When one of the World Bank’s most substantial engagements to date with civil society began to produce findings critical of its structural adjustment policies, the institution ran away. Will activists, who have shamed the Bank back to the table, be able to force a more serious response?
Published in the January/February 2003 edition of Dollars & Sense.
“[I] invite the critics to come in,” World Bank President James Wolfensohn said as anti-Bank protests raged in Washington, D.C., in April 2000, “but I do not think it helps to close down the meetings.” He added: “Fortunately there are many international institutions, NGOs and certainly local NGOs with whom we have a very deep and ongoing dialogue.”
In the past five years, the World Bank has claimed as a point of pride its cooperation with non-governmental organizations (NGOs), or “civil society.” Words like “interface,” “engagement,” and “partnership” litter the institution’s reports and press releases, as the Bank tries to remake its image from that of an elite financial institution to that of a noble crusader against world poverty.
Anyone who took such statements seriously would have expected a huge fanfare from the Bank when one of its biggest civil-society “engagements” produced its final report in 2002. For the Structural Adjustment Participatory Review Initiative (SAPRI), the Bank spent over four years working in partnership with thousands of non-governmental organizations in Asia, Africa, Eastern Europe, and Latin America. But when its NGO partners produced a final document summarizing the initiative’s findings, the Bank did not greet the review with enthusiasm. Instead, it responded with an eerie silence. In the course of the initiative, actions of Bank officers repeatedly stalled the research process. The Bank had worked to discredit reports prepared by in-country researchers (whom it had jointly selected with participating NGOs). And, in the end, it broke a main commitment it had made at the start—to present the results publicly in a major international forum.
Along the way, the Bank had realized that it would not be able to control the outcomes of the review, and that these findings would paint a damning picture of its structural adjustment policies. Based on the knowledge of people directly affected by Bank policies like privatization, labor-market “flexibility,” and trade and financial deregulation, the SAPRI findings go much further than suggesting that adjustment was well-intentioned but “difficult,” as Bank President James Wolfensohn had admitted. Rather, they charge the Bank’s adjustment policies with magnifying inequality, worsening poverty, and exacerbating the debt crisis in the global South. “What one realizes when reading the report is that all is interlinked,” said Swedish activist Johanna Sandahl. “Even as very different countries are being assessed, their experiences are very similar. The same model was being implemented everywhere, and it appears that it didn’t work anywhere.” The SAPRI findings call into question whether structural adjustment processes were ever intended to help the poor in the first place.
The SAPRI process also gives the lie to the claim that the World Bank has “changed from within” and developed policies more responsive to local demands. Lidy Nacpil of the Freedom from Debt Coalition in the Philippines and the steering committee of SAPRIN (the NGO coalition spawned by SAPRI) argues, “Thousands of groups around the world have involved themselves in various dialogues with the Bank, but all our words have fallen on deaf ears. The Bank continues to push countries into the same old programs which have failed” in their ostensible mission of helping the poor.
Like the Bank itself, the U.S. mainstream media ignored SAPRIN findings when the report was released in May 2002. However, critical news coverage in the global South and reports in the European press have shamed the World Bank back to the table. Now, activists are probing the limits of the institution’s ability to change. At the same time they are using the network they have developed to pressure for change and promote alternatives from the outside.
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Challenging the Bankers’ “Location in Life”
SAPRI was born in 1996, shortly after a network of NGOs launched the “50 Years is Enough” campaign to expose the damage World Bank policies caused in the developing world. The network of international NGOs challenged newly appointed Bank President James Wolfensohn to reevaluate—on the basis of local knowledge from Southern countries—the Bank’s structural adjustment policies. Eager to answer his critics, Wolfensohn accepted. In statements released that year, he offered a limited acknowledgement of problems with the adjustment process: “Policy reform has had a mixed track record … Adjustment has been a much slower, more difficult and more painful process than the Bank recognized at the outset.” He pitched the SAPRI initiative as a way to help shape “a different way of doing business in the future.”
In signing on to the initiative, the Bank agreed to negotiate with the NGOs how the research would be gathered and presented. The Bank took specific responsibility for such tasks as securing the cooperation of governments in the initiative’s target countries. While funding was to come from outside parties including European governments, the European Union, the United Nations Development Program, and private foundations, the Bank would be a fundraising partner for several SAPRI solicitations—raising approximately $1.8 million of the project’s $4.1 million total budget. Finally, Bank officers vowed that the exercise would “identify specific actions” to be used in formulating the institution’s future policies.
