From Poverty to Power Green, Oxfam 2008 - weman

FROM POVERTY TO POWERThroughout the 1980s and 1990s, ‘IMF riots’ periodically ravagedcities throughout the developing world, leaving hundreds of peopledead and wounded and losses of millions of dollars in damaged andlooted property. In the South Korean financial crisis of 1998, restaurantsoffered cut-price ‘IMF menus’ to the newly unemployed, who protestedwith placards carrying the eye-catching slogan ‘IMF = I’m Fired’.For much of the past 25 years the IMF and the World Bank havebeen pursuing nothing less than a radical overhaul of the way thatdeveloping countries run their economies. That role has been hugelycontroversial and, in many eyes, profoundly destructive. Bloodied byfailure and a chorus of criticism from both left and right, the institutionsstand at a crossroads: confused, divided, and (in the case of the Fund)increasingly ignored by the more powerful developing countries, yetthey remain a central cog in the machinery of global governance. Thissection explores how they got here, and what needs to happen next.The international financial institutions (IFIs) – chief among themthe World Bank and IMF, but also including regional developmentbanks and other institutions – are most influential in the poorestcountries, which are largely isolated from other sources of internationalcapital. Better-off middle-income countries can often turn tobanks or other sources of capital, but have to resort to the IFIs in theevent of a financial crisis. More generally, the IFIs exert enormousinfluence through their role as gatekeepers of other donor lending andas sources of research and technical assistance, which helps themdetermine what are considered ‘sound’ policies in the aid world and inmany developing-country governments.The IMF and the World Bank were born in July 1944 in BrettonWoods, New Hampshire, when the outcome of the Second World Warwas already evident. The new institutions formed part of an attemptby the victorious powers to prevent a repeat of the global economiccollapse of the 1930s, which had sown the seeds of war. While constitutionallypart of the UN system, the giant multilateral financialorganisations were set up in a radically different manner. Whilethe UN system works largely on a ‘one country, one vote’ principle(with the notable exception of the Security Council), in generaldecisions at the IMF and World Bank are taken on the basis of ‘onedollar, one vote’, guaranteeing the dominance of the USA and other296