Bangladesh and the World Bank saga

A parliamentary watchdog [of the Bangladeshi parliament] has cleared a controversial bill seeking blanket immunity for international lending agencies operating in Bangladesh – the World Bank and the International Monetary Fund. The International Financial Organisations Order (Amendment) Act 2004, piloted by the finance and planning minister, M Saifur Rahman, protects these institutions from any legal challenges against their operations in Bangladesh.

The bill states the following: “The Bank shall enjoy immunity from every form of legal process...” It also says “no action shall be brought against the Bank, by any agency, or by any entity or person, and there shall be recourse to such special procedures for the settlement of controversies between the Bank and the government or the agency or entity or person as the case may be.” And it goes on, “Property and assets of the Bank shall, whosesoever located and by whomsoever held, be immune from all forms of seizure, attachment or execution, before the delivery of final judgement against the Bank.”

Such coverage includes immunity from actions brought by members or persons. Its assets and property are also immune from all forms of seizure, attachment or execution before the delivery of final judgement against the Bank. No legal action is allowed against the activities of any employee if he or she does so at the directive of the Bank. No immigration-related rules are to be applicable against the foreign staff of the Bank in Bangladesh. In an explanatory clause, the bill included the International Development Association, International Bank for Reconstruction and Development and International Monetary Fund in the immunity measures.

Why is the government of Bangladesh so eager to pass this bill through parliament? The issue of immunity originated after one of its employees, Ms Ismet Khan, of the Bank filed a case against it in the local court of Bangladesh in 2001 for arbitrary and unfair dismissal as External Affairs Officer of the World Bank’s Dhaka office. The Bank also violated a previous court injunction and appointed Ms Khan’s predecessor to her position, with complete disregard for the laws of the land.

Paradoxically, while the Bank is preaching so-called “broad based reforms” to its member countries, it turns a blind eye to irregular practices within the Bank itself. Ms Khan was compelled to file her case in the courts of Bangladesh in 2001. At first, the World Bank ignored summons and fourteen dates to appear in court. Then it engaged lawyers to claim that it was “immune” from the legal process and implored the authorities to reject her case. Eventually, it forced the government to intervene in the case and defend the Bank’s interests in the court – a highly “illegitimate” and even illegal request from many points of view.

So much for transparency! The World Bank does not want to be held accountable to anyone, although it demands accountability from its client countries. Granting immunity to the World Bank and the IMF means giving it free rein to do whatever it wants in Bangladesh. It will put the local government completely at the mercy of these bodies. To a degree they already are in this position, but this bill actually legalises this relationship.

The new bill confirms the utter helplessness of the so-called “Third World” countries. Any World Bank or IMF official will be free to do as he or she wishes and will remain free from prosecution. Any Bengali employee unjustly treated or dismissed by any of these organisations will simply have to accept his or here fate.

World Bank and Bangladesh

The World Bank’s motto is “Our dream is a world without poverty.” It employs over 10,000 people in more than 100 offices throughout the world with an annual budget of $1.5 billion. However, contrary to its motto, according to the Index of Economic Freedom, the Bank’s money has done nothing to improve the living conditions of the countries it “donates” money to. These same countries are just as poor as they were 40 years ago when they started receiving loans from the World Bank.

The record of the IMF and World Bank is not good in this regard. Far from being the solution to the uneven development and poverty in these countries, they actually contribute to a great degree to the continued impoverishment of the same countries. Their lending practice actually enhances further poverty. The vast majority of countries who have received loans from them have been unable to develop fully after depending on these institutions for over 40 years.

Bangladesh is in fact the World Bank’s third highest recipient of funds. This actually goes against the World Bank’s own lending criteria. Bangladesh is now the world’s most corrupt country according to Transparency International (TI), a position it competes for with other countries such as Pakistan and Nigeria. In fact corruption is so high in Bangladesh that it caused a loss of economic activity equivalent to 4.7 percent of GDP in 2001 alone. The World Bank’s International Development Agency has lent Bangladesh $9.914 billion dollars since 1973. In spite of all this money – or better, partly thanks to it – Bangladesh is the world’s third poorest country. So much for “a world without poverty.”

Up to 1.28 billion people around the world are living below the poverty line. This is the figure the World Bank provides in its World Development Report, 2000. Almost 72 percent of these poor people live in Asia and about half of the one billion Asian poor live in South Asia alone! And Bangladesh is one of the poorest countries within this poor continent. One man in two is considered poor in Bangladesh, according to World Bank definitions, i.e. living on less than $1 a day. This is quite an arbitrary figure. What happens if you are living on more than $1 a day but less than $2? In spite of its shortcomings, however, it does allow for some form of comparison between the levels of poverty in each country.

In Bangladesh this 50% of the population officially classified as poor are the most downtrodden sections of society. They have no real income, no wealth, no access to education, social security and, most importantly, they have no access to political power. They are at the bottom of the ladder, in an intrinsically unequal society.

In Bangladesh there is an ongoing process of unequal and unjust distribution of wealth. In this process we see a growing pauperisation of the population. Even those layers classed as non-poor are slowly sinking into greater poverty. Sections of the middle class are slowly sinking into the “lower middle class” and then eventually they join the ranks of the poor. There is in fact a new term for it: “Poor Becoming Extreme Poor!”