For the organizations that entered into SAPRI, many of them leaders of the “50 Years” campaign, the initiative was not a substitute for organizing protest, nor was it occasion to abate their criticism of the institution. However, according to Kamal Malhotra of Focus on the Global South, they felt that SAPRI would provide an important stage for “critical engagement with the Bank on some of the most fundamental social and political issues.” Regardless of how genuine Wolfensohn’s offer really was, it opened a remarkably wide range of issues for discussion by allowing local citizens to identify the key issues. As SAPRIN member John Mihevc of the Halifax Initiative puts it, “The key macroeconomic framework [of Bank policy] was on the table for discussion.” “That was the discussion,” Mihevc says. This fact both made the opportunity to engage the Bank in public debate a valuable one, and made it unlikely from the outset that that Bank officers would ultimately find the SAPRI findings to be palatable.
SAPRIN members carefully negotiated the methodology of the initiative with Bank officials, so that the Bankers would not be able to co-opt it, and so that it would help build strong networks among World Bank critics at the grassroots. They planned a multi-year project with field investigations in Bangladesh, Ecuador, El Salvador, Ghana, Hungary, Uganda, and Zimbabwe. SAPRIN also coordinated with NGOs in Mexico and the Philippines to conduct parallel processes. For each location, SAPRIN planned two national forums to book-end more-traditional field research. The forums were designed to invite public discussion and, in the words of the final report, highlight “local knowledge and analysis related to the impact of adjustment programs.” Dozens of organizations worked to coordinate SAPRI. And hundreds of others in each country contributed to the public forums and participatory research.
According to the SAPRIN Global Steering Committee, the importance of this open process was to “level the playing field” between the Bank and civil society. The forums allowed local populations to become equal partners in the venture. SAPRIN contends that understanding structural adjustment policies requires perspectives coming from a different “location in life” than that of northern elites. “A major policy shift taken by a country of the South to meet a World Bank or IMF loan condition may look benign and, in fact, universally beneficial to a banker sitting in London,” the Committee writes, “but to a poor Third World farmer who has come to understand how S institutions work to reward the more powerful and influential, expectations may be much lower.”
Despite skepticism about a dialogue with the Bank, SAPRIN members felt that a show of good faith toward Wolfensohn would create a valuable opportunity to publicize and legitimate local concerns. “Our expectations for working with the Bank were modest,” says Doug Hellinger, SAPRIN’s global coordinator. “But we had faith that if this work on the ground was done professionally and objectively, the truth of what people were living would come out.” Since the Bank participated in choosing the countries that would be involved, determining the procedure that the initiative would follow, and hiring researchers to carry out field investigations, it acted as a full partner in the initiative. Economists at international financial institutions might dismiss the many existing studies documenting negative impacts of structural adjustment. With SAPRI, however, they would have to contend with the unusual credibility of a report from the World Bank itself.
In the course of the initiative, the shift in “location” produced very different findings from those of a typical World Bank study. SAPRIN’s final report “identified four basic ways in which adjustment policies have contributed to the further impoverishment and marginalization of local populations, while increasing economic inequality.”
First, trade and financial sector reforms, the research concluded, destroyed domestic manufacturing, throwing local employees and small producers out of work. “Instead of helping producers that need capital to maintain or expand their operations,” the report argues, “financial intermediaries have directed financing toward large (usually urban) firms and extended the largest share of loans to a few, powerful economic agents. This has hindered the development of small and medium-size enterprises, an important source of employment generation.”
Second, the promotion of export-oriented agriculture threatened food security, particularly in rural areas, and worsened prospects for small farmers. In the words of the report, “Where exports have expanded and earnings increased… much of the economic benefits has accrued only to large-scale producers, as small farmers have lacked equal opportunity to enter and gain within a liberalized market.”
Third, privatization and labor market reforms suppressed wages and weakened workers’ bargaining power. After changes to the labor code in Ecuador in the 1990s, for example, “72 percent of large and medium-sized businesses and 16 percent of small businesses have turned to employing temporary workers, and 38 percent of them laid of permanent staff” creating job insecurity and depressing real wages.
Finally, the cutting of state services reduced poor communities’ access to utilities, health care, and education in the SAPRI countries. “The establishment of user fees for health-care services” in places like Zimbabwe and Ghana, “has led an increasing number of people and families to resort to self-medication and home care instead of visiting clinics and hospitals. This has especially been the case for women.” As a result, these countries witnessed “an increase in the number if people who die in their homes from curable diseases” as well as the unnecessary spread of diseases that endanger public health.
Dagens Nyheter, the national newspaper of Sweden, summed up the findings with an article headlined, “World Bank Policies A Fiasco.”
