Inside the IDB

September 25, 2007

The officials of the Inter-American Development Bank make their recommendations from Washington where their headquarters sits at the corner of 13th Street and New York Avenue, five blocks east of the World Bank and two blocks from its real Mission Control at the U.S. Department of the Treasury. The lobby of the IDB is vast and intimidating, rather like the Atlanta Hyatt but without the bar and the comfy chairs: an enormous glass well of marble and daylight. Long ago it had a fake waterfall too, which, like most of the Bank’s dam projects, often did not work. It became an embarrassment and was therefore permanently turned off so as to not remind visitors of the hundreds of high-priced hydroelectric calamities with which the IDB had stopped up the hemisphere and for which the poor of the continent are still paying.

A 14-member board of governors runs the IDB, appointed by the 46 participating governments, and the board’s decisions are carried out by the executive directors, similarly appointed. The president, Enrique V. Iglesias, was unanimously re-elected this past November 8 in a Pinochet-type plebiscite: He got all 46 votes without an opposition candidate or a single dissenter. Vice Presidents and staff do the work of the Bank, together with representatives in each member country, which oversee the disbursement of about $7.5 billion a year in IDB loans. Each year the crack economists at the IDB account for the impact of their funding in the Report on Economic and Social Progress in Latin America and diagnose yet again what is wrong in the region and what is to be done.

Virtually no one is claiming that all is well in Latin America these days. If most people are demoralized and perplexed by this, the IDB is not. The IDB has the solution. Of course, the IDB has had the solution before; in fact, since 1959 the Bank has made a mission out of knowing more authoritatively than anyone else what is wrong in Latin America and recommending the appropriate remedies, all of which were designed to bring about the elusive and ethereal state of—DEVELOPMENT. Over the past forty years, at the behest of the IDB, Latin American governments have established highly-mechanized agriculture, export processing zones, extensive micro-credit/micro-enterprise operations, fiscal austerity, structural adjustment and dams that dwarf the Sierra Madre. These initiatives have brought about every socioeconomic horror you can name: rural diaspora, extreme labor exploitation—mostly of women—disguised and indebted joblessness, poverty and environmental ruin.

In the 1990s, the IDB condensed its recommendations into the Washington Consensus, which didn’t work out so well either: decentralization of government functions without sufficient financing, liberalization of trade and capital markets without adequate regulation, privatization of basic services and infrastructure, also without oversight, and as always, deeper debt, more debt servicing and budget cutting.

For the past few years the Bank’s Institutional Strategy has focused on development and poverty reduction through four tactical pursuits, euphemistically described in the 2002 report Profiles for Sector Strategies as “competitiveness, state modernization, social development and equity, and integration.” If the IDB’s own projects are evidence of what it’s actually doing, then in plain English these terms mean private sector union busting and wage reduction, public sector union busting and automation, privatization of education and health care systems, more borrowing for privatized highways, ports, pipelines and the like, as well as unfettered U.S. flooding of Latin American markets with goods, services and capital.

Beatrice Edwards is a research analyst based in Washington,D.C. who monitors the multilateral development banks for Public Services International

Tags: IDB, bank, development, foreign aid, neoliberalism

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