‘Adjusting’ to Globalization?
Wisconsin drops all its World Bank bonds
By Roger Bybee

Major U.S. media incessantly drive home one message about the all-powerful forces of corporate globalization to us puny mortals: surrender immediately. Resistance is futile.

Secure and decent-paying jobs? Environmental protections? Pro-consumer regulation? Real democracy where corporate interests are not the exclusive preoccupation of government?

Get rid of those hopelessly quaint and outdated expectations, chump. Don’t you see they inhibit maximum corporate flexibility and profit?

After all, according to the teachings of corporate globalization’s Grand Ayatollah, Thomas Friedman of The New York Times, globalization has people around the world tightly wrapped in a “golden straitjacket.” “You had better adjust” to globalization, Friedman warns, or severe consequences follow.

But accept the “straitjacket” of corporate dominance, and prosperity will follow. A key player in tightening the straitjackets has been the World Bank, a multilateral lending institution that insists that governments follow policies of privatization and free-market fundamentalism as the price for receiving Bank loans.

But a Wisconsin coalition of grassroots forces recently escaped, Houdini-like, from their straitjackets and managed to strike a blow against the World Bank. The State of Wisconsin Investment Board (SWIB) recently decided not to renew its remaining $15 million in World Bank bonds, thus eliminating the last of an investment in World Bank bonds that once totaled $36 million.

The SWIB, the nation’s ninth-largest pension fund with $63.8 billion in assets, manages the retirement funds for 520,000 public workers and retirees. The World Bank has been the target of widespread resentment in Wisconsin and internationally over its rigid policies that force poor nations to privatize vital public services, say critics.

“The World Bank has actively promoted policies aimed at holding down wages in the poor nations in order to lure family-sustaining manufacturing jobs from Wisconsin and other states,” said Steve Watrous, coordinator of the Wisconsin Fair Trade Campaign. The Fair Trade Campaign, formed in 1993 to fight against the North American Free Trade Agreement, led the statewide effort against World Bank bonds.

Local Targets

For its part, the Investment Board attributed its latest decision solely to the low rate of return on World Bank bonds. But Watrous dismissed the Investment Board’s explanation of the decision as entirely predictable. “We never expected them to admit that public pressure had any part in the decision. They hardly want to invite more public challenges to the impact of their investment decisions on working people here and abroad.”

Pressure for dropping the World Bank bonds came from a wide spectrum of municipal governments, labor, and religious organizations in Wisconsin. In early 2002, the Milwaukee Common Council passed a resolution in calling for the state to stop investment in World Bank bonds until the Bank reformed its policies demanding privatization of public services and low-wage export strategies. MilwaukeeBoulder, San Francisco and Oakland to join the World Bank boycott effort. thus became the first “Middle America” city outside progressive hothouses like

Following the Milwaukee victory, the next target was the nearby factory town of Racine, wracked by plant shutdowns and relocations. A campaign waged by the Racine Dominican order of nuns culminated in a 20-0 vote last fall by the conservative-dominated CountyBoard calling for the state to boycott World Bank bonds. The emotion propelling the Racine effort was summed up by Ron Thomas, secretary of the Racine County AFL-CIO Council and a narrowly defeated mayoral candidate: “There is a beast out there called the global economy, and it has devoured thousands of jobs here, and hundreds of thousands across the nation since NAFTA.”

The demand for the state workers’ retirement plan to drop World Bank bonds was backed strongly by AFSCME Council 40, representing municipal workers, and the Wisconsin Federation of Teachers. They viewed the World Bank’s pro-privatization direction as undermining the interests of the public sector in Wisconsin.

“We are delighted that the Investment Board will no longer be using state workers’ money against their interests and those of workers and farmers in the poor nations,” declared David Newby, president of the Wisconsin State AFL-CIO, another endorser of the World Bank campaign. “The policies of the World Bank promote the export of good family-supporting jobs from Wisconsin to sweatshops in poor, low-wage countries from Mexico to Guatemala to Malaysia. The conditions of their loans to developing countries require the privatization of public services and the adoption of policies that could devastate their environment. Their policies foster a lose/lose form of globalization for both developing and developed countries.”

Short Term vs. Long Term

For labor, the World Bank is viewed as the promoter of a model of globalization that fosters a race to the bottom on wages, environmental protections, and democratic rights. Wisconsin has lost a minimum of 19,000 jobs due to the North American Free Trade Agreement, which exemplifies the form of investor-rights-based globalization that the World Bank imposes. Milwaukee, for example, has lost thousands of jobs at one-time inner-city mainstays such as Tower Automotive, Master Lock and Johnson Controls, which now share the distinction of employing more workers in Mexico than in their hometown of Milwaukee.