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Strategies of Bureaucratic Resistance
The NGOs realized that such findings would be unacceptable to the World Bank well before SAPRIN produced a final project report. As early as December 1997, as the project suffered repeated bureaucratic delays, SAPRIN coordinators complained that Bank staff did not share President Wolfensohn’s stated enthusiasm for the engagement. Civil society groups endured lengthy negotiations when Bank staff resisted sharing information on the adjustment conditions demanded by their loans. This despite Wolfensohn’s March 1996 agreement to make necessary documents available to SAPRIN. Even after they reached a compromise, it took nearly a year before the Bank’s Legal Department would consent to the release.
Securing the cooperation of governments was another problem. The SAPRI Global Steering Committee argues that, early on, governments “began to understand the risk of involvement, caught as they would be between the popular expectations that would be raised by such an assessment and the unlikelihood that the Bank and the IMF would allow them to change economic course in response to citizen pressure.” Although the World Bank had insisted that it (not the NGOs) should interface with the governments, it failed to gain the cooperation of Mexican officials or to keep El Salvador from pulling out of SAPRI in June 1997.
A 1997 World Bank newsletter cited Wolfensohn arguing that his institution “was not able to force governments to participate.” Given that the Bank requires governments to comply with structural adjustment policies as a condition of receiving assistance, however, it is unclear why requiring participation in an evaluation of these policies as a similar type of condition should present a problem. This suggests that SAPRIN was right that the Bank “refused to exert high-level influence” to overcome resistance from governments.
“Our expectations were not high,” said Ivan Cisneros, coordinator of SAPRIN in Ecuador. “We were surprised, however, not only by how unforthcoming the Bank was, but also how unprofessional its Washington leadership was and has been throughout this endeavor.” Bureaucratic resistance persisted throughout the initiative, growing particularly acute in 2000 and 2001, when researchers began to compile the in-country reports. By SAPRIN’s account, the Bank’s Washington representatives informed them that “the institution refuses to accept both the validity of the SAPRI methodology that it helped to define and that of the joint findings that this process has produced.” Outraged, the NGO network appealed directly to Wolfensohn.
Its April 2001 letter frankly outlined the difficulties the network had encountered with Bank staff. And, citing the availability of $100,000 in funding for a public wrap-up event, it posed a direct question: “Are you and your staff prepared to address at the Global Forum S operationalizing SAPRI learning, as the Bank initially proposed?”
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Behind the “Invaluable Exchange of Ideas”
The Bank’s answer to this question was a “no” issued with genteel condescension. Rather than responding directly to any of the issues the NGOs raised, it lauds “just a few [of the] activities that [Wohlfensohn had] initiated over the past five years” with civil society. And it provides cheerily banal statements like “The exchange of ideas taking place through the course of those consultations is invaluable and greatly contributes to our learning to be more effective in our fight against poverty.”
The institution’s media advisories continue to hold up SAPRI as a model of civil-society engagement. Its reports claim this “valuable partnership experience” has led to further attempts to solicit NGO input. Bank officials have disputed allegations that they disowned the initiative’s findings or that they ultimately withdrew from the process. Bank economist Coralie Gevers claimed that the Bank was distributing the findings for internal review. “If we send back comments saying we don’t agree with the findings of the report,” she said in an interview with journalist Chris Strohm, “that doesn’t mean we are withdrawing from it.”
Such denials, however, run contrary to the Bank’s subsequent uncooperative behavior. In 2001, the Bank reneged on its commitment to present SAPRI findings publicly at a Second Global Forum. Its staff pushed instead for a smaller roundtable discussion of the research. When the meeting took place in July 2001, neither Wolfensohn nor other senior World Bank officials showed up, despite the fact that twenty SAPRIN representatives traveled from across the world to participate.
Moreover, during the negotiation process preceding the summer meeting, the Bank blocked the release of approximately $200,000 that had been raised from a European government and that had been specifically earmarked for the SAPRIN NGOs. Activists finally got the funding only after travelling to Europe to meet with the donor and making clear to the Bank SAPRIN’s legal right to the money.
Earlier, in its reply to the NGOs’ April 2001 letter, the World Bank unilaterally declared that the July meeting would “bring the project to a successful completion.” The Bank thanked SAPRIN for raising the issue of funding for the wrap-up event, but added: “It has been made clear to SAPRI that the funds available to the World Bank have been fully expended and that we will not consider additional funding requests.”