So how does one go about solving the question of “poor becoming extreme poor”? Well the bourgeoisie political thinkers are prone to believe that the natural law of “Struggle for Existence and Survival of the Fittest” holds good in society. Therefore what one can mostly do is to devise a few “Safety Net” measures for at least protecting the rights of the poor to live. The true meaning of these “Safety Net” Measures”, however, is to maintain the reserve of cheap labour for the more powerful employers of labour in society. That is why they have set the minimum subsistence income, or the so-called poverty line, as the norm for the millions of poor people of the globe.

At present it would seem that the World Bank is very anxious about poverty in Bangladesh. Now donors no longer give grants or untied aid. Most of the loans from the World Bank are either for a particular project or based on one or another certain strategic policy such as SAPs (Structural Adjustment Programmes). But the SAPs have miserably failed not only in Bangladesh but also in many countries of Asia and Africa. The main planks of these SAPs are:

1. Wholesale privatisation of industries and major utilities, such as water, electricity, gas, railways, ports, etc.

2. The blanket application of the so-called “free market policy”, which practically means a unilateral cancelling of all tariff and non-tariff restrictions by the country receiving the loans.

3. Withdrawal of all kinds of subsidies in the name of “Efficiency”.

4. Drastic cuts in government spending in order to ensure so-called “macro stability” of the economy.

A SAP was introduced in Bangladesh in the mid eighties when the country was under a Martial Law Regime led by General Ershad. Later in 1990, five years after the introduction of this SAP General Ershad was forced out of power by a mass upsurge of the working people, the backbone of which was the united movement of blue and white collar workers, students and agricultural labourers. In spite of that movement, the SAP is still in place. At present it is going through its last phase whereby all the remaining industries in the state sector, whether profitable or not, are to be privatised.

There is also very big pressure on the government to break up the BPC (Bangladesh Petroleum Corporation). The purpose of this is to put the oil and gas industry in the country at the mercy of the big multinational corporations. Similarly the United States are applying big pressure to get the Chittagong Port handed over to a US based company.

The incredible thing is the result of a recent official process of evaluation of the SAP. All the so-called “stakeholders”, including the World Bank itself, took part and the conclusion was negative! Theses “stakeholders” even demanded that the World Bank should pay compensation for imposing harmful policies that have provoked a slump in the economy, increased poverty and unemployment and caused mass discontent in the agricultural sector through the withdrawal of subsidies.

Some of the statements issued by this “stakeholders'” investigation are quite humorous. They recognised that nobody actually “owns” the SAP! The Minister confessed that they had been pressurised into accepting the SAP, otherwise loans or grants, whatever little that was coming, would have been stopped.

Given the real concrete results of these policies, the World Bank has had to recognise the failure of the SAP, at least partially anyway. But they tried to put the blame solely on the Bangladeshi government. According to them the government has not been sufficiently “committed”. This of course is not true. What is true is that the World Bank can pontificate from on high, but the government has the unfortunate position of actually having to sell these policies to the Bangladeshi masses!

Even the World Bank, however, has some insight on the effects its own policies are having on the poor masses. They therefore recognised the need for some safety measures to offset the so-called pains of the “reform process”. But this comes in the form of a so-called “Poverty Reduction Strategy Paper” (PRSP).

The World Bank is now insisting that Bangladesh and many other “highly indebted countries” will have to prepare a PRSP within a certain time limit and then submit it to them for a preliminary evaluation. Then they will in turn forward it to the September meeting of the member states of the board of directors of the World Bank for their final approval. Until then all so-called “soft loan options” will be withheld.

Ever since the birth of Bangladesh back in 1971, in spite of so-called “aid” from the World Bank and other international financial institutions, none of the basic problems of society have been solved. On the contrary things have deteriorated and continue to do so.

Crime levels have rocketed. The vulnerability of the poor and the weaker layers of society has increased enormously. The phenomenon of “Mastanocracy” (political gangsterism) has increased enormously. In fact the establishment’s political parties have become more and more alien to the masses with their activists behaving like gangsters. The local government bodies, and especially the police, have become totally unaccountable.

Healthcare has deteriorated, as has education. Good clean water and electricity supplies are scarce. The roads are in a state of terrible disrepair. Agriculture is lagging way behind in terms of investment and productivity.

Social inequality has massively increased, with the gap between the rich and poor getting bigger instead of smaller. Regional inequality is increasing, as is the gap between the rural and urban areas.

The social and political life of the country is becoming extremely polarised and conflictual. The poor have no real voice. The present political set up does not represent them. In fact a volcano is building up from below and will sooner or later erupt.

The only way out

The only answer to the above problems is to start with a revolutionary redistribution of wealth and power from which will follow an egalitarian growth or pro-poor growth within the society. The extreme neo-liberal policies of the World Bank are a product of capitalism in a period of global economic decay.

Therefore, any effective fight against the World Bank must be linked to building a powerful movement against capitalism itself, and to replace it with an alternative system. We believe the only viable alternative is socialism. How else can we control the multinationals’ pollution of the globe? How else can we ensure that the peoples of the world have enough to eat? How else can we end the domination of the poorest countries of the world by the multinational companies that have distorted and destroyed their local economies in search of global markets and cheap raw materials? How else can democracy be defended and expanded in the face of the huge media machinery which now straddles the globe?

All this can only be achieved through a genuine coming together of the working people of the globe based on mutually supporting economies controlled by the workers themselves. In other words, we need to fight for global socialism. The task may be big, but the time is right.