With bonds providing the World Bank with 80% of its revenues used in harshly conditioned loans to poor nations, a boycott of the Bank’s bonds has become a central aim of forces challenging corporate globalization.

“The World Bank claims to be offering a helping hand to poor nations, but it actually strong-arms Third World nations on behalf of transnational corporations,” says Frances Bartelt of the Wisconsin Fair Trade Campaign, a broad coalition of labor, religious, and environmental groups seeking to promote globalization shaped around human needs rather than maximum corporate profits. Bartelt led the effort to encourage non-governmental organizations and local governments to urge the Investment Board to divest itself of World Bank bonds.

“The World Bank has tried to cultivate the image of Mother Teresa, but it has functioned on a global scale like a Tony Soprano-style loan shark,” Bartelt says.

“The World Bank’s strategy is a formula for disaster for poor nations being kept poor by the Bank’s onerous conditions for financial assistance, and also devastating for cities like Milwaukee having its industrial base plundered,” she says.

Bartelt calls the Wisconsin Investment Board’s decision a “major step forward in pressuring the World Bank against its socially destructive faith in free-market fundamentalism.” She notes that TIAA-CREF, the world’s largest pension company with assets of some $300 billion, had divested all of its World Bank holdings in 2002-03. TIAA-CREF also cited low returns. Prior to the advent of a national boycott effort led by the Center for Economic Justice, California‘s massive CALPERS retirement plan had also decided not to renew its World Bank bonds.

“The Wisconsin Investment Board’s decision to dump the World Bank bonds is extremely significant, because it reinforces both investors’ increasing doubts about the Bank’s financial returns and more importantly, the growing movement against the Bank’s policies,” says Bartelt. “The concern of some investors over the low rate of return reflects the results of the World Bank’s own perverse policies. By prioritizing short-term debt repayment over the most urgent needs for health care, clean water and basic education, the World Bank has crippled the real development potential of many poor nations.”

“The movement against World Bank bonds reflects the increasing public understanding about the Bank’s role and the need for a different model of economic globalization based on human needs and human rights, not maximum profits and investor rights alone.”

Mob Mentality?
Understanding the World Bank

Often, the only apparent way out of financial ruin for heavily indebted Third World nations results in a scenario straight out of “The Sopranos.”

Like the Mob offering to take over a piece of a business whose hapless owner falls behind on exorbitant loan payments, the World Bank has often held out the “structural adjustment” option. Under structural adjustment, the Bank dictates the redesign of national economies so that they conform to the World Bank-Monetary Fund model of deregulated capitalism.

Essentially, there are three key elements to the World Bank formula:

1) Nations must pay back their debts to the bankers as rapidly as possible. Poor countries are obligated to cover even the debts of wealthy individuals and corporations if they wish to gain the World Bank’s good graces.

2) In concrete terms, this means cutting back on already-paltry government spending on education, health care and sanitation, while privatizing as many government programs as possible. This also means imposing fees on vital educational and health services, which leads to increased levels of illiteracy and disease.

3) Government priorities are refocused on subsidies to export-creating transnational corporations. These corporations are viewed as the new job-providing saviors of these nations. In essence, Third World countries that have adopted such structural adjustment policies have learned that structural adjustment is much like gaining John Gotti as their partner.

To cite just one example, the World Bank and the IMF pressured Bolivia’s third-largest city, Cochabamba, to sell its water services to the U.S.-based Bechtel Corp., known for its expertise in landing cost-plus contracts in Iraq and elsewhere. This Bolivian experiment in water privatization–designed to prove the inherent superiority of private-sector development–instead produced skyrocketing water rates and triggered massive public protests that were put down with bloody repression. Eventually, Bechtel was booted out.

The World Bank’s fostering of export-led development has also produced a strategy of extending loans to such notably non-needy corporate giants as Coca-Cola, Domino Pizza, Exxon-Mobil, Wal-Mart and the Marriott hotel chain. Even where building schools and providing safe water would seem to be clear-cut priorities, the Bank has handed out loans for four-and five-star hotels.

Meanwhile, family-supporting wage levels, such as those created by social spending, are viewed by the World Bank as an impediment to development rather than a fundamental goal of its work. In Mexico, for instance, the World Bank argued for the weakening of labor protections–astonishingly, calling for changes in the Mexican Constitution safeguarding workers’ economic rights–in a May 21, 2001 report. Mexico‘s wages had already fallen 27% between 1991 and 1998, but the Bank has been pushing to further dilute worker’s bargaining power.

–Roger Bybee

 

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