The Bank declined to collaborate with SAPRIN on a final global report, preferring to prepare its own document for the July 2001 meeting. Totaling only forty pages, Adjustment From Within devotes but a few pages to each of the major policy areas identified by the extensive country reports—the research on which the document is supposedly based. Even the few pages devoted to each subject do not focus on the country reports. Rather, they lean heavily on previous World Bank studies. This allowed the authors to reach conclusions like “The impact of financial sector reforms implemented in SAPRI countries has been generally positive, but less impressive than expected.”
During the nine months that followed, Bank staff provided no response to the extensive draft report that SAPRIN had provided. Lidy Nacpil concluded from these interactions that “It is clear that the Bank is incapable, for political and bureaucratic reasons, to hear, much less respond to, the insights and priorities of people around the world affected by its policies. Many of us have also been in the streets, in the South and the North, to bring public attention to the social, economic and environmental devastation it has wrought. We now know that this is the only way, other than cutting its resource base, to put an end to its calamitous and undemocratic processes.”
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A New Turn?
The SAPRIN Global Steering Committee explains that, since the initial release of its report, the group has extended its mandate to include “the launching of field-based programs of economic literacy and the development of economic alternatives parallel to, but also integrated with, the research” they conducted. “In the months ahead,” writes SAPRIN global coordinator Doug Hellinger, “SAPRIN will be expanding its mobilizing and advocacy efforts while shaping alternative, viable and more just economic policies nationally and globally.” Regardless of the Bank’s immediate response, the initiative succeeded in forging a network of hundreds of groups and equipping them with an extensive set of data to document their arguments against structural adjustment.
Unexpectedly, a process of “critical engagement” also resumed in the past year. SAPRIN held its own Global Forum at the European Union in Brussels on April 15, 2002, to present the final version of its report. Following substantial coverage of the event in the European media, Wolfensohn requested a meeting with SAPRIN members and apologized for dropping the dialogue with the NGOs. In a subsequent meeting, he recognized the validity and importance of the SAPRI findings and acknowledged many of the shortcomings of adjustment programs. According to NGO observers present, he further expressed his desire to open the Bank to change both at the global level and in particular countries.
As with his initial endorsement of SAPRI, there are two ways to interpret Wolfensohn’s statements. He may simply be presenting a self-serving position in public, while directing his economists to obstruct critical findings behind the scenes. Or he may be sincere, but have his prerogatives impeded by the very institution he heads. Given their personal exchanges with his office, as well as Wolfensohn’s provisional support for former Chief Economist Joseph Stiglitz—a key elite critic of the neoliberal orthodoxy—SAPRIN members adopt the latter opinion. Coordinating Committee member John Mihevc explains, “Follow-through from staff is what we have yet to see.” In the SAPRIN view, it is the action of the Bank’s bureaucracy that will determine the institution’s internal capability for reform, if any.
James Adams, the Bank’s Vice President of Operational Policy, has articulated the institution’s somewhat changed view of SAPRI. “There was a feeling that the Bank wasn’t engaged and we hope we’ve addressed that,” he says. “Our approach to this is forward-looking. There’s a recognition that we are willing to engage on the country level.” However, Bank operations that Adams oversees, like the development of guidelines for staff carrying out structural adjustment operations, have so far failed to change.
The World Bank and civil society are now debating whether the Bank’s approach to structural adjustment has changed. The Bank has not promoted “structural adjustment” in name for several years. Adams stresses, “We are prepared to accept reform packages from governments that don’t include all of the elements of what was known as the ‘Washington Consensus.'” Nevertheless, SAPRIN representatives from Africa, Asia, and Latin America emphasized in April 2002 that the Bank’s current “Poverty Reduction” process represents a continuation, rather than a reversal, of earlier Bank programs.
SAPRIN members welcome moves towards openness at the World Bank, to the extent that they discredit the neoliberal consensus. But the NGOs are aware that Bank “dialogues” have yet to affect the institution’s policies. Patrick McCully of International Rivers Network cites the example of the World Commission on Dams (WCD), which criticized many Bank-funded projects. “The World Bank, as a key sponsor of the WCD, should be actively incorporating the Commission’s findings into its own policies and practices and encouraging others to do so… Yet the Bank has refused to adopt any of the WCD’s recommendations into its binding policies … The Bank is also misrepresenting or ignoring the Commission’s findings on the Bank’s role in promoting poorly performing and destructive dams.”
“Our frustration in dealing with this process is nothing compared to what those on the ground experience constantly,” says Hellinger. “We need to see some evidence that rhetoric is being transformed into action.” Absent such evidence, the SAPRI experience has given activists throughout the world good reason to maintain that past invitations to “dialogue” should only fortify criticism of the World Bank. And that closing down its meetings remains a most helpful alternative.