix Edwards, Beatrice, IMF and World Bank to Labor Unions: Drop Dead, NACLA Report on the Americas, Jan/Feb2001, Vol. 34 Issue 4, p4
xxx Commission on Human Rights, The relationship between the enjoyment of human rights, in particular, international labour and trade union rights, and the working methods and activities of transnational corporations, 1995
xxxi Lloyd, Vincent; Weissman, Robert, Against the Workers, Multinational Monitor, Sep2001, Vol. 22 Issue 9, p7
xxxii Georgia, Paul, Robert McNamara's World Bank record rivals his Vietnam fiasco, Human Events, 6/9/95, Vol. 51 Issue 22, p15
xxxiii Georgia, Paul, Robert McNamara's World Bank record rivals his Vietnam fiasco, Human Events, 6/9/95, Vol. 51 Issue 22, p15
xxxiv Barr, Cameron W, Big loan, big leverage: Will West push Indonesia to let freedom ring? Christian Science Monitor, 4/13/98, Vol. 90 Issue 95, p7
"The Impact of the IMF and World Bank on Human Rights"
Bibliography
Barr, Cameron W, 1998, 'Big loan, big leverage: Will West push Indonesia to let freedom ring?', Christian Science Monitor, 4/13/98, Vol. 90 Issue 95, p7
Bretton Woods Project, 2001, IFIs must respect human rights,
Available: http://www.brettonwoodsproject.org/topic/social/2532.html
Brodnig, Gernot, 2001, The World Bank and Human Rights: Mission Impossible, Available: http://www.ksg.harvard.edu/cchrp/Web%20Working%20Papers/BrodnigHR&WorldBank.pdf
Capdevila, Gustavo, 2001, IMF Not Taking into Account Human Rights Issues, Available: http://www.globalpolicy.org/socecon/bwi-wto/imf/2001/0813hr.htm
Commission on Human Rights, 1995, 'The relationship between the enjoyment of human rights, in particular, international labour and trade union rights, and the working methods and activities of transnational corporations', Available: http://www.unhchr.ch/
Danaher, Kevin, 1994, 'Down with the World Bank', Progressive, Dec94, Vol. 58 Issue 12, p14
Edwards, Beatrice, 'IMF and World Bank to Labor Unions: Drop Dead', NACLA Report on the Americas, Jan/Feb2001, Vol. 34 Issue 4, p4
Forsythe, David, 2000, The United Nations and Human Rights in the New Millennium,
Available: http://www.unu.edu/millennium/forsythe.pdf
Georgia, Paul, 1995, 'Robert McNamara's World Bank record rivals his Vietnam fiasco', Human Events, 6/9/95, Vol. 51 Issue 22, p15
IMF External Relations Department , 1987, The IMF and the World Bank: How do they differ?, Call # Z UN XF26 87 I51
Lloyd, Vincent; Weissman, Robert, 2001, 'Against the Workers', Multinational Monitor, Sep2001, Vol. 22 Issue 9, p7
Rich, Bruce, 1993, 'Fifty years of World Bank outrages', Earth Island Journal, Winter93/94, Vol. 9 Issue 1, p34
Standing Committee on Foreign Affairs, 1998, Crisis in Asia: Implications for the Region, Canada, and the World,
Available: http://www.parl.gc.ca/36/1/parlbus/commbus/senate/com-e/fore-e/rep-e/rep08dec98-e.htm
Stern, Nicholas, 2002, The Role and Effectiveness of Development Assistance, World Bank, Available: http://econ.worldbank.org/files/13080_Development_Effectiveness.pdf
Stiglitz, Joseph, 2000, What I Learned at the World Economic Crisis, The Insider, Available: http://www.thenewrepublic.com/041700/stiglitz041700.html
Tebo, Margaret Graham, 2000, 'Power Back to the People', ABA Journal, Jul2000, Vol. 86 Issue 7, p52
Valverde, Gilbert, 1999, 'Democracy, Human Rights, and Development Assistance for Education', Economic Development & Cultural Change, 19990101, Vol. 47, Issue 2
Author Unknown, 'The U.S.'. Christian Science Monitor, 5/4/98, Vol. 90, Issue 110, p2
Author Unknown, 'Human-rights reforms', Sault Star, 2000
Bibliography
Barr, Cameron W, 1998, 'Big loan, big leverage: Will West push Indonesia to let freedom ring?', Christian Science Monitor, 4/13/98, Vol. 90 Issue 95, p7
Bretton Woods Project, 2001, IFIs must respect human rights,
Available: http://www.brettonwoodsproject.org/topic/social/2532.html
Brodnig, Gernot, 2001, The World Bank and Human Rights: Mission Impossible, Available: http://www.ksg.harvard.edu/cchrp/Web%20Working%20Papers/BrodnigHR&WorldBank.pdf
Capdevila, Gustavo, 2001, IMF Not Taking into Account Human Rights Issues, Available: http://www.globalpolicy.org/socecon/bwi-wto/imf/2001/0813hr.htm
Commission on Human Rights, 1995, 'The relationship between the enjoyment of human rights, in particular, international labour and trade union rights, and the working methods and activities of transnational corporations', Available: http://www.unhchr.ch/
Danaher, Kevin, 1994, 'Down with the World Bank', Progressive, Dec94, Vol. 58 Issue 12, p14
Edwards, Beatrice, 'IMF and World Bank to Labor Unions: Drop Dead', NACLA Report on the Americas, Jan/Feb2001, Vol. 34 Issue 4, p4
Forsythe, David, 2000, The United Nations and Human Rights in the New Millennium,
Available: http://www.unu.edu/millennium/forsythe.pdf
Georgia, Paul, 1995, 'Robert McNamara's World Bank record rivals his Vietnam fiasco', Human Events, 6/9/95, Vol. 51 Issue 22, p15
IMF External Relations Department , 1987, The IMF and the World Bank: How do they differ?, Call # Z UN XF26 87 I51
Lloyd, Vincent; Weissman, Robert, 2001, 'Against the Workers', Multinational Monitor, Sep2001, Vol. 22 Issue 9, p7
Rich, Bruce, 1993, 'Fifty years of World Bank outrages', Earth Island Journal, Winter93/94, Vol. 9 Issue 1, p34
Standing Committee on Foreign Affairs, 1998, Crisis in Asia: Implications for the Region, Canada, and the World,
Available: http://www.parl.gc.ca/36/1/parlbus/commbus/senate/com-e/fore-e/rep-e/rep08dec98-e.htm
Stern, Nicholas, 2002, The Role and Effectiveness of Development Assistance, World Bank, Available: http://econ.worldbank.org/files/13080_Development_Effectiveness.pdf
Stiglitz, Joseph, 2000, What I Learned at the World Economic Crisis, The Insider, Available: http://www.thenewrepublic.com/041700/stiglitz041700.html
Tebo, Margaret Graham, 2000, 'Power Back to the People', ABA Journal, Jul2000, Vol. 86 Issue 7, p52
Valverde, Gilbert, 1999, 'Democracy, Human Rights, and Development Assistance for Education', Economic Development & Cultural Change, 19990101, Vol. 47, Issue 2
Author Unknown, 'The U.S.'. Christian Science Monitor, 5/4/98, Vol. 90, Issue 110, p2
Author Unknown, 'Human-rights reforms', Sault Star, 2000
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