Going their own way

The WaPo has an excellent story of the New Latin Left movement, which has reduced their dependence on IMF and Bank loans (and their requisite policy prescriptions and structural adjustments), with an overall reduction from $49 billion in loans from 2003 to $759 million in 2006.

The new course, with its emphasis on health clinics and classrooms for poor communities, draws cheers in many parts of this country of 9 million, where about two-thirds of the population is poor. But economists and political opponents say they doubt it will lift large numbers from poverty…

Since taking office last year, Morales, a former coca grower and the first indigenous tribesman to lead Bolivia, has nationalized Bolivia's oil and gas industry, reversing a privatization orchestrated by the IMF. He forced foreign energy firms to accept drastically diminished profits, increasing the government's royalties by more than $1 billion a year and earmarking the money for schools and hospitals. To gain a free hand, he has ended a credit agreement with the IMF and pulled out of a World Bank body that referees disputes with foreign firms.

"What drives things now is social conscience," said Florencio Choque, a government engineer. "This is rule by the poor."

The excellent mag Dollars & Sense has more on the shift away from the Bank by countries able to get funding from other sources (often Venezuela or China), leaving unfortunately the poorest and least capable nations still under the tutelage of the Bank, or as Mark Weisbrot puts it, the Bank is most active where it can do the most damage:

The IMF/World Bank cartel is still operating in the poorest countries, and it is through this cartel that the World Bank does its worst damage: the privatization of water in countries like Ghana and Tanzania, the imposition of user fees on primary healthcare and education in Kenya and other African countries, the privatization of social security systems in Latin America and Central and Eastern Europe, the destabilization and overthrow of Haiti’s democratically elected government in 2004 and, most recently, the cartel’s role in deciding that poor countries in sub-Saharan Africa could not spend 70 percent of the desperately needed aid money that they received from 1999 to 2005–to name just a few of many disastrous examples.

There are critics that point to the successes of the Bank and IMF policies at curbing runaway inflation, but these come at the cost of rising inequality, higher risk exposure to shifting capital markets, and less control over natural resources and public utilities. Perhaps walking away from the Washington Consensus (or at least having some competition in lenders) will provide these countries the ability to carve their own path of development. In the end, it is the only successful path anyhow.